UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



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

For the Quarterly Period Ended September 30, ~~2016~~2017



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

For the transition period from to

Commission File Number 001-03970

HARSCO CORPORATION

(Exact name of registrant as specified in its charter)



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)

Registrant’s telephone number, including area code 717-763-7064

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ý NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ý NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” ~~and~~ “smaller reporting ~~company”~~company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer ý	Accelerated filer o

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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 October 31, ~~2016~~2017
Common stock, par value $1.25 per share		~~80,174,963~~80,444,425

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~~Income (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	2726

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3937

Item 4.	Controls and Procedures	3937


PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	4038

Item 1A.	Risk Factors	4038

Item 6.	Exhibits	4038

SIGNATURES		4139

~~EXHIBIT INDEX~~		42

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HARSCO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


(In thousands)	September 30 2016			December 31 2015			September 30 2017			December 31 2016
ASSETS
Current assets:
Cash and cash equivalents	$	79,911		$	79,756		$	59,544		$	69,831
Restricted cash							5,819			2,048
Trade accounts receivable, net	263,534			254,877			279,232			236,554
Other receivables	17,595			30,395			22,647			21,053
Inventories	208,695			216,967			227,008			187,681
Other current assets	62,894			82,527			35,825			33,108
Total current assets	632,629			664,522			630,075			550,275
Investments	2,210			252,609
Property, plant and equipment, net	518,251			564,035			479,141			490,255
Goodwill	391,657			400,367			399,916			382,251
Intangible assets, net	44,380			53,043			39,340			41,567
Deferred income tax assets							108,754			106,311
Other assets	97,997			126,621			13,767			10,679
Total assets	$	1,687,124		$	2,061,197		$	1,670,993		$	1,581,338
LIABILITIES
Current liabilities:
Short-term borrowings	$	5,279		$	30,229		$	5,668		$	4,259
Current maturities of long-term debt	20,760			25,084			15,569			25,574
Accounts payable	119,991			136,018			123,290			107,954
Accrued compensation	43,863			38,899			50,367			46,658
Income taxes payable	7,329			4,408			8,668			4,301
Dividends payable	—			4,105
Insurance liabilities	12,154			11,420			11,616			11,850
Advances on contracts and other customer advances	125,042			107,250			126,019			117,329
Due to unconsolidated affiliate	—			7,733
Unit adjustment liability	—			22,320
Other current liabilities	128,519			118,657			144,649			109,748
Total current liabilities	462,937			506,123			485,846			427,673
Long-term debt	649,511			845,621			602,673			629,239
Deferred income taxes	14,531			12,095
Insurance liabilities	26,625			30,400			24,097			25,265
Retirement plan liabilities	200,317			241,972			305,330			319,597
Due to unconsolidated affiliate	—			13,674
Unit adjustment liability	—			57,614
Other liabilities	40,179			42,895			43,029			42,001
Total liabilities	1,394,100			1,750,394			1,460,975			1,443,775
COMMITMENTS AND CONTINGENCIES
HARSCO CORPORATION STOCKHOLDERS’ EQUITY
Preferred stock	—			—			—			—
Common stock	140,625			140,503			141,093			140,625
Additional paid-in capital	170,716			170,699			178,287			172,101
Accumulated other comprehensive loss	(466,359		)	(515,688		)	(581,551		)	(606,722		)
Retained earnings	1,166,326			1,236,355			1,191,205			1,150,688
Treasury stock	(760,391		)	(760,299		)	(761,998		)	(760,391		)
Total Harsco Corporation stockholders’ equity	250,917			271,570			167,036			96,301
Noncontrolling interests	42,107			39,233			42,982			41,262
Total equity	293,024			310,803			210,018			137,563
Total liabilities and equity	$	1,687,124		$	2,061,197		$	1,670,993		$	1,581,338

See accompanying notes to unaudited condensed consolidated financial statements.

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						Nine Months Ended								Three Months Ended							Nine Months Ended
		September 30						September 30								September 30							September 30
(In thousands, except per share amounts)		2016			2015			2016				2015				2017				2016			2017				2016
Revenues from continuing operations:
Service revenues		$	239,057		$	272,463		$	714,177			$	852,100			$	246,144			$	239,057		$	738,059			$	714,177
Product revenues		128,730			155,871			376,824				483,560				138,509				128,730			414,033				376,824
Total revenues		367,787			428,334			1,091,001				1,335,660				384,653				367,787			1,152,092				1,091,001
Costs and expenses from continuing operations:
Cost of services sold		192,812			224,588			574,137				714,287				193,314				192,812			574,905				574,137
Cost of products sold		93,499			112,043			312,131				343,825				96,469				93,499			296,062				312,131
Selling, general and administrative expenses		50,249			64,526			150,553				186,891				61,221				50,249			171,968				150,553
Research and development expenses		910			1,057			2,748				3,490				936				910			3,096				2,748
Loss on disposal of the Harsco Infrastructure Segment and transaction costs		—			1,000			—				1,000
Other expenses		1,741			17,392			12,111				3,829
Other (income) expenses, net																(1,237		)		1,741			1,729				12,111
Total costs and expenses		339,211			420,606			1,051,680				1,253,322				350,703				339,211			1,047,760				1,051,680
Operating income from continuing operations		28,576			7,728			39,321				82,338				33,950				28,576			104,332				39,321
Interest income		673			264			1,760				951				610				673			1,615				1,760
Interest expense		(13,756		)	(11,110		)	(39,924		)		(34,812		)		(12,123		)		(13,756		)	(36,181		)		(39,924		)
Change in fair value to the unit adjustment liability and loss on dilution and sale of equity method investment		(44,788		)	(2,083		)	(58,494		)		(6,492		)		—				(44,788		)	—				(58,494		)
Income (loss) from continuing operations before income taxes and equity income (loss)		(29,295		)	(5,201		)	(57,337		)		41,985
Income (loss) from continuing operations before income taxes and equity income																22,437				(29,295		)	69,766				(57,337		)
Income tax expense		(5,079		)	(6,985		)	(14,913		)		(26,945		)		(8,270		)		(5,079		)	(25,757		)		(14,913		)
Equity in income (loss) of unconsolidated entities, net		3,205			3,105			5,686				(396		)
Equity income of unconsolidated entities, net																—				3,205			—				5,686
Income (loss) from continuing operations		(31,169		)	(9,081		)	(66,564		)		14,644				14,167				(31,169		)	44,009				(66,564		)
Discontinued operations:
Income (loss) on disposal of discontinued business		(592		)	(637		)	1,788				(849		)		(578		)		(592		)	(538		)		1,788
Income tax benefit (expense) related to discontinued business		217			235			(661		)		313				207				217			193				(661		)
Income (loss) from discontinued operations		(375		)	(402		)	1,127				(536		)		(371		)		(375		)	(345		)		1,127
Net income (loss)		(31,544		)	(9,483		)	(65,437		)		14,108				13,796				(31,544		)	43,664				(65,437		)
Less: Net (income) loss attributable to noncontrolling interests		(1,443		)	827			(4,592		)		(925		)
Less: Net income attributable to noncontrolling interests																(498		)		(1,443		)	(2,438		)		(4,592		)
Net income (loss) attributable to Harsco Corporation		$	(32,987	)	$	(8,656	)	$	(70,029	)		$	13,183			$	13,298			$	(32,987	)	$	41,226			$	(70,029	)
Amounts attributable to Harsco Corporation common stockholders:	Amounts attributable to Harsco Corporation common stockholders:														Amounts attributable to Harsco Corporation common stockholders:
Income (loss) from continuing operations, net of tax		$	(32,612	)	$	(8,254	)	$	(71,156	)		$	13,719			$	13,669			$	(32,612	)	$	41,571			$	(71,156	)
Income (loss) from discontinued operations, net of tax		(375		)	(402		)	1,127				(536		)		(371		)		(375		)	(345		)		1,127
Net income (loss) attributable to Harsco Corporation common stockholders		$	(32,987	)	$	(8,656	)	$	(70,029	)		$	13,183			$	13,298			$	(32,987	)	$	41,226			$	(70,029	)

Weighted-average shares of common stock outstanding		80,379			80,238			80,318				80,233				80,637				80,379			80,519				80,318
Basic earnings (loss) per common share attributable to Harsco Corporation common stockholders:	Basic earnings (loss) per common share attributable to Harsco Corporation common stockholders:														Basic earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations		$	(0.41	)	$	(0.10	)	$	(0.89	)		$	0.17			$	0.17			$	(0.41	)	$	0.52			$	(0.89	)
Discontinued operations		—			(0.01		)	0.01				(0.01		)		—				—			—				0.01
Basic earnings (loss) per share attributable to Harsco Corporation common stockholders		$	(0.41	)	$	(0.11	)	$	(0.87	)	(a)	$	0.16			$	0.16		(a)	$	(0.41	)	$	0.51		(a)	$	(0.87	)	(a)
Diluted weighted-average shares of common stock outstanding		80,379			80,238			80,318				80,363				83,136				80,379			82,753				80,318
Diluted earnings (loss) per common share attributable to Harsco Corporation common stockholders:	Diluted earnings (loss) per common share attributable to Harsco Corporation common stockholders:														Diluted earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations		$	(0.41	)	$	(0.10	)	$	(0.89	)		$	0.17			$	0.16			$	(0.41	)	$	0.50			$	(0.89	)
Discontinued operations		—			(0.01		)	0.01				(0.01		)		—				—			—				0.01
Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders		$	(0.41	)	$	(0.11	)	$	(0.87	)	(a)	$	0.16			$	0.16			$	(0.41	)	$	0.50			$	(0.87	)	(a)
Cash dividends declared per common share		$	—		$	0.205		$	—			$	0.615

(a) Does not total due to rounding

See accompanying notes to unaudited condensed consolidated financial statements.

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~LOSS~~INCOME (LOSS) (Unaudited)

Three Months Ended
September 30
(In thousands) 2016 2015
Net loss $ (31,544 ) $ (9,483 )
Other comprehensive income (loss):

Foreign currency translation adjustments, net of deferred income taxes of $(16,992) and $(3,747) in 2016 and 2015, respectively
9,613
(36,854 )
Net gain on cash flow hedging instruments, net of deferred income taxes of $(813) and $(799) in 2016 and 2015, respectively 1,609
4,164
Pension liability adjustments, net of deferred income taxes of $336 and $(466) in 2016 and 2015, respectively 10,712
19,580
Unrealized gain (loss) on marketable securities, net of deferred income taxes of $(9) and $4 in 2016 and 2015, respectively 14
(8 )
Total other comprehensive income (loss) 21,948
(13,118 )
Total comprehensive loss (9,596 ) (22,601 )
Less: Comprehensive income (loss) attributable to noncontrolling interests (1,448 ) 1,917
Comprehensive loss attributable to Harsco Corporation $ (11,044 ) $ (20,684 )



	Three Months Ended
	September 30
(In thousands)	2017			2016
Net income (loss)	$	13,796		$	(31,544	)
Other comprehensive income (loss):
Foreign currency translation adjustments, net of deferred income taxes of $1,747 and $(16,992) in 2017 and 2016, respectively	16,005			9,613
Net gain on cash flow hedging instruments, net of deferred income taxes of $21 and $(813) in 2017 and 2016, respectively	2,199			1,609
Pension liability adjustments, net of deferred income taxes of $(523) and $254 in 2017 and 2016, respectively	(7,324		)	10,712
Unrealized gain on marketable securities, net of deferred income taxes of $(3) and $(9) in 2017 and 2016, respectively	5			14
Total other comprehensive income	10,885			21,948
Total comprehensive income (loss)	24,681			(9,596		)
Less: Comprehensive income attributable to noncontrolling interests	(1,200		)	(1,448		)
Comprehensive income (loss) attributable to Harsco Corporation	$	23,481		$	(11,044	)

Nine Months Ended
September 30
(In thousands) 2016 2015
Net income (loss) $ (65,437 ) $ 14,108
Other comprehensive income (loss):

Foreign currency translation adjustments, net of deferred income taxes of $(27,680) and $(855) in 2016 and 2015, respectively 6,840
(74,671 )
Net gain (loss) on cash flow hedging instruments, net of deferred income taxes of $(398) and $(1,337) in 2016 and 2015, respectively (942 ) 10,045
Pension liability adjustments, net of deferred income taxes of $(920) and $(1,405) in 2016 and 2015, respectively 43,007
27,796
Unrealized gain (loss) on marketable securities, net of deferred income taxes of $(7) and $7 in 2016 and 2015, respectively 11
(12 )
Total other comprehensive income (loss) 48,916
(36,842 )
Total comprehensive loss (16,521 ) (22,734 )
Less: Comprehensive income (loss) attributable to noncontrolling interests (4,179 ) 1,270
Comprehensive loss attributable to Harsco Corporation $ (20,700 ) $ (21,464 )



	Nine Months Ended
	September 30
(In thousands)	2017			2016
Net income (loss)	$	43,664		$	(65,437	)
Other comprehensive income (loss):
Foreign currency translation adjustments, net of deferred income taxes of $3,598 and $(27,680) in 2017 and 2016, respectively	42,391			6,840
Net gain (loss) on cash flow hedging instruments, net of deferred income taxes of $888 and $(398) in 2017 and 2016, respectively	1,471			(942		)
Pension liability adjustments, net of deferred income taxes of $(1,567) and $(1,002) in 2017 and 2016, respectively	(16,467		)	43,007
Unrealized gain on marketable securities, net of deferred income taxes of $(6) and $(7) in 2017 and 2016, respectively	11			11
Total other comprehensive income	27,406			48,916
Total comprehensive income (loss)	71,070			(16,521		)
Less: Comprehensive income attributable to noncontrolling interests	(4,674		)	(4,179		)
Comprehensive income (loss) attributable to Harsco Corporation	$	66,396		$	(20,700	)

See accompanying notes to unaudited condensed consolidated financial statements.

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Nine Months Ended						Nine Months Ended
	September 30						September 30
(In thousands)	2016			2015			2017			2016
Cash flows from operating activities:
Net income (loss)	$	(65,437	)	$	14,108		$	43,664		$	(65,437	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	98,284			110,343			91,519			98,284
Amortization	10,003			9,003			5,989			10,003
Change in fair value to the unit adjustment liability and loss on dilution and sale of equity method investment	58,494			6,492			—			58,494
Deferred income tax expense (benefit)	(2,015		)	9,998			2,018			(2,015		)
Equity in (income) loss of unconsolidated entities, net	(5,686		)	396
Equity income of unconsolidated entities, net							—			(5,686		)
Dividends from unconsolidated entities	16			—			93			16
Contract estimated forward loss provision for Harsco Rail Segment	40,050			—			—			40,050
Other, net	(3,676		)	(12,345		)	2,567			1,911
Changes in assets and liabilities:
Accounts receivable	4,055			9,161			(26,633		)	4,055
Inventories	(24,295		)	(36,472		)	(30,112		)	(24,295		)
Accounts payable	(10,831		)	(3,346		)	9,045			(10,740		)
Accrued interest payable	6,245			7,658			287			6,245
Accrued compensation	4,481			(3,640		)	979			4,481
Advances on contracts and other customer advances	15,352			7,548			(6,534		)	15,352
Harsco 2011/2012 Restructuring Program accrual	—			(305		)
Retirement plan liabilities, net							(17,890		)	(17,151		)
Other assets and liabilities	(20,285		)	(29,497		)	7,913			(8,721		)
Net cash provided by operating activities	104,755			89,102			82,905			104,846

Cash flows from investing activities:
Purchases of property, plant and equipment	(49,946		)	(91,583		)	(64,131		)	(49,946		)
Proceeds from sales of assets	7,178			20,777			10,746			7,178
Purchases of businesses, net of cash acquired	(26		)	(7,705		)	—			(26		)
Proceeds from sale of equity investment	165,640			—			—			165,640
Payment of unit adjustment liability	—			(16,740		)
Other investing activities, net	7,058			(7,975		)	4,450			7,058
Net cash provided (used) by investing activities	129,904			(103,226		)	(48,935		)	129,904

Cash flows from financing activities:
Short-term borrowings, net	(1,527		)	1,211			1,915			(1,527		)
Current maturities and long-term debt:
Additions	50,835			92,993			26,000			50,835
Reductions	(275,768		)	(101,679		)	(65,245		)	(275,768		)
Cash dividends paid on common stock	(4,105		)	(49,311		)	—			(4,105		)
Dividends paid to noncontrolling interests	(1,702		)	(1,559		)	(1,783		)	(1,702		)
Purchase of noncontrolling interests	(4,731		)	(395		)	(3,412		)	(4,731		)
Common stock acquired for treasury	—			(12,143		)
Stock-based compensation - Employee taxes paid							(1,607		)	(91		)
Proceeds from cross-currency interest rate swap termination	16,625			75,057			—			16,625
Deferred pension underfunding payment to unconsolidated affiliate	(20,640		)	—			—			(20,640		)
Deferred financing costs							(42		)	(946		)
Other financing activities, net	(946		)	(2,607		)	(370		)	—
Net cash provided (used) by financing activities	(241,959		)	1,567
Net cash used by financing activities							(44,544		)	(242,050		)

Effect of exchange rate changes on cash	7,455			7,708
Net increase (decrease) in cash and cash equivalents	155			(4,849		)
Cash and cash equivalents at beginning of period	79,756			62,843
Cash and cash equivalents at end of period	$	79,911		$	57,994
Effect of exchange rate changes on cash and cash equivalents, including restricted cash							4,058			7,455
Net increase (decrease) in cash and cash equivalents, including restricted cash							(6,516		)	155
Cash and cash equivalents, including restricted cash, at beginning of period							71,879			79,756
Cash and cash equivalents, including restricted cash, at end of period							$	65,363		$	79,911

See accompanying notes to unaudited condensed consolidated financial statements.

