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 ~~June 30, 2017~~March 31, 2018



¨	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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting 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 ~~July 31, 2017~~April 30, 2018
Common stock, par value $1.25 per share		~~80,419,576~~80,574,856

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 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	2630

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37

Item 4.	Controls and Procedures	37


PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	38

Item 1A.	Risk Factors	38

Item 6.	Exhibits	38

SIGNATURES		39

~~EXHIBIT INDEX~~		40

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HARSCO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


(In thousands)	June 30 2017			December 31 2016			March 31 2018			December 31 2017
ASSETS
Current assets:
Cash and cash equivalents	$	58,105		$	69,831		$	64,780		$	62,098
Restricted cash	4,671			2,048			2,747			4,111
Trade accounts receivable, net	289,280			236,554			292,966			288,034
Other receivables	22,340			21,053			24,813			20,224
Inventories	201,851			187,681			132,352			178,293
Current portion of contract assets							23,871			—
Other current assets	32,840			33,108			41,227			39,332
Total current assets	609,087			550,275			582,756			592,092
Property, plant and equipment, net	484,100			490,255			482,837			479,747
Goodwill	393,804			382,251			406,706			401,758
Intangible assets, net	39,972			41,567			37,756			38,251
Contract assets							3,566			—
Deferred income tax assets	106,044			106,311			49,900			51,574
Other assets	13,277			10,679			19,100			15,263
Total assets	$	1,646,284		$	1,581,338		$	1,582,621		$	1,578,685
LIABILITIES
Current liabilities:
Short-term borrowings	$	5,985		$	4,259		$	5,160		$	8,621
Current maturities of long-term debt	16,248			25,574			10,065			11,208
Accounts payable	118,633			107,954			137,254			126,249
Accrued compensation	44,210			46,658			35,014			60,451
Income taxes payable	7,742			4,301			7,455			5,106
Insurance liabilities	11,949			11,850			11,061			11,167
Advances on contracts and other customer advances	124,902			117,329
Current portion of advances on contracts							38,147			117,958
Other current liabilities	135,191			109,748			145,501			133,368
Total current liabilities	464,860			427,673			389,657			474,128
Long-term debt	617,674			629,239			611,695			566,794
Insurance liabilities	23,344			25,265			23,017			22,385
Retirement plan liabilities	310,278			319,597			248,894			259,367
Advances on contracts							21,837			—
Other liabilities	43,232			42,001			41,176			40,846
Total liabilities	1,459,388			1,443,775			1,336,276			1,363,520
COMMITMENTS AND CONTINGENCIES
HARSCO CORPORATION STOCKHOLDERS’ EQUITY
Preferred stock	—			—			—			—
Common stock	141,039			140,625			141,286			141,110
Additional paid-in capital	178,435			172,101			183,310			180,201
Accumulated other comprehensive loss	(591,735		)	(606,722		)	(543,217		)	(546,582		)
Retained earnings	1,177,907			1,150,688			1,179,516			1,157,801
Treasury stock	(761,717		)	(760,391		)	(762,788		)	(762,079		)
Total Harsco Corporation stockholders’ equity	143,929			96,301			198,107			170,451
Noncontrolling interests	42,967			41,262			48,238			44,714
Total equity	186,896			137,563			246,345			215,165
Total liabilities and equity	$	1,646,284		$	1,581,338		$	1,582,621		$	1,578,685

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							Six Months Ended							Three Months Ended
		June 30							June 30							March 31
(In thousands, except per share amounts)		2017				2016			2017			2016				2018			2017
Revenues from continuing operations:
Service revenues		$	251,306			$	249,626		$	491,915		$	475,120			$	254,962		$	240,609
Product revenues		143,592				120,307			275,524			248,094				153,076			131,932
Total revenues		394,898				369,933			767,439			723,214				408,038			372,541
Costs and expenses from continuing operations:
Cost of services sold		192,690				191,508			381,591			381,325				199,373			189,482
Cost of products sold		100,727				125,388			199,593			218,632				111,980			98,790
Selling, general and administrative expenses		55,606				49,520			110,747			100,304				57,083			53,937
Research and development expenses		1,329				956			2,160			1,838				1,239			831
Other expenses		2,072				1,247			2,966			10,370
Other expenses, net																1,822			894
Total costs and expenses		352,424				368,619			697,057			712,469				371,497			343,934
Operating income from continuing operations		42,474				1,314			70,382			10,745				36,541			28,607
Interest income		493				552			1,005			1,087				498			512
Interest expense		(12,405		)		(13,805		)	(24,058		)	(26,168		)		(9,583		)	(11,653		)
Change in fair value to the unit adjustment liability and loss on dilution of equity method investment		—				(1,489		)	—			(13,706		)
Income (loss) from continuing operations before income taxes and equity income (loss)		30,562				(13,428		)	47,329			(28,042		)
Defined benefit pension income (expense)																839			(699		)
Income from continuing operations before income taxes																28,295			16,767
Income tax expense		(11,234		)		(12,000		)	(17,487		)	(9,834		)		(8,266		)	(6,253		)
Equity income (loss) of unconsolidated entities, net		—				(694		)	—			2,481
Income (loss) from continuing operations		19,328				(26,122		)	29,842			(35,395		)
Income from continuing operations																20,029			10,514
Discontinued operations:
Income on disposal of discontinued business		628				2,886			40			2,380
Income tax expense related to discontinued business		(225		)		(1,065		)	(14		)	(878		)
Income from discontinued operations		403				1,821			26			1,502
Net income (loss)		19,731				(24,301		)	29,868			(33,893		)
Loss on disposal of discontinued business																(580		)	(588		)
Income tax benefit related to discontinued business																128			211
Loss from discontinued operations																(452		)	(377		)
Net income																19,577			10,137
Less: Net income attributable to noncontrolling interests		(693		)		(1,872		)	(1,940		)	(3,149		)		(1,769		)	(1,247		)
Net income (loss) attributable to Harsco Corporation		$	19,038			$	(26,173	)	$	27,928		$	(37,042	)
Net income attributable to Harsco Corporation																$	17,808		$	8,890
Amounts attributable to Harsco Corporation common stockholders:
Income (loss) from continuing operations, net of tax		$	18,635			$	(27,994	)	$	27,902		$	(38,544	)
Income from discontinued operations, net of tax		403				1,821			26			1,502
Net income (loss) attributable to Harsco Corporation common stockholders		$	19,038			$	(26,173	)	$	27,928		$	(37,042	)
Income from continuing operations, net of tax																$	18,260		$	9,267
Loss from discontinued operations, net of tax																(452		)	(377		)
Net income attributable to Harsco Corporation common stockholders																$	17,808		$	8,890
Weighted-average shares of common stock outstanding		80,535				80,337			80,460			80,288				80,650			80,385
Basic earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations		$	0.23			$	(0.35	)	$	0.35		$	(0.48	)		$	0.23		$	0.12
Discontinued operations		0.01				0.02			—			0.02				(0.01		)	—
Basic earnings (loss) per share attributable to Harsco Corporation common stockholders		$	0.24			$	(0.33	)	$	0.35		$	(0.46	)
Basic earnings per share attributable to Harsco Corporation common stockholders																$	0.22		$	0.11		(a)
Diluted weighted-average shares of common stock outstanding		82,850				80,337			82,558			80,288				83,544			82,263
Diluted earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations		$	0.22			$	(0.35	)	$	0.34		$	(0.48	)		$	0.22		$	0.11
Discontinued operations		—				0.02			—			0.02				(0.01		)	—
Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders		$	0.23		(a)	$	(0.33	)	$	0.34		$	(0.46	)
Diluted earnings per share attributable to Harsco Corporation common stockholders																$	0.21		$	0.11

(a) Does not total due to rounding

See accompanying notes to unaudited condensed consolidated financial statements.

HARSCO CORPORATION

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

Three Months Ended
June 30
(In thousands) 2017 2016
Net income (loss) $ 19,731
$ (24,301 )
Other comprehensive income (loss):

Foreign currency translation adjustments, net of deferred income taxes of $1,458 and $(4,977) in 2017 and 2016, respectively
9,825
(14,394 )
Net loss on cash flow hedging instruments, net of deferred income taxes of $611 and $401 in 2017 and 2016, respectively (341 ) (144 )
Pension liability adjustments, net of deferred income taxes of $(522) and $(571) in 2017 and 2016, respectively (10,348 ) 21,855
Unrealized gain on marketable securities, net of deferred income taxes of $- and $(2) in 2017 and 2016, respectively —
4
Total other comprehensive income (loss) (864 ) 7,321
Total comprehensive income (loss) 18,867
(16,980 )
Less: Comprehensive income attributable to noncontrolling interests (1,841 ) (1,183 )
Comprehensive income (loss) attributable to Harsco Corporation $ 17,026
$ (18,163 )



	Three Months Ended
	March 31
(In thousands)	2018			2017
Net income	$	19,577		$	10,137
Other comprehensive income (loss):
Foreign currency translation adjustments, net of deferred income taxes of $1,627 and $393 in 2018 and 2017, respectively	12,501			16,561
Net gain (loss) on cash flow hedging instruments, net of deferred income taxes of $(839) and $256 in 2018 and 2017, respectively	2,677			(387		)
Pension liability adjustments, net of deferred income taxes of $(325) and $(522) in 2018 and 2017, respectively	(9,001		)	1,205
Unrealized gain (loss) on marketable securities, net of deferred income taxes of $4 and $(3) in 2018 and 2017, respectively	(14		)	6
Total other comprehensive income	6,163			17,385
Total comprehensive income	25,740			27,522
Less: Comprehensive income attributable to noncontrolling interests	(3,047		)	(1,633		)
Comprehensive income attributable to Harsco Corporation	$	22,693		$	25,889

Six Months Ended
June 30
(In thousands) 2017 2016
Net income (loss) $ 29,868
$ (33,893 )
Other comprehensive income (loss):

Foreign currency translation adjustments, net of deferred income taxes of $1,851 and $(8,554) in 2017 and 2016, respectively 26,386
(2,773 )
Net loss on cash flow hedging instruments, net of deferred income taxes of $867 and $415 in 2017 and 2016, respectively (728 ) (2,551 )
Pension liability adjustments, net of deferred income taxes of $(1,044) and $(1,256) in 2017 and 2016, respectively (9,143 ) 32,295
Unrealized gain (loss) on marketable securities, net of deferred income taxes of $(3) and $2 in 2017 and 2016, respectively 6
(3 )
Total other comprehensive income 16,521
26,968
Total comprehensive income (loss) 46,389
(6,925 )
Less: Comprehensive income attributable to noncontrolling interests (3,474 ) (2,731 )
Comprehensive income (loss) attributable to Harsco Corporation $ 42,915
$ (9,656 )

See accompanying notes to unaudited condensed consolidated financial statements.

