SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Large accelerated filer ý

Non-accelerated filer o

(Do not check if a smaller reporting company)

Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO ý

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.



Class		Outstanding at July ~~31, 2015~~29, 2016
Common stock, par value $1.25 per share		~~80,093,923~~80,174,963

~~Table of Contents~~

HARSCO CORPORATION

FORM 10-Q

INDEX



		Page
PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets (Unaudited)	3
	Condensed Consolidated Statements of Operations (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Loss (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows (Unaudited)	6
	Condensed Consolidated Statements of Equity (Unaudited)	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2826

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4037

Item 4.	Controls and Procedures	4038


PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	4139

Item 1A.	Risk Factors	4139

Item 6.	Exhibits	4139

SIGNATURES		4240

EXHIBIT INDEX		4341

~~Table of Contents~~

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HARSCO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


(In thousands)	June 30 2015			December 31 2014			June 30 2016			December 31 2015
ASSETS
Current assets:
Cash and cash equivalents	$	67,148		$	62,843		$	69,238		$	79,756
Trade accounts receivable, net	329,467			325,104			265,241			254,877
Other receivables	22,167			28,145			16,875			30,395
Inventories	208,043			178,922			208,243			216,967
Other current assets	82,603			88,465			80,503			82,527
Total current assets	709,428			683,479			640,100			664,522
Investments	262,689			288,505			236,112			252,609
Property, plant and equipment, net	626,616			663,244			531,292			564,035
Goodwill	412,998			416,155			394,423			400,367
Intangible assets, net	57,868			58,524			47,078			53,043
Other assets	186,707			159,320			110,016			126,621
Total assets	$	2,256,306		$	2,269,227		$	1,959,021		$	2,061,197
LIABILITIES
Current liabilities:
Short-term borrowings	$	12,352		$	16,748		$	10,129		$	30,229
Current maturities of long-term debt	21,585			25,188			35,588			25,084
Accounts payable	152,034			146,506			113,532			136,018
Accrued compensation	44,572			53,780			40,736			38,899
Income taxes payable	3,127			1,985			7,192			4,408
Dividends payable	16,419			16,535			—			4,105
Insurance liabilities	11,976			12,415			11,927			11,420
Advances on contracts	119,473			117,398
Advances on contracts and other customer advances							107,912			107,250
Due to unconsolidated affiliate	8,929			8,142			7,715			7,733
Unit adjustment liability	22,320			22,320			11,681			22,320
Other current liabilities	136,696			144,543			121,536			118,657
Total current liabilities	549,483			565,560			467,948			506,123
Long-term debt	909,235			829,709			832,339			845,621
Deferred income taxes	10,467			6,379			15,364			12,095
Insurance liabilities	31,605			35,470			25,078			30,400
Retirement plan liabilities	322,143			350,889			210,482			241,972
Due to unconsolidated affiliate	20,773			20,169			14,138			13,674
Unit adjustment liability	64,692			71,442			52,510			57,614
Other liabilities	36,450			37,699			40,213			42,895
Total liabilities	1,944,848			1,917,317			1,658,072			1,750,394
COMMITMENTS AND CONTINGENCIES
HARSCO CORPORATION STOCKHOLDERS’ EQUITY
Preferred stock	—			—			—			—
Common stock	140,502			140,444			140,622			140,503
Additional paid-in capital	167,824			165,666			169,048			170,699
Accumulated other comprehensive loss	(554,875		)	(532,256		)	(488,302		)	(515,688		)
Retained earnings	1,272,591			1,283,549			1,199,313			1,236,355
Treasury stock	(760,294		)	(749,815		)	(760,391		)	(760,299		)
Total Harsco Corporation stockholders’ equity	265,748			307,588			260,290			271,570
Noncontrolling interests	45,710			44,322			40,659			39,233
Total equity	311,458			351,910			300,949			310,803
Total liabilities and equity	$	2,256,306		$	2,269,227		$	1,959,021		$	2,061,197

See accompanying notes to unaudited condensed consolidated financial statements.

~~Table of Contents~~

HARSCO CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)	HARSCO CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)													HARSCO CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

		Three Months Ended						Six Months Ended							Three Months Ended						Six Months Ended
		June 30						June 30							June 30						June 30
(In thousands, except per share amounts)		2015			2014			2015			2014				2016			2015			2016			2015
Revenues from continuing operations:
Service revenues		$	292,209		$	361,966		$	579,637		$	712,760			$	249,626		$	292,209		$	475,120		$	579,637
Product revenues		163,538			173,378			327,689			335,067				120,307			163,538			248,094			327,689
Total revenues		455,747			535,344			907,326			1,047,827				369,933			455,747			723,214			907,326
Costs and expenses from continuing operations:
Cost of services sold		243,838			296,532			489,699			590,840				191,508			243,838			381,325			489,699
Cost of products sold		116,561			120,657			231,782			236,123				125,388			116,561			218,632			231,782
Selling, general and administrative expenses		58,463			77,969			122,365			144,763				49,520			58,463			100,304			122,365
Research and development expenses		1,514			1,058			2,433			3,721				956			1,514			1,838			2,433
Loss on disposal of the Harsco Infrastructure Segment and transaction costs		—			2,918			—			4,599
Other (income) expenses		(358		)	27,516			(13,563		)	26,860				1,247			(358		)	10,370			(13,563		)
Total costs and expenses		420,018			526,650			832,716			1,006,906				368,619			420,018			712,469			832,716
Operating income from continuing operations		35,729			8,694			74,610			40,921				1,314			35,729			10,745			74,610
Interest income		431			410			687			707				552			431			1,087			687
Interest expense		(11,818		)	(11,958		)	(23,702		)	(23,379		)		(13,805		)	(11,818		)	(26,168		)	(23,702		)
Change in fair value to the unit adjustment liability		(2,164		)	(2,473		)	(4,409		)	(5,019		)
Income (loss) from continuing operations before income taxes and equity loss		22,178			(5,327		)	47,186			13,230
Change in fair value to the unit adjustment liability and loss on dilution of equity method investment															(1,489		)	(2,164		)	(13,706		)	(4,409		)
Income (loss) from continuing operations before income taxes and equity income (loss)															(13,428		)	22,178			(28,042		)	47,186
Income tax expense		(7,105		)	(4,843		)	(19,960		)	(10,154		)		(12,000		)	(7,105		)	(9,834		)	(19,960		)
Equity in loss of unconsolidated entities, net		(7,584		)	(3,518		)	(3,501		)	(4,748		)
Equity in income (loss) of unconsolidated entities, net															(694		)	(7,584		)	2,481			(3,501		)
Income (loss) from continuing operations		7,489			(13,688		)	23,725			(1,672		)		(26,122		)	7,489			(35,395		)	23,725
Discontinued operations:
Income (loss) on disposal of discontinued business		434			1,732			(212		)	1,092				2,886			434			2,380			(212		)
Income tax (expense) benefit related to discontinued business		(161		)	(642		)	78			(405		)
Income tax benefit (expense) related to discontinued business															(1,065		)	(161		)	(878		)	78
Income (loss) from discontinued operations		273			1,090			(134		)	687				1,821			273			1,502			(134		)
Net income (loss)		7,762			(12,598		)	23,591			(985		)		(24,301		)	7,762			(33,893		)	23,591
Less: Net income attributable to noncontrolling interests		(1,187		)	(14		)	(1,752		)	(1,416		)		(1,872		)	(1,187		)	(3,149		)	(1,752		)
Net income (loss) attributable to Harsco Corporation		$	6,575		$	(12,612	)	$	21,839		$	(2,401	)		$	(26,173	)	$	6,575		$	(37,042	)	$	21,839
Amounts attributable to Harsco Corporation common stockholders:
Income (loss) from continuing operations, net of tax		$	6,302		$	(13,702	)	$	21,973		$	(3,088	)		$	(27,994	)	$	6,302		$	(38,544	)	$	21,973
Income (loss) from discontinued operations, net of tax		273			1,090			(134		)	687				1,821			273			1,502			(134		)
Net income (loss) attributable to Harsco Corporation common stockholders		$	6,575		$	(12,612	)	$	21,839		$	(2,401	)		$	(26,173	)	$	6,575		$	(37,042	)	$	21,839

Weighted-average shares of common stock outstanding		80,221			80,885			80,230			80,850				80,337			80,221			80,288			80,230
Basic earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations		$	0.08		$	(0.17	)	$	0.27		$	(0.04	)		$	(0.35	)	$	0.08		$	(0.48	)	$	0.27
Discontinued operations		—			0.01			—			0.01				0.02			—			0.02			—
Basic earnings (loss) per share attributable to Harsco Corporation common stockholders		$	0.08		$	(0.16	)	$	0.27		$	(0.03	)		$	(0.33	)	$	0.08		$	(0.46	)	$	0.27

Diluted weighted-average shares of common stock outstanding		80,418			80,885			80,385			80,850				80,337			80,418			80,288			80,385
Diluted earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations		$	0.08		$	(0.17	)	$	0.27		$	(0.04	)		$	(0.35	)	$	0.08		$	(0.48	)	$	0.27
Discontinued operations		—			0.01			—			0.01				0.02			—			0.02			—
Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders		$	0.08		$	(0.16	)	$	0.27		$	(0.03	)		$	(0.33	)	$	0.08		$	(0.46	)	$	0.27

Cash dividends declared per common share		$	0.205		$	0.205		$	0.41		$	0.41			$	—		$	0.205		$	—		$	0.410

See accompanying notes to unaudited condensed consolidated financial statements.

~~Table of Contents~~

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)



	Three Months Ended						Three Months Ended
	June 30						June 30
(In thousands)	2015			2014			2016			2015
Net income (loss)	$	7,762		$	(12,598	)	$	(24,301	)	$	7,762
Other comprehensive income (loss):
Foreign currency translation adjustments, net of deferred income taxes of $4,542 and $(359) in 2015 and 2014, respectively	(8,975		)	3,017
Net gain (loss) on cash flow hedging instruments, net of deferred income taxes of $984 and $282 in 2015 and 2014, respectively	(1,693		)	2,096
Pension liability adjustments, net of deferred income taxes of $2,131 and $333 in 2015 and 2014, respectively	(17,077		)	(3,005		)
Unrealized gain on marketable securities, net of deferred income taxes of $(1) and $(5) in 2015 and 2014, respectively	4			9
Foreign currency translation adjustments, net of deferred income taxes of $(4,977) and $4,542 in 2016 and 2015, respectively							(14,394		)	(8,975		)
Net loss on cash flow hedging instruments, net of deferred income taxes of $401 and $984 in 2016 and 2015, respectively							(144		)	(1,693		)
Pension liability adjustments, net of deferred income taxes of $(517) and $(469) in 2016 and 2015, respectively							21,855			(17,077		)
Unrealized gain on marketable securities, net of deferred income taxes of $(2) and $(1) in 2016 and 2015, respectively							4			4
Total other comprehensive income (loss)	(27,741		)	2,117			7,321			(27,741		)
Total comprehensive loss	(19,979		)	(10,481		)	(16,980		)	(19,979		)
Less: Comprehensive (income) loss attributable to noncontrolling interests	(846		)	100
Less: Comprehensive income attributable to noncontrolling interests							(1,183		)	(846		)
Comprehensive loss attributable to Harsco Corporation	$	(20,825	)	$	(10,381	)	$	(18,163	)	$	(20,825	)



	Six Months Ended						Six Months Ended
	June 30						June 30
(In thousands)	2015			2014			2016			2015
Net income (loss)	$	23,591		$	(985	)	$	(33,893	)	$	23,591
Other comprehensive income (loss):
Foreign currency translation adjustments, net of deferred income taxes of $2,892 and $(460) in 2015 and 2014, respectively	(37,817		)	1,747
Net gain (loss) on cash flow hedging instruments, net of deferred income taxes of $(538) and $668 in 2015 and 2014, respectively	5,881			(1,867		)
Pension liability adjustments, net of deferred income taxes of $(960) and $(73) in 2015 and 2014, respectively	8,216			676
Unrealized gain (loss) on marketable securities, net of deferred income taxes of $3 and $(2) in 2015 and 2014, respectively	(4		)	4
Foreign currency translation adjustments, net of deferred income taxes of $(8,554) and $2,892 in 2016 and 2015, respectively							(2,773		)	(37,817		)
Net gain (loss) on cash flow hedging instruments, net of deferred income taxes of $415 and $(538) in 2016 and 2015, respectively							(2,551		)	5,881
Pension liability adjustments, net of deferred income taxes of $(1,034) and $(939) in 2016 and 2015, respectively							32,295			8,216
Unrealized loss on marketable securities, net of deferred income taxes of $2 and $3 in 2016 and 2015, respectively							(3		)	(4		)
Total other comprehensive income (loss)	(23,724		)	560			26,968			(23,724		)
Total comprehensive loss	(133		)	(425		)	(6,925		)	(133		)
Less: Comprehensive income attributable to noncontrolling interests	(647		)	(1,002		)	(2,731		)	(647		)
Comprehensive loss attributable to Harsco Corporation	$	(780	)	$	(1,427	)	$	(9,656	)	$	(780	)

~~Table of Contents~~

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Six Months Ended						Six Months Ended
	June 30						June 30
(In thousands)	2015			2014			2016			2015
Cash flows from operating activities:
Net income (loss)	$	23,591		$	(985	)	$	(33,893	)	$	23,591
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	73,507			84,333			65,736			73,507
Amortization	6,073			6,046			5,926			6,073
Change in fair value to the unit adjustment liability	4,409			5,019
Deferred income tax expense	2,133			2,862
Equity in loss of unconsolidated entities, net	3,501			4,748
Loss on disposal of Harsco Infrastructure Segment	—			2,911
Change in fair value to the unit adjustment liability and loss on dilution of equity method investment							13,706			4,409
Deferred income tax expense (benefit)							(2,857		)	2,355
Equity in (income) loss of unconsolidated entities, net							(2,481		)	3,501
Dividends from unconsolidated entities							16			—
Contract loss provision for Harsco Rail Segment							40,050			—
Other, net	(17,473		)	16,926			4,257			(17,473		)
Changes in assets and liabilities:
Accounts receivable	(10,698		)	(31,496		)	3,011			(10,698		)
Inventories	(31,192		)	(12,972		)	(23,791		)	(31,192		)
Accounts payable	11,437			(7,172		)	(16,399		)	11,437
Accrued interest payable	(163		)	704			(36		)	(163		)
Accrued compensation	(6,870		)	2,072			1,237			(6,870		)
Advances on contracts	8,246			32,870
Advances on contracts and other customer advances							(1,109		)	8,246
Harsco 2011/2012 Restructuring Program accrual	(101		)	(2,198		)	—			(101		)
Other assets and liabilities	(21,182		)	(28,338		)	(24,791		)	(21,404		)
Net cash provided by operating activities	45,218			75,330			28,582			45,218

Cash flows from investing activities:
Purchases of property, plant and equipment	(63,246		)	(82,496		)	(32,176		)	(63,246		)
Proceeds from the Infrastructure Transaction	—			15,699
Proceeds from sales of assets	13,351			6,120			5,115			13,351
Purchases of businesses, net of cash acquired	(7,757		)	(26,046		)	(26		)	(7,757		)
Payment of unit adjustment liability	(11,160		)	(11,160		)	—			(11,160		)
Other investing activities, net	(4,783		)	(1,926		)	(616		)	(4,783		)
Net cash used by investing activities	(73,595		)	(99,809		)	(27,703		)	(73,595		)

Cash flows from financing activities:
Short-term borrowings, net	(3,046		)	(1,570		)	1,949			(3,046		)
Current maturities and long-term debt:
Additions	92,980			108,431			50,019			92,980
Reductions	(16,152		)	(62,595		)	(75,608		)	(16,152		)
Cash dividends paid on common stock	(32,891		)	(33,146		)	(4,105		)	(32,891		)
Dividends paid to noncontrolling interests	(1,559		)	(1,586		)	(1,702		)	(1,559		)
Purchase of noncontrolling interests							(4,731		)	—
Common stock acquired for treasury	(12,143		)	—			—			(12,143		)
Proceeds from cross-currency interest rate swap termination							16,625			—
Other financing activities, net	(2,192		)	(2		)	(895		)	(2,192		)
Net cash provided by financing activities	24,997			9,532
Net cash provided (used) by financing activities							(18,448		)	24,997

Effect of exchange rate changes on cash	7,685			(1,191		)	7,051			7,685
Net increase (decrease) in cash and cash equivalents	4,305			(16,138		)	(10,518		)	4,305
Cash and cash equivalents at beginning of period	62,843			93,605			79,756			62,843
Cash and cash equivalents at end of period	$	67,148		$	77,467		$	69,238		$	67,148

See accompanying notes to unaudited condensed consolidated financial statements.