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

13,183

925
14,108
Cash dividends declared:

Common @ $0.615 per share

(49,247 )

(49,247 )
Noncontrolling interests (1,559 ) (1,559 )
Total other comprehensive loss, net of deferred income taxes of $(5,529) (34,647 ) (2,195 ) (36,842 )
Contributions from noncontrolling interests

2,100
2,100
Purchase of subsidiary shares from noncontrolling interest (3 ) (395 ) (398 )
Sale of investment in consolidated subsidiary 200
200
Vesting of restricted stock units and other stock grants, net 31,147 shares 59
(264 ) (99 )

(304 )
Treasury shares repurchased, 596,632 shares (10,220 ) (10,220 )
Amortization of unearned portion of stock-based compensation, net of forfeitures

3,545

3,545
Balances, September 30, 2015 $ 140,503
$ (760,299 ) $ 169,109
$ 1,247,485
$ (566,903 ) $ 43,398
$ 273,293



	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, 2016	$	140,503	$	(760,299	)	$	170,699		$	1,236,355		$	(515,688	)	$	39,233		$	310,803
Net income (loss)									(70,029		)				4,592			(65,437		)
Cash dividends declared:
Noncontrolling interests															(1,702		)	(1,702		)
Total other comprehensive income (loss), net of deferred income taxes of $(29,087)												49,329			(413		)	48,916
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	122		(92		)	(595		)										(565		)
Amortization of unearned portion of stock-based compensation, net of forfeitures						5,740												5,740
Balances, September 30, 2016	$	140,625	$	(760,391	)	$	170,716		$	1,166,326		$	(466,359	)	$	42,107		$	293,024


	Harsco Corporation Stockholders’ Equity																								Harsco Corporation Stockholders’ Equity
(In thousands)	Common Stock					Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive Loss			Noncontrolling Interests								Common Stock							Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive Loss				Noncontrolling Interests
	Issued		Treasury										Total							Issued				Treasury							Total
Balances, January 1, 2016	$	140,503	$	(760,299	)				$	170,699			$			1,236,355		$	(515,688	)		$	39,233			$	310,803
Net income (loss)										(70,029		)					4,592				(65,437		)
Balances, January 1, 2017																									$	140,625		$	(760,391	)				$	172,101			$	1,150,688			$	(606,722	)		$	41,262			$	137,563
Adoption of new accounting standard (See Note 2)																																1,106				(709		)										397
Net income																																				41,226								2,438				43,664
Cash dividends declared:
Noncontrolling interests																	(1,702		)		(1,702		)																					(1,783		)		(1,783		)
Total other comprehensive income (loss), net of deferred income taxes of $(29,005)														49,329			(413		)		48,916
Purchase of subsidiary shares from noncontrolling interest						(5,128		)									397				(4,731		)									(2,242		)										(1,170		)		(3,412		)
Vesting of restricted stock units and other stock grants, net 80,598 shares	122		(92		)	(595		)													(565		)
Total other comprehensive income, net of deferred income taxes of $2,913																																								25,171				2,235				27,406
Stock Appreciation Rights exercised, net 8,965 shares																									16			(63		)		(16		)														(63		)
Vesting of restricted stock units and other stock grants, net 260,497 shares																									452			(1,544		)		(452		)														(1,544		)
Amortization of unearned portion of stock-based compensation, net of forfeitures						5,740															5,740											7,790																7,790
Balances, September 30, 2016	$	140,625	$	(760,391	)	$	170,716			$	1,166,326			$	(466,359	)	$	42,107			$	293,024
Balances, September 30, 2017																									$	141,093		$	(761,998	)		$	178,287			$	1,191,205			$	(581,551	)		$	42,982			$	210,018

See accompanying notes to unaudited condensed consolidated financial statements.

HARSCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Basis of Presentation

Harsco Corporation (the ~~“Company”~~"Company") has prepared these unaudited condensed consolidated financial statements based on Securities and Exchange Commission (the “SEC”) 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 statement are reflected in the unaudited condensed consolidated financial statements. The December 31, ~~2015~~2016 Condensed Consolidated Balance Sheet information contained in this Quarterly Report on Form 10-Q was derived from the ~~2015~~2016 audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the U.S. (“("U.S. ~~GAAP”~~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, ~~2015~~2016.

Operating results and cash flows for the three and nine months ended September 30, ~~2016~~2017 are not indicative of the results that may be expected for the year ending December 31, ~~2016~~2017.

Reclassifications

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

~~Significant Accounting Policies - Revenue Recognition~~Restricted Cash

~~Product revenues~~The Company had restricted cash of $5.8 million and $2.0 million at September 30, 2017 and December 31, 2016, respectively, and the restrictions are ~~recognized when they are realized or realizable and when earned. Revenue is realized or realizable and earned when all~~primarily related to collateral provided for certain guarantees 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 second quarter of 2016, as a result of increased vendor costs, ongoing discussions with SBB, and increased estimates for commissioning, certification and testing costs, as well as expected settlements with SBB, the Company 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 estimated forward loss provision related to the SBB contracts of $40.1 million for the nine months ended September 30, 2016 in the caption Costs of products sold in the Condensed Consolidated Statements of Operations. There was no estimated forward loss provision at December 31, 2015. See Note 3, Accounts Receivable and Inventories, for additional information related to the SBB contracts.Company’s performance.

2. Recently Adopted and Recently Issued Accounting Standards

The following accounting standards have been adopted in ~~2016:~~2017:

On January 1, ~~2016,~~2017, the Company adopted changes issued by the Financial Accounting Standards Board ("FASB") related to ~~reporting extraordinary and unusual items.~~the simplification of the measurement of inventory. The changes ~~simplified income statement presentation by eliminating~~required entities to measure most inventory at the ~~concept~~lower of ~~extraordinary items.~~cost and net realizable value, thereby simplifying the previous guidance under which an entity must measure inventory at the lower of cost or market. The changes ~~became effective for~~did not apply to inventories that are measured using either the ~~Company on January 1, 2016.~~last-in, first-out method or the retail inventory method. The adoption of these changes did not have an impact on the Company's condensed consolidated financial statements.

On January 1, ~~2016,~~2017, the Company adopted changes issued by the FASB ~~related~~that required deferred tax assets and liabilities to ~~consolidation.~~be classified as non-current in a classified statement of financial position. The changes ~~updated consolidation analysis and affected reporting~~applied to all entities that ~~are required to evaluate whether they should consolidate certain legal entities.~~present a classified statement of financial position. The ~~changes became effective for the Company on January 1, 2016.~~requirement that deferred tax assets and liabilities of a tax-paying component of an entity be offset and presented as a single amount was not affected. The adoption of these changes ~~did not have a material impact~~resulted in the Company reclassifying approximately $27 million from reported current assets to Deferred income tax assets based on ~~the Company's condensed consolidated financial statements.~~balances at December 31, 2016.

On January 1, ~~2016,~~2017, the Company adopted changes issued by the FASB ~~related~~amending the accounting for stock-based compensation and requiring excess tax benefits and shortfalls to ~~simplifying the presentation~~be recognized as a component of ~~debt issuance costs. The~~income tax expense rather than equity. These changes also required ~~that debt issuance costs related~~excess tax benefits and shortfalls to ~~a recognized debt liability~~ be presented inas an operating activity on the ~~balance sheet~~Condensed Consolidated Statement of Cash Flows and allowed an entity to make an accounting policy election to either estimate expected forfeitures or to account for them 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 thesethey occur. These changes resulted in the ~~reclassification~~Company recording the cumulative impact of approximately $8$1 million pre-tax on January 1, 2017 to retained earnings, related to the Company electing to not estimate forfeitures on stock compensation plans but rather recognize forfeitures as they occur. The inclusion of excess tax benefits and ~~approximately $10 million at September 30, 2016 and December 31, 2015, respectively, in deferred financing costs~~shortfalls as a component of the Company’s income tax expense will increase volatility within the provision for income taxes as the amount of excess tax benefits or deficiencies from ~~Other assets to Long-term debt~~stock-based compensation awards are dependent on the Company's ~~Condensed Consolidated Balance Sheets~~stock price at the date an award vests. The impact to income tax expense resulting from this change was tax expense of $0.1 million and a tax benefit of $0.4 million for ~~all periods presented.~~the three and nine months ended September 30, 2017, respectively.

~~On January 1, 2016,~~

During the second quarter of 2017, the Company ~~adopted~~early-adopted changes issued by the FASB that added and clarified guidance related to the ~~determination~~classification, presentation and disclosure of ~~whether a cloud computing arrangement includes a software license. If a cloud computing arrangement is determined to include a software license, then~~restricted cash in the ~~customer accounts for the software license element consistent with the acquisition~~statement 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.cash flows. The adoption of these changes did not have an impact on the Company's condensed consolidated ~~financial statements; however in~~statement of cash flows for the ~~future will have an effect on how the Company reports adjustments to provisional amounts during the measurement period.~~current and prior periods.

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. During 2016, the FASB clarified the implementation guidance for principal versus agent ~~considerations,~~considerations; identifying performance ~~obligations,~~obligations; accounting for intellectual property ~~licenses, collectability,~~licenses; collectability; non-cash ~~consideration~~consideration; and the presentation of sales and other similar ~~taxes, as well as~~taxes. The FASB also introduced practical expedients related to disclosures of remaining performance ~~obligations.~~obligations and other technical corrections and improvements. These changes become effective for the Company on January 1, 2018. Management has determined that the most significant impact will be with regard to the timing of revenue recognition associated with the air-cooled heat exchanger business of the Harsco Industrial Segment and certain equipment sales in the Harsco Rail Segment. The Company currently recognizes revenues on such arrangements upon the completion of the efforts associated with these arrangements, but as a result of these changes, revenue from these arrangements will be recognized over time and increase revenue in earlier periods. Management has determined that there will not be any significant impact with regards to the timing of revenue recognition associated with the Harsco Metals & Minerals Segment or the industrial grating and fencing or heat transfer businesses of the Harsco Industrial Segment. Management is currently ~~evaluating~~quantifying the impact of these changes, ~~on its condensed consolidated financial statements.~~

~~In August 2014,~~including the ~~FASB issued changes~~impact of income taxes, training those with responsibilities related to ~~management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern~~revenue recognition 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 impactevaluating impacts on the Company's ~~condensed consolidated~~internal controls over financial ~~statements.~~

~~In July 2015,~~reporting. The Company will adopt the ~~FASB issued~~standard using the modified retrospective method of implementation with the cumulative effect of initially applying the changes ~~related~~recognized in retained earnings at the date of initial application and continues to progress with regard to the ~~simplification~~quantification 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 November 2015, the FASB issued changes that require deferred tax assets and liabilities to be classified as noncurrent in a classified statement of financial position. The changes apply to all entities that present a classified statement of 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, 2017. Had these changes been adopted, the Company's working capital would have decreased by approximately $27 million and $38 million at September 30, 2016 and December 31, 2015, respectively.above identified differences.

In February 2016, the FASB issued changes in accounting for leases. The changes introduce a lessee model that brings most leases ononto 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 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 also require lessors to increase the transparency of their exposure to changes in value of their residual assets and how they manage that exposure. The changes become effective for the Company on January 1, 2019. Management is currently evaluating the impact of these changes on its condensed consolidated financial statements.

In ~~March 2016,~~January 2017, the FASB issued changes ~~related~~that remove the second step of the annual goodwill impairment test, which requires a hypothetical purchase price allocation. The changes provide that the amount of goodwill impairment will be equal to the ~~simplification~~amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of ~~several aspects~~goodwill. All other goodwill impairment guidance remains largely unchanged. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount 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 statement of cash flows.goodwill at reporting units with zero or negative carrying amounts. The changes become effective for the Company on January 1, ~~2017.~~2020. Management has determined that these changes will not have a material impact on the Company's condensed consolidated financial statements. However, should the Company be required to record a goodwill impairment charge in future periods, the amount recorded may differ compared to any amounts that might be recorded under current practice.

In March 2017, the FASB issued changes to how employers that sponsor defined benefit pension plans and other postretirement plans present the net periodic pension cost ("NPPC") in the statement of operations. An employer will be required to report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. Other components of NPPC are required to be presented in the statement of operations separately from the service cost component and outside of the subtotal of income from operations. The changes also allow only the service cost component to be eligible for capitalization. The changes become effective for the Company on

January 1, 2018. Management is currently evaluating the impact of these changes on its condensed consolidated financial ~~statements and does not expect them to have a material impact.~~statements.

In ~~August 2016,~~May 2017, the FASB issued changes to ~~address eight specific cash flow presentation issues with~~clarify when revisions to the ~~objective~~terms or conditions of ~~reducing diversity~~a share-based payment award require an entity to apply modification accounting. The changes require modification accounting only in ~~practice. The issues identified include: debt prepayments~~circumstances when

the terms or ~~extinguishment costs; contingent consideration payments made after a business combination; proceeds from~~conditions result in changes to the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and applicationfair value, vesting conditions or classification of the ~~predominance principle.~~award as an equity instrument or a liability. The changes become effective for the Company on January 1, 2018. Management ~~has determined that~~does not believe these changes will ~~not have a material~~ impact its condensed consolidated financial statements.

In August 2017, the FASB issued changes which expand and refine hedge accounting for both financial and non-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedged items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The amendments in this update should be applied to hedging relationships existing on the ~~Company's~~date of adoption, which includes a cumulative-effect adjustment to eliminate any ineffectiveness recorded to accumulated other comprehensive income or loss with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year in which adoption occurred. Presentation and disclosure amendments are required to be applied prospectively. The changes become effect for the Company on January 1, 2019. Management is currently evaluating the impact of these changes on its condensed consolidated financial statements.

3. Accounts Receivable and Inventories

Accounts receivable consist of the following:


(In thousands)	September 30 2016			December 31 2015			September 30 2017			December 31 2016
Trade accounts receivable	$	276,625		$	280,526		$	284,397		$	248,354
Less: Allowance for doubtful accounts	(13,091		)	(25,649		)	(5,165		)	(11,800		)
Trade accounts receivable, net	$	263,534		$	254,877		$	279,232		$	236,554

Other receivables (a)	$	17,595		$	30,395		$	22,647		$	21,053

(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 the Allowance for doubtful accounts ~~in 2016~~during 2017 is due to the write-off of previously reserved trade accounts receivable balances.

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


	Three Months Ended					Nine Months Ended				Three Months Ended					Nine Months Ended
	September 30					September 30				September 30					September 30
(In thousands)	2016			2015		2016		2015		2017		2016			2017		2016
Provision for doubtful accounts related to trade accounts receivable	$	(93	)	$	10,005	$	84	$	10,615	$	4,087	$	(93	)	$	5,262	$	84

The increase in the Provision for doubtful accounts for the three months ended September 30, 2017 is due principally to the write-off of certain pre-administration accounts receivable balances for one of the Company's customers in Australia.

Inventories consist of the following:


(In thousands)	September 30 2016		December 31 2015		September 30 2017		December 31 2016
Finished goods	$	30,198	$	32,586	$	28,765	$	26,464
Work-in-process	30,273		30,959		32,364		22,815
Contracts-in-process	55,675		55,786		79,279		54,044
Raw materials and purchased parts	67,287		70,755		62,188		61,450
Stores and supplies	25,262		26,881		24,412		22,908
Inventories	$	208,695	$	216,967
Total inventories					$	227,008	$	187,681

Contracts-in-process consist of the following:


(In thousands)	September 30 2016		December 31 2015	September 30 2017			December 31 2016
Contract costs accumulated to date	90,668		55,786	$	119,322		$	90,276
Estimated forward loss provisions for contracts-in-process ~~(a)~~(b)	(34,993	)	—	(40,043		)	(36,232		)
Contracts-in-process(c)	55,675		55,786	$	79,279		$	54,044


~~(a)~~(b)	To the extent that the estimated forward loss provision exceeds accumulated contract costs it is included in the caption Other current liabilities on the Condensed Consolidated Balance Sheets. At September 30, 2017 and December 31, 2016, this amount totaled ~~$5.5 million.~~$3.4 million and $6.7 million, respectively.

(c) At September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the Company has ~~$106.8~~$111.6 million and ~~$82.7~~$101.1 million, respectively, 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.

The Company recognized an estimated forward loss provision related to the contracts with the federal railway system of Switzerland ("SBB") of $45.1 million, for the year ended December 31, 2016 in Costs of products sold on the Condensed Consolidated Statements of Operations, of which $40.1 million was recognized during the nine months ended September 30, 2016. There was no additional estimated forward loss provision recognized, excluding the impact of foreign currency fluctuation, for the three and nine months ended September 30, 2017. The estimated forward loss provision represents the Company's best estimate based on currently available information. It is possible that the Company's overall estimate of costs to complete these contracts may increase, which would result in an additional estimated forward loss provision at such time, but the Company is unable to estimate any further possible loss or range of loss at this time.

The Company recognized less than $1 million in revenue for the contracts with SBB for the three and nine months ended September 30, 2017 under the percentage-of-completion (units-of-delivery) method and accordingly, there was an insignificant impact on the Company's gross margins and results of operations for this period. The Company did not recognize any revenue for these contracts for 2016. The Company has not yet recognized any revenue associated with the major equipment deliveries under the contracts with SBB. The majority of the equipment deliveries and related revenue recognition under these contracts are expected through 2020.

4. Equity Method Investments

In November 2013, the Company sold the Company's Harsco Infrastructure Segment into a strategic venture with Clayton, Dubilier & Rice ("CD&R") as part of a transaction that combined the Harsco Infrastructure Segment with Brand Energy & Infrastructure Services, Inc., which CD&R simultaneously acquired (the "Infrastructure Transaction"). As a result of the Infrastructure Transaction, the Company retained an equity interest in Brand Energy & Infrastructure Service, Inc. and Subsidiaries ("Brand" or the "Infrastructure strategic venture") which was accounted for as an equity method investment in accordance with U.S. GAAP. ~~The Company's equity interest in Brand at December 31, 2015 was approximately 29%.~~

As part of the Infrastructure Transaction, the Company was required to make a quarterly payment to the Company's partner in the Infrastructure strategic venture, either (at the Company's election) (i) in cash, with total payments to equal approximately $22 million per year on a pre-tax basis (approximately $15 million per year after-tax), or (ii) in kind, through the transfer of approximately 3% of the Company's ownership interest in the Infrastructure strategic venture on an annual basis (the "unit adjustment liability"). The Company recognized the change in fair value to the unit adjustment liability each period until the Company was no longer required to make these payments or chose not to make these payments. The change in fair value to the unit adjustment liability was a non-cash expense.

In March 2016, the Company elected not to make the quarterly cash payments to the Company's partner in the Infrastructure strategic venture for the remainder of 2016. Instead, the Company transferred approximately 3% of its ownership interest in satisfaction of the Company's 2016 obligation related to the unit adjustment liability. As a result of not making the quarterly cash payments for 2016, the Company's ownership interest in the Infrastructure strategic venture decreased by approximately 3% and the value of the unit adjustment liability was updated to reflect this change. Accordingly, the book value of the Company's equity method investment in Brand decreased by $29.4 million and the unit adjustment liability decreased by

$19.1 million. The resulting net loss of $10.3 million was recognized in Change in fair value to the unit adjustment liability and loss on dilution and sale of equity method investment on the Condensed Consolidated Statement of Operations. This net loss was a non-cash expense.

For the three and nine months ended September 30, 2016 the Company recognized $1.3 million and $4.7 million, respectively, of change in fair value to the unit adjustment liability exclusive of the fair value adjustment resulting from the decision not to make the quarterly payments in 2016, in the Condensed Consolidated Statement of Operations caption Change in fair value to the unit adjustment liability and loss on dilution and sale of equity method investment. ~~This net loss was a non-cash expense.~~

In September 2016, the Company entered into an Omnibus Agreement with CDR Bullseye Holdings, L.P., Bullseye G.P., LLC, Bullseye Partnership, L.P., Bullseye Holdings, L.P. and Brand Energy & Infrastructure Holdings, Inc. (the “Brand Entities”), pursuant to which the Brand Entities repurchased the Company'ssold its remaining, ~~approximate~~approximately 26% interest in Brand.