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Six Months Ended						Three Months Ended
	June 30						March 31
(In thousands)	2017			2016			2018			2017
Cash flows from operating activities:
Net income (loss)	$	29,868		$	(33,893	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net income							$	19,577		$	10,137
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation	60,495			65,736			31,418			30,207
Amortization	4,008			5,926			1,934			2,021
Change in fair value to the unit adjustment liability and loss on dilution of equity method investment	—			13,706
Deferred income tax expense (benefit)	3,433			(2,857		)	4,635			(221		)
Equity in (income) loss of unconsolidated entities, net	—			(2,481		)
Dividends from unconsolidated entities	19			16			—			19
Contract estimated forward loss provision for Harsco Rail Segment	—			40,050
Other, net	5,708			1,871			1,944			5,131
Changes in assets and liabilities:
Accounts receivable	(42,806		)	3,011			(4,848		)	(27,882		)
Inventories	(6,296		)	(23,791		)	(11,490		)	(755		)
Contract assets							(5,698		)	—
Accounts payable	4,259			(16,308		)	7,340			(541		)
Accrued interest payable	166			(36		)	51			286
Accrued compensation	(4,365		)	1,237			(26,131		)	(12,352		)
Advances on contracts and other customer advances	(1,479		)	(1,109		)
Advances on contracts							(7,348		)	(4,998		)
Retirement plan liabilities, net	(11,221		)	(13,871		)	(12,252		)	(8,381		)
Other assets and liabilities	4,990			(8,534		)	(7,375		)	1,205
Net cash provided by operating activities	46,779			28,673

Net cash used by operating activities							(8,243		)	(6,124		)
Cash flows from investing activities:
Purchases of property, plant and equipment	(40,700		)	(32,176		)	(26,897		)	(16,989		)
Proceeds from sales of assets	1,534			5,115			377			1,006
Purchases of businesses, net of cash acquired	—			(26		)
Other investing activities, net	4,170			(616		)
Net proceeds (payments) from settlement of foreign currency forward exchange contracts							(3,822		)	33
Net cash used by investing activities	(34,996		)	(27,703		)	(30,342		)	(15,950		)

Cash flows from financing activities:
Short-term borrowings, net	2,302			1,949			(3,659		)	3,655
Current maturities and long-term debt:
Additions	24,000			50,019			46,000			24,000
Reductions	(46,712		)	(75,608		)	(2,944		)	(14,345		)
Cash dividends paid on common stock	—			(4,105		)
Dividends paid to noncontrolling interests	(1,769		)	(1,702		)
Purchase of noncontrolling interests	—			(4,731		)
Sale of noncontrolling interests							477			—
Stock-based compensation - Employee taxes paid	(1,326		)	(91		)	(709		)	(53		)
Proceeds from cross-currency interest rate swap termination	—			16,625
Deferred financing costs	(42		)	(895		)	—			(36		)
Other financing activities, net	(368		)	—
Net cash used by financing activities	(23,915		)	(18,539		)

Net cash provided by financing activities							39,165			13,221
Effect of exchange rate changes on cash and cash equivalents, including restricted cash	3,029			7,051			738			1,403
Net decrease in cash and cash equivalents, including restricted cash	(9,103		)	(10,518		)
Net increase (decrease) in cash and cash equivalents, including restricted cash							1,318			(7,450		)
Cash and cash equivalents, including restricted cash, at beginning of period	71,879			79,756			66,209			71,879
Cash and cash equivalents, including restricted cash, at end of period	$	62,776		$	69,238		$	67,527		$	64,429

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, 2016 $ 140,503
$ (760,299 ) $ 170,699
$ 1,236,355
$ (515,688 ) $ 39,233
$ 310,803
Net income (loss)

(37,042 )
3,149
(33,893 )
Cash dividends declared:

Noncontrolling interests (1,702 ) (1,702 )
Total other comprehensive income (loss), net of deferred income taxes of $(9,393) 27,386
(418 ) 26,968
Purchase of subsidiary shares from noncontrolling interest (5,128 ) 397
(4,731 )
Vesting of restricted stock units and other stock grants, net 80,598 shares 119
(92 ) (595 )

(568 )
Amortization of unearned portion of stock-based compensation, net of forfeitures

4,072

4,072
Balances, June 30, 2016 $ 140,622
$ (760,391 ) $ 169,048
$ 1,199,313
$ (488,302 ) $ 40,659
$ 300,949



	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, 2017	$	140,625	$	(760,391	)	$	172,101		$	1,150,688		$	(606,722	)	$	41,262	$	137,563
Adoption of new accounting standard						1,106			(709		)						397
Net income									8,890						1,247		10,137
Total other comprehensive income, net of deferred income taxes of $124												16,999			386		17,385
Vesting of restricted stock units and other stock grants, net 7,254 shares	14		(53		)	(14		)									(53		)
Amortization of unearned portion of stock-based compensation, net of forfeitures						3,104											3,104
Balances, March 31, 2017	$	140,639	$	(760,444	)	$	176,297		$	1,158,869		$	(589,723	)	$	42,895	$	168,533

Harsco Corporation Stockholders’ Equity
(In thousands) Common Stock Additional Paid-in Capital
Retained
Earnings

Accumulated Other
Comprehensive
Loss

Noncontrolling
Interests

Issued Treasury Total
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

27,928

1,940
29,868
Cash dividends declared:

Noncontrolling interests

(1,769 ) (1,769 )
Total other comprehensive income, net of deferred income taxes of $1,671 14,987
1,534
16,521
Stock Appreciation Rights exercise, net 7,441 shares 13
(49 ) (13 ) (49 )
Vesting of restricted stock units and other stock grants, net 236,335 shares 401
(1,277 ) (401 )

(1,277 )
Amortization of unearned portion of stock-based compensation, net of forfeitures

5,642

5,642
Balances, June 30, 2017 $ 141,039
$ (761,717 ) $ 178,435
$ 1,177,907
$ (591,735 ) $ 42,967
$ 186,896



	Harsco Corporation Stockholders’ Equity
(In thousands)	Common Stock					Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Loss			Noncontrolling Interests
(In thousands)	Issued		Treasury			Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Loss			Noncontrolling Interests		Total
Balances, January 1, 2018	$	141,110	$	(762,079	)	$	180,201		$	1,157,801	$	(546,582	)	$	44,714	$	215,165
Adoption of new accounting standards (See Note 2)									3,907		(1,520		)			2,387
Net income									17,808					1,769		19,577
Sale of subsidiary shares to noncontrolling interest														477		477
Total other comprehensive income, net of deferred income taxes of $467											4,885			1,278		6,163
Stock Appreciation Rights exercised, net 2,560 shares	5		(26		)	(5		)								(26		)
Vesting of restricted stock units and other stock grants, net 102,695 shares	171		(683		)	(171		)								(683		)
Amortization of unearned portion of stock-based compensation, net of forfeitures						3,285										3,285
Balances, March 31, 2018	$	141,286	$	(762,788	)	$	183,310		$	1,179,516	$	(543,217	)	$	48,238	$	246,345

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") 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, ~~2016~~2017 Condensed Consolidated Balance Sheet information contained in this Quarterly Report on Form 10-Q was derived from the ~~2016~~2017 audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the U.S. ("U.S. GAAP") for an annual report. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017.

Operating results and cash flows for the three ~~and six~~ months ended ~~June 30, 2017~~March 31, 2018 are not indicative of the results that may be expected for the year ending December 31, ~~2017~~2018.

Reclassifications

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

~~Restricted Cash~~

The Company had restricted cash of $4.7 million and $2.0 million at June 30, 2017 and December 31, 2016, respectively, and the restrictions are primarily related to collateral provided for certain guarantees of the Company’s performance.

2. Recently Adopted and Recently Issued Accounting Standards

The following accounting standards have been adopted in ~~2017:~~2018:

On January 1, ~~2017,~~2018, the Company adopted changes, with subsequent amendments, issued by the Financial Accounting Standards Board ("FASB") related to the simplification of the measurement of inventory. The changes required entities to measure most inventory at the lower of 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 did not apply to inventories that are measured using either the 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, 2017, the Company adopted changes issued by the FASB that required deferred tax assets and liabilities to be classified as non-current in a classified statement of financial position. The changes applied to all entities that present a classified statement of financial position. The 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 resulted in the Company reclassifying approximately $27 million from reported current assets to Deferred income tax assets based on balances at December 31, 2016.

On January 1, 2017, the Company adopted changes issued by the FASB amending the accounting for stock-based compensation and requiring excess tax benefits and shortfalls to be recognized as a component of income tax expense rather than equity. These changes also required excess tax benefits and shortfalls to be presented as an operating activity on the 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 they occur. These changes resulted in the Company recording the cumulative impact of approximately $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 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 stock-based compensation awards are dependent on the Company's stock price at the date an award vests. The impact to income tax expense resulting from this change was a tax benefit of $0.5 million for both the three and six months ended June 30, 2017.

During the second quarter of 2017, the Company early-adopted changes issued by the FASB that added and clarified guidance related to the classification, presentation and disclosure of restricted cash in the statement of cash flows. The adoption of these changes did not have an impact on the Company's condensed consolidated statement of cash flows for the 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~~adoption of these changes ~~by one year, but will permit entities~~resulted in the following modifications to ~~adopt one year earlier. During 2016,~~ the FASB clarified the implementation guidance for principal versus agent considerations; identifying performance obligations; accounting for intellectual property licenses; collectability; non-cash consideration; and the presentation of sales and other similar taxes.Company's revenue recognition process:

Harsco Industrial Segment - Air-X-Changers - The FASB also introduced practical expedients related to disclosures of remaining performance obligations and other technical corrections and improvements. These changes become effective for the Company on January 1, 2018. Management is currently finalizing its evaluation, but currently believes the most significant impact will be with regard to the timing of revenue recognition ~~associated with the~~for air-cooled heat exchanger ~~business of~~sales, which the ~~Harsco Industrial Segment and limited equipment sales in the Harsco Rail Segment. The~~ Company ~~currently recognizes revenues on such arrangements~~historically recognized upon the completion of the efforts associated with these arrangements, ~~but as a result of these changes, revenue from these arrangements will be~~is now recognized over time ~~and increase~~with the impact of increasing revenue in earlier periods. ~~Management does not currently believe that there will be any significant impact with regards~~This change also impacted the Company's Condensed Consolidated Balance Sheets by decreasing both Inventories and Advances on contracts; and creating a new caption and establishing a balance related to ~~the~~Contract assets.

Harsco Rail Segment - The timing of revenue recognition for certain railway track maintenance equipment sales, which the Company historically recognized upon the completion of the efforts associated with these arrangements, is now recognized over time with the ~~Harsco Metals & Minerals Segment or~~impact of increasing revenue in earlier periods. This change also impacted the ~~industrial grating~~Company's Condensed Consolidated Balance Sheets by decreasing both Inventories and ~~fencing or heat transfer businesses~~Advances on contracts; and creating a new caption and establishing a balance related to Contract assets. In addition, certain advance payments received from customers, which provide a significant benefit of financing and are expected to be outstanding longer than twelve months, are treated as significant financing components to the related transactions and the Company will increase the overall transaction price with a corresponding increase in interest expense.

Additionally, the Company's disclosure related to revenue recognition has been expanded in accordance with the FASB changes. Please refer to Note 12, Revenue Recognition for additional information.

The Company chose to implement the impact of the ~~Harsco Industrial Segment, but continues to evaluate the effect of these changes. The Company will adopt the standard using~~FASB changes utilizing the modified retrospective transition method, using the following practical expedients:

The Company has elected to apply the changes only to revenue arrangements that were not completed as of ~~implementation with~~January 1, 2018; and

The Company has elected to reflect the aggregate effect of all contract modifications that occurred prior to the beginning of the earliest reported period when (i) identifying the satisfied and unsatisfied performance obligations;

(ii) determining the transaction price; and (iii) allocating the transaction price to the satisfied and unsatisfied performance obligations.

Comparative information has not been restated and continues to be reported under U.S. GAAP in effect for those periods.

The cumulative effect of ~~initially applying~~ the changes ~~recognized~~made to the Condensed Consolidated Balance Sheet at January 1, 2018 was as follows:



(In thousands)	Balance at December 31, 2017			Impact of Adoption			Balance at January 1, 2018
ASSETS
Current assets:
Trade accounts receivable, net	$	288,034		$	532		$	288,566
Inventories	178,293			(59,793		)	118,500
Current portion of contract assets	—			18,248			18,248
Other current assets	39,332			179			39,511
Total current assets	592,092			(40,834		)	551,258
Contract assets	—			3,566			3,566
Other assets	15,263			1,337			16,600
Total assets	1,578,685			(35,931		)	1,542,754
LIABILITIES
Current liabilities:
Current portion of advances on contracts	117,958			(78,507		)	39,451
Other current liabilities	133,368			13,995			147,363
Total current liabilities	474,128			(64,512		)	409,616
Advances on contracts	—			24,564			24,564
Other liabilities	40,846			1,580			42,426
Total liabilities	1,363,520			(38,368		)	1,325,152
HARSCO CORPORATION STOCKHOLDERS' EQUITY
Accumulated other comprehensive loss	(546,582		)	(1,520		)	(548,102		)
Retained earnings	1,157,801			3,957			1,161,758
Total Harsco Corporation stockholders' equity	170,451			2,437			172,888
Total equity	215,165			2,437			217,602
Total liabilities and equity	1,578,685			(35,931		)	1,542,754

The impact of modifying the Company's Condensed Consolidated Balance Sheet at March 31, 2018 and the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 are as follows:



	March 31, 2018
(In thousands)	As Reported			Impact of Adoption			As Reported - Less Impact of Adoption
ASSETS
Current assets:
Trade accounts receivable, net	$	292,966		$	(668	)	$	292,298
Inventories	132,352			71,195			203,547
Current portion of contract assets	23,871			(23,871		)	—
Other current assets	41,227			(177		)	41,050
Total current assets	582,756			46,479			629,235
Contract assets	3,566			(3,566		)	—
Deferred income tax assets	49,900			947			50,847
Other assets	19,100			(1,285		)	17,815
Total assets	1,582,621			42,575			1,625,196
LIABILITIES
Current liabilities:
Current portion of advances on contracts	38,147			78,809			116,956
Other current liabilities	145,501			(11,801		)	133,700
Total current liabilities	389,657			67,008			456,665
Advances on contracts	21,837			(21,837		)	—
Other liabilities	41,176			(381		)	40,795
Total liabilities	1,336,276			44,790			1,381,066
HARSCO CORPORATION STOCKHOLDERS' EQUITY
Accumulated other comprehensive loss	(543,217		)	1,827			(541,390		)
Retained earnings	1,179,516			(4,042		)	1,175,474
Total Harsco Corporation stockholders' equity	198,107			(2,215		)	195,892
Total equity	246,345			(2,215		)	244,130
Total liabilities and equity	1,582,621			42,575			1,625,196



	Three Months Ended
	March 31, 2018
(In thousands, except per share amounts)	As Reported			Impact of Adoption			As Reported - Less Impact of Adoption
Revenues from continuing operations:
Services revenues	$	254,962		$	1,350		$	256,312
Product revenues	153,076			(10,452		)	142,624
Total revenues	408,038			(9,102		)	398,936
Costs and expenses from continuing operations:
Costs of services sold	199,373			1,358			200,731
Costs of products sold	111,980			(9,930		)	102,050
Selling, general and administrative costs	57,083			16			57,099
Total costs and expenses	371,497			(8,556		)	362,941
Operating income from continuing operations	36,541			(546		)	35,995
Interest expense	(9,583		)	452			(9,131		)
Income from continuing operations before income taxes	28,295			(94		)	28,201
Income tax expense	(8,266		)	(8		)	(8,274		)
Income from continuing operations	20,029			(102		)	19,927
Net income	19,577			(102		)	19,475
Amounts attributable to Harsco Corporation common stockholders:
Income from continuing operations, net of tax	18,260			(102		)	18,158
Net income attributable to Harsco Corporation common stockholders	17,808			(102		)	17,706
Basic earnings per share attributable to Harsco Corporation common stockholders:
Continuing operations	0.23			—			0.23
Basic earnings per share attributable to Harsco Corporation common stockholders	0.22			—			0.22
Diluted earnings per share attributable to Harsco Corporation common stockholders:
Continuing operations	0.22			—			0.22
Diluted earnings per share attributable to Harsco Corporation common stockholders	0.21			—			0.21



	Three Months Ended March 31, 2018
(In thousands)	As Reported			Impact of Adoption			As Reported - Less Impact of Adoption
Cash flows from operating activities:
Net income	$	19,577		$	(102	)	$	19,475
Adjustments to reconcile net income to net cash used by operating activities:
Deferred income tax expense (benefit)	4,635			8			4,643
Changes in assets and liabilities:
Accounts receivable	(4,848		)	136			(4,712		)
Inventories	(11,490		)	(11,402		)	(22,892		)
Contract assets	(5,698		)	5,698			—
Advances on contracts	(7,348		)	3,028			(4,320		)
Other assets and liabilities	(7,375		)	2,634			(4,741		)
Net cash used by operating activities	(8,243		)	—			(8,243		)

On January 1, 2018, the Company adopted changes issued by the FASB related 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. Employers are 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 adoption of these changes resulted in the Company reclassifying $0.7 million of NPPC expense for the three months ended March 31, 2017 from the captions Cost of services sold; Cost of products sold; and Selling, general and administrative expenses to the new caption, Defined benefit pension income (expense) on the Company's Condensed Consolidated Statement of Operations.

On January 1, 2018, the Company adopted changes issued by the FASB clarifying when revisions to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The changes require modification accounting only in circumstances when the terms or conditions result in changes to the fair value, vesting conditions or classification of the award as an equity instrument or a liability. The adoption of these changes did not have an impact on the Company's condensed consolidated financial statements.

On January 1, 2018, the Company adopted changes issued by FASB which eliminate the requirement to defer the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. Under the new guidance, an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The changes resulted in an adjustment to opening retained earnings of less than

$0.1 million.

The following accounting standards have been issued and become effective for the Company at ~~the date of initial application and continues to progress with regard to the quantification of the above identified differences.~~a future date:

In February 2016, the FASB issued changes in accounting for leases. The changes introduce a lessee model that brings most leases onto 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 January 2017, the FASB issued changes 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 amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of 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 goodwill at reporting units with zero or negative carrying amounts. The changes become effective for the Company on January 1, 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~~August 2017, the FASB issued changes ~~to how employers that sponsor defined benefit pension plans~~which expand and ~~other postretirement plans present~~refine hedge accounting for both financial and non-financial risk components, aligns the ~~net periodic pension cost ("NPPC")~~recognition and presentation of the effects of hedging instruments and hedged items in the ~~statement~~financial statements, and includes certain targeted improvements to ease the application of ~~operations. An employer will~~current guidance related to the assessment of hedge effectiveness. The amendments in this update should be ~~required~~applied to ~~report~~hedging relationships existing on the ~~service cost component~~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 ~~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~~which adoption occurred. Presentation and disclosure amendments 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.applied prospectively. The changes become effective for the Company on

January 1, ~~2018.~~2019. Management is currently evaluating the impact of these changes on its condensed consolidated financial statements.

In ~~May 2017,~~February 2018, the FASB issued changes which allow entities to ~~clarify when revisions~~reclassify stranded income tax effects resulting from the Tax Cuts and Jobs Act (the “Act”) from accumulated other comprehensive income to retained earnings in their consolidated financial statements. Under the Act, deferred taxes were adjusted to reflect the reduction of the historical corporate income

tax rate to the ~~terms or conditions of a share-based payment award require an entity to apply modification accounting. The changes require modification accounting only in circumstances when~~newly enacted corporate income tax rate, which left the ~~terms or conditions result in changes to the fair value, vesting conditions or classification of the award as an equity instrument or a liability.~~tax effects on items within accumulated other comprehensive income stranded at historical tax rates. The changes become effective for the Company on January 1, ~~2018. Management does not believe these changes will impact its condensed consolidated financial statements.~~2019. The Company had approximately $21 million of stranded income tax effects in accumulated other comprehensive income at December 31, 2017 resulting from the Act.

3. Accounts Receivable and Inventories

Accounts receivable consist of the following:


(In thousands)	June 30 2017			December 31 2016			March 31 2018			December 31 2017
Trade accounts receivable	$	297,221		$	248,354		$	297,515		$	292,765
Less: Allowance for doubtful accounts	(7,941		)	(11,800		)	(4,549		)	(4,731		)
Trade accounts receivable, net	$	289,280		$	236,554		$	292,966		$	288,034

Other receivables (a)	$	22,340		$	21,053		$	24,813		$	20,224

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

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

~~The~~ provision (benefit) for doubtful accounts related to trade accounts receivable was as follows:


	Three Months Ended				Six Months Ended				Three Months Ended
	June 30				June 30				March 31
(In thousands)	2017		2016		2017		2016		2018			2017
Provision for doubtful accounts related to trade accounts receivable	$	1,197	$	323	$	1,175	$	177
Provision (benefit) for doubtful accounts related to trade accounts receivable									$	(46	)	$	(22	)

Inventories consist of the following:


(In thousands)	June 30 2017		December 31 2016		March 31 2018		December 31 2017
Finished goods	$	23,272	$	26,464	$	18,747	$	26,415
Work-in-process	23,415		22,815		20,967		24,367
Contracts-in-process(b)	73,156		54,044		—		45,599
Raw materials and purchased parts	57,967		61,450		68,531		58,943
Stores and supplies	24,041		22,908		24,107		22,969
Total inventories	$	201,851	$	187,681	$	132,352	$	178,293

Contracts-in-process consist of the following:


(In thousands)	June 30 2017			December 31 2016			December 31 2017
Contract costs accumulated to date	$	110,281		$	90,276		$	73,740
Estimated forward loss provisions for contracts-in-process ~~(b)~~(c)	(37,125		)	(36,232		)	(28,141		)
Contracts-in-process (c)	$	73,156		$	54,044
Contracts-in-process (b) (d)							$	45,599

(b)

ToThe Company has adopted the ~~extent that~~new revenue recognition standard utilizing the ~~estimated forward loss provision exceeds accumulated contract costs it is included in~~modified retrospective transition method, including use of practical expedients. Amounts previously reported as Contracts-in-progress have been recognized through the ~~caption Other current liabilities on the Condensed Consolidated Balance Sheets. At June 30, 2017~~related cumulative catch-up adjustment. See Note 2, Recently Adopted and ~~December 31, 2016 this amount totaled $5.1 million and $6.7 million, respectively.~~Recently Issued Accounting Standards for additional information.

(c) For periods prior to January 1, 2018, 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 and amounted to $3.0 million at December 31, 2017. At ~~June 30, 2017~~March 31, 2018, due to the implementation of the new revenue standard, the entire remaining estimated forward loss provision is included in the caption Other current liabilities on the Condensed Consolidated Balance Sheets and amounted to $10.4 million.

(d) At March 31, 2018 and December 31, ~~2016,~~2017, the Company has ~~$109.9~~$49.9 million and ~~$101.1~~$97.9 million, respectively, of net customer advances related to ~~contracts-in-process.~~SBB contracts. These amounts are included in the caption Current portion of advances on contracts and Advances on contracts, ~~and other customer advances~~representing the non-current portion, on the Condensed Consolidated Balance Sheets.

The Company recognized an initial 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 three and six months ended~~

~~June 30,~~ 2016. ~~There was no~~The Company recorded an additional ~~estimated~~ forward loss provision ~~recognized, excluding the impact~~ of ~~foreign currency fluctuation,~~$1.8 million for the three ~~and six~~ months ended ~~June 30, 2017.~~March 31, 2018. 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 $7.9 million of revenues for the contracts with SBB, on an over time basis, utilizing an input method based on costs incurred for the three months ended March 31, 2018. The Company did not recognize any revenue for the contracts with SBB for the three and six months ended June 30, 2017 and 2016 under the percentage-of-completion (units-of-delivery) method and accordingly, there was no impact on the Company's gross margins or results of operations for these periods. 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.

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 of equity method investment on the Condensed Consolidated Statement of Operations. This net loss was a non-cash expense.

For the three and six months ended June 30, 2016 the Company recognized $1.5 million and $3.4 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 of equity method investment.

~~In September 2016, the Company sold its remaining, approximately 26% interest in Brand. Accordingly, there has been no activity related to Brand subsequent to the date of sale.~~

~~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 six~~ months ended March 31, ~~2016~~2017. For three months ended March 31, 2018, product revenue gross margins were ~~utilized~~not significantly impacted by the revenue recognized under the SBB contracts. The Company ~~to record its proportional share~~is approximately 98% complete on the first contract and 15% completed on the second contract with SBB as of income in the three and six months ended June 30, 2016. There was no equity income recorded for Brand for the three and six months ended June 30, 2017 due to the sale of the interest in Brand. Brand's results of operations are summarized as follows:

Three Months Ended Six Months Ended
March 31 March 31
(In thousands) 2016 2016
Net revenues $ 750,394
$ 1,551,146
Gross profit 148,972
329,549
Net income (loss) attributable to Brand Energy & Infrastructure Services, Inc. and Subsidiaries (2,682 ) 8,378
Harsco's equity in income (loss) of Brand (694 ) 2,481
March 31, 2018.

5.4. Property, Plant and Equipment

Property, plant and equipment consists of the following:


(In thousands)	June 30 2017			December 31 2016			March 31 2018			December 31 2017
Land	$	10,822		$	10,606		$	10,828		$	10,840
Land improvements	15,398			15,032			14,866			14,996
Buildings and improvements	192,785			185,657			202,273			198,582
Machinery and equipment	1,589,309			1,525,156			1,643,743			1,599,713
Uncompleted construction	21,088			21,035			23,095			24,387
Gross property, plant and equipment	1,829,402			1,757,486			1,894,805			1,848,518
Less: Accumulated depreciation	(1,345,302		)	(1,267,231		)	(1,411,968		)	(1,368,771		)
Property, plant and equipment, net	$	484,100		$	490,255		$	482,837		$	479,747

6.5. Goodwill and Other Intangible Assets

The following table reflects the changes in carrying amounts of goodwill by segment for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018:


(In thousands)	Harsco Metals & Minerals Segment		Harsco Industrial Segment		Harsco Rail Segment		Consolidated Totals		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
Balance at December 31, 2017									$	381,893	$	6,839	$	13,026	$	401,758
Foreign currency translation	11,553		—		—		11,553		4,948		—		—		4,948
Balance at June 30, 2017	$	373,939	$	6,839	$	13,026	$	393,804
Balance at March 31, 2018									$	386,841	$	6,839	$	13,026	$	406,706

The Company’s 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 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 ~~June 30, 2017,~~March 31, 2018, no interim goodwill impairment testing was necessary.