~~Table of Contents~~

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

Harsco Corporation Stockholders’ Equity
Common Stock Additional Paid-in Capital
Retained
Earnings

Accumulated Other
Comprehensive
Loss

Noncontrolling
Interests

(In thousands, except share and per share amounts) Issued Treasury Total
Balances, January 1, 2014 $ 140,248
$ (746,237 ) $ 159,025
$ 1,372,041
$ (370,615 ) $ 43,093
$ 597,555
Net income (loss)

(2,401 )
1,416
(985 )
Cash dividends declared:

Common @ $0.41 per share

(33,174 )

(33,174 )
Noncontrolling interests (1,719 ) (1,719 )
Total other comprehensive income (loss), net of deferred income taxes of $133 974
(414 ) 560
Contributions from noncontrolling interests

1,560
1,560
Noncontrolling interests transferred in the Infrastructure Transaction (905 ) (905 )
Vesting of restricted stock units and other stock grants, net 124,532 shares 187
(693 ) 1,933

1,427
Amortization of unearned portion of stock-based compensation, net of forfeitures

2,321

2,321
Balances, June 30, 2014 $ 140,435
$ (746,930 ) $ 163,279
$ 1,336,466
$ (369,641 ) $ 43,031
$ 566,640



	Harsco Corporation Stockholders’ Equity
	Common Stock					Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests
(In thousands, except share amounts)	Issued		Treasury			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total
Balances, January 1, 2015	$	140,444	$	(749,815	)	$	165,666		$	1,283,549		$	(532,256	)	$	44,322		$	351,910
Net income									21,839						1,752			23,591
Cash dividends declared:
Common @ $0.41 per share									(32,797		)							(32,797		)
Noncontrolling interests															(1,559		)	(1,559		)
Total other comprehensive loss, net of deferred income taxes of $1,418												(22,619		)	(1,105		)	(23,724		)
Contributions from noncontrolling interests															2,100			2,100
Sale of investment in consolidated subsidiary															200			200
Vesting of restricted stock units and other stock grants, net 30,705 shares	58		(259		)	(97		)										(298		)
Treasury shares repurchased, 596,632 shares			(10,220		)													(10,220		)
Amortization of unearned portion of stock-based compensation, net of forfeitures						2,255												2,255
Balances, June 30, 2015	$	140,502	$	(760,294	)	$	167,824		$	1,272,591		$	(554,875	)	$	45,710		$	311,458

Harsco Corporation Stockholders’ Equity
(In thousands, except share and per share amounts) Common Stock Additional Paid-in Capital
Retained
Earnings

Accumulated Other
Comprehensive
Loss

Noncontrolling
Interests

Issued Treasury Total
Balances, January 1, 2015 $ 140,444
$ (749,815 ) $ 165,666
$ 1,283,549
$ (532,256 ) $ 44,322
$ 351,910
Net income

21,839

1,752
23,591
Cash dividends declared:

Common @ $0.41 per share

(32,797 )

(32,797 )
Noncontrolling interests

(1,559 ) (1,559 )
Total other comprehensive loss, net of deferred income taxes of $1,397 (22,619 ) (1,105 ) (23,724 )
Contributions from noncontrolling interests

2,100
2,100
Sale of investment in consolidated subsidiary 200
200
Vesting of restricted stock units and other stock grants, net 30,705 shares 58
(259 ) (97 )

(298 )
Treasury shares repurchased, 596,632 shares (10,220 ) (10,220 )
Amortization of unearned portion of stock-based compensation, net of forfeitures

2,255

2,255
Balances, June 30, 2015 $ 140,502
$ (760,294 ) $ 167,824
$ 1,272,591
$ (554,875 ) $ 45,710
$ 311,458



	Harsco Corporation Stockholders’ Equity
(In thousands)	Common Stock					Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests
(In thousands)	Issued		Treasury			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total
Balances, January 1, 2016	$	140,503	$	(760,299	)	$	170,699		$	1,236,355		$	(515,688	)	$	39,233		$	310,803
Net income (loss)									(37,042		)				3,149			(33,893		)
Cash dividends declared:
Noncontrolling interests															(1,702		)	(1,702		)
Total other comprehensive income (loss), net of deferred income taxes of $(9,171)												27,386			(418		)	26,968
Purchase of subsidiary shares from noncontrolling interest						(5,128		)							397			(4,731		)
Vesting of restricted stock units and other stock grants, net 80,598 shares	119		(92		)	(595		)										(568		)
Amortization of unearned portion of stock-based compensation, net of forfeitures						4,072												4,072
Balances, June 30, 2016	$	140,622	$	(760,391	)	$	169,048		$	1,199,313		$	(488,302	)	$	40,659		$	300,949

See accompanying notes to unaudited condensed consolidated financial statements.

~~Table of Contents~~

HARSCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Basis of Presentation

Harsco Corporation (the “Company”) has prepared these unaudited condensed consolidated financial statements based on Securities and Exchange Commission rules that permit reduced disclosure for interim periods. In the opinion of management, all adjustments (all of which are of a normal recurring nature) that are necessary for a fair ~~presentation~~statement are reflected in the unaudited condensed consolidated financial statements. The December 31, ~~2014~~2015 Condensed Consolidated Balance Sheet information contained in this Quarterly Report on Form 10-Q was derived from the ~~2014~~2015 audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the ~~United States of America~~U.S. (“U.S. GAAP”) for an annual report. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015~~, as revised in the Company's Current Report on Form 8-K filed on June 1, 2015.~~.

Operating results and cash flows for the three and six months ended June 30, ~~2015~~2016 are not indicative of the results that may be expected for the year ending December 31, ~~2015~~2016.

Reclassifications

Certain reclassifications have been made to prior year amounts to conform with current year classifications.

~~2. Revised Financial Statements~~Significant Accounting Policies - Revenue Recognition

Product revenues are recognized when they are realized or realizable and when earned. Revenue is realized or realizable and earned when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the Company's price to the buyer is fixed or determinable and collectability is reasonably assured. Product revenues include the Harsco Industrial Segment and the product revenues of the Harsco Metals & Minerals and Harsco Rail Segments.

Certain contracts within the Harsco Rail Segment, which meet specific criteria established in U.S. GAAP, are accounted for as long-term contracts. The Company recognizes revenues on two contracts from the federal railway system of Switzerland ("SBB") based on the percentage of completion (units-of-delivery) method of accounting, whereby revenues and estimated average costs of the units to be produced under the contracts are recognized as deliveries are made or accepted. Contract revenues and cost estimates are reviewed and revised, at a minimum quarterly, and adjustments are reflected in the accounting period as such amounts are determined.

Change in Estimates

Accounting for contracts using the percentage-of-completion method requires judgment relative to assessing risks, estimating contract revenues and costs (including estimating any liquidating damages or penalties related to performance) and making assumptions for schedule and technical items. Due to the number of years it may take to complete these contracts and the scope and nature of the work required to be performed on those contracts, estimating total sales and costs at completion is inherently complicated and subject to many variables and, accordingly estimates are subject to change. When adjustments in estimated total contract sales or estimated total costs are required, any changes from prior estimates are recognized in the current period for the inception-to-date effect of such changes. When estimates of total costs to be incurred on a contract, using the percentage-of-completion method, exceed estimates of total sales to be earned, a provision for the entire loss on the contract is recorded in the period in which the loss is determined.

During the ~~first~~second quarter of ~~2015,~~2016, as a result of increased vendor costs, ongoing discussions with the customer, and increased estimates for commissioning, certification and testing costs, as well as expected settlements with respect to the customer, the Company ~~identified~~has concluded it will have a loss on the contracts with SBB. The majority of the equipment deliveries and related revenue recognition under these contracts are expected in 2017 through 2020. The Company recognized an ~~error that would have had the net effect of decreasing after-tax income by $7.5 million,~~estimated loss provision related to ~~an unasserted multiemployer pension plan withdrawal liability that should have been recorded by~~ the ~~Company~~SBB contracts of $40.1 million at June 30, 2016 in the ~~fourth quarter~~caption Costs of 2012. The Company became aware of the potential withdrawal liability during the first quarter of 2015 and followed the Company's standard procedure of engaging outside experts to determine the amount of potential liability. Based on these procedures, the Company determined it had triggered a partial withdrawal during the fourth quarter of 2012 due to a decrease in hours worked by the Company's employees who participateproducts sold in the plan and that such amount should have been accrued in that period. The Company assessed the individual and aggregate impact of this error on the current year and all prior periods and determined that the cumulative effect of this error was material to both the first quarter and expected full-year 2015 results, but did not result in a material misstatement to any previously issued annual or quarterly financial statements. Accordingly, the Company is revising the relevant financial statements for all applicable periods and will revise additional financial statements as they appear in future filings.

In connection with the revision, the Company additionally corrected all previously disclosed immaterial out-of-period adjustments, including tax adjustments. The impact of revising the Company’s Condensed Consolidated Balance Sheets, Condensed Statements of Operations and Condensed Consolidated Statements of ~~Cash Flows for all periods presented are as follows:~~

December 31, 2014
(In thousands) As Previously Reported Revision As Revised
ASSETS
Inventories $ 177,265
$ 1,657
$ 178,922
Total current assets 681,822
1,657
683,479
Other assets 155,551
3,769
159,320
Total assets 2,263,801
5,426
2,269,227

LIABILITIES
Other liabilities $ 25,849
$ 11,850
$ 37,699
Total liabilities 1,905,467
11,850
1,917,317

HARSCO CORPORATION STOCKHOLDERS’ EQUITY
Accumulated other comprehensive loss $ (532,491 ) $ 235
$ (532,256 )
Retained earnings 1,290,208
(6,659 ) 1,283,549
Total Harsco Corporation stockholders’ equity 314,012
(6,424 ) 307,588
Total equity 358,334
(6,424 ) 351,910
Total liabilities and equity 2,263,801
5,426
2,269,227

~~Table of Contents~~

Three Months Ended
June 30, 2014
(In thousands, except per share amounts) As Previously Reported Revision As Revised
Revenues from continuing operations:
Service revenues $ 361,199
$ 767
$ 361,966
Total revenues 534,577
767
535,344

Costs and expenses from continuing operations:
Cost of services sold $ 296,801
$ (269 ) $ 296,532
Research and development expenses 1,983
(925 ) 1,058
Loss on disposal of the Harsco Infrastructure Segment and transaction costs 3,415
(497 ) 2,918
Total costs and expenses 528,341
(1,691 ) 526,650

Operating income from continuing operations $ 6,236
$ 2,458
$ 8,694
Loss from continuing operations before income taxes and equity loss (7,785 ) 2,458
(5,327 )
Income tax expense (4,258 ) (585 ) (4,843 )
Equity in loss of unconsolidated entities, net (3,008 ) (510 ) (3,518 )
Loss from continuing operations (15,051 ) 1,363
(13,688 )
Net loss (13,961 ) 1,363
(12,598 )
Net loss attributable to Harsco Corporation (13,975 ) 1,363
(12,612 )

Amounts attributable to Harsco Corporation common stockholders:
Loss from continuing operations, net of tax $ (15,065 ) $ 1,363
$ (13,702 )
Net loss attributable to Harsco Corporation common stockholders (13,975 ) 1,363
(12,612 )

Basic loss per common share attributable to Harsco Corporation common stockholders:
Continuing operations $ (0.19 ) $ 0.02
$ (0.17 )
Basic loss per share attributable to Harsco Corporation common stockholders (0.17 ) 0.01
(0.16 )

Diluted loss per common share attributable to Harsco Corporation common stockholders:
Continuing operations $ (0.19 ) $ 0.02
$ (0.17 )
Diluted loss per share attributable to Harsco Corporation common stockholders (0.17 ) 0.01
(0.16 )

~~Table of Contents~~

Six Months Ended
June 30, 2014
(In thousands, except per share amounts) As Previously Reported Revision As Revised
Revenues from continuing operations:
Service revenues $ 712,209
$ 551
$ 712,760
Total revenues 1,047,276
551
1,047,827

Costs and expenses from continuing operations:
Cost of services sold $ 590,800
$ 40
$ 590,840
Research and development expenses 4,602
(881 ) 3,721
Loss on disposal of the Harsco Infrastructure Segment and transaction costs 5,553
(954 ) 4,599
Total costs and expenses 1,008,701
(1,795 ) 1,006,906

Operating income from continuing operations $ 38,575
$ 2,346
$ 40,921
Income from continuing operations before income taxes and equity loss 10,884
2,346
13,230
Income tax expense (8,753 ) (1,401 ) (10,154 )
Equity in loss of unconsolidated entities, net (4,238 ) (510 ) (4,748 )
Loss from continuing operations (2,107 ) 435
(1,672 )
Net loss (1,420 ) 435
(985 )
Net loss attributable to Harsco Corporation (2,836 ) 435
(2,401 )

Amounts attributable to Harsco Corporation common stockholders:
Loss from continuing operations, net of tax $ (3,523 ) $ 435
$ (3,088 )
Net loss attributable to Harsco Corporation common stockholders (2,836 ) 435
(2,401 )

Basic loss per common share attributable to Harsco Corporation common stockholders:
Basic loss per share attributable to Harsco Corporation common stockholders (0.04 ) 0.01
(0.03 )

Diluted earnings per common share attributable to Harsco Corporation common stockholders:
Diluted loss per share attributable to Harsco Corporation common stockholders (0.04 ) 0.01
(0.03 )

Six Months Ended
June 30, 2014
(In thousands) As Previously Reported Revision As Revised
Net cash provided (used) by:
Operating activities $ 74,449
$ 881
$ 75,330
Investing activities (98,928 ) (881 ) (99,809 )

~~As of June 30, 2015, the cumulative impact of this revision~~Operations. There was ~~a $6.7 million reduction in retained earnings. The diluted~~no loss ~~per share from continuing operations decrease for the year ended~~provision at December 31, ~~2014 was $0.03. The diluted loss per share from continuing operations increase~~2015. See Note 3, Accounts Receivable and Inventories, for ~~the years ended December 31, 2013 and 2012 was $0.06 for both periods. The notes~~additional information related to the ~~condensed consolidated financial statements for the three and six months ended June 30, 2015 have been revised, as applicable.~~SBB contracts.

~~Table of Contents~~

3.2. Recently Adopted and Recently Issued Accounting Standards

The following accounting standards have been adopted in ~~2015:~~2016:

On January 1, ~~2015,~~2016, the Company adopted changes issued by the Financial Accounting Standards Board ("FASB") related to reporting ~~discontinued operations~~extraordinary and ~~the disclosure of disposals of components of an entity.~~unusual items. The changes ~~modify~~simplified income statement presentation by eliminating the ~~criteria~~concept of extraordinary items. The changes became effective for the Company on January 1, 2016. The adoption of these changes did not have an impact on the Company's condensed consolidated financial statements.

On January 1, 2016, the Company adopted changes issued by the FASB related to ~~what transactions constitute discontinued operations~~consolidation. The changes updated consolidation analysis and ~~expand disclosure requirements.~~affected reporting entities that are required to evaluate whether they should consolidate certain legal entities. The changes became effective for the Company on January 1, 2016. The adoption of these changes did not have a material impact on the Company's condensed consolidated financial statements.

On January 1, 2016, the Company adopted changes issued by the FASB related to simplifying the presentation of debt issuance costs. The changes required that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of that debt liability. In August 2015, the FASB added guidance about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. The changes became effective for the Company on January 1, 2016. The adoption of these changes resulted in the reclassification of approximately $10 million in deferred financing costs from Other assets to Long-term debt on the Company's Condensed Consolidated Balance Sheets for all periods presented.

On January 1, 2016, the Company adopted changes issued by the FASB related to the determination of whether a cloud computing arrangement includes a software license. If a cloud computing arrangement is determined to include a software license, then the customer accounts for the software license element consistent with the acquisition of other software licenses. If the arrangement is determined not to contain a software license, the customer should account for the arrangement as a service contract. The changes became effective for the Company on January 1, 2016. The adoption of these changes did not have a material impact on the Company's condensed consolidated financial statements.

On January 1, 2016, the Company adopted changes issued by the FASB simplifying the accounting for measurement period adjustments for business combinations. The changes resulted in an acquirer no longer being required to retrospectively reflect adjustments to provisional amounts during the measurement period as if they were recognized as of the acquisition date. Instead the acquirer would record the effect of the change to the provisional amounts during the measurement period in which the adjustment is identified. The changes also required additional disclosure related to such measurement period adjustments. The changes became effective for the Company on January 1, 2016. The adoption of these changes did not have an impact on the Company's condensed consolidated financial statements; however in the future will have an effect on how the Company reports adjustments to provisional amounts during the measurement period.

The following accounting standards have been issued and become effective for the Company at a future date:

In May 2014, the FASB issued changes related to the recognition of revenue from contracts with customers. The changes clarify the principles for recognizing revenue and develop a common revenue standard. The core principle of the changes is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The changes also require additional disclosures related to revenue recognition. In July 2015, the FASB deferred the effective date of these changes by one year, but will permit entities to adopt one year earlier. ~~The~~During 2016, the FASB clarified the implementation guidance for principal versus agent considerations, identifying performance obligations, accounting for intellectual property licenses, collectability, non-cash consideration and the presentation of sales and other similar taxes, as well as introduced practical expedients related to disclosures of remaining performance obligations. These changes become effective for the Company on January 1, 2018. Management is currently evaluating these changes.

In August 2014, the FASB issued changes related to management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The changes become effective for the Company for the annual period ending December 31, 2016 and interim periods thereafter. Management has evaluated these changes and does not expect these changes will have a material impact on the Company's condensed consolidated financial statements.

In July 2015, the FASB issued changes related to the simplification of the measurement of inventory. The changes require entities to measure most inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The changes do not apply to inventories that are measured using either the last-in, first-out method or the retail inventory method. The changes become effective for the Company on January 1, 2017. Management has determined that these changes will not have a material impact on the Company's condensed consolidated financial statements.