Accordingly, there has been no activity related to Brand subsequent to the date of sale. In exchange for the Company's interest, (i) the Company received $145 million in cash, net, and (ii) the requirement for the Company to fund certain obligations to Brand through 2018 were satisfied, the present value of which equaled $20.6 million. In addition, the Company received $1.4 million in accrued but unpaid fees, rent and expenses from the ~~Brand Entities.~~Brand. As a result of the sale, the Company’s obligation to make quarterly payments related to the unit adjustment liability under the terms of a limited partnership agreement that governed the operation of the strategic venture terminated. The Company recognized a loss on the sale of its equity interest in Brand in the amount of $43.5 million which

was reflected in the Condensed Consolidated Statement of Operations caption Change in fair value to unit adjustment liability and loss on dilution and sale of equity method investment.

~~For~~The Company’s proportionate share of Brand's net income was recorded one quarter in arrears. Accordingly, Brand’s results of operations for the three and nine months ended June 30, 2016 were utilized by the Company to record its proportional share of income in the three and nine months ended September 30, 2016, the Company recognized $1.3 million and $4.7 million, respectively, of change in fair value to the unit adjustment liability, exclusive of the fair value adjustment resulting from the decision not to make the quarterly payments in 2016 and the loss related to the sale of the Company's interest, in the Condensed Consolidated Statement of Operations caption Change in fair value to the unit adjustment liability and loss on dilution and sale of2016. There was no equity ~~method investment. This compared to $2.1 million and $6.5 million~~income recorded for Brand for the three and nine months ended September 30, ~~2015, respectively. The Condensed Consolidated Balance Sheet as of December 31, 2015 included balances related~~2017 due to the unit adjustment liability of $79.9 million in the current and non-current captions, Unit adjustment liability. A reconciliation of beginning and ending balances related to the unit adjustment liability is included in Note 12, Derivative Instruments, Hedging Activities and Fair Value.

~~The book value~~sale of the ~~Company's equity method investment~~interest in ~~Brand at December 31, 2015 was $250.1 million. The Company's proportionate share of Brand's net income or loss is recorded one quarter in arrears.~~

Brand. Brand's results of operations are summarized as follows:

Three Months Ended Nine Months Ended
June 30 June 30
(In thousands) 2016 2015 2016 2015
Net revenues $ 782,415
$ 736,178
$ 2,333,561
$ 2,217,904
Gross profit 169,456
154,710
499,005
486,656
Net income (loss) attributable to Brand Energy & Infrastructure Services, Inc. and Subsidiaries 12,378
10,817
20,756
(1,384 )

Harsco's equity in income (loss) of Brand 3,205
3,105
5,686
(396 )

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

(In thousands) September 30
2016 December 31
2015
Balances due from Brand $ —
$ 1,557
Balances due to Brand 26
21,407



	Three Months Ended		Nine Months Ended
	June 30		June 30
(In thousands)	2016		2016
Net revenues	$	782,415	$	2,333,561
Gross profit	169,456		499,005
Net income attributable to Brand Energy & Infrastructure Services, Inc. and Subsidiaries	12,378		20,756
Harsco's equity in income of Brand	3,205		5,686

5. Property, Plant and Equipment

Property, plant and equipment consists of the following:

(In thousands) September 30
2016 December 31
2015
Land $ 10,906
$ 10,932
Land improvements 15,172
15,277
Buildings and improvements 189,864
191,356
Machinery and equipment 1,614,597
1,661,914
Construction in progress 23,656
36,990
Gross property, plant and equipment 1,854,195
1,916,469
Less: Accumulated depreciation (1,335,944 ) (1,352,434 )
Property, plant and equipment, net $ 518,251
$ 564,035



(In thousands)	September 30 2017			December 31 2016
Land	$	10,965		$	10,606
Land improvements	15,567			15,032
Buildings and improvements	195,739			185,657
Machinery and equipment	1,606,633			1,525,156
Uncompleted construction	23,490			21,035
Gross property, plant and equipment	1,852,394			1,757,486
Less: Accumulated depreciation	(1,373,253		)	(1,267,231		)
Property, plant and equipment, net	$	479,141		$	490,255

6. Goodwill and Other Intangible Assets

The following table reflects the changes in carrying amounts of goodwill by segment for the nine months ended September 30, ~~2016~~2017:

(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 (8,969 ) —
—
(8,969 )
Balance at September 30, 2016 $ 371,792
$ 6,839
$ 13,026
$ 391,657



(In thousands)	Harsco Metals & Minerals Segment		Harsco Industrial Segment		Harsco Rail Segment		Consolidated Totals
Balance at December 31, 2016	$	362,386	$	6,839	$	13,026	$	382,251
Foreign currency translation	17,665		—		—		17,665
Balance at September 30, 2017	$	380,051	$	6,839	$	13,026	$	399,916

The Company’s ~~2015~~2016 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 ~~15%~~12%. 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 September 30, ~~2016,~~2017, 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 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.

Intangible assets included in the ~~captions, Other current assets and~~caption, Intangible assets, net, on the Condensed Consolidated Balance Sheets consist of the following:


	September 30, 2016				December 31, 2015				September 30, 2017				December 31, 2016
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer related	$	149,719	$	113,482	$	153,287	$	111,227	$	152,423	$	119,870	$	146,840	$	112,610
Non-compete agreements	1,096		1,096		1,092		1,092
Patents	5,783		5,532		5,882		5,495		5,832		5,697		5,729		5,534
Technology related	25,836		25,343		25,559		23,089		26,151		26,151		25,687		25,634
Trade names	8,309		4,455		8,303		4,194		8,316		4,767		8,306		4,529
Other	8,663		5,118		8,701		4,669		8,805		5,702		8,512		5,200
Total	$	199,406	$	155,026	$	202,824	$	149,766	$	201,527	$	162,187	$	195,074	$	153,507

Amortization expense for intangible assets was as follows:


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30				September 30				September 30				September 30
(In thousands)	2016		2015		2016		2015		2017		2016		2017		2016
Amortization expense for intangible assets	$	2,053	$	2,286	$	6,208	$	6,602	$	1,269	$	2,053	$	3,868	$	6,208

The estimated amortization expense for the next five fiscal years based on current intangible assets is as follows:


(In thousands)	2016		2017		2018		2019		2020		2017		2018		2019		2020		2021
Estimated amortization expense (a)	$	8,000	$	5,500	$	5,250	$	4,750	$	4,500	$	5,000	$	4,750	$	4,500	$	4,250	$	4,000

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

7. ~~Debt and Credit Agreements~~

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”).

During September 2016, the Company received approximately $145 million in cash, net, from its sale of its remaining 26% equity interest in the Infrastructure strategic venture. The Company used these proceeds to repay $85.0 million on its Term Loan Facility and $60.0 million on its Revolving Credit Facility. Related to the repayment of the Term Loan Facility, the Company expensed $1.1 million of previously deferred financing costs associated with the Term Loan Facility. The balance of the Company's Term Loan Facility was $158.8 million and $250.0 million at September 30, 2016 and December 31, 2015, respectively. The balance of the Company's Revolving Credit Facility was $40.0 million and $165.0 million at September 30, 2016 and December 31, 2015, respectively.

In November 2016, the Company entered into a new senior secured credit facility (the “New Credit Facility”), consisting of a $400 million revolving credit facility and a $550 million term loan B facility. Upon closing of the New Credit Facility, the Company has amended and extended the existing Revolving Credit Facility, repaid the existing Term Loan Facility and will redeem, satisfy and discharge the 5.75% Senior Notes due 2018 (the “Notes”) in accordance with the indenture governing the Notes. As a result, an estimated charge of approximately $37 million will be recorded during the fourth quarter of 2016 consisting principally of the cost of early extinguishment of the Notes and the write-off of unamortized deferred financing costs associated with the Company’s existing Senior Secured Credit Facilities and the Notes.

8. Employee Benefit Plans


	Three Months Ended												Three Months Ended
	September 30												September 30
Defined Benefit Pension Plans Net Periodic Pension Cost	U.S. Plans						International Plans						U.S. Plans						International Plans
(In thousands)	2016			2015			2016			2015			2017			2016			2017			2016
Service cost	$	945		$	722		$	405		$	428
Interest cost	2,545			3,089			6,542			9,146
Service costs													$	942		$	945		$	426		$	405
Interest costs													2,469			2,545			5,843			6,542
Expected return on plan assets	(3,601		)	(4,203		)	(10,475		)	(12,630		)	(3,552		)	(3,601		)	(10,632		)	(10,475		)
Recognized prior service costs	16			20			44			47			8			16			48			44
Recognized loss	1,373			1,230			2,923			4,244			1,425			1,373			4,130			2,923
Settlement/curtailment losses	223			—			—			—			—			223			—			—
Defined benefit pension plans net periodic pension cost (income)	$	1,501		$	858		$	(561	)	$	1,235		$	1,292		$	1,501		$	(185	)	$	(561	)

Nine Months Ended
September 30
Defined Benefit Pension Plans Net Periodic Pension Cost U.S. Plans International Plans
(In thousands) 2016 2015 2016 2015
Service costs $ 2,837
$ 2,167
$ 1,214
$ 1,320
Interest cost 7,635
9,268
20,649
27,475
Expected return on plan assets (10,803 ) (12,609 ) (33,157 ) (37,914 )
Recognized prior service costs 47
60
133
144
Recognized loss 4,117
3,689
9,283
12,700
Settlement/curtailment losses 223
—
—
—
Defined benefit pension plans net periodic pension cost (income) $ 4,056
$ 2,575
$ (1,878 ) $ 3,725

The Company has changed the method utilized to estimate the 2016 service cost and interest cost components of net periodic pension cost ("NPPC") for defined benefit pension plans. The more precise application of discount rates for measuring both service costs and interest costs employs yield curve spot rates on a year-by-year expected cash flow basis, using the same yield curves that the Company has previously used. This change in method represented a change in accounting estimate and has been accounted for in the period of change. This change in method decreased the Company's NPPC by approximately

~~$2 million and approximately $5 million for the three and nine months ended September 30, 2016, respectively, compared to what NPPC would have been under the prior method.~~



	Nine Months Ended
	September 30
Defined Benefit Pension Plans Net Periodic Pension Cost	U.S. Plans						International Plans
(In thousands)	2017			2016			2017			2016
Service costs	$	2,825		$	2,837		$	1,243		$	1,214
Interest costs	7,408			7,635			17,349			20,649
Expected return on plan assets	(10,656		)	(10,803		)	(31,571		)	(33,157		)
Recognized prior service costs	24			47			139			133
Recognized loss	4,276			4,117			12,260			9,283
Settlement/curtailment losses	—			223			—			—
Defined benefit pension plans net periodic pension cost (income)	$	3,877		$	4,056		$	(580	)	$	(1,878	)


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
Company Contributions	September 30				September 30				September 30				September 30
(In thousands)	2016		2015		2016		2015		2017		2016		2017		2016
Defined benefit pension plans (U.S.)	$	471	$	567	$	1,411	$	1,841	$	4,112	$	471	$	5,054	$	1,411
Defined benefit pension plans (International)	3,170		3,935		16,222		24,166		3,038		3,170		14,338		16,222
Multiemployer pension plans	494		570		1,520		1,876		498		494		1,481		1,520
Defined contribution pension plans	2,291		2,619		7,593		8,884		3,278		2,291		8,306		7,593

The Company's estimate of expected contributions to be paid during the remainder of ~~2016~~2017 for the U.S. and international defined benefit pension plans are $~~0.5~~0.8 million and $~~3.4~~3.2 million, respectively.

9.8. Income Taxes

~~The income~~Income tax expense related to continuing operations for the three and nine months ended September 30, 2017 was $8.3 million and $25.8 million, respectively. Income tax expense related to continuing operations for the three and nine months ended

September 30, 2016 was $5.1 million and $14.9 million, ~~respectively, compared with $7.0 million and $26.9 million for the three and nine months ended September 30, 2015,~~ respectively. Additionally, there was no income tax benefit realized from the loss on the sale of the Company's equity method investment in the Infrastructure strategic venture, as a valuation allowance of $16.1 million was established to offset the deferred tax assets on the resulting capital loss carryforward, because the Company determined that it is not more likely than not that this benefit will be realized in the future.

An income tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, based on technical merits, including resolutions of any related appeals or litigation processes. The ~~unrecognized income~~reserve for uncertain tax ~~benefit~~positions at September 30, ~~2016~~2017 was ~~$6.0~~$4.9 million, including interest and penalties. Within the next twelve months, it is reasonably possible that no$0.3 million of unrecognized income tax benefits will be recognized upon settlement of tax examinations and the expiration of various statutes of limitations.

~~10.~~9. Commitments and Contingencies

Environmental

The Company is involved in a number of environmental remediation investigations and cleanups and, along with other companies, has been identified as a “potentially responsible party” for certain waste disposal sites. While each of these matters is subject to various uncertainties, it is probable that the Company will agree to make payments toward funding certain of these activities, and it is possible that some of these matters will be decided unfavorably to the Company. The Company has evaluated its potential liability, and its financial exposure is dependent upon such factors as the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the allocation of cost among potentially responsible parties, the years of remedial activity required and the remediation methods selected. The Company did not have any material accruals or record any material expenses related to environmental matters during the periods presented.

The Company evaluates its liability for future environmental remediation costs on a quarterly basis. Although actual costs to be incurred at identified sites in future periods may vary from the estimates (given inherent uncertainties in evaluating environmental exposures), the Company does not expect that any costs that are reasonably possible to be incurred by the Company in connection with environmental matters in excess of the amounts accrued would have a material adverse effect on the Company's financial condition, results of operations or cash flows.

Brazilian Tax Disputes

The Company is involved in a number of tax disputes with federal, state and municipal tax authorities in Brazil. These disputes are at various stages of the legal process, including the administrative review phase and the collection action phase, and include assessments of fixed amounts of principal and penalties, plus interest charges that increase at statutorily determined amounts per month and are assessed on the aggregate amount of the principal and penalties. In addition, the losing party at the collection action or court of appeals phase could be subject to a charge to cover statutorily mandated legal fees, which are generally calculated as a percentage of the total assessed amounts due, inclusive of penalty and interest. A large number of the claims relate to value-added ("ICMS"), services and social security ~~("INSS")~~ tax disputes. The largest proportion of the assessed amounts relate to ICMS claims filed by the State Revenue Authorities from the State of São Paulo, Brazil (the "SPRA"), encompassing the period from January 2002 to May 2005.

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 September 30, ~~2016~~2017, the principal amount of the tax assessment from the SPRA with regard to this case is approximately $2 million, with penalty, interest and fees assessed to date increasing such amount by an additional ~~$23~~$25 million. Any change in the aggregate amount since the Company’s last Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016 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~~has not yet reached the ~~administrative~~judicial phase. The aggregate amount assessed by the tax authorities in August 2005 was $~~7.7~~7.9 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 $~~1.8~~1.9 million, with penalty and interest assessed through that date increasing such amount by an additional $~~5.9~~6.0 million. All such amounts include the effect of foreign currency translation.

The Company continues to believe that 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.~~law.

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 September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the Company has established reserves of ~~$8.5~~$9.2 million and ~~$6.9~~$7.9 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.

Customer Disputes

The Company ~~through its Harsco Metals & Minerals Segment,~~ may, in the normal course of business, become involved in commercial disputes with subcontractors or customers.

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. ~~A court-led investigation into~~In August 2017, the ~~cause~~Company reached a mutually agreed upon settlement with the customer whereby the Company (1) will make a net payment of $5.4 million to the customer; (2) received ownership of the ~~accident~~underlying equipment; and (3) was ~~performed, but~~released from all claims and potential claims. Based on the ~~results~~evaluation of the terms of the settlement, this settlement did not ~~ascribe liability to any particular party. Depending~~have a material impact on the ~~cause of the fire and the extent of insurance coverage, the Company's~~Company’s results of ~~operations and cash flows may be impacted in future periods.~~operations.

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 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

On April 8, 2016, Lima Refining Company filed a lawsuit against the Company in the District Court of Harris County, Texas related to a January 2015 explosion at an oil refinery operated by Lima Refining Company. The action seeks approximately ~~$95~~$106 million in property damages and ~~$250~~approximately $289 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 is vigorously contesting 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 will 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.

U.K. Health and Safety Executive Matter

In the third quarter of 2016, a subsidiary in the Company’s Harsco Metals & Minerals Segment, along with one of its customers, was named as a co-defendant in an action brought by the U.K. Health and Safety Executive in the U.K. Crown Court Sitting at ~~Kingston-Upon Hull.~~ Kingston-Upon-Hull. In September 2017, the U.K. Health and Safety Executive withdrew its case against the Company, ending the Company’s involvement in these proceedings.

Compliance Matter

The ~~action relates to a fatal accident~~Company recently began an internal investigation, with the assistance of outside counsel, after it became aware of allegations involving ~~one~~an employee and an agent of the ~~customer’s employees~~Harsco Rail subsidiary in ~~2010. The action seeks~~China (“Harsco Rail China”). During this investigation, which remains ongoing, the Company learned about certain payments that potentially violate the Foreign Corrupt Practices Act. Revenues attributed to ~~levy a fine against~~Harsco Rail China were approximately 2% of the ~~Company.~~ Company’s consolidated revenues for each of the past two years and through the third quarter of this year.

The Company ~~believes~~has voluntarily self-reported its initial findings to the Securities and Exchange Commission (the “SEC”) and the U.S. Department of Justice (the “DOJ”) and intends to fully cooperate with these agencies in their review. Based on information known to date, we believe the amounts of the potential improper payments are not material to our consolidated financial statements. Any determination that ~~it is~~our operations or activities were not ~~responsible for~~in compliance with existing laws or regulations could result in the ~~accident~~imposition of fines and ~~is defending the action vigorously. A loss~~penalties. No provision ~~related~~with respect to this ~~action~~matter has ~~not~~ been ~~recorded~~made in the Company’s ~~condensed~~ consolidated financial ~~statements, because~~statements. At this time, the Company ~~believes that a loss is not probable. However, if~~cannot predict the outcome or impact of its investigation or the ~~proceedings is unfavorable,~~reviews by the ~~Company does~~SEC and the DOJ. However, based on information available at this time, we do not believe ~~that it~~any potential liability would ~~have a~~be material ~~adverse affect on~~to our consolidated financial position, although an amount recorded, if any, could be material to the ~~Company's financial condition, result~~results of operations ~~or cash flows.~~for the period in which it may be recorded.

Other

The Company is named as one of many defendants (approximately 90 or more in most cases) in legal actions in the 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 September 30, ~~2016,~~2017, there were ~~17,076~~17,150 pending asbestos personal injury actions filed against the Company. Of those actions, ~~16,762~~16,752 were filed in the New York Supreme Court (New York County), 111 were filed in other New York State Supreme Court Counties and ~~203~~287 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 September 30, ~~2016, 16,743~~2017, 16,721 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 1931 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~~are being paid by the ~~Company’s~~Company's insurers.

In view of the persistence of asbestos litigation in the 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 September 30, ~~2016,~~2017, the Company has obtained dismissal in ~~27,892~~27,931 cases by stipulation or summary judgment prior to trial.