Intangible assets included in the caption, Intangible assets, net, on the Condensed Consolidated Balance Sheets consist of the following:


	June 30, 2017				December 31, 2016				March 31, 2018				December 31, 2017
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer related	$	150,373	$	117,365	$	146,840	$	112,610	$	154,949	$	123,676	$	153,014	$	121,385
Patents	5,783		5,649		5,729		5,534		5,874		5,752		5,825		5,700
Technology related	25,918		25,907		25,687		25,634		26,035		26,035		26,131		26,131
Trade names	8,312		4,687		8,306		4,529		8,316		4,921		8,317		4,845
Other	8,709		5,515		8,512		5,200		8,966		6,000		8,875		5,850
Total	$	199,095	$	159,123	$	195,074	$	153,507	$	204,140	$	166,384	$	202,162	$	163,911

Amortization expense for intangible assets was as follows:


	Three Months Ended				Six Months Ended				Three Months Ended
	June 30				June 30				March 31
(In thousands)	2017		2016		2017		2016		2018		2017
Amortization expense for intangible assets	$	1,280	$	2,050	$	2,598	$	4,155	$	1,282	$	1,318

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


(In thousands)	2017		2018		2019		2020		2021		2018		2019		2020		2021		2022
Estimated amortization expense (a)	$	5,000	$	4,750	$	4,500	$	4,250	$	4,000	$	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.

7.6. Employee Benefit Plans


	Three Months Ended												Three Months Ended
	June 30												March 31
Defined Benefit Pension Plans Net Periodic Pension Cost	U.S. Plans						International Plans						U.S. Plans						International Plans
(In thousands)	2017			2016			2017			2016			2018			2017			2018			2017
Defined benefit plans:
Service cost	$	942		$	946		$	406		$	405
Interest cost	2,470			2,545			5,773			6,984
Service costs													$	10		$	11		$	386		$	411
Interest costs													2,391			2,469			5,672			5,734
Expected return on plan assets	(3,552		)	(3,601		)	(10,515		)	(11,219		)	(3,017		)	(2,621		)	(11,145		)	(10,424		)
Recognized prior service costs	8			15			46			45			—			8			(39		)	45
Recognized loss	1,425			1,372			4,087			3,142			1,302			1,425			3,840			4,042
Defined benefit pension plans net periodic pension cost (income)	$	1,293		$	1,277		$	(203	)	$	(643	)
Settlement/curtailment losses													166			—			—			—
Defined benefit pension plans net periodic pension cost (benefit)													$	852		$	1,292		$	(1,286	)	$	(192	)

On January 1, 2018, the Company adopted changes issued by the FASB related to how employers that sponsor defined benefit pension plans and other postretirement plans present NPPC in the statement of operations. Employers are 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. See Note 2, Recently Adopted and Recently Issued Accounting Standards, for additional details.

Six Months Ended
June 30
Defined Benefit Pension Plans Net Periodic Pension Cost U.S. Plans International Plans
(In thousands) 2017 2016 2017 2016
Service costs $ 1,884
$ 1,892
$ 817
$ 809
Interest cost 4,939
5,090
11,507
14,107
Expected return on plan assets (7,104 ) (7,202 ) (20,939 ) (22,682 )
Recognized prior service costs 16
31
91
89
Recognized loss 2,850
2,744
8,129
6,360
Defined benefit pension plans net periodic pension cost (income) $ 2,585
$ 2,555
$ (395 ) $ (1,317 )


	Three Months Ended				Six Months Ended				Three Months Ended
Company Contributions	June 30				June 30				March 31
(In thousands)	2017		2016		2017		2016		2018		2017
Defined benefit pension plans (U.S.)	$	471	$	470	$	942	$	940	$	1,284	$	471
Defined benefit pension plans (International)	2,963		3,254		11,300		13,052		9,734		8,337
Multiemployer pension plans	498		505		983		1,026		501		485
Defined contribution pension plans	2,468		2,476		5,028		5,302		2,835		2,560

The Company's estimate of expected contributions to be paid during the remainder of ~~2017~~2018 for the U.S. and international defined benefit pension plans are $~~5.3~~8.6 million and $~~6.2~~10.2 million, respectively.

8.7. Income Taxes

Income tax expense related to continuing operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and March 31, 2017 was ~~$11.2~~$8.3 million and ~~$17.5 million, respectively. Income tax expense related to continuing operations for the three and six months ended~~

~~June 30, 2016 was $12.0 million and $9.8~~$6.3 million, respectively.

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 reserve for uncertain tax positions at ~~June 30, 2017~~March 31, 2018 was ~~$5.7~~$4.9 million, including interest and penalties. Within the next twelve months, it is reasonably possible that ~~$0.8~~$1.2 million of unrecognized income tax benefits will be recognized upon settlement of tax examinations and the expiration of various statutes of limitations.

9.8. 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 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 ~~June 30, 2017~~March 31, 2018, 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 $24 million. Any change in the aggregate amount since the Company’s last Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 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 has not yet reached the judicial phase. The aggregate amount assessed by the tax authorities in August 2005 was $7.6 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 million, with penalty and interest assessed through that date increasing such amount by an additional $5.8 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 of the Company's customer and such customer’s pledge of assets in connection with the October 2009 notice, as required by Brazilian 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 ongoing collective bargaining and individual labor claims in Brazil through the Harsco Metals & Minerals Segment which allege, among other things, the Company's failure to pay required amounts for overtime and vacation at certain sites. The Company is vigorously defending itself against these claims; however, litigation is inherently unpredictable, particularly in foreign jurisdictions. While the Company does not currently expect that the ultimate resolution of these claims will have a material adverse effect on the Company’s financial condition, results of operations or cash flows, it is not possible to predict the ultimate outcome of these labor-related disputes.

The Company is continuing to review all known labor claims and as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company has established reserves of ~~$8.0~~$9.9 million and ~~$7.9~~$9.6 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. Depending on the cause of the fire and the extent of insurance coverage, the Company's results of operations and cash flows may be impacted in future periods.

Although results of operations and cash flows for a given period could be adversely affected by a negative outcome in these or other lawsuits, claims or proceedings, management believes that the ultimate outcome of ~~these~~any on going 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 $106 million in property damages and 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~~Compliance Matter

As previously disclosed, in 2017, the Company undertook an internal investigation, with the assistance of outside counsel, after it became aware of allegations involving an employee and ~~Safety Executive Matter~~

Inan agent of the ~~third quarter of 2016, a~~Harsco Rail subsidiary in China (“Harsco Rail China”). During this investigation the Company learned about certain payments that potentially violate the Foreign Corrupt Practices Act. Revenues attributed to Harsco Rail China were approximately 2% of the Company’s ~~Harsco Metals & Minerals Segment, along~~consolidated revenues for each of the prior three years.

The Company has voluntarily self-reported its initial findings to the SEC and the U.S. Department of Justice (the “DOJ”) and intends to fully cooperate with ~~one~~these agencies in their review. Based on information known to date, the Company believes the amount of ~~its customers, was named as a co-defendant~~the potential improper payments are not material to the condensed consolidated financial statements. Any determination that the Company's operations or activities were not in ~~an action brought by the U.K. Health and Safety Executive~~compliance with existing laws or regulations could result in the ~~U.K. Crown Court Sitting at Kingston-Upon-Hull. The action relates to a fatal accident involving one~~imposition of ~~the customer’s employees in 2010. The action seeks to levy a fine against the Company. The Company believes it is not responsible for the accident~~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. If~~cannot predict the outcome or impact of the ~~proceedings is unfavorable,~~investigation or the reviews by the SEC and the DOJ. However, based on information available at this time, the Company does not believe itany potential liability would ~~have a~~be material ~~adverse effect on~~to the Company's condensed consolidated financial ~~condition, however~~position, although an ~~unfavorable decision~~amount recorded, if any, could ~~have a~~be material ~~impact on~~to the ~~Company's~~ results of operations for the period in ~~any one period.~~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 ~~June 30, 2017,~~March 31, 2018, there were ~~17,164~~17,251 pending asbestos personal injury actions filed against the Company. Of those actions, ~~16,752~~16,737 were filed in the New York Supreme Court (New York County), 111 were filed in other New York State Supreme Court Counties and ~~301~~403 were filed in courts located in other states.

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

At ~~June 30, 2017, 16,730~~March 31, 2018, 16,712 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 2225 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 ~~June 30, 2017,~~March 31, 2018, the Company has obtained dismissal in ~~27,921~~27,971 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.

As previously disclosed, the Company has had ongoing meetings with the Supreme Council for Environment in Bahrain (“SCE”) over processing a byproduct (“salt cakes”) stored at the Al Hafeerah site. The Company’s Bahrain operations that produced the salt cakes has ceased operations and are owned under a strategic venture for which its strategic venture partner owns a 35% minority interest. An Environmental Impact Assessment and Technical Feasibility Study was approved by the SCE during the first quarter of 2018. The Company has previously established a reserve of $7.0 million, payable over several years, related to the estimated cost of processing and disposal of the salt cakes. This reserve represents the Company’s best estimate of ultimate costs to be incurred. The Company continues to evaluate this reserve and any future change in estimated costs could be material to the Company’s results of operations in any one period.

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, ~~2016~~2017 for additional information on Accrued insurance and loss reserves.

~~10.~~9. Reconciliation of Basic and Diluted Shares


	Three Months Ended					Six Months Ended						Three Months Ended
	June 30					June 30						March 31
(In thousands, except per share amounts)	2017		2016			2017		2016				2018		2017
Income (loss) from continuing operations attributable to Harsco Corporation common stockholders	$	18,635	$	(27,994	)	$	27,902	$	(38,544	)
Income from continuing operations attributable to Harsco Corporation common stockholders												$	18,260	$	9,267

Weighted-average shares outstanding - basic	80,535		80,337			80,460		80,288				80,650		80,385
Dilutive effect of stock-based compensation	2,315		—			2,098		—				2,894		1,878
Weighted-average shares outstanding - diluted	82,850		80,337			82,558		80,288				83,544		82,263

Earnings (loss) from continuing operations per common share, attributable to Harsco Corporation common stockholders:
Earnings from continuing operations per common share, attributable to Harsco Corporation common stockholders:											Earnings from continuing operations per common share, attributable to Harsco Corporation common stockholders:
Basic	$	0.23	$	(0.35	)	$	0.35	$	(0.48	)		$	0.23	$	0.12

Diluted	$	0.22	$	(0.35	)	$	0.34	$	(0.48	)		$	0.22	$	0.11

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


	Three Months Ended		Six Months Ended		Three Months Ended
	June 30		June 30		March 31
(In thousands)	2017	2016	2017	2016	2018	2017
Restricted stock units	—	957	—	694	—	—
Stock options	55	90	55	90	—	55
Stock appreciation rights	972	1,641	1,117	1,364	696	1,263
Performance share units	176	835	320	572	—	467

~~11.~~10. 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 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 in 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. 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 was as follows:



	Asset Derivatives			Liability Derivatives
(In thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
March 31, 2018
Derivatives designated as hedging instruments:
Foreign currency exchange forward contracts	Other current assets	$	1,755
Interest rate swaps	Other current assets	1,198
Interest rate swaps	Other assets	1,991		Other liabilities	$	612
Total derivatives designated as hedging instruments		$	4,944		$	612
Derivatives not designated as hedging instruments:
Foreign currency exchange forward contracts	Other current assets	$	3,528	Other current liabilities	$	9,227


		Asset Derivatives			Liability Derivatives				Asset Derivatives			Liability Derivatives
(In thousands)		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value			Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
June 30, 2017
December 31, 2017
Derivatives designated as hedging instruments:
Foreign currency exchange forward contracts		Other current assets	$	895	Other current liabilities	$	60		Other current assets	$	2,329	Other current liabilities	$	153
Cross-currency interest rate swaps		Other current assets	206			—
Interest rate swaps			—		Other current liabilities	196			Other current assets	464
Interest rate swaps		Other assets	35		Other liabilities	2,382			Other assets	170		Other liabilities	1,368
Total derivatives designated as hedging instruments			$	1,136		$	2,638			$	2,963		$	1,521
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	$	2,311	Other current liabilities	$	17,131		Other current assets	$	2,915	Other current liabilities	$	6,970

Asset Derivatives Liability Derivatives
(In thousands) Balance Sheet Location Fair Value Balance Sheet Location Fair Value
December 31, 2016
Derivatives designated as hedging instruments:
Foreign currency exchange forward contracts Other current assets $ 473
Other current liabilities $ 166
Cross-currency interest rate swaps Other current assets 514

—
Total derivatives designated as hedging instruments $ 987
$ 166
Derivatives not designated as hedging instruments:
Foreign currency exchange forward contracts Other current assets $ 4,459
Other current liabilities $ 3,372

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~~resulted in a net asset orof $0.6 million and a net liability of $0.2 million at ~~either June 30, 2017 or~~March 31, 2018 and December 31, ~~2016~~2017., respectively.