In ~~January~~November 2015, the FASB issued changes ~~related~~that require deferred tax assets and liabilities to ~~reporting extraordinary and unusual items.~~be classified as noncurrent in a classified statement of financial position. The changes ~~simplify income~~apply to all entities that present a classified statement ~~presentation by eliminating the concept~~ of ~~extraordinary items.~~financial position. The current requirement that deferred tax assets and liabilities of a tax-paying component of an entity be offset and presented as a single amount is not affected. The changes become effective for the Company on January 1, ~~2016. Management has determined that~~2017. Had these changes ~~will not have a material impact on~~been adopted, the Company's ~~condensed consolidated financial statements.~~working capital would have decreased by approximately $34 million and $38 million at June 30, 2016 and December 31, 2015, respectively.

In February ~~2015,~~2016, the FASB issued changes in accounting for leases. The changes introduce a lessee model that brings most leases on the balance sheet. The changes also align many of the underlying principles of the new lessor model with those in the FASB’s new revenue recognition standard. Furthermore, the changes address other concerns related to ~~consolidation.~~the current leases model such as eliminating the requirement in current guidance for an entity to use bright-line tests in determining lease classification. The changes ~~update consolidation analysis~~also require lessors to increase the transparency of their exposure to changes in value of their residual assets and ~~affect reporting entities~~how they manage that ~~are required to evaluate whether they should consolidate certain legal entities.~~exposure. The changes become effective for the Company on January 1, ~~2016. Management has determined that~~2019. The Company is currently evaluating the impact of these changes ~~will not have a material impact~~ on ~~the Company's~~its condensed consolidated financial statements.

In ~~April 2015,~~March 2016, the FASB issued changes related to ~~simplifying~~ the ~~presentation~~simplification of ~~debt issuance costs. The amendment requires that debt issuance costs related to a recognized debt liability be presented~~several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the ~~balance sheet as a direct reduction from the carrying amount~~statement of ~~that debt liability.~~cash flows. The changes become effective for the Company on January 1, ~~2016. Management has determined that~~2017. The Company is currently evaluating the impact of these changes ~~will not have a material impact~~ on ~~the Company's condensed consolidated financial statements.~~

In April 2015, the FASB issued changes related to the determination of whether a cloud computing arrangement includes a software license. If a cloud computing arrangement is determined to include a software license, then the customer accounts for the software license element consistent with the acquisition of other software licenses. If the arrangement is determined not to contain a software license, the customer should account for the arrangement as a service contract. The changes become effective for the Company on January 1, 2016. Management has determined that these changes will not have a material impact on the Company'sits condensed consolidated financial statements.

~~4. Acquisitions~~

~~Acquisitions~~

In March 2015, the Company acquired Protran Technology ("Protran"), a U.S. designer and producer of safety systems for transportation and industrial applications; and in April 2015, the Company acquired JK Rail Products, LLC ("JK Rail"), a provider of after-market parts for railroad track maintenance. Protran and JK Rail have been included in the results of the Harsco Rail Segment. Inclusion of pro forma financial information for these transactions is not necessary as the acquisitions are immaterial. The purchase price allocations are not yet final for Protran and JK Rail.

~~Table of Contents~~

5.3. Accounts Receivable and Inventories

Accounts receivable consist of the following:


(In thousands)	June 30 2015			December 31 2014			June 30 2016			December 31 2015
Trade accounts receivable	$	344,470		$	340,223		$	278,424		$	280,526
Less: Allowance for doubtful accounts	(15,003		)	(15,119		)	(13,183		)	(25,649		)
Trade accounts receivable, net	$	329,467		$	325,104		$	265,241		$	254,877

Other receivables (a)	$	22,167		$	28,145		$	16,875		$	30,395

(a) Other receivables include insurance claim receivables, employee receivables, tax claim receivables, receivables from affiliates and other miscellaneous receivables not included in Trade accounts receivable, net.

The decrease in Allowance for doubtful accounts in 2016 is due to the write-off of previously reserved accounts receivable balances.

The provision for doubtful accounts related to trade accounts receivable was as follows:


	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30				June 30				June 30				June 30
(In thousands)	2015		2014		2015		2014		2016		2015		2016		2015
Provision for doubtful accounts related to trade accounts receivable	$	414	$	7,364	$	610	$	7,345	$	323	$	414	$	177	$	610

The decrease in the Provision for doubtful accounts related to trade accounts receivable for both the three and six months ended June 30, 2015 relates to reserves taken in 2014 for two European customers in the Harsco Metals & Minerals Segment.

Inventories consist of the following:


(In thousands)	June 30 2015		December 31 2014		June 30 2016		December 31 2015
Finished goods	$	36,181	$	30,525	$	38,207	$	32,586
Work-in-process	59,047		28,690		29,349		30,959
Contracts-in-process					44,335		55,786
Raw materials and purchased parts	80,671		87,985		69,975		70,755
Stores and supplies	32,144		31,722		26,377		26,881
Inventories	$	208,043	$	178,922	$	208,243	$	216,967



(In thousands)	June 30 2016		December 31 2015
Contract costs accumulated to date	78,922		55,786
Estimated loss provisions for contracts-in-process (a)	(34,587	)	—
Contracts-in-process	44,335		55,786

At June 30, 2016 and December 31, 2015, the Company has $84.7 million and $82.7 million, of customer advances related to contracts-in-process. These amounts are included in the caption Advances on contracts and other customer advances on the Condensed Consolidated Balance Sheets.

6.4. Equity Method Investments

(In thousands) Three Months Ended March 31 2015 Three Months Ended March 31 2014 Six Months Ended March 31 2015 Period From November 27 2013 Through March 31 2014
Summarized Statement of Operations Information of Brand:
Net revenues $ 677,527
$ 741,763
$ 1,481,726
$ 977,857
Gross profit 134,705
151,862
331,946
200,694
Net loss attributable to Brand Energy & Infrastructure Services, Inc. and Subsidiaries (26,418 ) (13,272 ) (12,201 ) (17,513 )

Harsco's equity in loss of Brand (7,584 ) (3,518 ) (3,501 ) (4,748 )



	Three Months Ended						Six Months Ended
	June 30						June 30
(In thousands)	2016			2015			2016		2015
Net revenues	$	750,394		$	677,527		$	1,551,146	$	1,481,726
Gross profit	148,972			134,705			329,549		331,946
Net income (loss) attributable to Brand Energy & Infrastructure Services, Inc. and Subsidiaries	(2,682		)	(26,418		)	8,378		(12,201		)

Harsco's equity in income (loss) of Brand	(694		)	(7,584		)	2,481		(3,501		)

Balances related to transactions between the Company and Brand are as follows:

7.5. Property, Plant and Equipment

Property, plant and equipment consists of the following:

6. Goodwill and Other Intangible Assets

The following table reflects the changes in carrying amounts of goodwill by segment for the six months ended June 30, ~~2015~~2016:

(In thousands) Harsco Metals & Minerals Segment Harsco Industrial Segment
Harsco Rail
Segment

Consolidated
Totals
Balance at December 31, 2014 $ 400,006
$ 6,839
$ 9,310
$ 416,155
Changes to goodwill (a)
(493 ) —
3,350
2,857
Foreign currency translation (6,014 ) —
—
(6,014 )
Balance at June 30, 2015 $ 393,499
$ 6,839
$ 12,660
$ 412,998

(a) Changes to goodwill in the Harsco Rail Segment relate to the acquisitions of Protran and JK Rail. See Note 4, Acquisitions and Dispositions. In addition, the change to goodwill in the Harsco Metals & Minerals Segment relates to the allocation of goodwill associated with the sale of the Company's Pakistan-based chromium operations.



(In thousands)	Harsco Metals & Minerals Segment			Harsco Industrial Segment		Harsco Rail Segment		Consolidated Totals
Balance at December 31, 2015	$	380,761		$	6,806	$	12,800	$	400,367
Changes to goodwill	—			33		226		259
Foreign currency translation	(6,203		)	—		—		(6,203		)
Balance at June 30, 2016	$	374,558		$	6,839	$	13,026	$	394,423

The Company’s ~~2014~~2015 annual goodwill impairment testing did not result in any impairment of the Company’s goodwill. The fair value of the Harsco Metals & Minerals Segment exceeded the carrying value by approximately ~~10%~~15%. The Company tests for goodwill impairment annually or more frequently if indicators of impairment exist, or if a decision is made to dispose of a business. The Company performs the annual goodwill impairment test as of October 1 and monitors for triggering events on an ongoing basis. The Company determined that, as of June 30, ~~2015,~~2016, no interim goodwill impairment testing was necessary. There can be no assurance that the Company’s annual goodwill impairment testing will not result in a charge to earnings. Should the Company’s analysis ~~continue to~~ indicate further degradation in the overall markets served by the Harsco Metals & Minerals Segment, impairment losses for associated assets could be required. Any impairment could result in the write-down of the carrying value of goodwill to its implied fair value.

~~(b)~~(a) These estimated amortization expense amounts do not reflect the potential effect of future foreign currency exchange fluctuations.

~~9. Debt and Credit Agreements~~

At June 30, 2015 and December 31, 2014, the Company had $183.0 million and $98.5 million, respectively, of Credit Agreement borrowings outstanding. At June 30, 2015 and December 31, 2014, all such balances were classified as long-term borrowings in the Condensed Consolidated Balance Sheets. Classification of such balances is based on the Company's ability and intent to repay such amounts over the subsequent twelve months, as well as reflects the Company's ability and intent to borrow for a period longer than a year. To the extent the Company expects to repay any amounts within the subsequent twelve months, the amounts are classified as short-term borrowings.

At June 30, 2015, the Company's 2.7% notes due October 15, 2015 are classified as long-term debt on the Condensed Consolidated Balance Sheet based on the Company's intent and ability to refinance this debt on a long-term basis.

Three Months Ended
June 30
Defined Benefit Pension Plans Net Periodic Pension Cost U. S. Plans International Plans
(In thousands) 2015 2014 2015 2014
Service cost $ 722
$ 558
$ 453
$ 411
Interest cost 3,089
3,217
9,140
11,012
Expected return on plan assets (4,203 ) (4,196 ) (12,611 ) (12,708 )
Recognized prior service costs 20
22
48
47
Recognized loss 1,230
838
4,223
3,583
Settlement/curtailment losses —
—
—
56
Defined benefit pension plans net periodic pension cost $ 858
$ 439
$ 1,253
$ 2,401



	Three Months Ended				Six Months Ended
Company Contributions	June 30				June 30
(In thousands)	2016		2015		2016		2015
Defined benefit pension plans (U.S.)	$	470	$	592	$	940	$	1,274
Defined benefit pension plans (International)	3,254		4,165		13,052		20,231
Multiemployer pension plans	505		741		1,026		1,306
Defined contribution pension plans	2,476		2,817		5,302		6,265

The Company's estimate of expected contributions to be paid during the remainder of ~~2015~~2016 for the U.S. and international defined benefit plans are $~~1.2~~1.1 million and $~~9.1~~5.3 million, respectively.

9. Commitments and Contingencies

Brazilian Tax Disputes

In October 2009, the Company received notification of the SPRA’s final administrative decision regarding the levying of ICMS in the State of São Paulo in relation to services provided to a customer in the State between January 2004 and May 2005. As of June 30, ~~2015~~2016, the principal amount of the tax assessment from the SPRA with regard to this case ~~was~~is approximately $2 million, with penalty, interest and fees assessed to date increasing such amount by an additional $2223 million. Any change in the aggregate amount since the Company’s last Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015~~, as revised on Form 8-K filed on June 1, 2015,~~ is due to an increase in assessed interest and statutorily mandated legal fees for the period as well as foreign currency translation.

Another ICMS tax case involving the SPRA refers to the tax period from January 2002 to December 2003, and is still pending at the administrative phase. The aggregate amount assessed by the tax authorities in August 2005 was $~~8.1~~7.8 million (the amounts with regard to this claim are valued as of the date of the assessment since it has not yet reached the collection phase), composed of a principal amount of $1.9 million, with penalty and interest assessed through that date increasing such amount by an additional $~~6.2~~6.0 million. All such amounts include the effect of foreign currency translation.

The Company continues to believe it is not probable that it will incur a loss for these assessments by the SPRA. The Company also continues to believe that sufficient coverage for these claims exists as a result of the Company’s customer’s indemnification obligations and such customer’s pledge of assets in connection with the October 2009 notice, as required by Brazilian procedure.

The Company intends to continue its practice of vigorously defending itself against these tax claims under various alternatives, including judicial appeal. The Company will continue to evaluate its potential liability with regard to these claims on a quarterly basis; however, it is not possible to predict the ultimate outcome of these tax-related disputes in Brazil. No loss provision has been recorded in the Company's condensed consolidated financial statements for the disputes described above because the loss contingency is not deemed probable, and the Company does not expect that any costs that are reasonably possible to be incurred by the Company in connection with Brazilian tax disputes would have a material adverse effect on the Company's financial condition, results of operations or cash flows.

Brazilian Labor Disputes

The Company is subject to collective bargaining and individual labor claims in Brazil through the Harsco Metals & Minerals Segment which allege, among other things, the Company's failure to pay required amounts for overtime and vacation at certain sites. The Company is vigorously defending itself against these claims; however, litigation is inherently unpredictable, particularly in foreign jurisdictions. While the Company does not currently expect that the ultimate resolution of these claims

will have a material adverse effect on the Company’s financial condition, results of operations or cash flows, it is not possible to predict the ultimate outcome of these labor-related disputes.

The Company is continuing to review all known labor claims and as of June 30, ~~2015~~2016 and December 31, ~~2014,~~2015, the Company has established reserves of ~~$7.9~~$8.7 million and ~~$8.6~~$6.9 million, respectively, on the Company's Condensed Consolidated Balance Sheets for amounts considered to be probable and estimable. As the Company continues to evaluate these claims and takes actions to address them, the amount of established reserves may be impacted.

The Company, through its Harsco Metals & Minerals Segment, provides services through long-term service contracts on a number of sites worldwide. As previously disclosed, a subcontractor at the site of a large customer has filed for arbitration against the Company, claiming that it is owed monetary damages from the Company in connection with its processing certain materials. The Company disputes that it is responsible for such alleged damages and intends to vigorously defend itself against this claim. In addition, the Company has impleaded its customer - which the Company believes has responsibility for any damages - into its arbitration with the subcontractor. The Company has concluded that a loss contingency is neither probable nor estimable and, therefore has not made any provision for any potential loss in its condensed consolidated financial statements. Moreover, based on the information currently available to the Company, the Company does not expect that the ultimate resolution of this arbitration will have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

During the first quarter of 2015, a rail grinder manufactured by the Company's Harsco Rail Segment and operated by a subcontractor caught fire, causing a customer to incur monetary damages. There is a legal action pending to determine the cause of the incident. Depending on the cause of the fire and the extent of insurance coverage, the Company's results of operations and cash flows may be impacted in future periods.

Although results of operations and cash flows for a given period could be adversely affected by a negative outcome in these or other lawsuits, claims ~~and~~or proceedings, management believes that the ultimate outcome of these matters will not have a material adverse effect on the Company's financial condition, results of operations or cash flows.

Lima Refinery Litigation

~~Table~~On April 8, 2016, Lima Refining Company filed a lawsuit against the Company in the District Court of ~~Contents~~Harris County, Texas related to a January 2015 explosion at an oil refinery operated by Lima Refining Company. The action seeks approximately $95 million in property damages and $250 million in lost profits and business interruption damages. The action alleges the explosion occurred because of a defect in a heat exchange cooler manufactured by Hammco Corporation ("Hammco") in 2009, prior to the Company’s acquisition of Hammco in 2014. The Company plans to vigorously contest the allegations against it both as to liability for the accident and the amount of the claimed damages. As a result, the Company believes the situation does not result in a probable loss. The Company has both an indemnity right from the sellers of Hammco and liability insurance coverage under various primary and excess policies that the Company believes will be available, if necessary, to cover substantially all of any such liability that might ultimately be incurred in the above action.

Other

The Company is named as one of many defendants (approximately 90 or more in most cases) in legal actions in the ~~United States~~U.S. alleging personal injury from exposure to airborne asbestos over the past several decades. In their suits, the plaintiffs have named as defendants, among others, many manufacturers, distributors and installers of numerous types of equipment or products that allegedly contained asbestos.

The Company believes that the claims against it are without merit. The Company has never been a producer, manufacturer or processor of asbestos fibers. Any asbestos-containing part of a Company product used in the past was purchased from a supplier and the asbestos encapsulated in other materials such that airborne exposure, if it occurred, was not harmful and is not associated with the types of injuries alleged in the pending actions.

At June 30, ~~2015,~~2016, there were ~~17,225~~17,096 pending asbestos personal injury actions filed against the Company. Of those actions, ~~16,899~~16,767 were filed in the New York Supreme Court (New York County), 125 were filed in other New York State Supreme Court Counties and ~~201~~204 were filed in courts located in other states.

The complaints in most of those actions generally follow a form that contains a standard damages demand of $20 million or $25 million, regardless of the individual plaintiff’s alleged medical condition, and without identifying any specific Company product.