It is not possible to predict the ultimate outcome of asbestos-related actions in the 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 position, 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, ~~2015~~2016 for additional information on Accrued insurance and loss reserves.

In addition, from time to time, the Company is subject to legal proceedings, claims, and litigation, including commercial and contract disputes and employment matters, arising in the ordinary course of business. The Company defends itself vigorously against any such claims. Although the outcome of these matters is currently not determinable, management expects that any losses that are probable or reasonably possible of being incurred as a result of these matters, which are in excess of amounts already accrued in the Company’s condensed consolidated balance sheets, would not be material to the financial statements as a whole.

~~11.~~10. Reconciliation of Basic and Diluted Shares


	Three Months Ended						Nine Months Ended					Three Months Ended					Nine Months Ended
	September 30						September 30					September 30					September 30
(In thousands, except per share amounts)	2016			2015			2016			2015		2017		2016			2017		2016
Income (loss) from continuing operations attributable to Harsco Corporation common stockholders	$	(32,612	)	$	(8,254	)	$	(71,156	)	$	13,719	$	13,669	$	(32,612	)	$	41,571	$	(71,156	)

Weighted-average shares outstanding - basic	80,379			80,238			80,318			80,233		80,637		80,379			80,519		80,318
Dilutive effect of stock-based compensation	—			—			—			130		2,499		—			2,234		—
Weighted-average shares outstanding - diluted	80,379			80,238			80,318			80,363		83,136		80,379			82,753		80,318

Earnings (loss) from continuing operations per common share, attributable to Harsco Corporation common stockholders:
Basic	$	(0.41	)	$	(0.10	)	$	(0.89	)	$	0.17	$	0.17	$	(0.41	)	$	0.52	$	(0.89	)

Diluted	$	(0.41	)	$	(0.10	)	$	(0.89	)	$	0.17	$	0.16	$	(0.41	)	$	0.50	$	(0.89	)

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		Nine Months Ended		Three Months Ended		Nine Months Ended
	September 30		September 30		September 30		September 30
(In thousands)	2016	2015	2016	2015	2017	2016	2017	2016
Restricted stock units	922	441	770	—	—	922	—	770
Stock options	90	90	90	101	55	90	55	90
Stock appreciation rights	1,567	1,265	1,432	1,156	526	1,567	918	1,432
Performance share units	801	322	649	265	—	801	212	649

~~12.~~11. Derivative Instruments, Hedging Activities and Fair Value

Derivative Instruments and Hedging Activities

The Company uses derivative instruments, including foreign currency exchange forward contracts, interest rate swaps and cross-currency interest rate swaps ("CCIRs"), to manage certain foreign currency and interest rate exposures. Derivative instruments are viewed as risk management tools by the Company and are not used for trading or speculative purposes.

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 asin Accumulated other comprehensive loss, 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~~ ~~September 30, 2016, deferred gains and losses related to asset purchases are reclassified to earnings over~~ 10 to ~~15 years~~ ~~from the balance sheet 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 value of outstanding derivative contracts recorded as assets and liabilities on the Condensed Consolidated Balance Sheets ~~were~~was as follows:



	Asset Derivatives			Liability Derivatives
(In thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
September 30, 2017
Derivatives designated as hedging instruments:
Foreign currency exchange forward contracts	Other current assets	$	2,673	Other current liabilities	$	92
Cross-currency interest rate swaps	Other current assets	110			—
Interest rate swaps		—		Other current liabilities	197
Interest rate swaps	Other assets	92		Other liabilities	2,773
Total derivatives designated as hedging instruments		$	2,875		$	3,062
Derivatives not designated as hedging instruments:
Foreign currency exchange forward contracts	Other current assets	$	572	Other current liabilities	$	22,698


		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
September 30, 2016
December 31, 2016
Derivatives designated as hedging instruments:
Foreign currency exchange forward contracts		Other current assets	$	60	Other current liabilities	$	97		Other current assets	$	473	Other current liabilities	$	166
Cross-currency interest rate swaps		Other assets	595			—			Other current assets	514			—
Total derivatives designated as hedging instruments			$	655		$	97			$	987		$	166

Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:							Derivatives not designated as hedging instruments:
Foreign currency exchange forward contracts		Other current assets	$	2,448	Other current liabilities	$	4,691		Other current assets	$	4,459	Other current liabilities	$	3,372

Asset Derivatives Liability Derivatives
(In thousands) Balance Sheet Location Fair Value Balance Sheet Location Fair Value
December 31, 2015
Derivatives designated as hedging instruments:
Foreign currency exchange forward contracts Other current assets $ 1,640

$ —
Cross-currency interest rate swaps Other assets 15,417

—
Total derivatives designated as hedging instruments $ 17,057
$ —

Derivatives not designated as hedging instruments:
Foreign currency exchange forward contracts Other current assets $ 4,188
Other current liabilities $ 1,738

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 interest rate swaps, CCIRs and certain foreign currency exchange forward 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 September 30, ~~2016~~2017 or December 31, ~~2015~~2016.

The effect of derivative instruments on the Condensed Consolidated Statements of Operations and the Condensed Consolidated Statements of Comprehensive ~~Loss~~Income (Loss), was as follows:

Derivatives Designated as Hedging Instruments ~~(a)~~


(In thousands)	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					Amount Recognized in Other Comprehensive Income (“OCI”) on Derivative - Effective Portion			Location of Amount Reclassified from Accumulated OCI into Income - Effective Portion	Amount Reclassified from Accumulated OCI into Income - Effective Portion		Location of Amount Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing	Amount Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing
Three Months Ended September 30, 2017:											Three Months Ended September 30, 2017:
Foreign currency exchange forward contracts												$	2,333			$	—		$	—
Interest rate swaps												(335		)		—			—
Cross-currency interest rate swaps												(72		)	Interest expense	252		Cost of services and products sold	(103		)	(a)
												$	1,926			$	252		$	(103	)
Three Months Ended September 30, 2016:
Foreign currency exchange forward contracts	$	2,378		$	—		$	—				$	2,378			$	—		$	—
Cross-currency interest rate swaps	265			—		Cost of services and products sold	(232		)	(b)		(210		)	Interest expense	254		Cost of services and products sold	(232		)	(a)
	$	2,643		$	—		$	(232	)			$	2,168			$	254		$	(232	)

Three Months Ended September 30, 2015:
Foreign currency exchange forward contracts	$	2,532	Cost of services and products sold	$	78		$	—
Cross-currency interest rate swaps	2,446			—		Cost of services and products sold	13,087			(b)
	$	4,978		$	78		$	13,087



(In thousands)	Amount Recognized in OCI on Derivative - Effective Portion			Location Amount Reclassified from Accumulated OCI into Income - Effective Portion	Amount Reclassified from Accumulated OCI into Income - Effective Portion			Location of Amount Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing	Amount Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing
Nine Months Ended September 30, 2017:
Foreign currency forward exchange contracts	$	3,096		Product revenues / Cost of services and products sold	$	(185	)		$	—
Interest rate swaps	(2,878		)		—				—
Cross currency interest rate swaps	(195		)	Interest expense	745			Cost of services and products sold	(420		)	(a)
	$	23			$	560			$	(420	)
Nine Months Ended September 30, 2016:
Foreign currency forward exchange contracts	$	1,748		Product revenues / Cost of services and products sold	$	(409	)		$	—
Cross currency interest rate swaps	(2,361		)	Interest expense	478			Cost of services and products sold	3,987			(a)
	$	(613	)		$	69			$	3,987

(In thousands)
Amount of Gain (Loss)Recognized in 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 Gain Recognized in Income on Derivative - Ineffective Portion
and Amount
Excluded from
Effectiveness Testing

Amount of Gain Recognized in Income on Derivative - Ineffective Portion and Amount
Excluded from
Effectiveness Testing

Nine Months Ended September 30, 2016:
Foreign currency forward exchange contracts $ 1,748
Product revenues / Cost of services and products sold $ 409
$ —

Cross currency interest rate swaps (1,819 ) —
Cost of services and products sold 3,987
(b)
$ (71 ) $ 409
$ 3,987

Nine Months Ended September 30, 2015:
Foreign currency forward exchange contracts $ 4,132
Cost of services and products sold $ 80

$ —

Cross currency interest rate swaps 8,531
—
Cost of services and products sold 24,739
(b)
$ 12,663
$ 80
$ 24,739

(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


	Location of Gain (Loss) Recognized in Income on Derivative		Amount of Gain Recognized in Income on Derivative for the Three Months Ended September 30 (c)						Location of Gain (Loss) Recognized in Income on Derivative		Amount of Gain (Loss) Recognized in Income on Derivative for the Three Months Ended September 30 (b)
(In thousands)		2016				2015			Location of Gain (Loss) Recognized in Income on Derivative	2017				2016
Foreign currency exchange forward contracts	Location of Gain (Loss) Recognized in Income on Derivative	Cost of services and products sold		$	552		$	2,724		Cost of services and products sold		$	(7,025	)	$	552


	Location of Gain (Loss) Recognized in Income on Derivative		Amount of Gain (Loss) Recognized in Income on Derivative for the Nine Months Ended September 30 (c)							Location of Gain (Loss) Recognized in Income on Derivative		Amount of Gain (Loss) Recognized in Income on Derivative for the Nine Months Ended September 30 (b)
(In thousands)		2016				2015				Location of Gain (Loss) Recognized in Income on Derivative	2017				2016
Foreign currency forward exchange contracts	Location of Gain (Loss) Recognized in Income on Derivative	Cost of services and products sold		$	2,292		$	(4,510	)		Cost of services and products sold		$	(18,764	)	$	2,292

~~(c)~~(b) 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 Contracts

The Company conducts business in multiple currencies and, accordingly, is subject to the inherent risks associated with foreign exchange rate movements. The financial position and results of operations of substantially all of the Company’s foreign subsidiaries are measured using the local currency as the functional currency. Foreign currency-denominated assets and liabilities are translated into U.S. dollars at the exchange rates existing at the respective balance sheet dates, and income and expense items are translated at the average exchange rates during the respective periods. The aggregate effects of translating the balance sheets of these subsidiaries are deferred and recorded in Accumulated other comprehensive loss, which is a separate component of equity.

The Company uses derivative instruments to hedge cash flows related to foreign currency fluctuations. Foreign currency exchange forward 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~~The 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 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 contracts in U.S. 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 Contracts Outstanding at September 30, ~~2016~~2017:


(In thousands)	Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)			Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)
British pounds sterling	Sell	$	45,864	October 2016	$	513		Sell	$	70,207	October 2017	$	(807	)
British pounds sterling	Buy	1,088		October 2016 through December 2016	(9		)	Buy	10,638		October 2017 through January 2018	17
Euros	Sell	310,174		October 2016 through December 2016	(3,265		)	Sell	317,163		October 2017 through December 2017	(19,028		)
Euros	Buy	155,478		October 2016 through January 2018	604			Buy	196,214		October 2017 through May 2018	792
Other currencies	Sell	45,658		October 2016 through September 2017	(135		)	Sell	50,692		October 2017 through April 2018	(758		)
Other currencies	Buy	8,957		October 2016 through December 2016	11			Buy	30,578		October 2017 through January 2018	239
Total		$	567,219		$	(2,281	)		$	675,492		$	(19,545	)

Contracted Amounts of Foreign Currency Exchange Forward Contracts Outstanding at December 31, ~~2015~~2016:


(In thousands)	Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)			Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)
British pounds sterling	Sell	$	43,511	January 2016	$	822		Sell	$	55,120	January 2017	$	(228	)
British pounds sterling	Buy	2,062		January 2016	(54		)	Buy	827		March 2017	(14		)
Euros	Sell	336,397		January 2016 through December 2016	547			Sell	326,797		January 2017 through December 2017	628
Euros	Buy	167,037		January 2016 through August 2016	2,497			Buy	171,578		January 2017 through January 2018	(468		)
Other currencies	Sell	35,426		January 2016 through March 2016	316			Sell	43,455		January 2017 through September 2017	1,477
Other currencies	Buy	7,981		January 2016	(38		)	Buy	3,106		March 2017	(1		)
Total		$	592,414		$	4,090			$	600,883		$	1,394

In addition to foreign currency exchange forward contracts, the Company designates certain loans as hedges of net investments in international subsidiaries. The Company recorded pre-tax net ~~losses~~gains of ~~$9.0~~$7.6 million and ~~$29.3 million during the~~ ~~three and nine months endedSeptember 30, 2016, respectively, and a pre-tax net loss of $2.2 million and a pre-tax net gain of $2.4~~$17.1 million during the three and nine months ended September 30, ~~2015,~~2017, respectively ~~into~~ and pre-tax net losses of $9.0 million and $29.3 million during the three and nine months ended September 30, 2016, respectively, in Accumulated other comprehensive ~~loss~~.loss.

Interest Rate Swaps

The Company uses interest rate swaps in conjunction with certain debt issuances in order to secure a fixed interest rate. The interest rate swaps are recorded on the Condensed Consolidated Balance Sheets at fair value, with changes in value attributed to the effect of the swaps’ interest spread and changes in the credit worthiness of the counter-parties recorded in Accumulated other comprehensive loss.

In January 2017, the Company entered into a series of interest rate swaps that cover the period from 2018 through 2021, and had the effect of converting $300.0 million of the Term Loan Facility from floating-rate to fixed-rate beginning in 2018. The fixed rates provided by the swaps replace the adjusted LIBOR rate in the interest calculation, ranging from 1.65% for 2018 to 2.71% for 2021.

The following table indicates the notional amounts of the Company's interest rate swaps at September 30, 2017:



	Annual Notional Amount		Interest Rates
(In millions)	Annual Notional Amount		Receive	Pay
Maturing 2018 through 2021	$	300.0	Floating U.S. dollar rate	Fixed U.S. dollar rate

Cross-Currency Interest Rate Swaps (CCIRs)

The Company uses CCIRs in conjunction with certain debt issuances in order to secure a fixed local currency interest rate. Under these CCIRs, the Company receives interest based on a fixed or floating U.S. dollar rate and pays interest on a fixed local currency rate based on the contractual amounts in dollars and the local currency, respectively. At maturity, there is also the payment of principal amounts between currencies. The CCIRs are recorded on the Condensed Consolidated Balance Sheets at fair value, with changes in value attributed to the effect of the swaps’ interest spread and changes in the credit worthiness of the counter-parties recorded in ~~the caption,~~ Accumulated other comprehensive loss. Changes in value attributed to the effect of foreign currency fluctuations are recorded inon the Condensed Consolidated Statements of Operations and offset currency fluctuation effects on the debt principal.

The following table indicates the contractual amounts of the Company's CCIRs at September 30, ~~2016~~2017:

Interest Rates

(In millions)

Contractual Amount

Receive

Pay

Contractual Amount

Receive

Pay

Maturing 2017

3.4

Floating U.S. dollar rate

Fixed rupee rate

0.7

Floating U.S. dollar rate

Fixed rupee rate

During March 2016, the Company effected the early termination of the British pound sterling CCIR with an original maturity date of 2020. The Company received $16.6 million in cash related to this termination. There was no gain or loss recorded on the termination, as any change in value attributable to the effect of foreign currency translation was previously recognized in the Condensed Consolidated Statements of Operations.

Fair Value of Derivative Assets and Liabilities and Other Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The Company utilizes market data or assumptions that the Company believes market participants would use in valuing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique.

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:

Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3—Inputs that are both significant to the fair value measurement and unobservable.

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:


Level 2 Fair Value Measurements (In thousands)	September 30 2016		December 31 2015		September 30 2017		December 31 2016
Assets
Foreign currency exchange forward contracts	$	2,508	$	5,828	$	3,245	$	4,932
Interest rate swaps					92		—
Cross-currency interest rate swaps	595		15,417		110		514
Liabilities
Foreign currency exchange forward contracts	4,788		1,738		22,790		3,538
Interest rate swaps					2,970		—

The following table reconciles the beginning and ending balances for liabilities measured on a recurring basis using unobservable inputs (Level 3):


Level 3 Liabilities—Unit Adjustment Liability (d) for the Nine Months Ended June 30 (In thousands)	Nine Months Ended
	September 30
	2016			2015
Level 3 Liabilities—Unit Adjustment Liability (c) for the Nine Months Ended September 30 (In thousands)							Nine Months Ended
							September 30
							2016
Balance at beginning of period	$	79,934		$	93,762		$	79,934
Reduction in the fair value related to election not to make 2016 payments	(19,145		)	—			(19,145		)
Sale of equity interest in Brand	(65,461		)	—			(65,461		)
Payments	—			(16,740		)
Change in fair value to the unit adjustment liability	4,672			6,492			4,672
Balance at end of period	$	—		$	83,514		$	—

~~(d)~~(c)

During the quarter ended March 31, 2016, the Company decided that it would not make the four quarterly payments to CD&R for 2016. This resulted in the Company revaluing the Unit Adjustment Liability. ~~In September 2016, the~~The Company sold its ~~equity interest~~investment in ~~Brand.~~Brand in September 2016 and the unit adjustment liability ceased at that time. See Note 4, Equity Method ~~Investments,~~Investment, for additional information related to the unit adjustment liability.

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. Foreign currency exchange forward contracts, interest rate swaps and 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 September 30, ~~2016~~2017 and December 31, ~~2015~~2016, the total fair value of long-term debt (excluding deferred financing costs), including current maturities, was ~~$682.1~~$642.2 million and $~~834.6~~682.9 million, respectively, compared with a carrying value of $~~678.1~~634.8 million and $~~880.8~~673.4 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 (Level 2).