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

Derivatives Designated as Hedging Instruments


(In thousands)	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					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 or Equity			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 June 30, 2017:
Three Months Ended March 31, 2018:													Three Months Ended March 31, 2018:
Foreign currency exchange forward contracts														$	240			Product revenues	$	(212	)		$	—
Foreign currency exchange forward contracts	$	1,001		Product revenues/Cost of services and products sold	$	(186	)		$	—				—				Retained earnings (b)	(1,520		)		—
Interest rate swaps	(2,021		)		—				—					3,310					—				—
Cross-currency interest rate swaps	3			Interest expense	251			Cost of services and products sold	(107		)	(a)		(93		)	(c)	Interest expense	271				—
	$	(1,017	)		$	65			$	(107	)			$	3,457				$	(1,461	)		$	—
Three Months Ended June 30, 2016:
Three Months Ended March 31, 2017:													Three Months Ended March 31, 2017:
Foreign currency exchange forward contracts	$	(305	)	Cost of services and products sold	$	(1	)		$	—				$	(236	)		Cost of services and products sold	$	1			$	—
Interest rate swaps														(522		)			—				—
Cross-currency interest rate swaps	(520		)	Interest expense	281			Cost of services and products sold	(42		)	(a)		(128		)		Interest Expense	242			Cost of services and products sold	(210		)	(a)
	$	(825	)		$	280			$	(42	)			$	(886	)			$	243			$	(210	)

(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

Six Months Ended June 30, 2017:
Foreign currency forward exchange contracts $ 763
Product revenues / Cost of services and products sold $ (185 ) $ —

Interest rate swaps (2,543 ) —
—

Cross currency interest rate swaps (123 ) Interest expense 493
Cost of services and products sold (317 ) (a)
$ (1,903 ) $ 308
$ (317 )
Six Months Ended June 30, 2016:
Foreign currency forward exchange contracts $ (630 ) Product revenues / Cost of services and products sold $ (409 )
$ —

Cross currency interest rate swaps (2,151 ) Interest expense 224
Cost of services and products sold 4,219
(a)
$ (2,781 ) $ (185 ) $ 4,219

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

(b) The Company has adopted the new revenue recognition standard utilizing the modified retrospective transition method, including use of practical expedients. See Note 2, Recently Adopted and Recently Issued Accounting Standards for additional information.

(c) Amounts represent changes in foreign currency translation related to balances in Accumulated other comprehensive loss.

Derivatives Not Designated as Hedging Instruments


	Location of Gain (Loss) Recognized in Income on Derivative		Amount of Gain (Loss) Recognized in Income on Derivative for the Three Months Ended June 30 (b)						Location of Gain (Loss) Recognized in Income on Derivative		Amount of Gain (Loss) Recognized in Income on Derivative for the Three Months Ended March 31 (d)
(In thousands)		2017				2016			Location of Gain (Loss) Recognized in Income on Derivative	2018				2017
Foreign currency exchange forward contracts	Location of Gain (Loss) Recognized in Income on Derivative	Cost of services and products sold		$	(13,289	)	$	8,583		Cost of services and products sold		$	(5,466	)	$	1,550

Location of Gain
(Loss) Recognized in
Income on Derivative

Amount of Gain (Loss) Recognized in
Income on Derivative for the
Six Months Ended June 30 (b)
(In thousands) 2017 2016
Foreign currency forward exchange contracts Cost of services and products sold $ (11,739 ) $ 1,739

~~(b)~~(d) 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. 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 ~~June 30, 2017~~March 31, 2018:


(In thousands)	Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)			Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)
British pounds sterling	Sell	$	69,228	July 2017	$	(1,516	)	Sell	$	77,579	April 2018	$	(202	)
British pounds sterling	Buy	9,788		July 2017 through September 2017	108			Buy	10,789		April 2018 through May 2018	134
Euros	Sell	304,566		July 2017 through December 2017	(14,233		)	Sell	311,405		April 2018 through December 2018	(6,322		)
Euros	Buy	163,183		July 2017 through May 2018	2,482			Buy	203,648		April 2018 through November 2018	3,613
Other currencies	Sell	47,184		July 2017 through December 2017	(880		)	Sell	41,660		April 2018 through August 2018	(1,148		)
Other currencies	Buy	14,292		July 2017 through January 2018	54			Buy	2,901		April 2018	(19		)
Total		$	608,241		$	(13,985	)		$	647,982		$	(3,944	)

Contracted Amounts of Foreign Currency Exchange Forward Contracts Outstanding at December 31, ~~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	$	55,120	January 2017	$	(228	)	Sell	$	76,761	January 2018	$	(769	)
British pounds sterling	Buy	827		March 2017	(14		)	Buy	5,960		January 2018	72
Euros	Sell	326,797		January 2017 through December 2017	628			Sell	314,649		January 2018 through December 2018	(4,916		)
Euros	Buy	171,578		January 2017 through January 2018	(468		)	Buy	223,111		January 2018 through November 2018	4,564
Other currencies	Sell	43,455		January 2017 through September 2017	1,477			Sell	39,889		January 2018 through June 2018	(1,049		)
Other currencies	Buy	3,106		March 2017	(1		)	Buy	11,487		January 2018	219
Total		$	600,883		$	1,394			$	671,857		$	(1,879	)

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 gains of ~~$7.7~~$9.5 million and ~~$9.5~~$1.9 million during the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and March 31, 2017, ~~respectively and pre-tax net losses of $16.4 million and $20.3 million during the three and six months ended June 30, 2016,~~ respectively, in Accumulated other comprehensive 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 and February 2018, the Company entered into a series of ~~fixed to floating~~ interest rate swaps that cover the period from 2018 through ~~2021,~~2022, 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, ~~range~~ranging from 1.65% for 2018 to ~~2.71%~~3.124% for ~~2021.~~2022.

The following table indicates the notional amounts of the Company's interest rate swaps at ~~June 30, 2017:~~March 31, 2018:

Annual

Notional Amount

Interest Rates

Annual

Notional Amount

Interest Rates

(In millions)

Receive

Pay

Receive

Pay

Maturing 2018 through 2021

300.0

Floating U.S. dollar rate

Fixed U.S. dollar rate

Maturing 2018 through 2022

300.0

Floating U.S. dollar rate

Fixed U.S. dollar rate

Cross-Currency Interest Rate Swaps ~~(CCIRs)~~

The Company ~~uses~~may use 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’~~swaps' interest spread and changes in the credit worthiness of the counter-parties recorded in Accumulated other comprehensive loss. Changes in value attributed to the effect of foreign currency fluctuations are recorded on 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~~Company had no outstanding CCIRs at ~~June 30, 2017~~:March 31, 2018.

Interest Rates
(In millions) Contractual Amount Receive Pay
Maturing 2017 $ 1.4
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)	June 30 2017		December 31 2016		March 31 2018		December 31 2017
Assets
Foreign currency exchange forward contracts	$	3,206	$	4,932	$	5,283	$	5,244
Interest rate swaps	35		—		3,189		634
Cross-currency interest rate swaps	206		514
Liabilities
Foreign currency exchange forward contracts	17,191		3,538		9,227		7,123
Interest rate swaps	2,578		—		612		1,368

~~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 (c) for the Six Months Ended June 30
(In thousands)
Six Months Ended
June 30
2016
Balance at beginning of period $ 79,934
Reduction in the fair value related to election not to make 2016 payments (19,145 )
Change in fair value to the unit adjustment liability 3,402
Balance at end of period $ 64,191



~~(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. The Company sold its investment in Brand in September 2016 and the unit adjustment liability ceased at that time. See Note 4, Equity Method 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.~~inputs (Level 2). Model inputs can be verified, and valuation techniques do not involve significant management judgment.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and short-term borrowings approximate fair value due to the short-term maturities of these assets and liabilities. At ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017, the total fair value of long-term debt (excluding deferred financing costs), including current maturities, was ~~$658.6~~$643.5 million and $~~682.9~~599.1 million, respectively, compared with a carrying value of $~~651.4~~636.8 million and $~~673.4~~593.7 million, respectively. Fair values for debt are based on ~~quoted~~pricing models using market ~~prices~~based inputs (Level 1)2) for ~~the same or~~ similar issues or on the current rates offered to the Company for debt of the same remaining ~~maturities (Level 2).~~maturities.

~~12.~~11. Review of Operations by Segment


	Three Months Ended						Six Months Ended							Three Months Ended
	June 30						June 30							March 31
(In thousands)	2017			2016			2017			2016				2018			2017
Revenues From Continuing Operations
Harsco Metals & Minerals	$	259,306		$	253,560		$	506,340		$	483,232			$	264,723		$	247,034
Harsco Industrial	73,563			66,270			139,448			128,139				83,598			65,885
Harsco Rail	61,994			50,103			121,582			111,843				59,678			59,588
Corporate	35			—			69			—				39			34
Total Revenues From Continuing Operations	$	394,898		$	369,933		$	767,439		$	723,214			$	408,038		$	372,541
Operating Income (Loss) From Continuing Operations
Operating Income (loss) From Continuing Operations													Operating Income (loss) From Continuing Operations
Harsco Metals & Minerals	$	32,177		$	30,927		$	58,606		$	37,868			$	27,735		$	25,757
Harsco Industrial	9,151			7,300			11,955			13,771				12,421			2,894
Harsco Rail	7,961			(31,948		)	13,947			(27,042		)		1,952			6,217
Corporate	(6,815		)	(4,965		)	(14,126		)	(13,852		)		(5,567		)	(6,261		)
Total Operating Income From Continuing Operations	$	42,474		$	1,314		$	70,382		$	10,745			$	36,541		$	28,607
Depreciation and Amortization
Harsco Metals & Minerals	$	27,928		$	30,662		$	55,808		$	61,687			$	29,085		$	27,880
Harsco Industrial	1,843			1,850			3,683			3,568				1,855			1,840
Harsco Rail	1,025			1,361			2,062			2,795				1,064			1,037
Corporate	1,479			1,744			2,950			3,612				1,348			1,471
Total Depreciation and Amortization	$	32,275		$	35,617		$	64,503		$	71,662			$	33,352		$	32,228
Capital Expenditures
Harsco Metals & Minerals	$	21,599		$	13,305		$	37,071		$	28,725			$	25,176		$	15,472
Harsco Industrial	796			1,162			1,548			2,296				1,087			752
Harsco Rail	1,083			767			1,303			1,139				430			220
Corporate	233			(9		)	778			16				204			545
Total Capital Expenditures	$	23,711		$	15,225		$	40,700		$	32,176			$	26,897		$	16,989

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


	Three Months Ended						Six Months Ended						Three Months Ended
	June 30						June 30						March 31
(In thousands)	2017			2016			2017			2016			2018			2017
Segment operating income	$	49,289		$	6,279		$	84,508		$	24,597		$	42,108		$	34,868
General Corporate expense	(6,815		)	(4,965		)	(14,126		)	(13,852		)	(5,567		)	(6,261		)
Operating income from continuing operations	42,474			1,314			70,382			10,745			36,541			28,607
Interest income	493			552			1,005			1,087			498			512
Interest expense	(12,405		)	(13,805		)	(24,058		)	(26,168		)	(9,583		)	(11,653		)
Change in fair value to the unit adjustment liability and loss on dilution of equity method investment	—			(1,489		)	—			(13,706		)
Income (loss) from continuing operations before income taxes and equity income (loss)	$	30,562		$	(13,428	)	$	47,329		$	(28,042	)
Defined benefit pension income (expense)													839			(699		)
Income from continuing operations before income taxes													$	28,295		$	16,767

~~13. Other Expenses~~

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

Three Months Ended Six Months Ended
June 30 June 30
(In thousands) 2017 2016 2017 2016
Employee termination benefit costs $ 1,695
$ 1,194
$ 2,448
$ 6,966
Harsco Metals & Minerals Segment separation costs —
10
—
3,297
Net gains (a)
(88 ) (105 ) (210 ) (757 )
Other costs to exit activities 247
36
347
218
Impaired asset write-downs 281
23
281
116
Other (63 ) 89
100
530
Other expenses $ 2,072
$ 1,247
$ 2,966
$ 10,370


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

12. Revenue Recognition

Service revenues and product revenues are recognized to depict the transfer of promised services and products to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring those services or products. Service revenues include the service components of the Harsco Metals & Minerals and Harsco Rail Segments. Product revenues include the Harsco Industrial Segment and the product revenues of the Harsco Metals & Minerals and Harsco Rail Segments.