At June 30, ~~2015, 16,772~~2016, 16,752 of the actions filed in New York Supreme Court (New York County) were on the Deferred/Inactive Docket created by the court in December 2002 for all pending and future asbestos actions filed by persons who cannot demonstrate that they have a malignant condition or discernible physical impairment. The remaining ~~127~~15 cases in New York County are pending on the Active or In Extremis Docket created for plaintiffs who can demonstrate a malignant condition or physical impairment.

The Company has liability insurance coverage under various primary and excess policies that the Company believes will be available, if necessary, to substantially cover any liability that might ultimately be incurred in the asbestos actions referred to above. The Company believes that a substantial portion of the costs and expenses of the asbestos actions will be paid by the Company’s insurers.

In view of the persistence of asbestos litigation in the ~~United States,~~U.S., the Company expects to continue to receive additional claims in the future. The Company intends to continue its practice of vigorously defending these claims and cases. At June 30, ~~2015,~~2016, the Company has obtained dismissal in ~~27,663~~27,864 cases by stipulation or summary judgment prior to trial.

It is not possible to predict the ultimate outcome of asbestos-related actions in the ~~United States~~U.S. due to the unpredictable nature of this litigation, and no loss provision has been recorded in the Company's condensed consolidated financial statements because a loss contingency is not deemed probable or estimable. Despite this uncertainty, and although results of operations and cash flows for a given period could be adversely affected by asbestos-related actions, the Company does not expect that any costs that are reasonably possible to be incurred by the Company in connection with asbestos litigation would have a material adverse effect on the Company's financial condition, results of operations or cash flows.

The Company is subject to various other claims and legal proceedings covering a wide range of matters that arose in the ordinary course of business. In the opinion of management, all such matters are adequately covered by insurance or by established reserves, and, if not so covered, are without merit or are of such kind, or involve such amounts, as would not have a material adverse effect on the financial condition, results of operations or cash flows of the Company.

Insurance liabilities are recorded when it is probable that a liability has been incurred for a particular event and the amount of loss associated with the event can be reasonably estimated. Insurance reserves have been estimated based primarily upon actuarial calculations and reflect the undiscounted estimated liabilities for ultimate losses, including claims incurred but not reported. Inherent in these estimates are assumptions that are based on the Company's history of claims and losses, a detailed analysis of existing claims with respect to potential value, and current legal and legislative trends. If actual claims differ from those projected by management, changes (either increases or decreases) to insurance reserves may be required and would be recorded through income in the period the change was determined. When a recognized liability is covered by third-party insurance, the Company records an insurance claim receivable to reflect the covered liability. Insurance claim receivables are included in Other receivables on the Company's Condensed Consolidated Balance Sheets. See Note 1, Summary of Significant Accounting Policies, to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2014, as revised on Form 8-K filed on June 1,~~ 2015 for additional information on Accrued ~~Insurance~~insurance and ~~Loss Reserves.~~loss reserves.

~~Table of Contents~~

~~13.~~10. Reconciliation of Basic and Diluted Shares


	Three Months Ended					Six Months Ended					Three Months Ended					Six Months Ended
	June 30					June 30					June 30					June 30
(In thousands, except per share amounts)	2015		2014			2015		2014			2016			2015		2016			2015
Income (loss) from continuing operations attributable to Harsco Corporation common stockholders	$	6,302	$	(13,702	)	$	21,973	$	(3,088	)	$	(27,994	)	$	6,302	$	(38,544	)	$	21,973

Weighted-average shares outstanding - basic	80,221		80,885			80,230		80,850			80,337			80,221		80,288			80,230
Dilutive effect of stock-based compensation	197		—			155		—			—			197		—			155
Weighted-average shares outstanding - diluted	$	80,418	$	80,885		$	80,385	$	80,850		$	80,337		$	80,418	$	80,288		$	80,385

Earnings (loss) from continuing operations per common share, attributable to Harsco Corporation common stockholders:
Basic	$	0.08	$	(0.17	)	$	0.27	$	(0.04	)	$	(0.35	)	$	0.08	$	(0.48	)	$	0.27

Diluted	$	0.08	$	(0.17	)	$	0.27	$	(0.04	)	$	(0.35	)	$	0.08	$	(0.48	)	$	0.27

The following average outstanding stock-based compensation units were not included in the computation of diluted earnings (loss) per share because the effect was antidilutive:


	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
	June 30		June 30		June 30		June 30
(In thousands)	2015	2014	2015	2014	2016	2015	2016	2015
Restricted stock units	—	311	—	311	957	—	694	—
Stock options	100	215	107	215	90	100	90	107
Stock appreciation rights	1,334	968	1,100	968	1,641	1,334	1,364	1,100
Performance share units	350	97	236	97	835	350	572	236

~~14.~~11. Derivative Instruments, Hedging Activities and Fair Value

Derivative Instruments and Hedging Activities

All derivative instruments are recorded on the Condensed Consolidated Balance Sheets at fair value. Changes in the fair value of derivatives used to hedge foreign currency denominated balance sheet items are reported directly in earnings, along with offsetting transaction gains and losses on the items being hedged. Derivatives used to hedge forecasted cash flows associated with foreign currency commitments or forecasted commodity purchases may be accounted for as cash flow hedges, as deemed appropriate, if the criteria for hedge accounting are met. Gains and losses on derivatives designated as cash flow hedges are deferred as a separate component of equity and reclassified to earnings in a manner that matches the timing of the earnings impact of the hedged transactions. Generally, at June 30, ~~2015~~2016, ~~these~~ deferred gains and losses related to asset purchases are reclassified to earnings over 10 to 15 years from the balance sheet ~~date.~~date and those related to revenue are deferred until the revenue is recognized. The ineffective portion of all hedges, if any, is recognized currently in earnings.

The fair ~~values~~value of outstanding derivative contracts recorded as assets and liabilities on the Condensed Consolidated Balance Sheets at ~~June 30, 2015~~ ~~and~~ ~~December 31, 2014~~were as follows:

All of the Company's derivatives are recorded in the Condensed Consolidated Balance Sheets at gross amounts and not offset. All of the Company's ~~cross-currency interest rate swaps~~CCIRs and certain foreign currency exchange forward ~~exchange~~ contracts are transacted under International Swaps and Derivatives Association ("ISDA") documentation. Each ISDA master agreement permits the net settlement of amounts owed in the event of default. The Company's derivative assets and liabilities subject to enforceable master netting arrangements did not result in a net asset or net liability at either June 30, ~~2015~~2016 or December 31, ~~2014~~2015.

The effect of derivative instruments on the Condensed Consolidated Statements of Operations and the Condensed Consolidated Statements of Comprehensive Loss ~~for the~~ ~~three and six months endedJune 30, 2015~~ ~~and~~ ~~2014~~was as follows:

Amount of Gain (Loss) Recognized in Other

Income (“OCI”) on Derivative -

Accumulated OCI into Income -

Location of Gain Recognized in Income on Derivative - Ineffective Portion

Effectiveness Testing

Amount of Loss Recognized in Income on Derivative - Ineffective Portion and Amount

Effectiveness Testing

Amount of Gain (Loss) Recognized in Other

Income (“OCI”) on Derivative -

Accumulated OCI into Income -

Location of Loss Recognized in Income on Derivative - Ineffective Portion

Effectiveness Testing

Amount of Loss Recognized in Income on Derivative - Ineffective Portion and Amount

Effectiveness Testing

Amount of Gain (Loss)Recognized in Other

Income (“OCI”) on Derivative -

Accumulated OCI into Income -

(Loss) Recognized in Income on Derivative - Ineffective Portion

Effectiveness Testing

Amount of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount

Effectiveness Testing

Amount of Gain (Loss)Recognized in OCI on Derivative -

Accumulated OCI into Income -

Location of Gain Recognized in Income on Derivative - Ineffective Portion

Effectiveness Testing

Amount of Gain Recognized in Income on Derivative - Ineffective Portion and Amount

Effectiveness Testing

(a) Reflects only the activity of the Company and excludes derivative designated as hedging instruments held by the Company's equity method investments.

(b) These gains ~~(losses)~~ offset foreign currency fluctuation effects on the debt principal.

Derivatives Not Designated as Hedging Instruments

(Loss) Recognized in

Income on Derivative

Amount of Gain (Loss) Recognized in

Income on Derivative for the

Three Months Ended June 30 (a)

(Loss) Recognized in

Income on Derivative

Amount of Gain (Loss) Recognized in

Income on Derivative for the

Three Months Ended June 30 (c)

(Loss) Recognized in

Income on Derivative

Amount of Gain (Loss) Recognized in

Income on Derivative for the

Six Months Ended June 30 (a)

(Loss) Recognized in

Income on Derivative

Amount of Gain (Loss) Recognized in

Income on Derivative for the

Six Months Ended June 30 (c)

~~(a)~~(c) These gains (losses) offset amounts recognized in cost of services and products sold principally as a result of intercompany or third party foreign currency exposures.

Foreign Currency Exchange Forward ~~Exchange~~ Contracts

The Company uses derivative instruments to hedge cash flows related to foreign currency fluctuations. Foreign currency exchange forward ~~exchange~~ contracts outstanding are part of a worldwide program to minimize foreign currency exchange operating income and balance sheet exposure by offsetting foreign currency exposures of certain future payments between the Company and various subsidiaries, suppliers or customers. These unsecured contracts are with major financial institutions. The Company may be exposed to credit loss in the event of non-performance by the contract counterparties. The Company evaluates the creditworthiness of the counterparties and does not expect default by them. Foreign currency exchange forward ~~exchange~~ contracts are used to hedge commitments, such as foreign currency debt, firm purchase commitments and foreign currency cash flows for certain export sales transactions.

The following tables summarize, by major currency, the contractual amounts of the Company’s foreign currency exchange forward ~~exchange~~ contracts in U.S. ~~dollars at~~ ~~June 30, 2015~~ ~~and~~ ~~December 31, 2014~~.dollars. The “Buy” amounts represent the U.S. dollar equivalent of commitments to purchase foreign currencies, and the “Sell” amounts represent the U.S. dollar equivalent of commitments to sell foreign currencies. The recognized gains and losses offset amounts recognized in cost of services and products sold principally as a result of intercompany or third party foreign currency exposures.

Contracted Amounts of Foreign Currency Exchange Forward ~~Exchange~~ Contracts Outstanding at June 30, ~~2015~~2016:

Contracted Amounts of Foreign Currency Exchange Forward ~~Exchange~~ Contracts Outstanding at December 31, ~~2014~~2015:

In addition to foreign currency exchange forward ~~exchange~~ contracts, the Company designates certain loans as hedges of net investments in international subsidiaries. The Company recorded pre-tax net ~~gains~~losses of ~~$1.5~~$16.4 million and ~~$4.6~~$20.3 million during the three and six months ended June 30, ~~2015~~2016, respectively, and pre-tax net gains of ~~$4.6~~$1.5 million and ~~$4.9~~$4.6 million during the three and six months ended June 30, ~~2014,~~2015, respectively, into Accumulated other comprehensive loss.

Cross-Currency Interest Rate Swaps

Fair Value of Derivative Assets and Liabilities and Other Financial Instruments

The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs), and (2) an entity’s own assumptions about market participant assumptions based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which give the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

The three levels of the fair value hierarchy are described below:

In instances in which multiple levels of inputs are used to measure fair value, hierarchy classification is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The following table indicates the fair value hierarchy of the financial instruments of the ~~Company at~~ ~~June 30, 2015~~ ~~and~~ ~~December 31, 2014~~:Company:

Level 2 Fair Value Measurements

The following table reconciles the beginning and ending balances for liabilities measured on a recurring basis using unobservable inputs (Level 3) ~~for the six months ended June 30, 2015 and 2014:~~:

~~(a) See Note 6, Equity Method Investments, for additional information related to the unit adjustment liability.~~

~~(b) Does not total due to rounding.~~

The Company primarily applies the market approach for recurring fair value measurements and endeavors to utilize the best available information. Accordingly, the Company utilizes valuation techniques that maximize the use of observable inputs, such as forward rates, interest rates, the Company’s credit risk and counterparties’ credit risks, and which minimize the use of unobservable inputs. The Company is able to classify fair value balances based on the ability to observe those inputs. ~~Commodity derivatives, foreign~~Foreign currency exchange forward ~~exchange~~ contracts and ~~cross-currency interest rate swaps~~CCIRs are classified as Level 2 fair value based upon pricing models using market-based inputs. Model inputs can be verified, and valuation techniques do not involve significant management judgment.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and short-term borrowings approximate fair value due to the short-term maturities of these assets and liabilities. At June 30, ~~2015~~2016 and December 31, ~~2014~~2015, the total fair value of long-term debt (excluding deferred financing costs), including current maturities, was ~~$946.5~~$845.5 million and $~~885.0~~834.6 million, respectively, compared with a carrying value of $~~930.8~~877.7 million and $~~854.9~~880.8 million, respectively. Fair values for debt are based on quoted market prices ~~(Level 1)~~ for the same or similar issues, or on the current rates offered to the Company for debt of the same remaining ~~maturities.~~maturities (Level 2).

~~16.~~13. Other (Income) Expenses

~~(a) Other includes employee termination benefit costs and costs to exit activities that are not directly related to the restructuring programs detailed in Note 18, Restructuring Programs.~~

In January 2015, the Swiss National Bank ended its policy of maintaining a stable exchange rate between the Swiss franc and the euro. As a result of this change in policy, the Swiss franc experienced significant appreciation against the euro. During the three months ended March 31, 2015, the Company recognized $10.9 million in foreign currency gains primarily related to converting Swiss franc bank deposits to euros. This gain was associated with advances received for the Harsco Rail Segment's two contracts with the federal railway system of Switzerland.

~~17.~~14. Components of Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss is included on the Condensed Consolidated Statements of ~~Stockholders'~~ Equity. The components of Accumulated other comprehensive loss, net of the effect of income taxes, and activity for the six months ended June 30, ~~2014~~2015 and ~~2015~~2016 was as follows:



	Components of Accumulated Other Comprehensive Income (Loss) - Net of Tax
(In thousands)	Cumulative Foreign Exchange Translation Adjustments				Effective Portion of Derivatives Designated as Hedging Instruments				Cumulative Unrecognized Actuarial Losses on Pension Obligations				Unrealized Loss on Marketable Securities			Total
Balance at December 31, 2014	$	(39,938	)		$	(9,025	)		$	(483,278	)		$	(15	)	$	(532,256	)
Other comprehensive income (loss) before reclassifications	(23,957		)	(a)	6,681			(b)	(2,493		)	(a)	(4		)	(19,773		)
Realized (gains) losses reclassified from accumulated other comprehensive loss, net of tax	—				(2		)		10,114				—			10,112
Other comprehensive income (loss) from equity method investee	(13,860		)		(798		)		595				—			(14,063		)
Total other comprehensive income (loss)	(37,817		)		5,881				8,216				(4		)	(23,724		)
Less: Other comprehensive loss attributable to noncontrolling interests	1,091				14				—				—			1,105
Other comprehensive income (loss) attributable to Harsco Corporation	(36,726		)		5,895				8,216				(4		)	(22,619		)
Balance at June 30, 2015	$	(76,664	)		$	(3,130	)		$	(475,062	)		$	(19	)	$	(554,875	)

~~(a) Principally foreign currency fluctuation.~~

~~(b) Net change from periodic revaluations.~~

~~Amounts~~Realized (gains) losses reclassified from accumulated other comprehensive loss are as follows:

Actuarial losses (c)

Prior-service costs (c)

(c) These accumulated other comprehensive loss components are included in the computation of net periodic pension costs. See Note ~~10,~~7, Employee Benefit Plans, for additional details.

Realized (gains) losses reclassified from accumulated other comprehensive loss in connection with loss on dilution of equity method investment are as follows:

~~Table of Contents~~

~~18.~~15. Restructuring Programs

In recent years, the Company has instituted restructuring programs to balance short-term profitability goals with long-term strategies. A primary objective of these programs has been to establish platforms upon which the affected businesses can grow with reduced fixed investment and generate annual operating expense savings. The restructuring programs have been instituted in response to the continuing impact of global financial and economic uncertainty on the Company’s end markets. Restructuring costs incurred in these programs were recorded as part of the caption, Other ~~(income) expense,~~expenses, of the Condensed Consolidated Statements of Operations. The timing of associated cash payments is dependent on the type of restructuring cost and can extend over a multi-year period.

Project Orion

Under the Harsco Metals & Minerals ~~Segment~~Segment's Improvement Plan ("Project Orion"), the Harsco Metals & Minerals Segment made organizational and process improvement changes that are expected to improve its return on capital and deliver a higher and more consistent level of service to customers. These changes include improving several core processes and simplifying the organizational structure. ~~Annual recurring benefits under~~During the fourth quarter of 2015, Project Orion was expanded with additional targeted workforce and operational savings of $20 million to $25 million. The majority of these benefits are expected to be ~~approximately $37 million.~~realized in 2016.