~~13.~~12. Review of Operations by Segment


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30						September 30						September 30						September 30
(In thousands)	2016			2015			2016			2015			2017			2016			2017			2016
Revenues From Continuing Operations
Harsco Metals & Minerals	$	247,691		$	277,367		$	730,923		$	862,901		$	255,163		$	247,691		$	761,503		$	730,923
Harsco Industrial	63,422			91,199			191,561			281,883			78,318			63,422			217,766			191,561
Harsco Rail	56,674			59,768			168,517			190,876			51,134			56,674			172,716			168,517
Total revenues from continuing operations	$	367,787		$	428,334		$	1,091,001		$	1,335,660

Corporate													38			—			107			—
Total Revenues From Continuing Operations													$	384,653		$	367,787		$	1,152,092		$	1,091,001
Operating Income (Loss) From Continuing Operations
Harsco Metals & Minerals	$	24,066		$	(3,331	)	$	61,934		$	25,851		$	24,327		$	24,066		$	82,933		$	61,934
Harsco Industrial	6,312			13,934			20,083			45,380			12,864			6,312			24,819			20,083
Harsco Rail	4,599			7,786			(22,443		)	40,819			4,161			4,599			18,108			(22,443		)
Corporate	(6,401		)	(10,661		)	(20,253		)	(29,712		)	(7,402		)	(6,401		)	(21,528		)	(20,253		)
Total operating income from continuing operations	$	28,576		$	7,728		$	39,321		$	82,338

Total Operating Income From Continuing Operations													$	33,950		$	28,576		$	104,332		$	39,321
Depreciation and Amortization
Harsco Metals & Minerals	$	30,255		$	34,636		$	91,942		$	104,368		$	28,636		$	30,255		$	84,444		$	91,942
Harsco Industrial	1,827			1,855			5,395			4,507			1,826			1,827			5,509			5,395
Harsco Rail	1,441			1,476			4,236			4,670			1,094			1,441			3,156			4,236
Corporate	3,102			1,799			6,714			5,801			1,449			3,102			4,399			6,714
Total Depreciation and Amortization	$	36,625		$	39,766		$	108,287		$	119,346		$	33,005		$	36,625		$	97,508		$	108,287

Capital Expenditures
Harsco Metals & Minerals	$	15,272		$	23,205		$	43,997		$	72,748		$	20,994		$	15,272		$	58,065		$	43,997
Harsco Industrial	1,817			3,662			4,113			12,467			1,678			1,817			3,226			4,113
Harsco Rail	497			374			1,636			1,599			462			497			1,765			1,636
Corporate	184			1,096			200			4,769			297			184			1,075			200
Total Capital Expenditures	$	17,770		$	28,337		$	49,946		$	91,583		$	23,431		$	17,770		$	64,131		$	49,946

Reconciliation of Segment Operating Income to Income (Loss) From Continuing Operations Before Income Taxes and Equity Income ~~(Loss)~~


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30						September 30						September 30						September 30
(In thousands)	2016			2015			2016			2015			2017			2016			2017			2016
Segment operating income	$	34,977		$	18,389		$	59,574		$	112,050		$	41,352		$	34,977		$	125,860		$	59,574
General Corporate expense	(6,401		)	(10,661		)	(20,253		)	(29,712		)	(7,402		)	(6,401		)	(21,528		)	(20,253		)
Operating income from continuing operations	28,576			7,728			39,321			82,338			33,950			28,576			104,332			39,321
Interest income	673			264			1,760			951			610			673			1,615			1,760
Interest expense	(13,756		)	(11,110		)	(39,924		)	(34,812		)	(12,123		)	(13,756		)	(36,181		)	(39,924		)
Change in fair value to the unit adjustment liability and loss on dilution and sale of equity method investment	(44,788		)	(2,083		)	(58,494		)	(6,492		)	—			(44,788		)	—			(58,494		)
Income (loss) from continuing operations before income taxes and equity income (loss)	$	(29,295	)	$	(5,201	)	$	(57,337	)	$	41,985
Income (loss) from continuing operations before income taxes and equity income													$	22,437		$	(29,295	)	$	69,766		$	(57,337	)

~~14.~~13. Other (Income) Expenses, Net

The major components of this Condensed Consolidated Statements of Operations caption are as follows:


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30						September 30						September 30						September 30
(In thousands)	2016			2015			2016			2015			2017			2016			2017			2016
Employee termination benefit costs	$	1,790		$	3,454		$	8,756		$	5,962		$	2,536		$	1,790		$	4,947		$	8,756
Harsco Metals & Minerals Segment separation costs	1			—			3,298			—			—			1			—			3,298
Net gains (a)	(608		)	(1,747		)	(1,365		)	(8,479		)	(4,821		)	(608		)	(4,815		)	(1,365		)
Foreign currency gains related to Harsco Rail Segment advances on contracts and other customer advances	—			—			—			(10,940		)
Bahrain salt cake disposal	—			7,000			—			7,000
Subcontractor settlement	—			4,220			—			4,220
Other costs to exit activities													327			—			495			—
Impaired asset write-downs													539			—			820			—
Other	558			4,465			1,422			6,066			182			558			282			1,422
Other expenses	$	1,741		$	17,392		$	12,111		$	3,829
Other (income) expenses													$	(1,237	)	$	1,741		$	1,729		$	12,111


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

~~15.~~

14. Components of Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss is included on the Condensed Consolidated Statements of Equity. The components of Accumulated other comprehensive loss, net of the effect of income taxes, and activity for the nine months ended September 30, ~~2015~~2016 and ~~2016~~2017 was as follows:


	Components of Accumulated Other Comprehensive Income (Loss) - Net of Tax																		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			Cumulative Foreign Exchange Translation Adjustments				Effective Portion of Derivatives Designated as Hedging Instruments				Cumulative Unrecognized Actuarial Losses on Pension Obligations				Unrealized Gain (Loss) on Marketable Securities			Total
Balance at December 31, 2014	$	(39,938	)		$	(9,025	)		$	(483,278	)		$	(15	)	$	(532,256	)
Balance at December 31, 2015																			$	(125,561	)		$	(400	)		$	(389,696	)		$	(31	)	$	(515,688	)
Other comprehensive income (loss) before reclassifications	(61,537		)	(a)	10,905			(b)	12,012			(a)	(12		)	(38,632		)	(23,744		)	(a)	(2,199		)	(b)	32,067			(a)	11			6,135
Realized (gains) losses reclassified from accumulated other comprehensive loss, net of tax	—				(52		)		15,188				—			15,136
Amounts reclassified from accumulated other comprehensive loss, net of tax																			—				26				12,168				—			12,194
Realized (gains) losses reclassified from accumulated other comprehensive loss in connection with loss on dilution of equity method investment (See Note 4, Equity Method Investments)																			28,641				1,636				(1,534		)		—			28,743
Other comprehensive income (loss) from equity method investee	(13,134		)		(808		)		596				—			(13,346		)	1,943				(405		)		306				—			1,844
Total other comprehensive income (loss)	(74,671		)		10,045				27,796				(12		)	(36,842		)	6,840				(942		)		43,007				11			48,916
Less: Other comprehensive loss attributable to noncontrolling interests	2,187				8				—				—			2,195
Other comprehensive income (loss) attributable to noncontrolling interests																			420				(7		)		—				—			413
Other comprehensive income (loss) attributable to Harsco Corporation	(72,484		)		10,053				27,796				(12		)	(34,647		)	7,260				(949		)		43,007				11			49,329
Balance at September 30, 2015	$	(112,422	)		$	1,028			$	(455,482	)		$	(27	)	$	(566,903	)
Balance at September 30, 2016																			$	(118,301	)		$	(1,349	)		$	(346,689	)		$	(20	)	$	(466,359	)

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, 2015 $ (125,561 ) $ (400 ) $ (389,696 ) $ (31 ) $ (515,688 )
Other comprehensive income (loss) before reclassifications (23,744 ) (a) (1,915 ) (b) 32,067
(a) 11
6,419
Realized (gains) losses reclassified from accumulated other comprehensive loss, net of tax —
(258 ) 12,168
—
11,910
Realized (gains) losses reclassified from accumulated other comprehensive loss in connection with loss on dilution of equity method investment (See Note 4, Equity Method Investments) 28,641
1,636
(1,534 ) —
28,743
Other comprehensive income (loss) from equity method investee 1,943
(405 ) 306
—
1,844
Total other comprehensive income (loss) 6,840
(942 ) 43,007
11
48,916
Less: Other comprehensive (income) loss attributable to noncontrolling interests 420
(7 ) —
—
413
Other comprehensive income (loss) attributable to Harsco Corporation 7,260
(949 ) 43,007
11
49,329
Balance at September 30, 2016 $ (118,301 ) $ (1,349 ) $ (346,689 ) $ (20 ) $ (466,359 )



	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 Gain (Loss) on Marketable Securities			Total
Balance at December 31, 2016	$	(144,534	)		$	(1,089	)		$	(461,094	)		$	(5	)	$	(606,722	)
Other comprehensive income (loss) before reclassifications	42,391			(a)	1,133			(b)	(31,600		)	(a)	11			11,935
Amounts reclassified from accumulated other comprehensive loss, net of tax	—				338				15,133				—			15,471
Total other comprehensive income (loss)	42,391				1,471				(16,467		)		11			27,406
Other comprehensive income attributable to noncontrolling interests	(2,235		)		—				—				—			(2,235		)
Other comprehensive income (loss) attributable to Harsco Corporation	40,156				1,471				(16,467		)		11			25,171
Balance at September 30, 2017	$	(104,378	)		$	382			$	(477,561	)		$	6		$	(581,551	)


(a)	Principally foreign currency fluctuation.


(b)	Net change from periodic revaluations.

~~Realized (gains) losses~~

Amounts reclassified from accumulated other comprehensive loss are as follows:


(In thousands)	Three Months Ended						Nine Months Ended						Affected Caption in the Condensed Consolidated Statements of Operations		Three Months Ended						Nine Months Ended						Affected Caption in the Condensed Consolidated Statements of Operations
(In thousands)	September 30 2016			September 30 2015			September 30 2016			September 30 2015					September 30 2017			September 30 2016			September 30 2017			September 30 2016
Amortization of cash flow hedging instruments:
Foreign currency exchange forward contracts	$	—		$	—		$	(408	)	$	—		Product revenues		$	—		$	—		$	(189	)	$	(408	)	Product revenues
Foreign currency exchange forward contracts	—			(78		)	(1		)	(80		)	Cost of services and products sold		—			—			4			(1		)	Cost of services and products sold
Cross-currency interest rate swaps															252			254			745			478			Interest expense
Total before tax	—			(78		)	(409		)	(80		)			252			254			560			69
Tax expense	—			28			151			28					(99		)	(99		)	(222		)	(43		)
Total reclassification of cash flow hedging instruments, net of tax	$	—		$	(50	)	$	(258	)	$	(52	)			$	153		$	155		$	338		$	26

Amortization of defined benefit pension items:
Amortization of defined benefit pension items (c):														Amortization of defined benefit pension items (c):
Actuarial losses (c)	$	2,042		$	4,000		$	6,703		$	11,942		Selling, general and administrative expenses		$	2,643		$	2,042		$	8,001		$	6,703		Selling, general and administrative expenses
Actuarial losses ~~(c)~~	2,253			1,473			6,696			4,447			Cost of services and products sold
Prior-service costs (benefits) (c)	(5		)	31			(9		)	93			Selling, general and administrative expenses
Prior-service costs (c)	66			36			190			111			Cost of services and products sold
Actuarial losses															2,915			2,253			8,535			6,696			Cost of services and products sold
Prior-service benefits															(14		)	(5		)	(36		)	(9		)	Selling, general and administrative expenses
Prior-service costs															70			66			199			190			Cost of services and products sold
Settlement/curtailment losses	223			—			223			—			Selling, general and administrative expenses		—			223			—			223			Selling, general and administrative expenses
Total before tax	4,579			5,540			13,803			16,593					5,614			4,579			16,699			13,803
Tax benefit	(601		)	(466		)	(1,635		)	(1,405		)			(523		)	(601		)	(1,566		)	(1,635		)
Total reclassification of defined benefit pension items, net of tax	$	3,978		$	5,074		$	12,168		$	15,188				$	5,091		$	3,978		$	15,133		$	12,168

(c) These accumulated other comprehensive loss components are included in the computation of net periodic pension costs. See Note 8,7, Employee Benefit Plans, for additional details.

~~Realized (gains) losses~~Amounts reclassified from accumulated other comprehensive loss in connection with loss on dilution ~~and sale~~

of equity method investment are as follows:


(In thousands)	Three Months Ended			Nine Months Ended			Affected Caption in the Condensed Consolidated Statements of Operations	Three Months Ended			Nine Months Ended			Affected Caption in the Condensed Consolidated Statements of Operations
(In thousands)	September 30 2016			September 30 2016				September 30 2016			September 30 2016
Foreign exchange translation adjustments	$	40,525		$	45,405		Change in fair value to the adjustment liability and loss on dilution and sale of equity method investment	$	40,525		$	45,405		Change in fair value to the adjustment liability and loss on dilution of equity method investment
Cash flow hedging instruments	2,425			2,593			Change in fair value to the adjustment liability and loss on dilution and sale of equity method investment	2,425			2,593			Change in fair value to the adjustment liability and loss on dilution of equity method investment
Defined benefit pension obligations	(2,198		)	(2,433		)	Change in fair value to the adjustment liability and loss on dilution and sale of equity method investment	(2,198		)	(2,433		)	Change in fair value to the adjustment liability and loss on dilution of equity method investment
Total before tax	40,752			45,565				40,752			45,565
Tax benefit (d)	(15,046		)	(16,822		)		(15,046		)	(16,822		)
Total amounts reclassified from accumulated other comprehensive loss in connection with loss on dilution and sale of equity method investment	$	25,706		$	28,743
Total amounts reclassified from accumulated other comprehensive loss in connection with loss on dilution of equity method investment								$	25,706		$	28,743

(d) For the three months ended September 30, 2016 the tax benefit was not recognized in the condensed consolidated statement of operations since a valuation allowance was established against the resulting deferred tax assets. See Note 9,11, Income Taxes included in the Company’s Annual Report on Form 10-K for ~~additional~~the year ended December 31, 2016 for more information.

~~16. 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 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'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. 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.

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

(In thousands) Employee Termination Benefit Costs
Balance, December 31, 2015 $ 5,807
Cash expenditures (4,796 )
Foreign currency translation 60
Other adjustments (84 )
Balance, September 30, 2016 $ 987

~~The remaining accrual related to Project Orion is expected to be paid principally in the fourth quarter of 2016.~~

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, ~~2015~~2016 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 ~~2016~~2017 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) implementation of environmental remediation matters; ~~(20)~~(18) risk and uncertainty associated with intangible assets; ~~(21) 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 ~~(22)~~(19) 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, ~~2015~~2016 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.

Executive Overview

~~In September 2016, the Company sold its remaining approximate 26% equity interest in Brand Energy & Infrastructure Services ("Brand" or the "Infrastructure strategic venture"). In exchange for~~Markets served by the Company's ~~interest, (i)~~Harsco Metals & Minerals Segment continued to demonstrate some improvement during the ~~Company received $145 million~~first nine months of 2017 as increased customer steel production and higher commodity volumes and prices positively affected both revenues and operating income. In addition, results were positively affected by the operational benefits and discipline achieved in ~~cash, net, and (ii)~~recent years due to the ~~requirement for the Company to fund certain obligations to Brand through 2018 were satisfied, the present value of which equaled $20.6 million.~~ Harsco Metals & Minerals Segment's Improvement Plan ("Project Orion").

As ~~a result~~previously disclosed, one of the ~~sale, the~~ Company’s obligation to make quarterly payments related to the unit adjustment liability under the terms of a limited partnership agreement that governed the operation of the strategic venture terminated. The Company recognized a loss on the sale of its equity interest in Brand in the amount of $43.5 million which was recognized in the Condensed Consolidated Statement of Operations caption Change in fair value to unit adjustment liability and loss on dilution and sale of equity method investment. See Note 4, Equity Method Investments, in Part I, Item I, Financial Statementscustomers for ~~additional information.~~

~~Although steel markets have demonstrated some improvement,~~ the Harsco Metals & Minerals Segment ~~continues~~in Australia had entered into the process of voluntary administration under Australian law, the purpose of which was to focus on long-term solvency. The result of this administration process was that the customer’s operation was sold to a new owner in August 2017. In September 2017, the administrators informed the Company that most of the pre-administration accounts receivable balance would not be ~~negatively impacted by lower customer steel production, weak commodity prices~~paid, and ~~site exits. These impacts have been offset by~~as a result the ~~savings and benefits achieved as part~~Company recorded a bad debt expense 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$4.6 million to $25 million. The majority of these benefits are expected to be realized in 2016. See Note 16, Restructuring Programs, in Part I, Item 1, Financial Statements for additional information. Also, results for the third quarter ~~and~~of 2017. The Company continues to provide services for the new owner pending formalization of a new contract.

Energy markets also demonstrated some fundamental improvement during the first nine months ~~ended September 30, 2015, included costs incurred~~of 2017. The Harsco Industrial Segment’s air-cooled heat exchangers business has seen steadily improving results. Bookings for this business have increased but may fluctuate with energy prices and underlying market fundamentals. The Harsco Industrial Segment's industrial grating business continues to be impacted by a lack of large-scale projects, delayed capital expenditures, competitive market dynamics and increased material costs. Accordingly, these factors impacted revenue and operating income during the third quarter and first nine months of 2017 in the Harsco ~~Metals & Minerals Segment related to a steel mill customer liquidation, salt cake disposal costs and charges associated with a subcontractor settlement decreased~~Industrial Segment. In addition, operating income during the third quarter and first nine months of 2017 was positively effected by ~~$24.9 million~~a gain on the sale of a property of approximately $4 million.

Results for ~~both periods. The Company remains focused on achieving additional cost reductions and operational improvements to enhance returns for the Harsco Metals & Minerals Segment.~~

~~During the second quarter of 2016,~~ the Harsco Rail Segment ~~recorded~~for the first nine months of 2016, included an estimated ~~forward~~ loss provision of $40.1 million related to the Company's contracts with the federal railway system of Switzerland ("SBB"). The estimated ~~forward~~ loss provision resulted from increased vendor costs, ongoing discussions with ~~SBB,~~the customer, and increased estimates for commissioning, certification and testing costs, as well as expected ~~settlements~~settlement with ~~SBB. See Note 1, Basis~~respect to the customer. Excluding the impact of ~~Presentation - Change in Estimates, in Part I, Item 1, Financial Statements for additional information. Also, results for~~ the ~~nine months ended September 30, 2015, included a $10.9 million foreign exchange gain that was not repeated in 2016. Additionally,~~estimated loss provision, 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 served by the Company. Accordingly, these factors are expected to impact revenue andSegment's operating ~~income during the near-term in the Harsco Industrial 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 expensesresults during the first nine months of ~~2016 related to~~2017 were consistent with the ~~separation, which are included as part of the Corporate caption~~same period in the ~~Company's segment results.~~prior year.