Harsco Metals & Minerals - This Segment provides on-site services, under long-term contracts, for material logistics; product quality improvement and resource recovery from iron, steel and metals manufacturing; and also manufactures and sells industrial abrasives and roofing granule products.

Service revenues are recognized over time because the customer simultaneously receives and consumes the benefits provided by the Company's performance. The Company utilizes an appropriate output method based on work performed (liquid steel tons processed, weight of material handled, etc.) to measure progress, which is deemed to best depict the transfer of value to the customer and revenue earned by the Company at any given point. Transaction prices are determined based on the terms of the contract, which may include both fixed and variable portions. The fixed fee portion is recognized periodically as earned (normally monthly) over the contractual period. The variable fee portion is recognized as services are performed and differs from period to period based upon the actual performance of services. Additionally, given the long-term nature of these arrangements, most contracts permit periodic adjustment of either the variable or both the fixed and variable fee portions based on the changes in macroeconomic indicators, including changes in commodity prices. Transaction prices, when the standalone selling price is not directly observable, are allocated to performance obligations utilizing an expected cost plus a margin approach. Amounts are typically billed and payable on a monthly basis as services are performed.

Product revenues are recognized at the point in time when control transfers to the customer. Control generally transfers to the customer at the point of shipment for domestic orders and in accordance with the international commercial terms included in specific customer contracts for export sales. Transaction prices are determined based on the terms of the contract, which are generally fixed and when the standalone selling price is not directly observable, allocated to performance obligations utilizing an adjusted market assessment approach. Amounts are billed and payable upon completion of each transaction.

At March 31, 2018, the Harsco Metals & Minerals Segment had remaining, fixed, unsatisfied performance obligations, where the expected contract duration exceeds one year totaling $86.5 million. Of this amount, $32.4 million is expected to be fulfilled by March 31, 2019, $24.3 million by March 31, 2020, $16.4 million by March 31, 2021, $7.3 million by March 31, 2022,

$5.5 million by March 31, 2023 and the remainder thereafter. These amounts exclude any variable fees, fixed fees subject to indexation and any performance obligations expected to be satisfied within one year.

Harsco Industrial - Air-X-Changers - This business unit sells air-cooled heat exchangers with revenue recognized over time as control is transferred to the customer. Control transfers to the customer over time because the air-cooled heat exchangers are customized, have no alternate use and the Company has an enforceable right to payment for performance completed. The Company utilizes an input method based on costs incurred to measure progress, which is deemed to best depict the transfer of value to the customer and revenue earned by the Company at any given point. Transaction prices are determined based on the terms of the contract, which are generally fixed, and when the standalone selling price is not directly observable, allocated to performance obligations utilizing an adjusted market assessment approach. Depending on product type, the Company may receive periodic payments associated with key milestones with any remaining consideration billed and payable upon successful completion of the transaction.

Harsco Industrial - IKG - This business unit sells metal bar grating configurations with revenue recognized at the point in time when control transfers to the customer. Control generally transfers to the customer at the point of shipment for domestic orders and in accordance with the international commercial terms included in specific customer contracts for export sales. Transaction prices are determined based on the terms of the contract, which are generally fixed, and when the standalone selling price is not directly observable, allocated to performance obligations utilizing an adjusted market assessment approach. Amounts are billed and payable upon completion of each transaction though advance payments are required in limited circumstances when credit concerns exist.

Harsco Industrial - Patterson-Kelley - This business unit sells energy-efficient heat transfer products with revenue recognized at the point in time when control transfers to the customer. Control generally transfers to the customer at the point of shipment. Transaction prices are determined based on the terms of the contract, which are generally fixed, and when the standalone selling price is not directly observable, allocated to performance obligations utilizing an adjusted market assessment approach. Amounts are billed and payable upon completion of each transaction.

Harsco Rail - This Segment sells railway track maintenance equipment, after-market parts and provides railway track maintenance services.

For the majority of railway track maintenance equipment sales, revenue is recognized at the point in time when control transfers to the customer. Control generally transfers to the customer at the point of shipment for domestic orders and in accordance with the international commercial terms included in specific customer contracts for export sales. In certain railway track maintenance equipment sales, revenue is recognized over time as control is transferred to the customer because such equipment is highly customized, has no alternate use and the Company has an enforceable right to payment for performance completed. In such instances, the Company utilizes an input method based on costs incurred to measure progress, which is deemed to best depict the transfer of value to the customer and revenue earned by the Company at any given point. Transaction prices are determined based on the terms of the contract, which are generally fixed, and when the standalone selling price is not directly observable, allocated to performance obligations utilizing either the adjusted market assessment or expected cost plus a margin approach. For certain transactions for railway track maintenance equipment with long lead times, the Company receives periodic payments associated with key milestones. In limited instances, the Company may receive payment in advance of related performance with the intent to provide financing with such transactions being treated as including a significant financing component. Any remaining consideration is billed and payable upon successful completion of the transaction.

For after-market parts sales, revenue is recognized at the point in time when control transfers to the customer. Control generally transfer to the customer at the point of shipment for domestic orders and in accordance with the international commercial terms included in specific customer contracts for export sales. Transaction prices are determined based on the terms of the contract, which are generally fixed, and when the standalone selling price is not directly observable, allocated to performance obligations utilizing an adjusted market assessment approach. Amounts are billed and payable upon completion of each contract.

For railway track maintenance services, revenue is recognized over time because the customer simultaneously receives and consumes the benefits provided by the Company's performance. In such instances, the Company utilizes an appropriate output method based on work performed (feet, miles, shifts worked, etc.) to measure progress, which is deemed to best depict the transfer of value to the customer and revenue earned by the Company at any given point. Transaction prices are determined based on the terms of the contract, which are generally variable. The variable fee portion is recognized as services are performed and differs from period to period based upon the actual provision of services. Additionally, given the long-term nature of these arrangements, most contracts permit periodic adjustment based on the changes in macroeconomic indicators. Transaction prices, when the standalone selling price is not directly observable, allocated to performance obligations utilizing an expected cost plus a margin approach. Amounts are typically billed and payable on a monthly basis as services are performed.

At March 31, 2018, the Harsco Rail Segment had remaining, fixed, unsatisfied performance obligations, where the expected contract duration exceeds one year totaling $170.2 million. Of this amount, $48.3 million is expected to be fulfilled by

March 31, 2019, $39.3 million by March 31, 2020, $49.2 million by March 31, 2021, $24.3 million by March 31, 2022, and

$9.1 million by March 31, 2023. These amounts exclude any variable fees, fixed fees subject to indexation and any performance obligations expected to be satisfied within one year.

A summary of the Company's revenues by primary geographical markets as well as by key product and service groups is as follows:



	Three Months Ended
	March 31, 2018
(In thousands)	Harsco Metals & Minerals Segment		Harsco Industrial Segment		Harsco Rail Segment		Corporate		Consolidated Totals
Primary Geographical Markets (a):
Western Europe	$	96,921	$	—	$	14,720	$	—	$	111,641
North America	71,065		78,858		40,405		39		190,367
Latin America (b)	41,458		4,740		833		—		47,031
Asia-Pacific	36,221		—		3,720		—		39,941
Middle East and Africa	11,553		—		—		—		11,553
Eastern Europe	7,505		—		—		—		7,505
Total Revenues (c)	$	264,723	$	83,598	$	59,678	$	39	$	408,038
Key Product and Service Groups:
On-site services and material logistics, product quality improvement and resource recovery for iron, steel and metals manufacturing; as well as value- added environmental solutions for industrial co-products.	$	264,723	$	—	$	—	$	—	$	264,723
Railway track maintenance services and equipment	—		—		59,678		—		59,678
Industrial grating and fencing products	—		30,097		—		—		30,097
Air-cooled heat exchangers	—		44,267		—		—		44,267
Heat transfer products	—		9,234		—		—		9,234
General Corporate	—		—		—		39		39
Total Revenues (c)	$	264,723	$	83,598	$	59,678	$	39	$	408,038



	Three Months Ended
	March 31, 2017
(In thousands)	Harsco Metals & Minerals Segment		Harsco Industrial Segment		Harsco Rail Segment		Corporate		Consolidated Totals
Primary Geographical Markets (a):
Western Europe	$	91,720	$	—	$	9,539	$	—	$	101,259
North America	67,233		58,351		45,150		34		170,768
Latin America (b)	38,020		6,582		476		—		45,078
Asia-Pacific	32,557		952		4,423		—		37,932
Middle East and Africa	10,556		—		—		—		10,556
Eastern Europe	6,948		—		—		—		6,948
Total Revenues (c)	$	247,034	$	65,885	$	59,588	$	34	$	372,541
Key Product and Service Groups:
On-site services and material logistics, product quality improvement and resource recovery for iron, steel and metals manufacturing; as well as value- added environmental solutions for industrial co-products.	$	247,034	$	—	$	—	$	—	$	247,034
Railway track maintenance services and equipment	—		—		59,588		—		59,588
Industrial grating and fencing products	—		28,159		—		—		28,159
Air-cooled heat exchangers	—		30,461		—		—		30,461
Heat transfer products	—		7,265		—		—		7,265
General Corporate	—		—		—		34		34
Total Revenues (c)	$	247,034	$	65,885	$	59,588	$	34	$	372,541


(a)	Revenues are attributed to individual countries based on the location of the facility generating the revenue.


(b)	Includes Mexico.


(c)	The Company has adopted the new revenue recognition standard utilizing the modified retrospective transition method, including use of practical expedients. Comparative information has not been restated and continues to be reported under U.S. GAAP in effect for those periods. See Note 2, Recently Adopted and Recently Issued Accounting Standards for additional information.

In certain instances, the Company may receive payments in advance of earning revenue, in such instances these amounts are treated as Advances on contracts and other customer advances on the Condensed Consolidated Balance Sheets. In other instances, the Company may recognize revenue in advance of being able to contractually invoice the customer, in such instances these amounts are treated as Contract assets on the Condensed Consolidated Balance Sheet. Contract assets are transferred to Trade accounts receivable, net when right to payment becomes unconditional. Contract assets and Contract liabilities are reported as a net position on a contract-by-contract basis at the end of each reporting period. These instances are primarily related to the Harsco Rail Segment and air-cooled heat exchangers business of the Harsco Industrial Segment. The following table reflects Contract assets and Advances on contracts:



(In thousands)	March 31, 2018		December 31, 2017
Contract assets:
Current portion of contract assets	$	23,871	$	—
Contract assets	3,566		—
Total contract assets	$	27,437	$	—
Advances on contracts:
Current portion of advances on contracts	$	38,147	$	117,958
Advances on contracts	21,837		—
Total advances on contracts	$	59,984	$	117,958

The increase in Contract assets and decrease in Advances on contracts is primarily attributable to initial adoption of the FASB issued changes related to revenue recognition. See Note 2, Recently Adopted and Recently Issued Accounting Standards for additional information.

The Company provides assurance type warranties associated primarily with product sales in the Harsco Industrial and Harsco Rail Segments. These assurance type warranties are typically not priced or negotiated separately (there is no option to separately purchase the warranty) or the warranty does not provide customers with a service in addition to the assurance that the product complies with agreed-upon specifications. Accordingly, such assurance type warranties do not represent separate performance obligations. 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, 2017 for additional information on warranties.

The Company has elected to utilize the following practical expedients on an ongoing basis as part of the adoption of the new revenue standard:

The Company has not adjusted the promised amount of consideration for the effects of a significant financing component if the Company expects, at contract inception, that the period between when the Company transfers the promised good or services to the customer and when the customer pays for that good or service will be one year or less; and

The Company has elected to exclude disclosures related to unsatisfied performance obligations where the related contract has a duration of one year or less; or where the consideration allocated to a wholly unsatisfied performance obligation or to a distinct good or service that forms part of a single performance obligation is entirely variable. Accordingly, the Company's disclosure related to unsatisfied performance obligations is limited to the railway track maintenance equipment in the Harsco Rail Segment and the fixed portion of fees related to metals services in the Harsco Metals & Minerals Segment.