The restructuring accrual for Project Orion at June 30, ~~2015~~2016 and the activity for the six months ended June 30, ~~2015~~2016 were as follows:

(In thousands)
Accrual at
December 31 2014
Other Adjustments
Cash
Expenditures

Foreign
Currency
Translation

Accrual at
June 30 2015
Employee termination benefit costs $ 7,668
$ (1,003 ) $ (3,201 ) $ (91 ) $ 3,373
Total $ 7,668
$ (1,003 ) $ (3,201 ) $ (91 ) $ 3,373



(In thousands)	Employee Termination Benefit Costs
Balance, December 31, 2015	$	5,807
Cash expenditures	(3,902		)
Foreign currency translation	70
Other adjustments	160
Balance, June 30, 2016	$	2,135

The remaining accrual related to Project Orion is expected to be paid principally through ~~2015 with~~ the ~~remainder in the first~~second half of 2016.

~~Prior Restructuring Programs~~

The remaining accrual for restructuring programs was $2.3 million and $2.4 million at June 30, 2015 and December 31, 2014, respectively. The remaining accrual relates primarily to exit activity costs for lease terminations expected to be paid over the remaining life of the leases.

~~Table of Contents~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the accompanying unaudited condensed consolidated financial statements as well as the audited consolidated financial statements of Harsco Corporation (the "Company"), including the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015~~, as revised on Form 8-K filed on June 1, 2015,~~ which includes additional information about the Company’s critical accounting policies, contractual obligations, practices and the transactions that support the financial results, and provides a more comprehensive summary of the Company’s outlook, trends and strategies for ~~2015~~2016 and beyond.

Certain amounts included in Item 2 of this Quarterly Report on Form 10-Q are rounded in millions and all percentages are calculated based on actual amounts. As a result, minor differences may exist due to rounding.

Forward-Looking Statements

The nature of the Company's business and the many countries in which it operates subject it to changing economic, competitive, regulatory and technological conditions, risks and uncertainties. In accordance with the "safe harbor" provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, the Company provides the following cautionary remarks regarding important factors that, among others, could cause future results to differ materially from the results contemplated by forward-looking statements, including the expectations and assumptions expressed or implied herein. Forward-looking statements contained herein could include, among other things, statements about management's confidence in and strategies for performance; expectations for new and existing products, technologies and opportunities; and expectations regarding growth, sales, cash flows, and earnings. Forward-looking statements can be identified by the use of such terms as "may," "could," "expect," "anticipate," "intend," "believe," "likely," "estimate," "plan" or other comparable terms.

Factors that could cause actual results to differ, perhaps materially, from those implied by forward-looking statements include, but are not limited to: (1) changes in the worldwide business environment in which the Company operates, including general economic conditions; (2) changes in currency exchange rates, interest rates, commodity and fuel costs and capital costs;(3) changes in the performance of equity and bond markets that could affect, among other things, the valuation of the assets in the Company's pension plans and the accounting for pension assets, liabilities and expenses; (4) changes in governmental laws and regulations, including environmental, occupational health and safety, tax and import tariff standards; (5) market and competitive changes, including pricing pressures, market demand and acceptance for new products, services and technologies; (6) the Company's inability or failure to protect its intellectual property rights from infringement in one or more of the many countries in which the Company operates; (7) failure to effectively prevent, detect or recover from breaches in the Company's cybersecurity infrastructure; (8) unforeseen business disruptions in one or more of the many countries in which the Company operates due to political instability, civil disobedience, armed hostilities, public health issues or other calamities; (9) disruptions associated with labor disputes and increased operating costs associated with union organization; (10) the seasonal nature of the Company's business; (11) the Company's ability to successfully enter into new contracts and complete new acquisitions or strategic ventures in the time-frame contemplated, or at all; (12) the integration of the Company's strategic acquisitions; (13) the amount and timing of repurchases of the Company's common stock, if any; (14) the prolonged recovery in global financial and credit markets and economic conditions generally, which could result in the Company's customers curtailing development projects, construction, production and capital expenditures, which, in turn, could reduce the demand for the Company's products and services and, accordingly, the Company's revenues, margins and profitability; (15) the outcome of any disputes with customers, contractors and subcontractors; (16) the financial condition of the Company's customers, including the ability of customers (especially those that may be highly leveraged and those with inadequate liquidity) to maintain their credit availability; (17) the Company's ability to successfully implement and receive the expected benefits of cost-reduction and restructuring initiatives, including the achievement of expected cost savings in the expected time frame; (18) the ability to successfully implement the Company's strategic initiatives and portfolio optimization and the impact of such initiatives, such as the Harsco Metals & Minerals Segment's Improvement Plan ("Project Orion"); (19) the ability of the strategic venture between the Company and Clayton, Dubilier & Rice ("CD&R") to effectively integrate the Company's Infrastructure business and the Brand Energy & Infrastructure Services business and realize the synergies contemplated by the transaction; (20) the Company's ability to realize cost savings from the divestiture of the Infrastructure business, as well as the transaction being accretive to earnings and improving operating margins and return on capital; (21) the amount ultimately realized from the Company's exit from the strategic venture between the Company and ~~CD&R~~Clayton, Dubilier & Rice and the timing of such exit; ~~(22)~~(20) implementation of environmental remediation matters; ~~(23)~~(21) risk and uncertainty associated with intangible assets; (22) the impact of a transaction, if any, resulting from the Company's determination to explore strategic options for the separation of the Harsco Metals & Minerals Segment; and ~~(24)~~(23) other risk factors listed from time to time in the Company's SEC reports. A further discussion of these, along with other potential risk factors, can be found in Part I, Item 1A, "Risk Factors," of the Company's Annual Report on Form 10-K for the year ended December 31, ~~2014, as revised on Form 8-K filed on June 1, 2015.~~2015 and Part II, Item 1A, Risk Factors herein. The Company cautions that these factors may not be exhaustive and that many of these factors are beyond the Company's ability to control or predict. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. The Company undertakes no duty to update forward-looking statements except as may be required by law.

~~Table of Contents~~

Executive Overview

During the second quarter of 2016, the Harsco Rail Segment recorded an estimated loss provision of $40.1 million related to the Company's contracts with the federal railway system of Switzerland ("SBB"). The estimated loss provision resulted from increased vendor costs, ongoing discussions with the customer, and increased estimates for commissioning, certification and testing costs, as well as expected settlements with respect to the customer. See Note 1, Basis of Presentation - Change in Estimates, in Part I, Item 1, Financial Statements for additional information. Also, results for the six months ended

June 30, 2015, included a $10.9 million foreign exchange gain that was not repeated in 2016. Additionally, the Harsco Rail Segment continues to be impacted by continued weakness in the North American market.

Although energy markets have demonstrated some fundamental improvement, the Harsco Industrial Segment’s air-cooled heat exchangers and industrial grating businesses expect recent low oil prices to continue to impact capital expenditures and overall spending by customers in the upstream, midstream, and downstream oil and gas markets. Accordingly, these factors will impact revenue and operating income during the near-term in the Harsco Industrial Segment.

Although steel markets have demonstrated some fundamental improvement, the Harsco Metals & Minerals Segment continues to be negatively impacted by lower customer steel production, weak commodity prices and site exits. In addition, the Harsco Metals & Minerals Segment recorded severance costs of $5.1 million resulting from a probable site exit in the first quarter of 2016. These impacts have been offset by the savings and benefits achieved as part of Project Orion including lower compensation costs and the impact of exited underperforming contracts. During the fourth quarter of 2015, Project Orion was expanded with additional targeted workforce and operational savings of $20 million to $25 million. The majority of these benefits are expected to be realized in 2016. See Note 15, Restructuring Programs, in Part I, Item 1, Financial Statements for additional information. The Company remains focused on achieving additional cost reductions and operational improvements to enhance returns for the Harsco Metals & Minerals Segment.

The Company has announced its intention to pursue strategic options for the separation of the Harsco Metals & Minerals Segment from the rest of the Company. A separation of the Harsco Metals & Minerals Segment would allow each of the Company's businesses to benefit from dedicated capital structures, execute tailored and flexible strategic priorities and optimize capital return policies consistent with each business's unique priorities. There is no specific timetable related to this initiative and there can be no assurance that a sale, spin-off or any other transaction will take place. The Company incurred $3.3 million of expenses during the first six months of 2016 related to the separation, which are included as part of the Corporate caption in the Company's segment results.



	Three Months Ended
Revenues by Segment	June 30
(In millions)	2016		2015		Change			%
Harsco Metals & Minerals	$	253.6	$	294.3	$	(40.8	)	(13.9	)%
Harsco Industrial	66.3		91.9		(25.6		)	(27.9	)
Harsco Rail	50.1		69.5		(19.4		)	(27.9	)
Total revenues	$	369.9	$	455.7	$	(85.8	)	(18.8	)%



	Six Months Ended
Revenues by Segment	June 30
(In millions)	2016		2015		Change			%
Harsco Metals & Minerals	$	483.2	$	585.5	$	(102.3	)	(17.5	)%
Harsco Industrial	128.1		190.7		(62.6		)	(32.8	)
Harsco Rail	111.8		131.1		(19.3		)	(14.7	)
Total revenues	$	723.2	$	907.3	$	(184.1	)	(20.3	)%



	Three Months Ended
Revenues by Region	June 30
(In millions)	2016		2015		Change			%
North America	$	159.4	$	215.2	$	(55.8	)	(25.9	)%
Western Europe	110.6		129.4		(18.8		)	(14.5	)
Latin America (includes Mexico)	45.0		47.0		(2.0		)	(4.2	)
Asia-Pacific	34.5		38.9		(4.4		)	(11.3	)
Middle East and Africa	12.2		13.0		(0.7		)	(5.7	)
Eastern Europe	8.2		12.3		(4.1		)	(33.5	)
Total revenues	$	369.9	$	455.7	$	(85.8	)	(18.8	)%



	Six Months Ended
Revenues by Region	June 30
(In millions)	2016		2015		Change			%
North America	$	321.7	$	425.4	$	(103.7	)	(24.4	)%
Western Europe	218.9		253.1		(34.2		)	(13.5	)
Latin America (included Mexico)	79.7		98.5		(18.8		)	(19.1	)
Asia-Pacific	66.2		77.3		(11.1		)	(14.4	)
Middle East and Africa	21.5		28.8		(7.3		)	(25.4	)
Eastern Europe	15.2		24.3		(9.1		)	(37.3	)
Total revenues	$	723.2	$	907.3	$	(184.1	)	(20.3	)%

Revenues for the Company during the second quarter and first six months of ~~2015~~2016 were $369.9 million and $723.2 million, respectively, compared with $455.7 million and $907.3 million, ~~respectively, compared with $535.3 million and $1.0 billion,~~ respectively, in the second quarter and first six months of ~~2014. These changes were~~2015. The change is primarily related to the ~~impacts~~impact of ~~foreign currency translation,~~price and volume changes across all segments; exited contracts in the Harsco Metals & Minerals ~~Segment~~Segment; and the ~~impact~~impacts of ~~price/volume changes in both the Harsco Metals & Minerals and Harsco Industrial Segments.~~foreign currency translation. Foreign currency translation decreased revenues by ~~$45.2~~$13.4 million and $32.1 million, respectively, for the second quarter ~~of 2015 compared with the second quarter of 2014. Foreign currency translation decreased revenues by $86.6 million for the~~and first six months of ~~2015~~2016 compared with the ~~first six months of 2014.~~

Three Months Ended
Revenues by Segment June 30
(In millions) 2015 2014 Change %
Harsco Metals & Minerals $ 294.3
$ 361.8
$ (67.4 ) (18.6 )%
Harsco Industrial 91.9
103.0
(11.1 ) (10.8 )
Harsco Rail 69.5
70.6
(1.0 ) (1.5 )
Total revenues $ 455.7
$ 535.3
$ (79.6 ) (14.9 )%

Six Months Ended
Revenues by Segment June 30
(In millions) 2015 2014 Change %
Harsco Metals & Minerals $ 585.5
$ 714.6
$ (129.0 ) (18.1 )%
Harsco Industrial 190.7
205.1
(14.4 ) (7.0 )
Harsco Rail 131.1
128.1
3.0
2.3
Total revenues $ 907.3
$ 1,047.8
$ (140.5 ) (13.4 )%

Three Months Ended
Revenues by Region June 30
(In millions) 2015 2014 Change %
North America $ 215.2
$ 241.1
$ (25.9 ) (10.7 )%
Western Europe 129.4
155.0
(25.6 ) (16.5 )
Latin America (a)
47.0
61.7
(14.8 ) (23.9 )
Asia-Pacific 38.9
39.3
(0.4 ) (1.1 )
Middle East and Africa 13.0
19.4
(6.4 ) (33.0 )
Eastern Europe 12.3
18.8
(6.6 ) (34.8 )
Total revenues $ 455.7
$ 535.3
$ (79.6 ) (14.9 )%

Six Months Ended
Revenues by Region June 30
(In millions) 2015 2014 Change %
North America $ 425.4
$ 462.0
$ (36.6 ) (7.9 )%
Western Europe 253.1
314.4
(61.4 ) (19.5 )
Latin America (a)
98.5
124.5
(26.0 ) (20.9 )
Asia-Pacific 77.3
73.7
3.6
4.9
Middle East and Africa 28.8
38.4
(9.6 ) (25.0 )
Eastern Europe 24.3
34.8
(10.5 ) (30.2 )
Total revenues $ 907.3
$ 1,047.8
$ (140.5 ) (13.4 )%

~~(a) Includes Mexico.~~

~~The Company began executing Project Orion~~same periods in the Harsco Metals & Minerals Segment during 2014, after conducting an analysis of the business to identify opportunities to improve its core processes and simplify its organizational structure. The goals of Project Orion are to improve financial returns and provide higher and more consistent levels of value added services to customers. Project Orion's primary elements include improving the bid and contract management process, improving underperforming contracts, and simplifying operational structures. As a result of actions initiated under Project Orion, the Company anticipates annualized savings of approximately $37 million by the end of 2015, which include both compensation and other operational savings. The Company has recognized approximately $16 million of cumulative compensation savings through June 30, 2015 related to Project Orion. Please see Note 18, Restructuring Programs, in Part I, Item 1, Financial Statements for additional information.prior year.



	Three Months Ended
Operating Income (Loss) by Segment	June 30
(In millions)	2016			2015			Change			%
Harsco Metals & Minerals	$	30.9		$	18.6		$	12.3		66.3	%
Harsco Industrial	7.3			14.4			(7.1		)	(49.4	)
Harsco Rail	(31.9		)	11.4			(43.3		)	(380.2	)
Corporate	(5.0		)	(8.7		)	3.7			42.9
Total operating income	$	1.3		$	35.7		$	(34.4	)	(96.3	)%

~~Table of Contents~~



	Six Months Ended
Operating Income (Loss) by Segment	June 30
(In millions)	2016			2015			Change			%
Harsco Metals & Minerals	$	37.9		$	29.2		$	8.7		29.8	%
Harsco Industrial	13.8			31.4			(17.7		)	(56.2	)
Harsco Rail	(27.0		)	33.0			(60.1		)	(181.9	)
Corporate	(13.9		)	(19.1		)	5.2			27.3
Total operating income	$	10.7		$	74.6		$	(63.9	)	(85.6	)%

Three Months Ended
Operating Income (Loss) by Segment June 30
(In millions) 2015 2014 Change %
Harsco Metals & Minerals $ 18.6
$ (7.3 ) $ 25.9
355.6 %
Harsco Industrial 14.4
17.4
(3.0 ) (17.3 )
Harsco Rail 11.4
13.5
(2.1 ) (15.7 )
Corporate (8.7 ) (15.0 ) 6.3
42.0
Total operating income $ 35.7
$ 8.7
$ 27.0
311.0 %



	Three Months Ended				Six Months Ended
	June 30				June 30
Operating Margin by Segment	2016		2015		2016		2015
Harsco Metals & Minerals	12.2	%	6.3	%	7.8	%	5.0	%
Harsco Industrial	11.0		15.7		10.7		16.5
Harsco Rail	(63.8	)	16.4		(24.2	)	25.2
Consolidated operating margin	0.4	%	7.8	%	1.5	%	8.2	%

Six Months Ended
Operating Income (Loss) by Segment June 30
(In millions) 2015 2014 Change %
Harsco Metals & Minerals $ 29.2
$ 15.4
$ 13.8
89.8 %
Harsco Industrial 31.4
34.0
(2.6 ) (7.5 )
Harsco Rail 33.0
19.0
14.0
73.6
Corporate (19.1 ) (27.5 ) 8.4
30.7
Total operating income $ 74.6
$ 40.9
$ 33.7
82.3 %

Three Months Ended Six Months Ended
June 30 June 30
Operating Margin by Segment 2015 2014 2015 2014
Harsco Metals & Minerals 6.3 % (2.0 )% 5.0 % 2.2 %
Harsco Industrial 15.7
16.9
16.5
16.6
Harsco Rail 16.4
19.2
25.2
14.8
Consolidated operating margin 7.8 % 1.6 % 8.2 % 3.9 %

Operating income from continuing operations for the second quarter and first six months of ~~2015~~2016 was $1.3 million and

$10.7 million, respectively, compared with $35.7 million and $74.6 ~~million, respectively, compared with operating income from continuing operations of $8.7 million and $40.9~~ million, respectively, in the second quarter and first six months of ~~2014.~~ 2015. Refer to the Segment discussions below for information pertaining to factors positively affecting and negatively impacting operating income from continuing operations.