	Three Months Ended									Three Months Ended
Revenues by Segment	September 30									September 30
(In millions)	2016		2015		Change			%		2017		2016		Change			%
Harsco Metals & Minerals	$	247.7	$	277.4	$	(29.7	)	(10.7	)%	$	255.2	$	247.7	$	7.5		3.0	%
Harsco Industrial	63.4		91.2		(27.8		)	(30.5	)	78.3		63.4		14.9			23.5
Harsco Rail	56.7		59.8		(3.1		)	(5.2	)	51.1		56.7		(5.5		)	(9.8	)
Total revenues	$	367.8	$	428.3	$	(60.5	)	(14.1	)%	$	384.7	$	367.8	$	16.9		4.6	%


	Nine Months Ended									Nine Months Ended
Revenues by Segment	September 30									September 30
(In millions)	2016		2015		Change			%		2017			2016		Change		%
Harsco Metals & Minerals	$	730.9	$	862.9	$	(132.0	)	(15.3	)%	$	761.5		$	730.9	$	30.6	4.2	%
Harsco Industrial	191.6		281.9		(90.3		)	(32.0	)	217.8			191.6		26.2		13.7
Harsco Rail	168.5		190.9		(22.4		)	(11.7	)	172.7			168.5		4.2		2.5
Corporate										0.1		—	—		0.1		—
Total revenues	$	1,091.0	$	1,335.7	$	(244.7	)	(18.3	)%	$	1,152.1		$	1,091.0	$	61.1	5.6	%



	Three Months Ended
Revenues by Region	September 30
(In millions)	2017		2016		Change			%
North America	$	178.7	$	166.2	$	12.5		7.5	%
Western Europe	100.0		101.4		(1.4		)	(1.4	)
Latin America (includes Mexico)	47.4		43.3		4.1			9.4
Asia-Pacific	40.8		35.0		5.8			16.5
Middle East and Africa	10.8		13.6		(2.7		)	(20.0	)
Eastern Europe	6.9		8.2		(1.3		)	(16.3	)
Total revenues	$	384.7	$	367.8	$	16.9		4.6	%

Three Months Ended
Revenues by Region September 30
(In millions) 2016 2015 Change %
North America $ 166.2
$ 201.3
$ (35.1 ) (17.4 )%
Western Europe 101.4
123.5
(22.1 ) (17.9 )
Latin America (includes Mexico) 43.3
44.2
(0.9 ) (2.0 )
Asia-Pacific 35.0
37.3
(2.3 ) (6.1 )
Middle East and Africa 13.6
13.6
—
(0.3 )
Eastern Europe 8.2
8.4
(0.2 ) (1.8 )
Total revenues $ 367.8
$ 428.3
$ (60.5 ) (14.1 )%


	Nine Months Ended									Nine Months Ended
Revenues by Region	September 30									September 30
(In millions)	2016		2015		Change			%		2017		2016		Change			%
North America	$	487.9	$	626.7	$	(138.8	)	(22.1	)%	$	536.2	$	487.9	$	48.3		9.9	%
Western Europe	320.3		376.6		(56.3		)	(14.9	)	305.6		320.3		(14.7		)	(4.6	)
Latin America (included Mexico)	123.1		142.7		(19.7		)	(13.8	)	138.3		123.1		15.3			12.4
Asia-Pacific	101.2		114.6		(13.4		)	(11.7	)	120.2		101.2		19.0			18.8
Middle East and Africa	35.0		42.4		(7.4		)	(17.4	)	31.4		35.0		(3.7		)	(10.4	)
Eastern Europe	23.4		32.7		(9.2		)	(28.2	)	20.4		23.4		(3.1		)	(13.1	)
Total revenues	$	1,091.0	$	1,335.7	$	(244.7	)	(18.3	)%	$	1,152.1	$	1,091.0	$	61.1		5.6	%

Revenues for the Company during the third quarter and first nine months ~~of 2016~~2017 were $384.7 million and $1.2 billion, respectively, compared with $367.8 million and $1.1 ~~billion, respectively, compared with $428.3 million and $1.3~~ billion, respectively, in the third quarter and first nine months of ~~2015.~~2016. The change is primarily related to the ~~impact~~effect of ~~price~~higher volumes and ~~volume changes across all segments; exited contracts~~commodity prices in the Harsco Metals & Minerals ~~Segment;~~Segment and the ~~impacts~~Harsco Industrial Segment's air-cooled heat exchangers business; partially offset by the lower volumes for the first nine months of ~~foreign currency translation.~~2017 in the Harsco Industrial Segment's industrial grating business. Foreign currency translation ~~decreased~~increased revenues by ~~$9.2~~$6.1 million ~~and $41.4 million, respectively,~~ for the third quarter of 2017 and decreased revenues by $4.2 million for the first nine months of ~~2016~~2017 compared with the same periods in the prior year.


	Three Months Ended											Three Months Ended
Operating Income (Loss) by Segment	September 30											September 30
(In millions)	2016			2015			Change			%		2017			2016			Change			%
Harsco Metals & Minerals	$	24.1		$	(3.3	)	$	27.4		(822.5	)%	$	24.3		$	24.1		$	0.3		1.1	%
Harsco Industrial	6.3			13.9			(7.6		)	(54.7	)	12.9			6.3			6.6			103.8
Harsco Rail	4.6			7.8			(3.2		)	(40.9	)	4.2			4.6			(0.4		)	(9.5	)
Corporate	(6.4		)	(10.7		)	4.3			40.0		(7.4		)	(6.4		)	(1.0		)	(15.6	)
Total operating income	$	28.6		$	7.7		$	20.8		269.8	%	$	34.0		$	28.6		$	5.4		18.8	%


	Nine Months Ended											Nine Months Ended
Operating Income (Loss) by Segment	September 30											September 30
(In millions)	2016			2015			Change			%		2017			2016			Change			%
Harsco Metals & Minerals	$	61.9		$	25.9		$	36.1		139.6	%	$	82.9		$	61.9		$	21.0		33.9	%
Harsco Industrial	20.1			45.4			(25.3		)	(55.7	)	24.8			20.1			4.7			23.6
Harsco Rail	(22.4		)	40.8			(63.3		)	(155.0	)	18.1			(22.4		)	40.6			180.7
Corporate	(20.3		)	(29.7		)	9.5			31.8		(21.5		)	(20.3		)	(1.3		)	(6.3	)
Total operating income	$	39.3		$	82.3		$	(43.0	)	(52.2	)%	$	104.3		$	39.3		$	65.0		165.3	%


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30				September 30				September 30				September 30
Operating Margin by Segment	2016		2015		2016		2015		2017		2016		2017		2016
Harsco Metals & Minerals	9.7	%	(1.2	)%	8.5	%	3.0	%	9.5	%	9.7	%	10.9	%	8.5	%
Harsco Industrial	10.0		15.3		10.5		16.1		16.4		10.0		11.4		10.5
Harsco Rail	8.1		13.0		(13.3	)	21.4		8.1		8.1		10.5		(13.3	)
Consolidated operating margin	7.8	%	1.8	%	3.6	%	6.2	%	8.8	%	7.8	%	9.1	%	3.6	%

Operating income from continuing operations for the third quarter and first nine months of ~~2016~~2017 was ~~$28.6~~$34.0 million and

~~$39.3~~ $104.3 million, respectively, compared with ~~$7.7~~$28.6 million and ~~$82.3~~$39.3 million, respectively, in the third quarter and first nine months of ~~2015.~~2016. 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			Nine Months Ended
Significant Effects on Revenues							Three Months Ended			Nine Months Ended
(In millions)	September 30, 2016			September 30, 2016			September 30, 2017			September 30, 2017
Revenues — 2015	$	277.4		$	862.9
Revenues — 2016							$	247.7		$	730.9
Net effects of price/volume changes, primarily attributable to volume changes.							8.3			43.1
Net impact of new and lost contracts (including exited underperforming contracts).	(19.0		)	(73.2		)	(6.2		)	(9.8		)
Impact of foreign currency translation.	(7.1		)	(36.0		)	5.4			(2.6		)
Net impacts of price/volume changes, primarily attributable to volume changes.	(3.6		)	(22.8		)
Revenues — 2016	$	247.7		$	730.9
Other.							—			(0.1		)
Revenues — 2017							$	255.2		$	761.5

Factors Positively Affecting Operating ~~Income (Loss):~~

Incremental Project Orion restructuring benefits, related to compensation savings, of approximately $3.9 million and $10.6 million during the third quarter and first nine months of 2016, respectively, associated with the last phase of Project Orion.

~~The effect of exited underperforming contracts and lower maintenance, fuel and pension costs.~~Income:

Increased ~~volumes in the roofing granules and industrial abrasives business, due partly to favorable weather conditions during the first nine months of 2016.~~

Costs incurred by the Harsco Metals & Minerals Segment related to a steel mill customer liquidation, salt cake disposal costs and charges associated with a subcontractor settlement. These items decreased operating income by $24.9 million during both the third quarter and first nine months of 2015 and did not repeat in the third quarter or first nine months of 2016.

~~Factors Negatively Impacting Operating Income (Loss):~~

~~Decreased~~ global steel production. Overall, steel production by customers under services contracts, including the impact of new and exited contracts, ~~decreased~~increased by 7%6% and ~~13%~~7%, respectively, for the third quarter and first nine months of ~~2016, respectively,~~2017 compared with the same periods in the prior year. Excluding the impact of new and exited contracts, steel production by customers under services contracts ~~decreased~~increased by 1%3% and 2%5%, respectively, for the third quarter and first nine months of ~~2016, respectively,~~2017 compared with the same periods in the prior year.

~~Decreased~~Increased income attributable to the impact of ~~lost contracts~~improved nickel, chrome and ~~reduced nickel~~scrap prices. Nickel-related prices increased 2% and ~~demand. Nickel prices decreased 3% and 27%~~7%, respectively during the third quarter and first nine months of ~~2016, respectively,~~2017 compared with the same periods in the prior year.

Severance costs resulting from a ~~probable~~ site exit ~~decreased operating income by~~of $5.1 million during the first nine months of 2016, which did not repeat in the first nine months of 2017.

Factors Negatively Impacting Operating Income:

Moderately higher selling, general and administrative costs due to higher compensation costs and professional fees.

Bad debt expense of $4.6 million related to certain pre-administration accounts receivable balances for one of the Company's customers in Australia for the third quarter and first nine months of ~~2016.~~2017.

Harsco Industrial Segment:


Significant Impacts on Revenues	Three Months Ended			Nine Months Ended
Significant Effects on Revenues							Three Months Ended		Nine Months Ended
(In millions)	September 30, 2016			September 30, 2016			September 30, 2017		September 30, 2017
Revenues — 2015	$	91.2		$	281.9
Net impacts of price/volume changes, primarily attributable to volume changes.	(27.1		)	(87.8		)
Revenues — 2016							$	63.4	$	191.6
Net effects of price/volume changes, primarily attributable to volume changes.							14.4		26.3
Impact of foreign currency translation.	(0.7		)	(2.5		)	0.5		(0.1		)
Revenues — 2016	$	63.4		$	191.6
Revenues — 2017							$	78.3	$	217.8

Factors Positively Affecting Operating Income:

~~Operating~~Higher overall volumes and a favorable sales mix in the air-cooled heat exchanger business, resulting in increased operating income ~~was aided by $2.3 million and $7.8 million of lower selling, general and administrative costs in~~during the third quarter and first nine months of ~~2016, respectively,~~2017 compared with the ~~same~~comparable periods in ~~prior year.~~2016.

~~The effect~~Gain on sale of ~~delivering a portion~~property of ~~the Mexico City International Airport security fencing order in~~approximately $4 million for the third quarter and first nine months of ~~2016.~~2017.

Factors Negatively Impacting Operating Income:

Lower ~~overall~~volumes and an unfavorable sales mix in the industrial grating products business for the first nine months of 2017.

Increased operating expenses including higher commissions due to the increase in volumes in the air-cooled heat ~~exchangers~~exchanger business resulting in decreased operating income during 2016. These lower volumes are primarily attributable to continued energy price declines which impacted capital spending by customers in the oil and natural gas industries served by the Company.

~~Lower volumes~~ and higher ~~material costs in the industrial grating products business.~~compensation costs.

~~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			Nine Months Ended
Significant Effects on Revenues							Three Months Ended			Nine Months Ended
(In millions)	September 30, 2016			September 30, 2016			September 30, 2017			September 30, 2017
Revenues — 2015	$	59.8		$	190.9
Net effects of price/volume changes, primarily attributable to volume changes.	(1.7		)	(19.5		)
Revenues — 2016							$	56.7		$	168.5
Net effect (impacts) of price/volume changes, primarily attributable to volume changes.							(5.5		)	5.8
Impact of foreign currency translation.	(1.4		)	(2.9		)	0.2			(1.5		)
Revenues — 2016	$	56.7		$	168.5
Other.							(0.3		)	(0.1		)
Revenues — 2017							$	51.1		$	172.7

Factors Positively Affecting Operating ~~Income (Loss):~~Income:

~~Higher international equipment sales.~~

~~Operating income (loss) was aided by $0.5 million and $1.1 million of lower selling, general and administrative costs in~~During the ~~third quarter and~~ first nine months ~~of 2016, respectively, compared with the same periods in prior year.~~

~~Factors Negatively Impacting Operating Income (Loss):~~

~~During the second quarter~~ of 2016, the Harsco Rail Segment recorded an estimated ~~forward~~ loss provision of $40.1 million related to the Company's contracts with ~~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~~SBB which did not repeat in the first ~~quarter~~nine months of ~~2016.~~2017.

~~Decreased volumes in North America and an unfavorable mix of equipment~~Higher after-market part sales ~~decreased~~increased operating income ~~(loss)~~ during the third quarter and first nine months of ~~2016~~2017 compared with the same ~~periods~~period in prior year.

~~Lower volumes~~

Factors Negatively Impacting Operating Income:

Increased selling, general and administrative expenses primarily related to higher compensation costs and professional fees for ~~contract services decreased operating income (loss) during~~ the third quarter and first nine months of ~~2016~~2017.

Lower machine sales volume in the third quarter of 2017 compared with the ~~same periods in prior year.~~third quarter of 2016.

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, ~~2015,~~2016, the following significant items, risks, trends and strategies are expected to affect the Company for the remainder of ~~2016~~2017 and beyond:

The Company will focus on providing returns above its cost of capital for its stockholders by ~~balancing its~~continuing to develop an attractive portfolio of businesses and by ~~executing its strategic~~continuing to focus on internal growth and operational ~~practices with reasonable amounts of financial leverage.~~excellence.

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.~~initiatives and expects to maintain a reasonable amount of financial leverage. Management will ~~continue to~~ be selective and disciplined in allocating capital by rigorously analyzing projects and utilizing a return-based capital allocation process.

The Company expects its operational effective income tax rate to approximate ~~39%~~36% to ~~41%~~38% in ~~2016,~~2017, excluding the tax impact ~~on equity income (loss) related to~~of the ~~Infrastructure strategic venture.~~new stock-based compensation accounting standard.

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:

~~Although steel~~Steel markets have demonstrated some pricing improvement since early 2016 and the Company ~~anticipates reduced steel production; weaker~~experienced improvements in demand and certain commodity ~~prices;~~prices during the ~~impact~~third quarter and first nine months of ~~site exits; and customer production curtailments to negatively impact revenue and operating income in~~2017. The Company expects these factors along with the ~~near term in~~effect of new contracts, the ~~Harsco Metals & Minerals Segment. These impacts will be partially offset by savings and~~continued benefits achieved as part of Project Orion and ~~other operational savings as well as new contracts awarded.~~ additional improvement initiatives to positively affect operating income in 2017 in the Harsco Metals & Minerals Segment.

~~The~~In addition to the benefits and discipline that resulted from Project Orion, the Company will continue to focus on ensuring that forecasted ~~profits~~results and other requirements for contracts meet certain established standards and deliver returns above its cost of capital. Project Orion's focus has enabled the Company to address underperforming contracts more rapidly with targeted actions to improve the 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 operational and commercial actions available to address underperforming contracts and the 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.

In January 2017, the Company announced two multi-year contracts for steel mill services in China and Brazil with projected revenues totaling more than $100 million. In March 2017, the Company announced a joint agreement with Hydro Industries for waste recycling solutions. In April 2017, the Company announced a ten year mill services contract in Egypt with projected revenues totaling approximately $60 million. In May 2017, the Company announced a multi-year contract in India to provide metal recovery and slag sales services with projected revenues totaling more than $25 million, and formation of a joint venture for metal recovery and slag sales services in Turkey. In August 2017, the Company renewed a Scrap Management contract for five years in Egypt and announced multi-year contracts for scrap handling at two major steel making plans in Latin America totaling more than $50 million in projected revenues.

As the Company has previously disclosed, over the past several years the Company has been in discussions with various governmental regulatory agencies and officials ~~at the Supreme Council for Environment~~ in Bahrain ("Bahrain ~~Council"~~Agencies") with regard to a processing ~~by-product~~

byproduct ("salt cakes") located at Hafeera. ~~During 2015, the~~The Company previously recorded a charge of $7.0 million, payable over ~~five to seven~~approximately ten years, related to the estimated cost of processing and disposal of the salt cakes. The Company's Bahrain operations that produced the salt cakes has ceased operations, and are ~~operated~~owned under a strategic venture for which its strategic venture partner has a 35% minority interest. The Company is ~~awaiting final approval from~~currently in active discussions with the Bahrain ~~Council regarding~~Agencies over the timing and method for the proposed processing and disposal method. If the Bahrain ~~Council does~~Agencies do not approve the proposed timing or method, or ~~mandates~~mandate alternative solutions, the Company’s estimated liability could change, and such change could be material in any one period.

In February 2016, the Company 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. In March 2016, the Company secured a contract extension for steel mill services in Belgium with projected revenues totaling more than $100 million. Additionally, during the third quarter of 2016, the Company announced expanded services with Chile's largest steelmaker and a new contract in Egypt with projected revenues totaling more than $40 million and $35 million, respectively.

~~In March~~During 2016, one of the Company's customers announced its intention to ~~sell~~conduct a strategic review of its ~~steel making~~steelmaking operations in Europe. As a result the ~~U.K. and in July 2016 introduced the possibility~~customer has entered into a memorandum of ~~strategic collaborations through a joint venture.~~understanding with another major steelmaker. Depending on the outcome of any potential transactions, there could be a material impact on the Company's results of operations, cash flows and asset valuations in any one period.

~~One of the Company's customers in Australia has begun the process of voluntary administration under Australian law, the purpose of which is to~~The Company will focus on ~~long-term solvency. The customer is continuing its operations during~~growing the ~~voluntary administration proceedings. The Company had approximately $5 million~~Harsco Metals & Minerals Segment through the provision of ~~receivables with the customer prior~~innovative solutions to ~~the start of the voluntary administration~~handle customers' waste and ~~continues~~by-products, improving commercial effectiveness and disciplined investments to ~~believe that these amounts are collectible because the Company is viewed as an important supplier, continues to provide services to the customer~~improve competitive positioning in core and continues to collect on post-administration invoices timely. However the administration process is uncertain in nature and length, with the next creditors' meeting scheduled for the fourth quarter of 2016. As such, a loss on the pre-administration receivables is reasonably possible, and if there 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 September 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.adjacent markets.

Harsco Industrial Segment:

~~Although~~As energy markets have demonstrated some fundamental improvement, the ~~Company expects recent low oil~~Harsco Industrial Segment’s air-cooled heat exchangers business has seen steadily improving results. Bookings for this business have increased but may fluctuate with energy prices ~~to continue to impact capital expenditures~~ and ~~overall spending by customers in the upstream, midstream, and downstream oil and gas markets.~~underlying market fundamentals. Accordingly, these factors ~~will negatively~~are expected to impact revenue and operating income in ~~the near-term~~2017 in the Harsco Industrial Segment.

The Harsco Industrial Segment's industrial grating business continues to be impacted by a lack of large-scale projects, delayed capital expenditures, competitive market dynamics and increased material costs. Accordingly, these factors are expected to impact revenue and operating income in 2017 in the Harsco Industrial Segment.

The Company is committed to maintaining recent efficiency gains in the air-cooled heat exchangers and industrial grating products businesses and implementing additional improvements in response to the recent industry and economic challenges.

The Company will continue to focus on product innovation and development to drive strategic growth in its businesses. During ~~the second quarter of 2016,~~January 2017, the Company announced ~~a significant new order~~the launch of an all-new capability for ~~twelve gas compression coolers~~remote indoor boiler monitoring that can be downloaded directly 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.~~wireless and desktop devices.