Taxes assessed by governmental authorities that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Additionally, in certain contracts, the Company facilitates shipping and handling activities after control has transferred to the customer. The Company has elected to record all shipping and handling activities as costs to fulfill a contract. In situations where the shipping and handling costs have not been incurred at the time revenue is recognized, the respective shipping and handling costs are accrued.

13. Other Expenses, Net

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



	Three Months Ended
	March 31
(In thousands)	2018		2017
Employee termination benefit costs	$	1,443	$	753
Net gains (a)	—		(122		)
Other costs to exit activities	364		100
Impaired asset write-downs	9		—
Other	6		163
Other expenses, net	$	1,822	$	894


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

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 ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 and ~~2017~~2018 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 Gain (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, 2015	$	(125,561	)		$	(400	)		$	(389,696	)		$	(31	)	$	(515,688	)
Balance at December 31, 2016																			$	(144,534	)		$	(1,089	)		$	(461,094	)		$	(5	)	$	(606,722	)
Other comprehensive income (loss) before reclassifications	(9,502		)	(a)	(2,262		)	(b)	23,873			(a)	(3		)	12,106			16,561			(a)	(536		)	(b)	(3,793		)	(a)	6			12,238
Amounts reclassified from accumulated other comprehensive loss, net of tax	—				(129		)		8,190				—			8,061			—				149				4,998				—			5,147
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)	3,079				106				(148		)		—			3,037
Other comprehensive income (loss) from equity method investee	3,650				(266		)		380				—			3,764
Total other comprehensive income (loss)	(2,773		)		(2,551		)		32,295				(3		)	26,968			16,561				(387		)		1,205				6			17,385
Less: Other comprehensive income (loss) attributable to noncontrolling interests	425				(7		)		—				—			418
Other comprehensive loss attributable to noncontrolling interests																			(386		)		—				—				—			(386		)
Other comprehensive income (loss) attributable to Harsco Corporation	(2,348		)		(2,558		)		32,295				(3		)	27,386			16,175				(387		)		1,205				6			16,999
Balance at June 30, 2016	$	(127,909	)		$	(2,958	)		$	(357,401	)		$	(34	)	$	(488,302	)
Balance at March 31, 2017																			$	(128,359	)		$	(1,476	)		$	(459,889	)		$	1		$	(589,723	)


	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 Gain (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, 2016	$	(144,534	)		$	(1,089	)		$	(461,094	)		$	(5	)	$	(606,722	)
Balance at December 31, 2017																			$	(111,567	)		$	808			$	(435,840	)		$	17		$	(546,582	)
Adoption of new accounting standard (a)																			—				(1,520		)		—				—			(1,520		)
Balance at January 1, 2018																			(111,567		)		(712		)		(435,840		)		17			(548,102		)
Other comprehensive income (loss) before reclassifications	26,386			(a)	(913		)	(b)	(19,185		)	(a)	6			6,294			12,501			(b)	2,768			(c)	(13,945		)	(b)	(14		)	1,310
Amounts reclassified from accumulated other comprehensive loss, net of tax	—				185				10,042				—			10,227			—				(91		)		4,944				—			4,853
Total other comprehensive income (loss)	26,386				(728		)		(9,143		)		6			16,521			12,501				2,677				(9,001		)		(14		)	6,163
Less: Other comprehensive income attributable to noncontrolling interests	(1,534		)		—				—				—			(1,534		)
Other comprehensive income attributable to noncontrolling interests																			(1,278		)		—				—				—			(1,278		)
Other comprehensive income (loss) attributable to Harsco Corporation	24,852				(728		)		(9,143		)		6			14,987			11,223				2,677				(9,001		)		(14		)	4,885
Balance at June 30, 2017	$	(119,682	)		$	(1,817	)		$	(470,237	)		$	1		$	(591,735	)
Balance at March 31, 2018																			$	(100,344	)		$	1,965			$	(444,841	)		$	3		$	(543,217	)


(a)	~~Principally foreign currency fluctuation.~~Represents the opening balance sheet adjustment to retained earnings related to the adoption of the revenue recognition standard adopted by the Company on January 1, 2018. See Note 2, Recently Adopted and Recently Issued Accounting Standards, for additional details.

(b) Principally foreign currency fluctuation.


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

Amounts reclassified from accumulated other comprehensive loss are as follows:


(In thousands)	Three Months Ended						Six Months Ended						Affected Caption in the Condensed Consolidated Statements of Operations		Three Months Ended						Affected Caption in the Condensed Consolidated Statements of Operations
(In thousands)	June 30 2017			June 30 2016			June 30 2017			June 30 2016					March 31 2018			March 31 2017
Amortization of cash flow hedging instruments:
Foreign currency exchange forward contracts	$	(189	)	$	—		$	(189	)	$	(408	)	Product revenues		$	(212	)	$	—		Product revenues
Foreign currency exchange forward contracts	3			(1		)	4			(1		)	Cost of services and products sold		—			1			Cost of services and products sold
Cross-currency interest rate swaps	251			281			493			224			Interest expense		271			242			Interest expense
Total before tax	65			280			308			(185		)			59			243
Tax expense	(29		)	(109		)	(123		)	56					(150		)	(94		)
Total reclassification of cash flow hedging instruments, net of tax	$	36		$	171		$	185		$	(129	)			$	(91	)	$	149

Amortization of defined benefit pension items (c):
Actuarial losses	$	2,706		$	2,285		$	5,358		$	4,661		Selling, general and administrative expenses
Actuarial losses	2,806			2,229			5,621			4,443			Cost of services and products sold
Prior-service benefits	(10		)	(3		)	(22		)	(4		)	Selling, general and administrative expenses
Prior-service costs	64			63			129			124			Cost of services and products sold
Amortization of defined benefit pension items (d):														Amortization of defined benefit pension items (d):
Recognized losses															$	5,142		$	5,467		Defined benefit pension income (expense)
Recognized prior-service costs															(39		)	53			Defined benefit pension income (expense)
Settlement/curtailment losses															166			—			Defined benefit pension income (expense)
Total before tax	5,566			4,574			11,086			9,224					5,269			5,520
Tax benefit	(522		)	(517		)	(1,044		)	(1,034		)			(325		)	(522		)
Total reclassification of defined benefit pension items, net of tax	$	5,044		$	4,057		$	10,042		$	8,190				$	4,944		$	4,998

~~(c)~~


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

~~Amounts reclassified from accumulated other comprehensive loss in connection with loss on dilution of equity method investment are as follows:~~

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

Tax benefit (1,776 )
Total amounts reclassified from accumulated other comprehensive loss in connection with loss on dilution of equity method investment $ 3,037

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, ~~2016~~2017 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 ~~2017~~2018 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)~~(15) 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)~~(16) implementation of environmental remediation matters; ~~(18)~~(17) risk and uncertainty associated with intangible assets; and ~~(19)~~(18) 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, ~~2016~~2017 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

The Company is a diversified, multinational provider of industrial services and engineered products serving global industries that are fundamental to worldwide economic growth and infrastructure development. The Company's operations consist of three reportable segments: Harsco Metals & Minerals, Harsco Industrial and Harsco Rail. In general, each of the Company’s segments are among the market leaders in their respective sectors. The Harsco Metals & Minerals Segment operates under primarily long-term contracts, providing critical services and support to the steelmaking process; and environmental and zero waste solutions for manufacturing by-products within the metals industry. The Harsco Industrial Segment is a supplier of custom-engineered and manufactured air-cooled heat exchangers that support the processing and distribution of natural gas and downstream refined products; manufactures a full range of metal bar grating configurations, used mainly in industrial flooring, as well as safety and security applications; and also manufactures energy-efficient heat transfer products such as boilers and water heaters, for various commercial and industrial applications. The Harsco Rail Segment is a provider of highly engineered maintenance equipment, after-market parts and safety and diagnostic systems which support railroad and transit customers worldwide. The Company has locations in approximately 30 countries, including the U.S. The Company was incorporated in 1956.

Highlights from the first quarter of 2018 included (Refer to the discussion of segment and consolidated results included within Results of Operations below, as well as Liquidity and Capital Resources, for additional information pertaining to the key drivers impacting these highlights):

Revenues and Operating income from continuing operations for the first quarter of 2018 increased approximately 10% and 28%, respectively, compared with the first quarter of 2017. The primary drivers for these increases were improved demand in the Harsco Industrial Segment and the Harsco Metals & Minerals Segment as well as the effect of foreign currency translation.

Diluted earnings per share common share from continuing operations attributable to Harsco Corporation for the first quarter of 2018 were $0.22, an increase of approximately 100% compared with the first quarter of 2017. The primary drivers for the increase were improved operating results and a decrease in interest expense.

Cash used by operating activities for the first quarter of 2018 increased by $2.1 million compared with the first quarter of 2017. The primary driver for the increase was an overall increase in working capital partially offset by higher net income.

Looking forward, the Company maintains a positive outlook across all businesses. The Company’s view for the remainder of 2018 and beyond is supported by the below factors, which should be considered in the context of other risks, trends and strategies in the Company's Annual Report on Form 10-K for the year ended December 31, 2017:

Markets served by the ~~Company's~~ Harsco Metals & Minerals Segment continued to demonstrate ~~some~~ improvement ~~during the first six months of 2017 as~~through increased customer steel production and higher commodity volumes and ~~prices~~prices. Additionally, the impact of new sites (or contracts), lower operating costs achieved through improvement initiatives and increased contributions from the Company’s industrial abrasive and roofing granules business are expected to positively ~~affected both revenues and operating income. In addition,~~impact results ~~were positively affected by the operational benefits and discipline achieved~~ in ~~recent years due to the Harsco Metals & Minerals Segment's Improvement Plan ("Project Orion").~~2018.

~~Energy markets also demonstrated some fundamental improvement during the second quarter and first six months of 2017.~~ The Harsco Industrial Segment’s air-cooled heat exchangers business ~~has seen steadily improving results.~~is expected to be positively impacted by fundamental improvements within the energy markets. Bookings for this business have increased ~~but may fluctuate with energy prices~~significantly in recent quarters. Additionally, increased demand for metal grating and ~~underlying~~heat transfer products, new product innovations and manufacturing efficiencies are also anticipated to have a positive impact within this segment during 2018.

Continued growth, market ~~fundamentals. The Harsco Industrial Segment's industrial grating business continues~~penetration and investment within after-market parts and Protran Technology are expected 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 second quarter and first six months of 2017support improved results in the Harsco ~~Industrial~~Rail Segment.

~~Results~~ The Company is also anticipating an improvement in demand for the Harsco Rail Segment for the second quarter and the first six months of 2016, included an estimated loss provision of $40.1 million related to the Company's contracts with the federal railway system of Switzerland ("SBB"). The estimated loss provision resultedoriginal equipment from ~~increased vendor costs, ongoing discussions with the customer, and increased estimates for commissioning, certification and testing costs,~~international customers, as well as from domestic railroads following a period of decreased demand in recent years.

Corporate spending is expected ~~settlement~~to increase modestly compared with ~~respect~~2017, while interest expense is forecasted to decline meaningfully following the ~~customer. Excluding the impact~~repricing of the ~~estimated loss provision,~~Company’s Senior Secured Credit Facility in 2017.

The Company expects its operational effective income tax rate to approximate 26% to 28% in 2018, representing a significant decline relative to 2017 as a result of recent U.S. tax reform.