Harsco Metals & Minerals Segment:



Significant Impacts on Revenues	Three Months Ended			Six Months Ended
(In millions)	June 30, 2016			June 30, 2016
Revenues — 2015	$	294.3		$	585.5
Net impact of new and lost contracts (including exited underperforming contracts).	(27.7		)	(54.2		)
Impact of foreign currency translation.	(11.7		)	(28.9		)
Net impacts of price/volume changes, primarily attributable to volume changes.	(1.3		)	(19.2		)
Revenues — 2016	$	253.6		$	483.2

Factors Positively Affecting Operating Income:

Costs incurred by the Harsco Metals & Minerals Segment during the second quarter and first six months of 2014 related to restructuring charges for Project Orion, bad debt reserves for two specific customers and site exits and non-cash long-lived asset impairment charges, which did not repeat during the second quarter and first six months of 2015, increased operating income by $34.6 million for both periods.

Foreign currency gain of $10.9 million during the first quarter of 2015, primarily related to converting Swiss franc bank deposits to euros after the Swiss National Bank ended its policy of maintaining a stable Swiss franc exchange rate with the euro.

Incremental Project Orion restructuring benefits, related to compensation savings, of approximately $4$3.7 million and ~~approximately $9~~$6.7 million during the second quarter and first six months of ~~2015, respectively.~~2016, respectively, associated with the recent expansion of Project Orion.

The ~~Corporate caption benefited from decreased selling, general~~effect of exited underperforming contracts, lower maintenance, fuel and administrative expenses, primarily related to decreased professional fees, which improved operating income by $4.5 million and $6.0 million during the second quarter and first six months of 2015, respectively, compared with the same periodspension costs.

Increased volumes in the ~~prior year.~~

~~Factors Negatively Impacting Operating Income:~~

~~Decreased income in the Harsco Metals & Minerals Segment~~roofing granules and industrial abrasives business, due partly to favorable weather conditions during the second quarter and first six months of 2015, primarily attributable to decreased steel production by customers under services contracts; the impact of exited contracts; reduced nickel and scrap price and demand; higher maintenance costs; and higher administrative costs compared with the same periods in prior year.

~~Impact of foreign currency translation of $2.2 million and $5.9 million during the second quarter and first six months of 2015, respectively.~~

The increase in operating income from continuing operations, partially offset by the increase in income tax expense and the impact of equity in loss of unconsolidated entities, was the primary driver of the diluted earnings per share from continuing operations for the second quarter of 2015 of $0.08 compared with diluted loss per share from continuing operations of $0.17 for the second quarter of 2014. The increase in operating income from continuing operations, partially offset by the increase in income tax expense, was the primary driver of the diluted earnings per share from continuing operations for the first six months of ~~2015 of $0.27 compared with diluted loss per share from continuing operations of $0.04 for the first six months of 2014.~~

~~Table of Contents~~

~~Harsco Metals & Minerals Segment:~~

Significant Impacts on Revenues Three Months Ended Six Months Ended
(In millions) June 30, 2015 June 30, 2015
Revenues — 2014 $ 361.8
$ 714.6
Impact of foreign currency translation. (43.3 ) (82.4 )
Net impact of new contracts and lost contracts (including exited underperforming contracts). (12.8 ) (28.8 )
Net impacts of price/volume changes, primarily attributable to volume changes. (11.4 ) (17.9 )
Revenues — 2015 $ 294.3
$ 585.5

~~Factors Positively Affecting Operating Income:~~

Costs incurred by the Harsco Metals & Minerals Segment during the second quarter and first six months of 2014 related to restructuring charges for Project Orion, bad debt reserves for two specific customers and site exits and non-cash long-lived asset impairment charges which did not repeat during the second quarter and first six months of 2015, increased operating income by $34.6 million for both periods.

~~Project Orion restructuring benefits, related to compensation savings, of approximately $4 million and approximately $9 million during the second quarter and first six months of 2015, respectively.~~2016.

Factors Negatively Impacting Operating Income:

Decreased global steel production and scrap metal ~~prices, primarily~~prices. Overall, steel production by customers under services contracts, including the impact of exited contracts, decreased by 14% and 16% for the second quarter and first six months of 2016, respectively, compared to the same periods in ~~North America and South America. Overall,~~prior year. Excluding the impact of exited contracts, steel production by customers under services contracts decreased by 3% and 4% ~~in both~~for the second quarter and first six months of ~~2015,~~2016, respectively, compared with the same periods in ~~the~~ prior year.

Decreased income attributable to the impact of exited contracts and reduced nickel ~~and scrap~~ prices and demand. Nickel prices decreased ~~31%~~32% and ~~18% in the second quarter and first six months of 2015, respectively, compared with the same periods in the prior year.~~

~~Increased costs of operations~~37% during the second quarter and first six months of ~~2015, primarily attributable to higher maintenance costs and higher administrative costs~~2016, respectively, compared with the same periods in prior year.

~~Foreign currency translation in the second quarter and first six months of 2015~~Severance costs resulting from a probable site exit decreased operating income ~~for this segment~~ by ~~$2.1 million and~~ $5.1 million ~~respectively, compared with~~during the ~~same periods in the prior year.~~first quarter of 2016.

Harsco Industrial Segment:


Significant Impacts on Revenues	Three Months Ended			Six Months Ended			Three Months Ended			Six Months Ended
(In millions)	June 30, 2015			June 30, 2015			June 30, 2016			June 30, 2016
Revenues — 2014	$	103.0		$	205.1
Revenues — 2015							$	91.9		$	190.7
Net impacts of price/volume changes, primarily attributable to volume changes.	(10.2		)	(12.4		)	(24.8		)	(60.9		)
Impact of foreign currency translation.	(0.9		)	(2.0		)	(0.8		)	(1.7		)
Revenues — 2015	$	91.9		$	190.7
Revenues — 2016							$	66.3		$	128.1

Factors Positively Affecting Operating Income:

Operating income was aided by $2.4 million and $5.5 million of lower selling, general and administrative costs in ~~both~~ the second quarter and first six months of ~~2015~~2016, respectively, compared with the same periods in ~~the~~ prior year.

~~Higher gain from~~The effect of delivering a portion of the ~~sale of assets~~Mexico City International Airport order in ~~the first six months of 2015 of $1.5 million, compared with the same period in the prior year. There was no gain from sale of assets in either~~ the second quarter of ~~2015 or 2014.~~2016.

Factors Negatively Impacting Operating Income:

Lower volumes in the air-cooled heat exchangers business resulting in decreased operating income during 2016, primarily attributable to continued energy price declines which impacted capital spending by customers in the oil and natural gas industries served by the Company.

The first quarter of 2015 included gains from sales of assets of $3.6 million which did not repeat during the first quarter of 2016.

Harsco Rail Segment:



Significant Impacts on Revenues	Three Months Ended			Six Months Ended
(In millions)	June 30, 2016			June 30, 2016
Revenues — 2015	$	69.5		$	131.1
Net effects of price/volume changes, primarily attributable to volume changes.	(18.5		)	(17.7		)
Impact of foreign currency translation.	(0.9		)	(1.6		)
Revenues — 2016	$	50.1		$	111.8

Factors Positively Affecting Operating Income (Loss):

Higher international equipment sales.

Factors Negatively Impacting Operating Income (Loss):

During the second quarter of 2016, the Harsco Rail Segment recorded an estimated loss provision of $40.1 million related to the Company's contracts with the SBB. See Note 1, Basis of Presentation - Change in Estimates, in Part I, Item 1, Financial Statements for additional information.

Foreign currency gain of $10.9 million recognized during the first quarter of 2015 which did not repeat in the first quarter of 2016.

Decreased volumes in North America and an unfavorable mix of equipment sales decreased operating income (loss) during the second quarter and first six months of 2015, primarily attributable to recent oil price volatility. This volatility impacts capital expenditures and overall spending by customers in the natural gas, natural gas processing and petrochemical industries served by the Company.

~~Costs associated with consolidating operating facilities for this segment's air cooled heat exchangers business.~~

Foreign currency translation decreased operating income for this segment by $0.1 million and $0.6 million during the second quarter and first six months of 2015, respectively, compared with the same periods in the prior year.

~~Table of Contents~~

~~Harsco Rail Segment:~~

Significant Effects on Revenues Three Months Ended Six Months Ended
(In millions) June 30, 2015 June 30, 2015
Revenues — 2014 $ 70.6
$ 128.1
Net effects of price/volume changes, primarily attributable to volume changes. (1.4 ) 3.7
Effect of Protran and JK Rail acquisitions 1.3
1.5
Impact of foreign currency translation. (1.0 ) (2.2 )
Revenues — 2015 $ 69.5
$ 131.1

~~Factors Positively Affecting Operating Income:~~

~~Equipment sales volume increased operating income in both the second quarter and first six months of 2015~~2016 compared with the same periods in prior ~~year.~~

~~Foreign currency translation increased operating income for this segment~~year, partially offset by ~~$0.4 million during both the second quarter~~lower selling and ~~first six months of 2015 compared with the same periods in the prior year.~~

~~Factors Negatively Impacting Operating Income:~~

Decreased after-market parts sales, due to several large one-time orders in the prior year, and lower contract services impacted operating income in both the second quarter and first six months of 2015 compared to the same periods in prior year.administrative costs.

Outlook, Trends and Strategies

In addition to the items noted in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2014, as revised on Form 8-K filed on June 1,~~ 2015, the following significant items, risks, trends and strategies are expected to affect the Company for the remainder of ~~2015~~2016 and beyond:

The Company will focus on ~~the goal~~providing returns above its cost of ~~providing top quartile returns~~capital for its stockholders by balancing its portfolio of businesses, and by executing its strategic and operational ~~strategies~~practices with reasonable amounts of financial leverage.

The Company will continue the focus on executing Project Orion to generate compensation and other operational savings in the Harsco Metals & Minerals Segment as well as making fundamental changes in key business processes.

The Company will continue to build and develop strong core capabilities and develop an active and lean corporate center that balances costs with value added services.

The Company will continue to assess capital needs in the context of operational trends and strategic initiatives. Management will continue to be selective and disciplined in allocating capital by rigorously analyzing projects and utilizing a ~~return based~~return-based capital allocation process.

The Company will focus on growing the Harsco Industrial and Harsco Rail Segments through disciplined organic expansion and acquisitions that improve these businesses' competitive positioning in core markets or adjacent market spaces. Management will target acquisitive growth that provides synergistic benefits to the Company, either through cost synergies from combined platforms or revenue synergies from expanded offerings and scalability.

The Company expects its operational effective income tax rate to approximate ~~42%~~39% to ~~44%,~~41% in 2016, excluding the tax impact on equity income (loss) related to ~~the~~ Brand Energy & Infrastructure Services Inc. and Subsidiaries ~~("Brand"~~(the "Infrastructure strategic venture").

The potential consequences related to uncertainty surrounding the United Kingdom's proposed exit from the European Union may have an impact on the Company results of operations, cash flows and asset valuations in any period particularly in the Harsco Metals & Minerals Segment. Please see Part II, Item 1A, Risk Factors for additional information.

Harsco Metals & Minerals Segment:

~~The~~Although steel markets have demonstrated some fundamental improvement, the Company ~~will focus on improving~~anticipates reduced steel production; weaker commodity prices; the impact of site exits; customer production curtailments; and the impact of foreign currency translation to negatively impact revenue and operating income in the near term in the Harsco Metals & Minerals ~~Segment's returns through executing Project Orion. The goals~~Segment. These impacts will be partially offset by savings and benefits achieved as part of Project Orion are to improve financial returns and provide higher and more consistent levels of value added services to customers. Project Orion's primary elements include improving the bid and contract management process, improving underperforming contracts and simplifying operational structures. The Company expects annualized, recurring benefits in the form of compensation and other operational savings ~~of approximately $37 million from Project Orion. The Company has recognized approximately $16 million of cumulative compensation savings through June 30, 2015 related to Project Orion.~~as well as new contracts awarded.

The Company will continue ~~its~~to focus on ensuring that forecasted profits and other requirements for contracts meet certain established ~~requirements~~standards and deliver returns above its cost of capital. Project Orion's focus ~~is intended to enable~~has enabled the Company to address underperforming contracts more rapidly with targeted actions to improve the ~~operational~~ efficiencies of the business. These actions include central protocols to monitor activities, structures and systems that aid in decision making, and processes designed to identify the best ~~strategic~~operational and commercial actions available to address underperforming contracts

~~Table of Contents~~

and its overall contract portfolio. In connection with this focus, the possibility exists that the Company may take strategic actions that result in exit costs and non-cash asset impairment charges that may have an adverse effect on the Company's results of operations and liquidity.

~~Over~~As the Company has previously disclosed, over the past several years the Company has been in discussions with officials at the Supreme Council for Environment in Bahrain ("Bahrain Council") with regard to a processing by-product ("salt cakes") located at Hafeera. During 2015, the Company recorded a charge of $7.0 million, payable over five to seven years, related to the estimated cost of processing and disposal of the salt cakes. The Company's Bahrain operations are operated under a strategic venture for which its strategic venture partner has a 35% minority interest. The Company is ~~currently assessing~~awaiting final approval from the ~~options available for~~Bahrain Council regarding the proposed processing and disposal method. If the Bahrain Council does not approve the proposed method or ~~removing~~mandates alternative solutions, the ~~salt cakes. To the extent~~Company’s estimated liability could change, and such change could be material in any one period.

In February 2016, the Company ~~is unable~~announced a new 15-year contract with China's largest steel maker with anticipated revenues totaling approximately $125 million over the life of the contract. Additionally, during March 2016, the Company secured a contract extension for steel mill services in Belgium with projected revenues totaling more than $100 million.

In March 2016, one of the Company's customers announced its intention to ~~find commercially viable opportunities to market~~sell its steel making operations in the ~~salt cakes, it may be required to incur~~U.K. and in July 2016 introduced the ~~cost~~possibility of ~~moving~~strategic collaborations through a joint venture. Depending on the ~~salt cakes to another location. The impact~~outcome of any ~~such removal~~potential transactions, there could be a material impact on the Company's results of operations, ~~financial condition and~~ cash flows ~~cannot be determined at this time, but may be significant.~~and asset valuations in any one period.

~~During the second quarter of 2015, one~~One of the Company's ~~steel mill~~ customers in ~~Europe missed normal progress payments.~~Australia has begun the process of voluntary administration under Australian law, the purpose of which is to focus on long-term solvency. The customer is continuing its operations during the voluntary administration proceedings. The Company ~~has~~had approximately ~~$11~~$5 million of receivables ~~excluding value added tax,~~ with ~~this~~the customer prior to the start of ~~which approximately $3 million has been previously reserved. The Company believes~~ the ~~remaining~~voluntary administration and continues to believe that these amounts are ~~collectible; however,~~collectible because the Company is viewed as an important supplier, continues to provide services to the customer and continues to collect on post-administration invoices timely. However the administration process is uncertain in nature and length, with the next creditors' meeting not scheduled until the first quarter of 2017. As such a loss on the pre-administration receivables is reasonably possible, and if there ~~is an adverse~~was a change in the Company's view on collectability, there could be a charge against income in future periods. Moreover, if the site were to close, additional costs may be incurred and asset valuations may be impacted, which may be significant in any one period.

During 2014, the Company accrued costs related to disposing certain slag material accumulated as part of a customer operation in Latin America because it had not received the necessary permits from the local government to sell the slag. This accrual is approximately $6 million at June 30, 2016. The Company has reengaged the local government to obtain the necessary permits, and if these permits are obtained, the reversal of accrued disposal costs may be either partially or fully recognized in income for that period.

Harsco Industrial Segment:

~~The~~Although energy markets have demonstrated some fundamental improvement, the Company ~~anticipates~~expects recent low oil ~~price volatility~~prices to continue to impact capital expenditures and overall spending by customers in the ~~natural~~upstream, midstream, and downstream oil and gas ~~natural gas processing and petrochemical industries.~~markets. Accordingly, these factors ~~may~~will negatively impact revenue and operating income in the near-term in the Harsco Industrial Segment.

During the second quarter of 2016, the Company announced a significant new order for twelve gas compression coolers to be delivered by the end of 2016. This is the fifth large midstream compression project for the Company within the past 24 months, totaling approximately $30 million in projected revenues.


•	The Company will continue to focus on product innovation and development to drive strategic growth in its businesses. The Company recently introduced GrateGuard^TM, a new fencing solution for first-line physical security in the Industrial grating business.

During the first quarter of 2016, the Company received an order worth approximately $10 million to supply security fencing for the new Mexico City International Airport.

The Company will focus on growing the Harsco Industrial Segment through disciplined organic expansion and acquisitions that improve competitive positioning in core ~~market~~markets or adjacent markets.

Harsco Rail Segment:

~~The outlook for this segment continues to be favorable.~~ The global demand for railway maintenance-of-way equipment, parts and services continues to be ~~strong, giving~~generally positive, ~~indication of further opportunities. The~~though North American markets are experiencing weakness due to reduced capital and operating spending by Class I railways. In total, the Company anticipates modest organic growth in its after-market parts business and its expected deliveries of existing equipment orders.

~~The~~During April 2016, the Company was awarded a multi-year rail grinding services contract-extension in the U.K. with anticipated revenues of at least $40 million.