•	~~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.~~

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

Harsco Rail Segment:

The global demand for railway maintenance-of-way equipment, parts and services continues to be generally positive over the long-term, though the North American ~~markets are~~market is experiencing weakness due to reduced capital and operating spending by Class I railways.

During ~~April 2016,~~January 2017, the Company ~~was awarded~~announced a ~~multi-year rail grinding services contract-extension~~new order to equip the entire Denver, Colorado regional railway fleet with enhanced safety systems. During June 2017, the Company announced a new order in the U.K. for seven Stoneblower track geometry machines with ~~anticipated revenues~~deliveries occurring over a two year period starting in late 2019. During September 2017, the Company announced new orders from the regional transit districts serving Washington, D.C. and Sacramento, CA to install enhanced safety systems that alert railway track workings on the ground before trains enter their work zones. The orders are scheduled for delivery through the end of ~~at least $38 million.~~

this year. In addition, during September 2017, the Company announced two equipment orders totaling approximately $25 million for railway track maintenance equipment in Saudi Arabia and the Republic of South Africa with deliveries expected to be by the end of 2017.

In prior years, the Company secured two contract awards with initial contract values totaling approximately $200 million from SBB. The majority of deliveries under these contracts are anticipated to occur during late 2017 through 2020. ~~During the second quarter of 2016, the Company~~The Harsco Rail Segment recorded an estimated forward loss ~~provision~~provisions of $40.1 million and $5.0 million during the second and fourth quarters of 2016, respectively, which resulted from increased vendor costs, ongoing discussions with SBB, and increased estimates for commissioning, certification and testing costs, as well as expected settlements with SBB. It is possible that the Company's overall estimate of costs to complete these contracts may increase which would result in an additional estimated forward 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 markets or adjacent markets.

Results of Operations


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30						September 30						September 30						September 30
(In millions, except per share amounts)	2016			2015			2016			2015			2017			2016			2017			2016
Total revenues	$	367.8		$	428.3		$	1,091.0		$	1,335.7		$	384.7		$	367.8		$	1,152.1		$	1,091.0
Cost of services and products sold	286.3			336.6			886.3			1,058.1			289.8			286.3			871.0			886.3
Selling, general and administrative expenses	50.2			64.5			150.6			186.9			61.2			50.2			172.0			150.6
Research and development expenses	0.9			1.1			2.7			3.5			0.9			0.9			3.1			2.7
Loss on disposal of the Harsco Infrastructure Segment and transaction costs	—			1.0			—			1.0
Other expenses	1.7			17.4			12.1			3.8
Other (income) expenses, net													(1.2		)	1.7			1.7			12.1
Operating income from continuing operations	28.6			7.7			39.3			82.3			34.0			28.6			104.3			39.3
Interest income	0.7			0.3			1.8			1.0			0.6			0.7			1.6			1.8
Interest expense	(13.8		)	(11.1		)	(39.9		)	(34.8		)	(12.1		)	(13.8		)	(36.2		)	(39.9		)
Change in fair value to the unit adjustment liability and loss on dilution and sale of equity method investment	(44.8		)	(2.1		)	(58.5		)	(6.5		)	—			(44.8		)	—			(58.5		)
Income tax expense from continuing operations	(5.1		)	(7.0		)	(14.9		)	(26.9		)
Equity in income (loss) of unconsolidated entities, net	3.2			3.1			5.7			(0.4		)
Income tax expense													(8.3		)	(5.1		)	(25.8		)	(14.9		)
Equity income of unconsolidated entities, net													—			3.2			—			5.7
Income (loss) from continuing operations	(31.2		)	(9.1		)	(66.6		)	14.6			14.2			(31.2		)	44.0			(66.6		)
Income (loss) from discontinued operations													(0.4		)	(0.4		)	(0.3		)	1.1
Net income (loss)													13.8			(31.5		)	43.7			(65.4		)
Total other comprehensive income													10.9			21.9			27.4			48.9
Total comprehensive income (loss)													24.7			(9.6		)	71.1			(16.5		)
Diluted earnings (loss) per common share from continuing operations attributable to Harsco Corporation common stockholders	(0.41		)	(0.10		)	(0.89		)	0.17			0.16			(0.41		)	0.50			(0.89		)
Effective income tax rate for continuing operations	(17.3		)%	(134.3		)%	(26.0		)%	64.2		%	36.9		%	(17.3		)%	36.9		%	(26.0		)%

Comparative Analysis of Consolidated Results

Revenues

Revenues for the third quarter of ~~2016 decreased $60.5~~2017 increased $16.9 million or ~~14.1%~~4.6% from the third quarter of ~~2015. Revenues~~2016. Revenue for the ~~first~~ nine months of ~~2016 decreased $244.7~~2017 increased $61.1 million or ~~18.3%~~5.6% from the first nine months of ~~2015.~~2016. Changes in revenues for the periods presented were attributable to the following significant items:

Change in Revenues — 2016 vs. 2015 Three Months Ended Nine Months Ended
(In millions) September 30, 2016 September 30, 2016
Net impacts of price/volume changes in the Harsco Industrial Segment, primarily attributable to volume changes. $ (27.1 ) (87.8 )
Net impact of new and lost contracts (including exited underperforming contracts) in the Harsco Metals & Minerals Segment. (19.0 ) (73.2 )
Impact of foreign currency translation. (9.2 ) (41.4 )
Net impacts of price/volume changes in the Harsco Metals & Minerals Segment, primarily attributable to volume changes. (3.6 ) (22.8 )
Net impacts of price/volume changes in the Harsco Rail Segment, primarily attributable to volume changes. (1.7 ) (19.5 )
Other. 0.1
—
Total change in revenues — 2016 vs. 2015 $ (60.5 ) $ (244.7 )



Change in Revenues — 2017 vs. 2016	Three Months Ended			Nine Months Ended
(In millions)	September 30, 2017			September 30, 2017
Net effects of price/volume changes in the Harsco Metals & Minerals Segment, primarily attributable to volume changes.	$	8.3		43.1
Net effects of price/volume changes in the Harsco Industrial Segment, primarily attributable to volume changes.	14.4			26.3
Net effect (impacts) of price/volume changes in the Harsco Rail Segment, primarily attributable to volume changes.	(5.5		)	5.8
Net impact of new and lost contracts (including exited underperforming contracts) in the Harsco Metals & Minerals Segment.	(6.2		)	(9.8		)
Impact of foreign currency translation.	6.1			(4.2		)
Other.	(0.2		)	(0.1		)
Total change in revenues — 2017 vs. 2016	$	16.9		$	61.1

Cost of Services and Products Sold

Cost of services and products sold for the third quarter of ~~2016 decreased $50.3~~2017 increased $3.5 million or ~~14.9%~~1.2% from the third quarter of ~~2015.~~2016. Cost of services and products ~~sold~~ for the first nine months of ~~2016~~2017 decreased ~~$171.8~~$15.3 million or ~~16.2%~~1.7% from the first nine months of ~~2015.~~2016. Changes in cost of services and products sold for the periods presented were attributable to the following significant items:

Change in Cost of Services and Products Sold — 2016 vs. 2015 Three Months Ended Nine Months Ended
(In millions) September 30, 2016 September 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). $ (36.1 ) $ (159.4 )
Impact of foreign currency translation. (8.1 ) (38.8 )
Other. (6.1 ) (13.7 )
Increased costs due to estimated forward loss provision in the Harsco Rail Segment. (a)
—
40.1
Total change in cost of services and products sold — 2016 vs. 2015 $ (50.3 ) $ (171.8 )

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



Change in Cost of Services and Products Sold — 2017 vs. 2016	Three Months Ended			Nine Months Ended
(In millions)	September 30, 2017			September 30, 2017
Decreased costs due to estimated loss provision in the Harsco Rail Segment during prior year.	$	—		$	(40.1	)
Impact (effect) of foreign currency translation.	5.1			(4.6		)
Increased (decreased) costs due to changes in revenues (exclusive of the effects of foreign currency translation and fluctuations in commodity costs included in selling prices).	0.3			34.9
Other.	(1.9		)	(5.5		)
Total change in cost of services and products sold — 2017 vs. 2016	$	3.5		$	(15.3	)

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the third quarter of ~~2016 decreased $14.3~~2017 increased $11.0 million or ~~22.1%~~21.8% from the third quarter of ~~2015.~~2016. Selling, general and administrative expenses for the first nine months of ~~2016 decreased $36.3~~2017 increased $21.4 million or ~~19.4%~~14.2% from the first nine months of ~~2015.~~2016. These ~~decreases~~increases were primarily related to higher compensation expense related to the ~~impact~~timing of ~~lower~~stock-based compensation issuances and higher expected incentive compensation; higher bad debt expense in the ~~Harsco~~ Metals & Minerals Segment; ~~decreased agent and broker~~increased commissions in the Harsco Industrial ~~Segment due to lower volume;~~Segment; and ~~foreign currency translation. Additionally, results for the first nine months of 2016 were also impacted by lower pension expense, lower~~increased professional ~~fees, lower compensation costs associated with Project Orion in the Harsco Metals & Minerals Segment and lower travel costs.~~fees.

Other (Income) Expenses, Net

This income statement classification includes: net gains on disposal of non-core assets, certain foreign currency gains, employee termination benefit costs, costs associated with the potential separation of the Harsco Metals & Minerals Segment, impaired asset write-downs and other costs to exit activities. Additional information on Other expenses is included in Note ~~14,~~13, Other Expenses, in Part I, Item 1, Financial Statements.


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30						September 30						September 30						September 30
(In thousands)	2016			2015			2016			2015			2017			2016			2017			2016
Employee termination benefit costs	$	1,790		$	3,454		$	8,756		$	5,962		$	2,536		$	1,790		$	4,947		$	8,756
Harsco Metals & Minerals Segment separation costs	1			—			3,298			—			—			1			—			3,298
Net gains (a)	(608		)	(1,747		)	(1,365		)	(8,479		)	(4,821		)	(608		)	(4,815		)	(1,365		)
Foreign currency gains related to Harsco Rail Segment advances on contracts and other customer advances	—			—			—			(10,940		)
Bahrain salt cake disposal	—			7,000			—			7,000
Subcontractor settlement	—			4,220			—			4,220
Other costs to exit activities													327			—			495			—
Impaired asset write-downs													539			—			820			—
Other	558			4,465			1,422			6,066			182			558			282			1,422
Other expenses	$	1,741		$	17,392		$	12,111		$	3,829		$	(1,237	)	$	1,741		$	1,729		$	12,111

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

Interest Expense

Interest expense during the third quarter and first nine months of ~~2016 increased $2.6~~2017 decreased $1.6 million and ~~$5.1~~$3.7 million, respectively, compared with the third quarter and first nine months of ~~2015.~~2016. The ~~increase~~decrease primarily relates to ~~$1.1 million of deferred financing costs expensed~~the Company's overall reduction in debt levels, partially offset by ~~the Company during the third quarter of 2016 related to payments for the Term Loan Facility (See Note 7, Debt and Credit Agreements,~~an increase in ~~Part I, Item 1, Financial Statements for additional information) and increased~~ interest rates associated with the Company's ~~Senior Secured Credit Facilities as well as other financing costs partially offset by lower debt levels.~~

debt.

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

The Change in fair value to the unit adjustment liability and loss on dilution ~~and sale~~ of equity method investment during the third quarter and first nine months of ~~2016 increased $42.7~~2017 decreased $44.8 million and ~~$52.0~~$58.5 million, respectively, compared towith the third quarter and first nine months of ~~2015.~~2016. The ~~increases~~decreases relate to losses associated with Company's first quarter of 2016 election not to make the quarterly cash payments to the Company's partner in the Infrastructure strategic venture for the remainder of 2016 and the Company's third quarter of 2016 sale of its remaining equity interest in the Infrastructure strategic ~~venture.~~venture which did not repeat in 2017. See Note 4, Equity Method Investments and Note ~~12,~~11, Derivative Instruments, Hedging Activities and Fair Value, in Part I, Item 1, Financial Statements for additional information.

Income Tax Expense

Income tax expense related to continuing operations for the third quarter and first nine months of ~~2016~~2017 was $8.3 million and $25.8 million, respectively, compared with an income tax expense related to continuing operations of $5.1 million and $14.9 million, respectively, ~~compared with $7.0 million and $26.9 million~~ for the third quarter and first nine months of ~~2015, respectively.~~2016. The income tax expense for the third quarter and first nine months of ~~2016~~2017 compared with the third quarter of 2015 decreased primarily due to the change in mix of income, as well as the release of uncertain tax positions in certain foreign jurisdictions due to tax audit closure in 2016. The income tax expense for theand first nine months of 2016 ~~compared with the first nine months of 2015 decreased~~increased primarily due to the ~~decrease~~increase in income in profitable ~~jurisdictions. Additionally, there was no income~~jurisdictions and increase in withholding tax ~~benefit realized from the loss on the sale of the Company's equity method investment~~ in the Infrastructure strategic venture, as a valuation allowance of $16.1 million was established to offset the deferred tax assets on the resulting capital loss carryforward, because the Company determined that it is not more likely than not that this benefit will be realized in the future.certain jurisdictions.

Income (Loss) from Continuing Operations

~~The Loss~~Income from continuing operations was ~~$31.2~~$14.2 million in the third quarter of ~~2016~~2017 compared with the loss from continuing operations of ~~$9.1~~$31.2 million in the third quarter of ~~2015.~~2016. This change is primarily related to the loss on sale of the Company's equity method investment in the Infrastructure strategic venture ~~partially offset by increased~~recorded in the third quarter of 2016 which did not repeat in 2017, as well as higher operating income ~~from continuing operations.~~in the Harsco Industrial Segment.

~~The Loss~~Income from continuing operations was $44.0 million in the first nine months of 2017 compared with a loss from continuing operations of $66.6 million in the first nine months of ~~2016 compared with Income from continuing operations of $14.6 million in the first nine months of 2015.~~2016. This change is primarily related to ~~decreased operating income from continuing operations, including~~ the Harsco Rail Segment's estimated forward loss provision of $40.1 million ~~related to~~for the Company's contracts with SBB and the loss on dilution and sale of the Company's equity method investment in the Infrastructure strategic venture recorded during 2016 which did not repeat in 2017, and higher operating income in the Harsco Metals & Minerals Segment.

Total Other Comprehensive Income (Loss)

Total other comprehensive income was $10.9 million and $27.4 million in third quarter and the first nine months of 2017, respectively, compared with total other comprehensive income of $21.9 million and $48.9 million, respectively in the third quarter and first nine months of 2016. The decrease in the third quarter of 2017 compared to the third quarter of 2016 is due to the reclassification of the other comprehensive loss attributable to the Brand equity method investment to income as a result of the sale of this investment in the third quarter of 2016 not repeated in 2017, partially offset by ~~decreased income tax expense and increased~~the positive impact of foreign currency translation in the third quarter of 2017. The decrease in the first nine months of 2017 compared to the first nine months of 2016 is due to the sale of the Brand equity method investment in ~~income~~2016. See Note 14, Components of ~~unconsolidated entities.~~

Accumulated Other Comprehensive Loss, for more information regarding the reclassification of the other comprehensive loss related the sale of the Brand equity method investment.

Liquidity and Capital Resources

Overview

The Company ~~continues to have adequate~~has sufficient financial liquidity and borrowing ~~capacity.~~capacity to support the strategies within each of its businesses. The Company currently expects operational and business needs to be met by cash provided by operations supplemented with borrowings from time to time due to historical patterns of seasonal cash flow and for the funding of various projects. The Company ~~continues to assess~~regularly assesses its capital needs in the context of operational trends and strategic initiatives.

The Company continues to implement and perform capital efficiency initiatives to enhance ~~liquidity.~~liquidity and working capital efficiency. 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~~risk; and Continuous Improvement initiatives ~~include~~aimed at improving the effective and efficient use of working capital, particularly in accounts receivable and inventories.

During the first nine months of ~~2016,~~2017, the Company generated ~~$104.8~~$82.9 million in operating cash flow, ~~an increase~~a decrease from the

~~$89.1~~ $104.8 million generated in the first nine months of ~~2015. In the first nine months of 2016, the~~2016.

The Company invested ~~$49.9~~$64.1 million in capital expenditures, mostly for the Harsco Metals & Minerals Segment, in the first nine months of 2017 compared with ~~$91.6~~$49.9 million in the first nine months of ~~2015.~~2016. The Company generated ~~$7.2~~$10.7 million in cash flow from asset sales in the first nine months of ~~2016~~2017 compared with ~~$20.8~~$7.2 million in the first nine months of ~~2015.~~2016. Asset sales have been a normal part of the Company's business model, primarily for the Harsco Metals & Minerals Segment. ~~The Company paid $4.1~~

Net cash outflows related to the Company's borrowings were $37.3 million ~~and $49.3 million in dividends to stockholders~~ in the first nine months of ~~2016 and 2015, respectively. The Company has suspended~~2017 principally due to the ~~quarterly dividend to preserve financial flexibility. The Board~~utilization of ~~Directors will continue to evaluate the Company's dividend policy each quarter.~~

~~During September 2016, the Company received approximately $145 million in~~operating cash net, from its sale of its remaining 26% equity interest in the Infrastructure strategic venture. The Company used these proceeds to repay $85.0 million on its Term Loan Facility and $60.0 million on its Revolving Credit Facility.

~~The Company's~~flows. There were net cash ~~payments on debt were~~outflows of $226.5 million in the first nine months of 2016 related to the Company's borrowings, principally due to the ~~utilization of operating cash flow, proceeds from the termination of a cross-currency interest rate swap ("CCIR") and~~ proceeds from the sale of the Company's equity interest in the Infrastructure strategic ~~venture.~~venture, utilization of operating cash flow and proceeds from the termination of a cross-currency interest rate swap ("CCIR"). The Company’s consolidated net debt to consolidated ~~EBITDA~~adjusted earnings before interest, tax, depreciation and amortization ("EBITDA") ratio, ~~(as~~as defined by the Credit ~~Agreement)~~Agreement, was ~~2.2~~2.1 to 1.0 at September 30, ~~2016, compared with 2.8 to 1.0 at December 31, 2015.~~2017.

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”).

The Company’s principal sources of liquidity are cash provided by operations and borrowings under its ~~Senior~~credit facility which consists of a term loan and revolver (the "Senior Secured Credit ~~Facilities,~~Facility"), augmented by cash proceeds from asset sales. The primary drivers of the Company’s cash flow from operations are the Company’s revenues and income. Cash returns on capital investments made in the prior years, for which limited cash is currently required, are a significant source of cash provided by operations. Depreciation expense related to these investments is a non-cash charge.

The Company plans to redeploy discretionary cash ~~primarily for debt reduction and secondarily~~ for potential growth opportunities, such as disciplined organic growth, ~~and~~ higher-return service ~~contracts~~contract opportunities and disciplined investments to improve competitive positioning in core and adjacent markets for the Harsco Metals & Minerals Segment, and strategic investments or possible acquisitions in the Harsco Rail and Harsco Industrial Segments that improve competitive positioning in core markets or adjacent markets.