In prior years, the Company secured atwo contract awards with initial contract values totaling approximately $200 million from SBB. The majority of deliveries under these contracts are anticipated to occur during 2017 through 2020. During the second ~~contract award worth over $100~~quarter of 2016, the Company recorded an estimated loss provision of $40.1 million ~~through 2017~~which resulted from increased vendor costs, ongoing discussions with the ~~federal railway system of Switzerland ("SBB") during 2014. The award comes~~customer, and increased estimates for commissioning, certification and testing costs, as ~~a follow-on option~~well as expected settlements with respect to the customer. It is possible that the Company's ~~previously awarded contract with SBB worth approximately $100 million. The Company's capabilities~~overall estimate of costs to ~~compete and deliver on large projects provide increased opportunities to build out its pipeline further, and enables the Company to continue to pursue other large projects.~~complete these contracts may increase which would result in an additional loss provision at such time. See Note 1, Basis of Presentation - Change in Estimates, in Part I, Item 1, Financial Statements for additional information.

The Company will focus on growing the Harsco Rail Segment through disciplined organic expansion and acquisitions that improve competitive positioning in core ~~market~~markets or adjacent markets.

During the first quarter of 2015, a rail grinder manufactured by the Company and operated by a subcontractor caught fire, causing a customer to incur monetary damages. The Company is currently working with the customer and reviewing the cause of this incident. Depending on the cause of the fire and the extent of insurance coverage, the Company's results of operations and cash flows may be impacted in future periods.

~~Table of Contents~~

Results of Operations


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30						June 30						June 30						June 30
(In millions, except per share amounts)	2015			2014			2015			2014			2016			2015			2016			2015
Revenues from continuing operations	$	455.7		$	535.3		$	907.3		$	1,047.8
Total revenues													$	369.9		$	455.7		$	723.2		$	907.3
Cost of services and products sold	360.4			417.2			721.5			827.0			316.9			360.4			600.0			721.5
Selling, general and administrative expenses	58.5			78.0			122.4			144.8			49.5			58.5			100.3			122.4
Research and development expenses	1.5			1.1			2.4			3.7			1.0			1.5			1.8			2.4
Loss on disposal of the Harsco Infrastructure Segment and transaction costs	—			2.9			—			4.6
Other (income) expenses	(0.4		)	27.5			(13.6		)	26.9			1.2			(0.4		)	10.4			(13.6		)
Operating income from continuing operations	35.7			8.7			74.6			40.9			1.3			35.7			10.7			74.6
Interest income	0.4			0.4			0.7			0.7			0.6			0.4			1.1			0.7
Interest expense	(11.8		)	(12.0		)	(23.7		)	(23.4		)	(13.8		)	(11.8		)	(26.2		)	(23.7		)
Change in fair value to the unit adjustment liability	(2.2		)	(2.5		)	(4.4		)	(5.0		)
Change in fair value to the unit adjustment liability and loss on dilution of equity method investment													(1.5		)	(2.2		)	(13.7		)	(4.4		)
Income tax expense from continuing operations	(7.1		)	(4.8		)	(20.0		)	(10.2		)	(12.0		)	(7.1		)	(9.8		)	(20.0		)
Equity in loss of unconsolidated entities, net	(7.6		)	(3.5		)	(3.5		)	(4.7		)
Equity in income (loss) of unconsolidated entities, net													(0.7		)	(7.6		)	2.5			(3.5		)
Income (loss) from continuing operations	7.5			(13.7		)	23.7			(1.7		)	(26.1		)	7.5			(35.4		)	23.7
Diluted earnings (loss) per common share from continuing operations attributable to Harsco Corporation common stockholders	0.08			(0.17		)	0.27			(0.04		)	(0.35		)	0.08			(0.48		)	0.27
Effective income tax rate for continuing operations	32.0		%	(90.9		)%	42.3		%	76.7		%	(89.4		)%	32.0		%	(35.1		)%	42.3		%

Comparative Analysis of Consolidated Results

Cost of Services and Products Sold

(a) See Note 1, Basis of Presentation - Change in Estimates, in Part I, Item 1, Financial Statements for additional information.

Selling, General and Administrative Expenses

Other (Income) Expenses

(a) ~~Other includes employee termination benefit costs~~Net gains result from the sales of redundant properties (primarily land, buildings and ~~costs to exit activities that are not directly~~ related ~~to the restructuring programs detailed in Note 18, Restructuring Programs, in Part I, Item 1, Financial Statements.~~equipment) and non-core assets.

Change in Fair Value to the Unit Adjustment Liability and Loss on Dilution of Equity Method Investment

Income (Loss) from Continuing Operations

Liquidity and Capital Resources

The Company continues to implement and perform capital efficiency initiatives to enhance liquidity. These initiatives have included: prudent allocation of capital spending to those projects where the highest results can be achieved; optimization of worldwide cash positions; reductions in discretionary spending; and frequent evaluation of customer and business-partner credit risk.

The Company continues to focus on improving working capital efficiency. The Company's Continuous Improvement initiatives ~~are being used to improve~~include improving the effective and efficient use of working capital, particularly in accounts receivable and inventories.

During the first six months of ~~2015~~,2016, the ~~Company’s operations~~Company generated ~~$45.2~~$28.6 million in operating cash flow, a decrease from the

2015. The Company ~~also~~ generated ~~$13.4~~$5.1 million in cash flow from asset sales in the first six months of ~~2015~~2016 compared with ~~$6.1~~

The ~~Company’s net cash borrowings increased by~~ ~~$73.8~~Company paid $4.1 million and $32.9 million in dividends to stockholders in the first six months of 2016 and 2015,~~, primarily~~ respectively. The Company has suspended the quarterly dividend to ~~fund capital expenditures, principally~~preserve financial flexibility. The Board of Directors will continue to evaluate the Company's dividend policy each quarter.

The Company's net cash payments on debt were $23.6 million in the ~~Harsco Metals & Minerals Segment; purchase Treasury shares under~~first six months of 2016, principally due to the ~~Company's share repurchase program then in effect;~~utilization of operating cash flow and ~~for~~proceeds from the ~~Protran and JK Rail acquisitions.~~

~~Table~~termination of ~~Contents~~a cross-currency interest rate swap ("CCIR"). The Company’s consolidated net debt to consolidated EBITDA ratio (as defined by the Credit Agreement) was 2.9 to 1.0 at June 30, 2016.

Sources and Uses of Cash

On December 2, 2015, the Company, entered into (i) an amendment and restatement agreement (the “Amendment Agreement”) and (ii) a second amended and restated credit agreement (the “Credit Agreement” and, together with the Amendment Agreement, the “Financing Agreements”). The Financing Agreements increased the Company's overall borrowing capacity from $500 million to $600 million by (i) amending and restating the Company’s existing credit agreement, (ii) establishing a term loan facility in an initial aggregate principal amount of $250 million, by converting a portion of the outstanding balance under the Initial Credit Agreement on a dollar-for-dollar basis (such facility, the “Term Loan Facility”) and (iii) reducing the revolving credit facility limit to $350 million (the “Revolving Credit Facility” and together with the Term Loan Facility, the “Senior Secured Credit Facilities”).

Resources available for cash requirements for operations and growth initiatives

The following table illustrates the Company's available credit at June 30, ~~2015~~:2016:

~~(a) The available credit of $317.0 million is limited to $286.5 million due to certain debt covenant restrictions.~~



	June 30, 2016
(In millions)	Facility Limit		Outstanding Balance		Outstanding Letters of Credit		Available Credit
Multi-year revolving credit agreement	$	350.0	$	152.0	$	43.5	$	154.5

On March 27, 2015, the Company entered into Amendment No. 3 ("Amendment No. 3") to the Amended and Restated Five Year Credit Agreement ("Credit Agreement"). Amendment No. 3 provides for (i) $500 million of borrowing capacity, which the Company may request be increased to $550 million pending lenders’ agreement, through a syndicate of 11 banks; (ii) extension of the current termination date for the Credit Agreement from March 2, 2017 to June 2, 2019 upon successful completion of refinancing the Company's 2.7% notes due October 15, 2015; (iii) replacement of the existing consolidated debt to consolidated earnings before interest, taxes, depreciation and amortization ("EBITDA") ratio with a net debt to consolidated EBITDA ratio not to exceed 3.75 to 1.0 through March 31, 2016 and 3.0 to 1.0 thereafter; and (iv) modification to certain defined terms. During the three months ended March 31, 2015, the Company expensed $0.6 million of previously deferred financing costs associated with the Credit Agreement for banks which did not participate in Amendment No. 3 to the Credit Agreement.

~~At June 30, 2015, the Company's 2.7% notes due October 15, 2015 are~~borrowings and $12.5 million was classified as current maturities of long-term debt onin the Condensed Consolidated Balance ~~Sheet based on the Company's intent and ability to refinance this debt on a long-term basis.~~



~~Rating Agency~~	~~Long-term Notes~~	~~Watch / Outlook~~
~~Standard & Poor’s (S&P)~~	BB	~~Negative Outlook~~
~~Moody’s~~	~~Ba1~~	~~Stable Outlook~~
~~Fitch~~	~~BB+~~	~~Stable Outlook~~

Working Capital Position

~~In July 2015, Fitch lowered its long-term Issuer Default Rating on the Company to BB+ from BBB-, while maintaining a stable outlook. Any future downgrades~~Changes in the Company’s ~~credit ratings will~~working capital are reflected in the following table:



(Dollars in millions)	June 30 2016			December 31 2015			Increase (Decrease)
Current Assets
Cash and cash equivalents	$	69.2		$	79.8		$	(10.5	)
Trade accounts receivable, net	265.2			254.9			10.4
Other receivables	16.9			30.4			(13.5		)
Inventories	208.2			217.0			(8.7		)
Other current assets	80.5			82.5			(2.0		)
Total current assets	640.1			664.5			(24.4		)
Current Liabilities
Short-term borrowings and current maturities	45.7			55.3			(9.6		)
Accounts payable	113.5			136.0			(22.5		)
Accrued compensation	40.7			38.9			1.8
Income taxes payable	7.2			4.4			2.8
Advances on contracts and other customer advances	107.9			107.3			0.7
Due to unconsolidated affiliate	7.7			7.7			—
Unit adjustment liability	11.7			22.3			(10.6		)
Other current liabilities	133.5			134.2			(0.7		)
Total current liabilities	467.9			506.1			(38.2		)
Working Capital	$	172.2		$	158.4		$	13.8
Current Ratio (a)	1.4		:1	1.3		:1

(a) Calculated as Total current assets divided by Total current liabilities.

(Dollars in millions) June 30
2015 December 31
2014
Increase
(Decrease)
Current Assets

Cash and cash equivalents $ 67.1
$ 62.8
$ 4.3
Trade accounts receivable, net 329.5
325.1
4.4
Other receivables 22.2
28.1
(6.0 )
Inventories 208.0
178.9
29.1
Other current assets 82.6
88.5
(5.9 )
Total current assets 709.4
683.5
25.9
Current Liabilities

Short-term borrowings and current maturities 33.9
41.9
(8.0 )
Accounts payable 152.0
146.5
5.5
Accrued compensation 44.6
53.8
(9.2 )
Income taxes payable 3.1
2.0
1.1
Advances on contracts 119.5
117.4
2.1
Due to unconsolidated affiliate 8.9
8.1
0.8
Unit adjustment liability 22.3
22.3
—
Other current liabilities 165.1
173.5
(8.4 )
Total current liabilities 549.5
565.6
(16.1 )
Working Capital $ 159.9
$ 117.9
$ 42.0
Current Ratio (a)
1.3 :1 1.2 :1

~~(a) Calculated as Total current assets divided by Total current liabilities.~~factor:

Certainty of Cash Flows

The types of products and services that the Company provides are not subject to rapid technological change, which increases the stability of related cash flows. Additionally, the Company believes each business in its portfolio is a leader in the industries and major markets the Company serves. Due to these factors, the Company is confident in the Company's future ability to generate positive cash flows from operations.


	Six Months Ended						Six Months Ended
	June 30						June 30
(In millions)	2015			2014			2016			2015
Net cash provided (used) by:
Operating activities	$	45.2		$	75.3		$	28.6		$	45.2
Investing activities	(73.6		)	(99.8		)	(27.7		)	(73.6		)
Financing activities	25.0			9.5			(18.4		)	25.0
Impact of exchange rate changes on cash	7.7			(1.2		)
Effect of exchange rate changes on cash							7.1			7.7
Net change in cash and cash equivalents	$	4.3		$	(16.1	)	$	(10.5	)	$	4.3

Cash provided by operating activities — Net cash provided by operating activities in the first ~~first~~ six months of ~~2015~~2016 was $~~45.2~~28.6 million, a decrease of $~~30.1~~16.6 million from cash provided by operating activities in the first ~~first~~ six months of ~~2014~~2015. The decrease is primarily attributable to ~~increased~~timing of accounts payable and lower cash net ~~working capital in~~income partially offset by the ~~first six months~~timing of ~~2015 which included a decrease in customer advances~~accounts receivable invoicing and collections, an increase in accrued compensation and timing of inventory ~~primarily related to the SBB contracts in the Harsco Rail Segment.~~purchases.

Included in the Cash flows from operating activities section of the Condensed Consolidated Statement of Cash Flows is the caption Other, net. For the first six months endedJune 30, 2015,, this caption ~~principally consisted of~~included the Harsco Rail Segment foreign exchange gain which is reflected in the Effect of exchange rate changes on cash caption, and net gains on the sale of non-core assets. For the six months ended June 30, 2014 this caption principally consisted of the impact of non-cash impaired asset write-downs related to the Harsco Metals & Minerals Segment.caption.

Also included in the Cash flows from operating activities section of the Condensed Consolidated Statements of Cash Flows is the caption, Other assets and liabilities. For the first six months ended June 30, ~~2015~~2016 and ~~2014~~2015, the decreases in this caption were $~~21.2~~24.8 million and $~~28.3~~21.4 million, respectively. A summary of the major components of this caption for the periods presented is as follows:

Cash used by investing activities — Net cash used by investing activities in the first six months of 2016 was $27.7 million, a decrease of $45.9 million from the cash used by investing activities in the first six months of 2015 ~~was~~ ~~$73.6 million, a~~ ~~decrease~~ of ~~$26.2 million~~ ~~from the~~ ~~first six months~~ of ~~2014~~. The ~~net~~ decrease was primarily due to a lower level of capital expenditures ~~primarily~~ in the Harsco Metals & Minerals Segment ~~a net decrease in purchases of businesses which consisted of Protran~~ and ~~JK Rail~~the Company's decision not to make cash payments, during 2016, to the Company's partner in the ~~Harsco Rail Segment~~Infrastructure strategic venture. See Note 4, Equity Method Investments and Note 11, Derivative Instruments, Hedging Activities and Fair Value, in the first six months of 2015 and Hammco in the Harsco Industrial Segment in the first six months of 2014; and an increase in proceeds from sales of assets, partially offset by the final working capital adjustment related to the Infrastructure transaction which was received in 2014.Part I, Item 1, Financial Statements for additional information.

Cash provided (used) by financing activities — Net cash ~~provided~~used by financing activities in the first ~~first~~ six months of ~~2015~~2016 was $~~25.0~~18.4 million, an increase of $~~15.5~~43.4 million from cash provided by financing activities in the first ~~first~~ six months of ~~2014~~2015. The change was primarily due to ~~an increase~~net cash payments on debt of $23.6 million in ~~year-over-year~~the first six months of 2016 compared with net cash borrowings of $73.8 million in the first six months of 2015. This was partially offset by ~~an increase in~~proceeds from the ~~Treasury shares purchased under~~termination of a CCIR, lower cash dividends and no repurchases of the Company's ~~share repurchase program, then in effect.~~common stock occurring the first six months of 2016.

~~The Company currently expects to continue paying dividends to stockholders.In July 2015, the Company declared its 262nd consecutive quarterly cash dividend, payable in November 2015.~~

The Company's financial position and debt capacity should enable it to meet current and future requirements. ~~As additional resources are needed, the Company should be able to obtain funds readily and at competitive costs.~~ The Company ~~intends~~continues to ~~continue investing~~assess its capital needs in ~~high-return, organic growth projects~~the context of operational trends, capital market conditions and ~~prudent,~~ strategic ~~alliances and ventures; reduce debt; and pay cash dividends as a means of enhancing stockholder value.~~initiatives.

Recently Adopted and Recently Issued Accounting Standards

ITEM 1. LEGAL PROCEEDINGS

Information on legal proceedings is included in Note ~~12,~~9, Commitments and Contingencies, in Part I, Item 1, Financial Statements.



Delaware	23-1483991
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification number)

350 Poplar Church Road, Camp Hill, Pennsylvania	17011
(Address of principal executive offices)	(Zip Code)


(In thousands)	June 30 2015		December 31 2014		June 30 2016		December 31 2015
Balances due from Brand	$	2,940	$	1,860	$	1,101	$	1,557
Balances due to Brand	29,702		28,311		21,853		21,407


(In thousands)	June 30 2015			December 31 2014			June 30 2016			December 31 2015
Land	$	13,742		$	15,721		$	11,006		$	10,932
Land improvements	15,751			15,898			15,216			15,277
Buildings and improvements	208,164			205,409			189,376			191,356
Machinery and equipment	1,804,315			1,861,965			1,649,620			1,661,914
Construction in progress	65,019			87,414			25,877			36,990
Gross property, plant and equipment	2,106,991			2,186,407			1,891,095			1,916,469
Less: Accumulated depreciation	(1,480,375		)	(1,523,163		)	(1,359,803		)	(1,352,434		)
Property, plant and equipment, net	$	626,616		$	663,244		$	531,292		$	564,035


	June 30, 2015				December 31, 2014				June 30, 2016				December 31, 2015
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer related	$	157,864	$	112,747	$	157,530	$	112,211	$	150,916	$	112,933	$	153,287	$	111,227
Non-compete agreements	1,097		1,043		1,107		1,039		1,095		1,095		1,092		1,092
Patents	6,957		5,533		6,079		5,399		5,827		5,519		5,882		5,495
Technology related	26,142		22,261		26,548		21,233		25,892		24,727		25,559		23,089
Trade names	8,317		3,963		7,745		3,733		8,310		4,379		8,303		4,194
Other	7,597		4,394		7,420		4,290		8,690		4,999		8,701		4,669
Total	$	207,974	$	149,941	$	206,429	$	147,905	$	200,730	$	153,652	$	202,824	$	149,766



	Six Months Ended
	June 30
Defined Benefit Pension Plans Net Periodic Pension Cost	U.S. Plans						International Plans
(In thousands)	2016			2015			2016			2015
Service costs	$	1,892		$	1,444		$	809		$	892
Interest cost	5,090			6,179			14,107			18,329
Expected return on plan assets	(7,202		)	(8,406		)	(22,682		)	(25,285		)
Recognized prior service costs	31			40			89			97
Recognized loss	2,744			2,459			6,360			8,457
Defined benefit pension plans net periodic pension cost (income)	$	2,555		$	1,716		$	(1,317	)	$	2,490



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934



Large accelerated filer ý	Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o



	Harsco Corporation Stockholders’ Equity
(In thousands, except share and per share amounts)	Common Stock					Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests
(In thousands, except share and per share amounts)	Issued		Treasury			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total
Balances, January 1, 2015	$	140,444	$	(749,815	)	$	165,666		$	1,283,549		$	(532,256	)	$	44,322		$	351,910
Net income									21,839						1,752			23,591
Cash dividends declared:
Common @ $0.41 per share									(32,797		)							(32,797		)
Noncontrolling interests															(1,559		)	(1,559		)
Total other comprehensive loss, net of deferred income taxes of $1,397												(22,619		)	(1,105		)	(23,724		)
Contributions from noncontrolling interests															2,100			2,100
Sale of investment in consolidated subsidiary															200			200
Vesting of restricted stock units and other stock grants, net 30,705 shares	58		(259		)	(97		)										(298		)
Treasury shares repurchased, 596,632 shares			(10,220		)													(10,220		)
Amortization of unearned portion of stock-based compensation, net of forfeitures						2,255												2,255
Balances, June 30, 2015	$	140,502	$	(760,294	)	$	167,824		$	1,272,591		$	(554,875	)	$	45,710		$	311,458



	December 31, 2014
(In thousands)	As Previously Reported			Revision			As Revised
ASSETS
Inventories	$	177,265		$	1,657		$	178,922
Total current assets	681,822			1,657			683,479
Other assets	155,551			3,769			159,320
Total assets	2,263,801			5,426			2,269,227

LIABILITIES
Other liabilities	$	25,849		$	11,850		$	37,699
Total liabilities	1,905,467			11,850			1,917,317

HARSCO CORPORATION STOCKHOLDERS’ EQUITY
Accumulated other comprehensive loss	$	(532,491	)	$	235		$	(532,256	)
Retained earnings	1,290,208			(6,659		)	1,283,549
Total Harsco Corporation stockholders’ equity	314,012			(6,424		)	307,588
Total equity	358,334			(6,424		)	351,910
Total liabilities and equity	2,263,801			5,426			2,269,227



	Three Months Ended
	June 30, 2014
(In thousands, except per share amounts)	As Previously Reported			Revision			As Revised
Revenues from continuing operations:
Service revenues	$	361,199		$	767		$	361,966
Total revenues	534,577			767			535,344

Costs and expenses from continuing operations:
Cost of services sold	$	296,801		$	(269	)	$	296,532
Research and development expenses	1,983			(925		)	1,058
Loss on disposal of the Harsco Infrastructure Segment and transaction costs	3,415			(497		)	2,918
Total costs and expenses	528,341			(1,691		)	526,650

Operating income from continuing operations	$	6,236		$	2,458		$	8,694
Loss from continuing operations before income taxes and equity loss	(7,785		)	2,458			(5,327		)
Income tax expense	(4,258		)	(585		)	(4,843		)
Equity in loss of unconsolidated entities, net	(3,008		)	(510		)	(3,518		)
Loss from continuing operations	(15,051		)	1,363			(13,688		)
Net loss	(13,961		)	1,363			(12,598		)
Net loss attributable to Harsco Corporation	(13,975		)	1,363			(12,612		)

Amounts attributable to Harsco Corporation common stockholders:
Loss from continuing operations, net of tax	$	(15,065	)	$	1,363		$	(13,702	)
Net loss attributable to Harsco Corporation common stockholders	(13,975		)	1,363			(12,612		)

Basic loss per common share attributable to Harsco Corporation common stockholders:
Continuing operations	$	(0.19	)	$	0.02		$	(0.17	)
Basic loss per share attributable to Harsco Corporation common stockholders	(0.17		)	0.01			(0.16		)

Diluted loss per common share attributable to Harsco Corporation common stockholders:
Continuing operations	$	(0.19	)	$	0.02		$	(0.17	)
Diluted loss per share attributable to Harsco Corporation common stockholders	(0.17		)	0.01			(0.16		)


(a)	To the extent that the estimated loss provision exceeds accumulated contract costs it is included in the caption Other current liabilities on the Condensed Consolidated Balance Sheets. At June 30, 2016 this amount totaled $5.5 million.



(In thousands)	Three Months Ended March 31 2015			Three Months Ended March 31 2014			Six Months Ended March 31 2015			Period From November 27 2013 Through March 31 2014
Summarized Statement of Operations Information of Brand:
Net revenues	$	677,527		$	741,763		$	1,481,726		$	977,857
Gross profit	134,705			151,862			331,946			200,694
Net loss attributable to Brand Energy & Infrastructure Services, Inc. and Subsidiaries	(26,418		)	(13,272		)	(12,201		)	(17,513		)

Harsco's equity in loss of Brand	(7,584		)	(3,518		)	(3,501		)	(4,748		)


		Asset Derivatives			Liability Derivatives				Asset Derivatives			Liability Derivatives
(In thousands)		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value			Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
June 30, 2015
June 30, 2016
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts		Other current assets	$	472		$	—
Foreign currency exchange forward contracts									Other current assets	$	92	Other current liabilities	$	31
Cross-currency interest rate swaps		Other assets	70,435		Other liabilities	1,002			Other assets	825			—
Total derivatives designated as hedging instruments			$	70,907		$	1,002			$	917		$	31

Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:							Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts		Other current assets	$	1,983	Other current liabilities	$	4,504
Foreign currency exchange forward contracts									Other current assets	$	8,982	Other current liabilities	$	4,108


(In thousands)	Amount of Gain (Loss) Recognized in Other Comprehensive Income (“OCI”) on Derivative - Effective Portion			Location of Gain (Loss) Reclassified from Accumulated OCI into Income - Effective Portion	Amount of Gain Reclassified from Accumulated OCI into Income - Effective Portion		Location of Gain Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing	Amount of Loss Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing					Amount of Gain (Loss) Recognized in Other Comprehensive Income (“OCI”) on Derivative - Effective Portion			Location of Gain Reclassified from Accumulated OCI into Income - Effective Portion	Amount of Gain Reclassified from Accumulated OCI into Income - Effective Portion		Location of Loss Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing	Amount of Loss Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing
Three Months Ended June 30, 2015:
Foreign currency forward exchange contracts	$	(141	)	Cost of services and products sold	$	1		$	—
Three Months Ended June 30, 2016:												Three Months Ended June 30, 2016:
Foreign currency exchange forward contracts													$	(305	)	Cost of services and products sold	$	1		$	—
Cross-currency interest rate swaps	(2,536		)		—		Cost of services and products sold	(19,090		)	(a)		407				—		Cost of services and products sold	(42		)	(b)
	$	(2,677	)		$	1		$	(19,090	)			$	102			$	1		$	(42	)

Three Months Ended June 30, 2014:
Foreign currency forward exchange contracts	$	9			$	—		$	—
Three Months Ended June 30, 2015:												Three Months Ended June 30, 2015:
Foreign currency exchange forward contracts													$	519		Cost of services and products sold	$	1		$	—
Cross-currency interest rate swaps	1,805				—		Cost of services and products sold	(3,801		)	(a)		(2,536		)		—		Cost of services and products sold	(19,090		)	(b)
	$	1,814			$	—		$	(3,801	)			$	(2,017	)		$	1		$	(19,090	)


	Location of Gain (Loss) Recognized in Income on Derivative		Amount of Gain (Loss) Recognized in Income on Derivative for the Three Months Ended June 30 (a)							Location of Gain (Loss) Recognized in Income on Derivative		Amount of Gain (Loss) Recognized in Income on Derivative for the Three Months Ended June 30 (c)
(In thousands)		2015				2014					2016			2015
Foreign currency forward exchange contracts		Cost of services and products sold		$	(11,989	)	$	(1,135	)
Foreign currency exchange forward contracts										Cost of services and products sold		$	8,583		$	(11,989	)


(In thousands)	2015		2016		2017		2018		2019		2016		2017		2018		2019		2020
Estimated amortization expense ~~(b)~~(a)	$	8,750	$	8,250	$	5,500	$	5,250	$	5,250	$	8,000	$	5,500	$	5,250	$	4,750	$	4,500


(In thousands)	Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)			Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)
British pounds sterling	Sell	$	39,281	July 2015	$	348		Sell	$	41,995	July 2016	$	3,309
British pounds sterling	Buy	2,870		July 2015 through August 2015	31			Buy	1,061		July 2016 through September 2016	(33		)
Euros	Sell	227,860		July 2015 through August 2015	(2,394		)	Sell	310,051		July 2016 through December 2016	(1,675		)
Euros	Buy	183,539		July 2015 through August 2015	(621		)	Buy	138,899		July 2016 through January 2018	3,511
Other currencies	Sell	12,571		July 2015 through December 2015	399			Sell	35,952		July 2016 through March 2017	(198		)
Other currencies	Buy	30,309		July 2015 through September 2015	188			Buy	8,521		September 2016	21
Total		$	496,430		$	(2,049	)		$	536,479		$	4,935


Level 2 Fair Value Measurements (In thousands)	June 30 2015		December 31 2014		June 30 2016		December 31 2015
Assets
Foreign currency forward exchange contracts	$	2,455	$	4,485
Foreign currency exchange forward contracts					$	9,074	$	5,828
Cross-currency interest rate swaps	70,435		52,989		825		15,417
Liabilities
Foreign currency forward exchange contracts	4,504		4,618
Cross-currency interest rate swaps	1,002		2,599
Foreign currency exchange forward contracts					4,139		1,738


Level 3 Liabilities—Unit Adjustment Liability (a) for the Six Months Ended June 30 (In thousands)	Six Months Ended
	June 30
	2015				2014
Level 3 Liabilities—Unit Adjustment Liability (d) for the Six Months Ended June 30 (In thousands)									Six Months Ended
									June 30
									2016			2015
Balance at beginning of period	$	93,762			$	106,343			$	79,934		$	93,762
Reduction in the fair value related to election not to make 2016 payments									(19,145		)	—
Payments	(11,160		)		(11,160		)		—			(11,160		)
Change in fair value to the unit adjustment liability	4,409				5,019				3,402			4,409
Balance at end of period	$	87,012		(b)	$	100,201		(b)	$	64,191		$	87,012		(e)


(d)	During the quarter ended March 31, 2016, the Company decided that it will not make the four quarterly payments to CD&R for 2016. This resulted in the Company revaluing the Unit Adjustment Liability. See Note 4, Equity Method Investments, for additional information related to the unit adjustment liability.


(a)	Net gains result from the sales of redundant properties (primarily land, buildings and related equipment) and non-core assets.



(In thousands)	Six Months Ended			Affected Caption in the Condensed Consolidated Statements of Operations
(In thousands)	June 30 2016
Foreign exchange translation adjustments	$	4,880		Change in fair value to the adjustment liability and loss on dilution of equity method investment
Cash flow hedging instruments	168			Change in fair value to the adjustment liability and loss on dilution of equity method investment
Defined benefit pension obligations	(235		)	Change in fair value to the adjustment liability and loss on dilution of equity method investment
Total before tax	4,813
Tax benefit	(1,776		)
Total amounts reclassified from accumulated other comprehensive loss in connection with loss on dilution of equity method investment	$	3,037



(In thousands)	Accrual at December 31 2014		Other Adjustments			Cash Expenditures			Foreign Currency Translation			Accrual at June 30 2015
Employee termination benefit costs	$	7,668	$	(1,003	)	$	(3,201	)	$	(91	)	$	3,373
Total	$	7,668	$	(1,003	)	$	(3,201	)	$	(91	)	$	3,373



Significant Effects on Revenues	Three Months Ended			Six Months Ended
(In millions)	June 30, 2015			June 30, 2015
Revenues — 2014	$	70.6		$	128.1
Net effects of price/volume changes, primarily attributable to volume changes.	(1.4		)	3.7
Effect of Protran and JK Rail acquisitions	1.3			1.5
Impact of foreign currency translation.	(1.0		)	(2.2		)
Revenues — 2015	$	69.5		$	131.1


Change in Revenues — 2015 vs. 2014	Three Months Ended			Six Months Ended
Change in Revenues — 2016 vs. 2015							Three Months Ended			Six Months Ended
(In millions)	June 30, 2015			June 30, 2015			June 30, 2016			June 30, 2016
Net impacts of price/volume changes in the Harsco Industrial Segment, primarily attributable to volume changes.							$	(24.8	)	(60.9		)
Net impact of new and lost contracts (including exited underperforming contracts) in the Harsco Metals & Minerals Segment.							(27.7		)	(54.2		)
Impact of foreign currency translation.	$	(45.2	)	$	(86.6	)	(13.4		)	(32.1		)
Net impact of new contracts and lost contracts (including exited underperforming contracts) in the Harsco Metals & Minerals Segment.	(12.8		)	(28.8		)
Net impacts of price/volume changes in the Harsco Metals & Minerals Segment, primarily attributable to volume changes.	(11.4		)	(17.9		)	(1.3		)	(19.2		)
Net impacts of price/volume changes in the Harsco Industrial Segment, primarily attributable to volume changes.	(10.2		)	(12.4		)
Net effects of increased equipment volumes in the Harsco Rail Segment, including the effect of the Protran and JK Rail acquisitions.	—			5.2
Total change in revenues — 2015 vs. 2014	$	(79.6	)	$	(140.5	)
Net impacts of price/volume changes in the Harsco Rail Segment, primarily attributable to volume changes.							(18.5		)	(17.7		)
Other.							(0.1		)	—
Total change in revenues — 2016 vs. 2015							$	(85.8	)	$	(184.1	)


Change in Cost of Services and Products Sold — 2015 vs. 2014	Three Months Ended			Six Months Ended
Change in Cost of Services and Products Sold — 2016 vs. 2015							Three Months Ended			Six Months Ended
(In millions)	June 30, 2015			June 30, 2015			June 30, 2016			June 30, 2016
Decreased costs due to changes in revenues (exclusive of the effects of foreign currency translation and fluctuations in commodity costs included in selling prices).							$	(66.0	)	(123.2		)
Impact of foreign currency translation.	(28.5		)	(59.2		)	(12.6		)	$	(30.7	)
Decreased costs due to changes in revenues (exclusive of the effects of foreign currency translation and fluctuations in commodity costs included in selling prices).	(25.1		)	(39.3		)
Other	(3.2		)	(7.0		)
Total change in cost of services and products sold — 2015 vs. 2014	$	(56.8	)	$	(105.5	)
Other.							(5.0		)	(7.7		)
Increased costs due to estimated loss provision in the Harsco Rail Segment. (a)							40.1			40.1
Total change in cost of services and products sold — 2016 vs. 2015							$	(43.5	)	$	(121.5	)




DATE	August ~~5, 2015~~4, 2016	/s/ PETER F. MINAN
		Peter F. Minan
		Senior Vice President and Chief Financial Officer
		(On behalf of the registrant and as Principal Financial and Chief Accounting Officer)



Exhibit Number		Description
10.1		~~Separation Agreement and General Release,~~2016 Non-Employee Directors’ Long-Term Equity Compensation Plan (incorporated by reference to the Company’s Form S-8 dated May ~~11, 2015, between Harsco Corporation and A. Verona Dorch~~6, 2016, Commission File Number 001-03970).
10.2		First Amendment to 2016 Non-Employee Directors' Long-Term Equity Compensation Plan.
10.3		Form of Restricted Stock Units Agreement (Non-Employee Director).
31.1		Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
31.2		Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).
32		Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief Financial Officer).
101		The following financial statements from Harsco Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2015~~2016 filed with the Securities and Exchange Commission on August ~~5, 2015,~~4, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Comprehensive Loss; (iv) the Condensed Consolidated Statements of Cash Flows; (v) the Condensed Consolidated Statements of Equity; and (vi) the Notes to Condensed Consolidated Financial Statements.