Resources available for cash requirements for operations and growth initiatives

In addition to utilizing cash provided by operations and cash proceeds from asset sales, the Company has bank credit facilities available throughout the world. The Company also utilizes capital leases to finance the acquisition of certain equipment when appropriate, which allows the Company to minimize capital expenditures. The Company expects to continue to utilize all of these sources to meet future cash requirements for operations and growth initiatives.

The following table illustrates ~~the Company's~~ available credit ~~under the Revolving Credit Facility~~ at September 30, ~~2016:~~2017:


	September 30, 2016								September 30, 2017
(In millions)	Facility Limit		Outstanding Balance		Outstanding Letters of Credit		Available Credit		Facility Limit		Outstanding Balance		Outstanding Letters of Credit		Available Credit
Revolving credit facility	$	350.0	$	40.0	$	43.5	$	266.5
Multi-year revolving credit facility									$	400.0	$	77.0	$	41.5	$	281.5

At September 30, ~~2016,~~2017, the Company had ~~$198.8~~$622.9 million of borrowings under the Senior Secured Credit Facilities, consisting of ~~$158.8~~$545.9 million under the Term Loan Facility and ~~$40.0~~$77.0 million under the Revolving Credit Facility. ~~At September 30, 2016, the entire~~Of this balance, $617.4 million was classified as Long-term debt and $5.5 million was classified as Current maturities of long-term debt inon the Condensed Consolidated Balance ~~Sheets.~~Sheet at September 30, 2017. At December 31, ~~2015,~~2016, the Company had ~~$415.0~~$648.0 million of borrowings under the Senior Secured Credit ~~Facilities~~Facility, consisting of ~~$250.0~~$550.0 million under the Term Loan Facility and ~~$165.0~~$98.0 million under the Revolving Credit Facility. At December 31, ~~2015,~~2016, of this balance, ~~$380.5~~$642.5 million was classified as ~~long-term~~Long-term debt ~~$22.0~~and $5.5 million was classified as ~~short-term borrowings and $12.5 million was classified as current~~Current maturities of long-term debt inon the Condensed Consolidated Balance ~~Sheets.~~

Sheet.

Working Capital Position

Changes in the Company’s working capital are reflected in the following table:


(Dollars in millions)	September 30 2016			December 31 2015			Increase (Decrease)			September 30 2017			December 31 2016			Increase (Decrease)
Current Assets
Cash and cash equivalents	$	79.9		$	79.8		$	0.2		$	59.5		$	69.8		$	(10.3	)
Restricted cash										5.8			2.0			3.8
Trade accounts receivable, net	263.5			254.9			8.7			279.2			236.6			42.7
Other receivables	17.6			30.4			(12.8		)	22.6			21.1			1.6
Inventories	208.7			217.0			(8.3		)	227.0			187.7			39.3
Other current assets	62.9			82.5			(19.6		)	35.8			33.1			2.7
Total current assets	632.6			664.5			(31.9		)	630.1			550.3			79.8
Current Liabilities
Short-term borrowings and current maturities	26.0			55.3			(29.3		)	21.2			29.8			(8.6		)
Accounts payable	120.0			136.0			(16.0		)	123.3			108.0			15.3
Accrued compensation	43.9			38.9			5.0			50.4			46.7			3.7
Income taxes payable	7.3			4.4			2.9			8.7			4.3			4.4
Advances on contracts and other customer advances	125.0			107.3			17.8			126.0			117.3			8.7
Due to unconsolidated affiliate	—			7.7			(7.7		)
Unit adjustment liability	—			22.3			(22.3		)
Other current liabilities	140.7			134.2			6.5			156.3			121.6			34.7
Total current liabilities	462.9			506.1			(43.2		)	485.8			427.7			58.2
Working Capital	$	169.7		$	158.4		$	11.3		$	144.2		$	122.6		$	21.6
Current Ratio (a)	1.4		:1	1.3		:1				1.3		:1	1.3		:1

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

Working capital increased ~~$11.3~~$21.6 million or ~~7.1%~~17.6% for the first nine months of ~~2016~~2017 due primarily to the following factors:

Working capital was positively affected by ~~a decrease~~an increase in ~~Short-term borrowings and current maturities~~Trade accounts receivable, net of ~~$29.3~~$42.7 million, primarily due to increased sales for all segments and the ~~repayment~~timing of ~~$85.0 million~~sales and collections in the Harsco Rail Segment, as well as the effect of ~~the Term Loan Facility which reduced the required payments for the next twelve months for this facility. See Note 7, Debt~~foreign currency translation; and ~~Credit Agreements, in Part I, Item1, Financial Statements for additional information.~~

Working capital was positively affected by ~~a decrease~~an increase in ~~the Unit adjustment liability~~Inventories of $22.3 million due to the sale of the Company's equity interest in the Infrastructure strategic venture. See Note 4, Equity Method Investments and Note 12, Derivative Instruments, Hedging Activities and Fair Value, in Part I, Item 1, Financial Statements for additional information.

~~Working capital was positively affected by a decrease in Accounts payable of $16.0~~$39.3 million, primarily due to the Harsco Rail Segment related to the continued inventory build for the SBB contracts and the timing of ~~payments.~~other shipments, as well as the effect of foreign currency translation.

These working capital increases were partially offset by the following factors:

Working capital was negatively impacted by ~~a decrease~~an increase in Other ~~current assets~~liabilities of ~~$19.6~~$34.7 million, primarily due to the timing of ~~current deferred tax assets and~~settlement of the Company's foreign currency exchange forward ~~contracts;~~contracts, the impact of foreign currency translation and timing of non-income tax payments; and

Working capital was negatively impacted by an increase in ~~Advances on contracts and other customer advances~~Accounts payable of ~~$17.8 million, primarily received in the Harsco Rail Segment; and~~

~~Working capital was negatively impacted by a decrease in Other receivables of $12.8~~$15.3 million, primarily due to ~~income tax refunds received and~~ the timing of ~~proceeds received from certain asset sales.~~payments and the impact of foreign currency translation.

Certainty of Cash Flows

The Company has historically generated the majority of its cash flows in the second half of the year. The certainty of the Company's future cash flows is underpinned by the long-term nature of the Company's metals services ~~contracts;~~contracts, the order backlog for the Company's railway track maintenance services and ~~equipment;~~equipment, and overall discretionary cash flows (operating cash flows plus cash from asset sales in excess of the amounts necessary for capital expenditures to maintain current revenue levels) generated by the Company. Historically, the Company has utilized these discretionary cash flows for growth-related capital expenditures, strategic acquisitions, debt repayment and dividend payments.

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.

The Company has historically generated the majority of its cash flows in the second half of the year. Additionally, the Company’s cash flows have been negatively impacted in the near term by reduced steel production, weaker commodity prices and demand, and the impact of site exits in the Harsco Metals & Minerals Segment.

Cash Flow Summary

The Company’s cash flows from operating, investing and financing activities, as reflected in the Condensed Consolidated Statements of Cash Flows, are summarized in the following table:


	Nine Months Ended						Nine Months Ended
	September 30						September 30
(In millions)	2016			2015			2017			2016
Net cash provided (used) by:
Operating activities	$	104.8		$	89.1		$	82.9		$	104.8
Investing activities	129.9			(103.2		)	(48.9		)	129.9
Financing activities	(242.0		)	1.6			(44.5		)	(242.1		)
Effect of exchange rate changes on cash	7.5			7.7
Net change in cash and cash equivalents	$	0.2		$	(4.8	)
Effect of exchange rate changes on cash and cash equivalents, including restricted cash							4.1			7.5
Net change in cash and cash equivalents, including restricted cash							$	(6.5	)	$	0.2

Cash provided by operating activities — Net cash provided by operating activities in the first nine months of ~~2016~~2017 was ~~$104.8~~$82.9 million, ~~an increase~~a decrease of ~~$15.7~~$21.9 million from cash provided by operating activities in the first nine months of ~~2015.~~2016. The ~~increase~~decrease is primarily attributable to the timing ~~in inventory purchases, increases in accrued compensation~~of sales and ~~increases on~~collections of accounts receivable, higher inventories and a decrease in advances on contracts and other customer ~~advances;~~advances received; partially offset by an increase related to the timing of accounts ~~receivable invoicing and collections and accounts payable.~~payable, as well as an increase in cash net income.

~~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~~ ~~nine months ended~~ ~~September 30, 2015, this caption included the Harsco Rail Segment foreign exchange gain which is reflected in the Effect of exchange rate changes on cash 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~~ ~~nine months endedSeptember 30, 2016~~ ~~and~~ ~~2015, the decreases in this caption were~~ ~~$20.3 million~~ ~~and~~ ~~$29.5 million, respectively. A summary of the major components of this caption for the periods presented is as follows:~~

Nine Months Ended
September 30
(In millions) 2016 2015
Net cash provided (used) by:
  Change in net defined benefit pension liabilities $ (17.2 ) $ (21.1 )
  Change in prepaid expenses 2.6
(8.1 )
  Other (5.7 ) (0.3 )
  Total $ (20.3 ) $ (29.5 )

Cash provided (used) by investing activities — Net cash used by investing activities in the first nine months of 2017 was $48.9 million, a decrease of $178.8 million from the cash provided by investing activities in the first nine months of ~~2016~~ ~~was~~ ~~$129.9 million, an increase of~~ ~~$233.1 million~~ ~~from the cash used by investing activities in the first~~ ~~nine months~~ of ~~2015~~.2016. The ~~increase~~decrease was primarily due to the gross proceeds received from the sale of the Company's ~~equity~~ investment in the Infrastructure strategic venture ~~as well as a lower level of~~which occurred in September 2016 and an increase in capital expenditures, primarily in the Company's Harsco Metals & Minerals ~~Segment.~~Segment, in the nine months ended September 30, 2017, compared with the nine months ended September 30, 2016.

Cash ~~provided (used)~~used by financing activities — Net cash used by financing activities in the first nine months of ~~2016~~2017 was $~~242.0~~44.5 million, ~~an increase~~a decrease of $~~243.5~~197.5 million from cash ~~provided~~used by financing activities in the first nine months of ~~2015~~2016. The change was primarily due to net cash payments on debt of $226.5 million in the first nine months of 2016 compared with $7.5 million in the first nine months of 2015; reduction in proceeds from the termination of CCIRs and a deferred pension underfunding payment related to the salelower repayments of the Company's ~~equity investment~~borrowings in the ~~Infrastructure strategic venture; partially offset by lower dividends paid and no repurchases of the Company's common stock during the first~~ nine months ~~of 2016.~~ended September 30, 2017.

Debt Covenants

The Credit Agreement contains a consolidated net debt to consolidated adjusted EBITDA ratio covenant, which is not to exceed

~~4.0~~ 3.75 to 1.0, and a minimum consolidated adjusted EBITDA to consolidated interest charges ratio covenant, which is not to be less than 3.0 to 1.0. The consolidated net debt to consolidated adjusted EBITDA ratio covenant is reduced to ~~3.75~~3.5 to 1.0 after December 31, ~~2016 and to 3.5 to 1.0 after June 30,~~ 2017. Additionally, upon the completion of the potential separation of the Harsco Metals & Minerals Segment, the Company would be required to repay the Term Loan Facility, and the consolidated net debt to consolidated EBITDA ratio would be reduced to 3.0 to 1.0 for the Credit Agreement. The Company’s 5.75% notes include covenants that require the Company to offer to repurchase the notes at 101% of par in the event of a change of control of the Company or disposition of substantially all of the Company’s assets in combination with a downgrade in the Company’s credit rating to non-investment grade. At September 30, ~~2016,~~2017, the Company was in compliance with these covenants, as the total net ~~debt to consolidated EBITDA~~leverage ratio was ~~2.2~~2.1 to 1.0 and total ~~consolidated EBITDA to consolidated~~ interest ~~charges~~coverage ratio was ~~5.3~~5.8 to 1.0. Based on balances and covenants in effect at September 30, ~~2016,~~2017, the Company could increase net debt by ~~$491.3~~$451.6 million (although the Company only has $281.5 million available credit remaining under the Revolving Credit Facility), and still be in compliance with these debt covenants. Alternatively, keeping all other factors constant, the Company's adjusted EBITDA could decrease by $120.5 million and the Company would still be within these debt covenants. The Company expects to continue to be in compliance with these debt covenants for at least the next twelve months.

Cash Management

The Company has various cash management systems throughout the world that centralize cash in various bank accounts where it is economically justifiable and legally permissible to do so. These centralized cash balances are then redeployed to other operations to reduce short-term borrowings and to finance working capital needs or capital expenditures. Due to the transitory nature of cash balances, they are normally invested in bank deposits that can be withdrawn at will or in very liquid short-term bank time deposits and government obligations. The Company's policy is to use the largest banks in the various countries in which the Company operates. The Company monitors the creditworthiness of banks and when appropriate will adjust banking operations to reduce or eliminate exposure to less creditworthy banks. The Company plans to continue the strategy of targeted, prudent investing for strategic purposes for the foreseeable future, and to make more efficient use of existing investments.

At September 30, ~~2016,~~2017, the Company's consolidated cash and cash equivalents included ~~$78.7~~$58.8 million held by non-U.S. subsidiaries. At September 30, ~~2016,~~2017, approximately ~~10%~~1.4% of the Company's consolidated cash and cash equivalents had regulatory restrictions that would preclude the transfer of funds with and among subsidiaries. ~~The~~Non-U.S. subsidiaries also held $14.2 million of cash and cash equivalents ~~held by non-U.S. subsidiaries also included $18.9 million held~~ in consolidated strategic ventures. The strategic venture agreements may require strategic venture partner approval to transfer funds with and among subsidiaries. While the Company's remaining non-U.S. cash and cash equivalents can be transferred with and among subsidiaries, the majority of these non-U.S. cash balances will be used to support the ongoing working capital needs and continued growth of the Company's non-U.S. operations.

The Company's financial position and debt capacity should enable it to meet current and future requirements. The Company continues to assess its capital needs in the context of operational trends, capital market conditions and strategic initiatives.

Recently Adopted and Recently Issued Accounting Standards

Information on recently adopted and recently issued accounting standards is included in Note 2, Recently Adopted and Recently Issued Accounting Standards, in Part I, Item 1, Financial Statements.

ITEM 33. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks have not changed significantly from those disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2015.~~2016.

ITEM 4. CONTROLS AND PROCEDURES

Based on the evaluation required by Securities Exchange Act Rules 13a-15(b) and 15d-15(b), the Company’s management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of disclosure controls and procedures, as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e), at September 30, ~~2016.~~2017. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective at September 30, ~~2016.~~2017. There have been no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the third quarter of ~~2016.~~2017.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information on legal proceedings is included in Note ~~10,~~9, Commitments and Contingencies, in Part I, Item 1, Financial Statements.

ITEM 1A. RISK FACTORS

~~Economic conditions and regulatory changes following the United Kingdom’s referendum on withdrawal~~The Company's risk factors as of September 30, 2017 have not changed materially from ~~the European Union could have a negative impact on our business and results of operations.~~

~~In June 2016, a majority of voters~~those described in the U.K. approved a withdrawal from the European Union ("EU") in a national referendum (often referred to as Brexit). The referendum was advisory, and the terms of any withdrawal are subject to a negotiation period that could last at least two years after the governmentPart 1, Item 1A, “Risk Factors,” of the U.K. formally initiates a withdrawal process. Nevertheless, the referendum has created significant uncertainty about the future relationship between the U.K. and the EU, including with respect to the laws and regulations that will apply as the U.K. determines which EU laws to replace or replicate in the event of a withdrawal. The referendum has also given rise to callsCompany’s Annual Report on Form 10-K for the governments of other EU member states to consider withdrawal. These developments, or the perception that any of them could occur, have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets.

Our business, particularly the Company's Harsco Metals & Minerals Segment, whose headquarters is in the U.K., could be adversely impacted by the likely exit of the U.K. from the EU. Adverse consequences such as deterioration in economic conditions and volatility in currency exchange rates could have a negative impact on our operations, financial condition and results of operations. In addition, incremental regulatory controls and regulations governing trade between the U.K. and the rest of the EU could have adverse consequences on the steel industry in the U.K. and/or the EU, and could negatively impact our operations and financial condition.year ended December 31, 2016.

ITEM 6. EXHIBITS

~~See the Exhibit Index~~The following ~~the signature page to this Quarterly Report on Form 10-Q for a list~~exhibits are included as part of ~~exhibits filed or furnished with~~ this report ~~which Exhibit Index is incorporated herein~~ by ~~reference.~~reference:



Exhibit Number		Description
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 September 30, 2017 filed with the Securities and Exchange Commission on November 8, 2017, 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 Income (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.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



			HARSCO CORPORATION
			(Registrant)




DATE	November ~~3, 2016~~8, 2017	/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 INDEX~~



~~Exhibit~~ ~~Number~~		~~Description~~
~~2.1~~		~~Omnibus Agreement dated September 15, 2016 (incorporated by reference to Company's Current Report on Form 8-K dated September 15, 2016, Commission File Number 001-03970).~~
~~10.1~~		~~Separation Agreement and General Release, dated August 15, 2016, between Harsco Corporation and Scott W. Jacoby.~~
~~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 September 30, 2016 filed with the Securities and Exchange Commission on November 3, 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.



(In thousands)	Amount of Gain (Loss)Recognized in 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 Gain Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing	Amount of Gain Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing
Nine Months Ended September 30, 2016:
Foreign currency forward exchange contracts	$	1,748		Product revenues / Cost of services and products sold	$	409		$	—
Cross currency interest rate swaps	(1,819		)		—		Cost of services and products sold	3,987		(b)
	$	(71	)		$	409		$	3,987

Nine Months Ended September 30, 2015:
Foreign currency forward exchange contracts	$	4,132		Cost of services and products sold	$	80		$	—
Cross currency interest rate swaps	8,531				—		Cost of services and products sold	24,739		(b)
	$	12,663			$	80		$	24,739



(In thousands)	Employee Termination Benefit Costs
Balance, December 31, 2015	$	5,807
Cash expenditures	(4,796		)
Foreign currency translation	60
Other adjustments	(84		)
Balance, September 30, 2016	$	987



Change in Revenues — 2016 vs. 2015	Three Months Ended			Nine Months Ended
(In millions)	September 30, 2016			September 30, 2016
Net impacts of price/volume changes in the Harsco Industrial Segment, primarily attributable to volume changes.	$	(27.1	)	(87.8		)
Net impact of new and lost contracts (including exited underperforming contracts) in the Harsco Metals & Minerals Segment.	(19.0		)	(73.2		)
Impact of foreign currency translation.	(9.2		)	(41.4		)
Net impacts of price/volume changes in the Harsco Metals & Minerals Segment, primarily attributable to volume changes.	(3.6		)	(22.8		)
Net impacts of price/volume changes in the Harsco Rail Segment, primarily attributable to volume changes.	(1.7		)	(19.5		)
Other.	0.1			—
Total change in revenues — 2016 vs. 2015	$	(60.5	)	$	(244.7	)