The Company is also focused on future growth opportunities, such as organic growth through higher-return service contract opportunities in attractive markets and investments to strengthen the ~~Harsco Rail Segment's operating results during the second quarter~~technical and ~~first six months of 2017 were consistent with the same periods in prior years.~~

Three Months Ended
Revenues by Segment June 30
(In millions) 2017 2016 Change %
Harsco Metals & Minerals $ 259.3
$ 253.6
$ 5.7
2.3 %
Harsco Industrial 73.6
66.3
7.3
11.0
Harsco Rail 62.0
50.1
11.9
23.7
Corporate —
—
—
—
Total revenues $ 394.9
$ 369.9
$ 25.0
6.7 %

Six Months Ended
Revenues by Segment June 30
(In millions) 2017 2016 Change %
Harsco Metals & Minerals $ 506.3
$ 483.2
$ 23.1
4.8 %
Harsco Industrial 139.4
128.1
11.3
8.8
Harsco Rail 121.6
111.8
9.7
8.7
Corporate 0.1
—
—
0.1
—
Total revenues $ 767.4
$ 723.2
$ 44.2
6.1 %

Three Months Ended
Revenues by Region June 30
(In millions) 2017 2016 Change %
North America $ 186.7
$ 159.4
$ 27.2
17.1 %
Western Europe 104.3
110.6
(6.2 ) (5.6 )
Latin America (includes Mexico) 45.8
45.0
0.8
1.8
Asia-Pacific 41.5
34.5
7.0
20.3
Middle East and Africa 10.0
12.2
(2.3 ) (18.7 )
Eastern Europe 6.6
8.2
(1.6 ) (19.6 )
Total revenues $ 394.9
$ 369.9
$ 25.0
6.7 %

Six Months Ended
Revenues by Region June 30
(In millions) 2017 2016 Change %
North America $ 357.4
$ 321.7
$ 35.7
11.1 %
Western Europe 205.6
218.9
(13.3 ) (6.1 )
Latin America (included Mexico) 90.9
79.7
11.2
14.0
Asia-Pacific 79.4
66.2
13.2
20.0
Middle East and Africa 20.5
21.5
(0.9 ) (4.4 )
Eastern Europe 13.5
15.2
(1.7 ) (11.4 )
Total revenues $ 767.4
$ 723.2
$ 44.2
6.1 %

~~Revenues~~applied product capabilities for the Company during the second quarter and first six months 2017 were $394.9 million and $767.4 million, respectively compared with $369.9 million and $723.2 million, respectively, in the second quarter and first six months of 2016. The change is primarily related to the effect of higher volumes in the Harsco Metals & Minerals Segment, ~~the Harsco Industrial Segment's air-cooled heat exchangers business,~~ and ~~machine sales~~strategic investments or possible acquisitions, including in the Harsco Rail ~~Segment; partially offset by the impacts of foreign currency translation~~ and ~~lower volumes in the~~ Harsco Industrial ~~Segment's industrial grating business. Foreign currency translation decreased revenues by $4.8 million~~Segments, that improve competitive positioning in core growth and ~~$10.3 million, respectively, for the second quarter~~technology applications and ~~first six months of 2017 compared with the same period in the prior year.~~

Three Months Ended
Operating Income (Loss) by Segment June 30
(In millions) 2017 2016 Change %
Harsco Metals & Minerals $ 32.2
$ 30.9
$ 1.3
4.0 %
Harsco Industrial 9.2
7.3
1.9
25.4
Harsco Rail 8.0
(31.9 ) 39.9
124.9
Corporate (6.8 ) (5.0 ) (1.9 ) (37.3 )
Total operating income $ 42.5
$ 1.3
$ 41.2
3,132.4 %

Six Months Ended
Operating Income (Loss) by Segment June 30
(In millions) 2017 2016 Change %
Harsco Metals & Minerals $ 58.6
$ 37.9
$ 20.7
54.8 %
Harsco Industrial 12.0
13.8
(1.8 ) (13.2 )
Harsco Rail 13.9
(27.0 ) 41.0
151.6
Corporate (14.1 ) (13.9 ) (0.3 ) (2.0 )
Total operating income $ 70.4
$ 10.7
$ 59.6
555.0 %

Three Months Ended Six Months Ended
June 30 June 30
Operating Margin by Segment 2017 2016 2017 2016
Harsco Metals & Minerals 12.4 % 12.2 % 11.6 % 7.8 %
Harsco Industrial 12.4
11.0
8.6
10.7
Harsco Rail 12.8
(63.8 ) 11.5
(24.2 )
Consolidated operating margin 10.8 % 0.4 % 9.2 % 1.5 %

Operating income from continuing operations for the second quarter and first six months of 2017 was $42.5 million and $70.4 million, respectively, compared with $1.3 million and $10.7 million, respectively, in the second quarter and first six months of 2016. Refer to the segment discussions below for information pertaining to factors positively affecting and negatively impacting operating income from continuing operations.adjacent markets.

Results of Operations

Segment Results



	Three Months Ended
	March 31
(In millions, except percentages)	2018			2017
Revenues:
Harsco Metals & Minerals	$	264.7		$	247.0
Harsco Industrial	83.6			65.9
Harsco Rail	59.7			59.6
Total Revenues	$	408.0		$	372.5
Operating Income (Loss):
Harsco Metals & Minerals	$	27.7		$	25.8
Harsco Industrial	12.4			2.9
Harsco Rail	2.0			6.2
Corporate	(5.6		)	(6.3		)
Total Operating Income:	$	36.5		$	28.6
Operating Margins:
Harsco Metals & Minerals	10.5		%	10.4		%
Harsco Industrial	14.9			4.4
Harsco Rail	3.3			10.4
	9.0		%	7.7		%

Harsco Metals & Minerals Segment:


Significant Impacts on Revenues	Three Months Ended			Six Months Ended
Significant Effects on Revenues							Three Months Ended
(In millions)	June 30, 2017			June 30, 2017			March 31, 2018
Revenues — 2016	$	253.6		$	483.2
Revenues — 2017							$	247.0
Impact of foreign currency translation.							17.0
Net effects of price/volume changes, primarily attributable to volume changes.	10.8			33.8			6.3
Impact of foreign currency translation.	(4.0		)	(8.0		)
Net impact of new and lost contracts (including exited underperforming contracts).	(1.1		)	(2.4		)	(5.6		)
Other.	—			(0.3		)
Revenues — 2017	$	259.3		$	506.3
Revenues — 2018							$	264.7

Factors Positively Affecting Operating Income:

Increased global steel production. Overall, steel production by customers under services contracts, including the impact of new and exited contracts, increased by ~~6% and 8%, respectively,~~2% for the ~~second~~first quarter ~~and first six months~~ of ~~2017~~2018 compared with the same periods in the prior year. Excluding the impact of new and exited contracts, steel production by customers under services contracts increased by 4% and 6%, respectively, for the second quarter and first six months of 2017 compared with the same periodsperiod in the prior year.

~~Increased~~New contracts increased operating income ~~attributable to the impact of improved nickel, chrome and scrap prices. Nickel-related prices increased 5% and 13%, respectively~~ during the ~~second~~first quarter ~~and first six months~~ of ~~2017~~2018 compared with the same ~~periods~~period in prior year.

Foreign currency translation increased operating income by approximately $2 million in the first quarter of 2018 compared with the same period in the prior year.

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

Factors Negatively Impacting Operating Income:

Reduced nickel and scrap demand, partially offset by higher nickel prices.

Moderately higher selling, general and administrative costs due to ~~higher~~ compensation costs and higher professional fees to support and ~~bad debt expense.~~execute the Company's growth strategies.

Harsco Industrial Segment:


Significant Impacts on Revenues	Three Months Ended			Six Months Ended
Significant Effects on Revenues							Three Months Ended
(In millions)	June 30, 2017			June 30, 2017			March 31, 2018
Revenues — 2016	$	66.3		$	128.1
Revenues — 2017							$	65.9
Net effects of price/volume changes, primarily attributable to volume changes.	7.5			12.0			17.2
Impact of foreign currency translation.	(0.2		)	(0.7		)	0.5
Revenues — 2017	$	73.6		$	139.4
Revenues — 2018							$	83.6

Factors Positively Affecting Operating Income:

Higher overall volumes ~~and a favorable sales mix~~ in the air-cooled heat exchanger business and a favorable product mix, resulting in increased operating income during the ~~second~~first quarter ~~and first six months~~ of ~~2017~~2018 compared with the comparable ~~periods~~period in ~~2016.~~2017.

~~Factors Negatively Impacting Operating Income:~~

~~Lower volumes~~Improved demand and ~~an unfavorable~~a favorable sales mix led to increased operating income in the industrial grating ~~products business.~~

~~Increased operating expenses including higher commissions due to the increase in volumes in the air-cooled~~and heat ~~exchanger business.~~transfer product businesses.

Harsco Rail Segment:


Significant Impacts on Revenues	Three Months Ended			Six Months Ended
Significant Effects on Revenues							Three Months Ended
(In millions)	June 30, 2017			June 30, 2017			March 31, 2018
Revenues — 2016	$	50.1		$	111.8
Net impacts of price/volume changes, primarily attributable to volume changes.	12.3			11.2
Revenues — 2017							$	59.6
Impact of foreign currency translation.							1.6
Net effect (impacts) of price/volume changes, primarily attributable to volume changes.							(1.6		)
Other.	0.3			0.2			0.1
Impact of foreign currency translation.	(0.7		)	(1.6		)
Revenues — 2017	$	62.0		$	121.6
Revenues — 2018							$	59.7

Factors Positively Affecting Operating Income:

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

~~Increased equipment sales during the second quarter and first six months of 2017 compared with the same periods in prior year.~~

~~Increased~~ after-market part sales increased operating income during the first ~~six months~~quarter of ~~2017~~2018 compared with the same period in the prior year.

Factors Negatively Impacting Operating Income:

~~Reductions in~~As expected, a less favorable mix of machine sales and lower contract service ~~revenues~~volumes decreased operating income ~~during~~in the ~~second~~first quarter ~~and first six months~~ of ~~2017~~2018 compared with the ~~same periods in the prior year.~~

~~Reductions in after-market part sales decreased operating income during the second~~first quarter of ~~2017 compared~~2017.

Additional forward contract loss provision related to the Company's first of two contracts, which is nearing completion, with the ~~same period~~federal railway system of Switzerland of $1.8 million resulting from incurring actual costs to complete in ~~prior year.~~

~~Increased selling, general and administrative expenses primarily related to compensation, commissions and other~~excess of originally estimated costs.

~~Outlook, Trends and Strategies~~

In addition to the items noted in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, the following significant items, risks, trends and strategies are expected to affect the Company for the remainder of 2017 and beyond:

The Company will focus on providing returns above its cost of capital for its stockholders by continuing to develop an attractive portfolio of businesses and by continuing to focus on internal growth and operational excellence.

The Company will assess capital needs in the context of operational trends and strategic initiatives and expects to maintain a reasonable amount of financial leverage. Management will 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 36% to 38% in 2017, excluding the tax impact of the new stock-based compensation accounting standard.~~

~~Harsco Metals & Minerals Segment:~~

Steel markets demonstrated some pricing improvement since early 2016 and the Company experienced improvements in demand and certain commodity prices during the second quarter and first six months of 2017. The Company expects these factors along with the effect of new contracts, the continued benefits achieved as part of Project Orion and additional improvement initiatives to positively affect operating income in 2017 in the Harsco Metals & Minerals Segment.

In addition to the benefits and discipline that resulted from Project Orion, the Company will continue to focus on ensuring that forecasted results and other requirements for contracts meet certain established standards and deliver returns above its cost of capital. 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 addition, 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.

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

During 2016, one of the Company's customers announced its intention to conduct a strategic review of its steelmaking operations in Europe, including the possibility of strategic collaborations through a joint venture 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 focus on long-term solvency. The customer is continuing its operations during the voluntary administration proceedings. The Company had approximately $5 million of receivables with the customer prior to the start of the voluntary administration. The Company continues to believe that these amounts are collectible. The Company continues to provide services to the customer and continues to collect on post-administration invoices timely. However the administration process is uncertain in nature and length. 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.

The Company will focus on growing the Harsco Metals & Minerals Segment through the provision of innovative solutions to handle customers' waste and by-products, improving commercial effectiveness and disciplined investments to improve competitive positioning in core and adjacent markets.

~~Harsco Industrial Segment:~~

As energy markets have demonstrated some fundamental improvement, 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. Accordingly, these factors are expected to impact revenue and operating income in 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 January 2017, the Company announced the launch of an all-new capability for remote indoor boiler monitoring that can be downloaded directly to wireless and desktop devices.

~~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 market is experiencing weakness due to reduced capital and operating spending by Class I railways.

During January 2017, the Company announced a new order to equip the entire Denver, Colorado regional railway fleet with enhanced safety systems. In addition during June 2017, the Company announced a new order in the U.K. for seven Stoneblower track geometry machines. The order calls for deliveries over two years starting in late 2019.

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. The Harsco Rail Segment recorded estimated forward loss 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.

~~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.~~

Consolidated Results ~~of Operations~~


	Three Months Ended						Six Months Ended						Three Months Ended
	June 30						June 30						March 31
(In millions, except per share amounts)	2017			2016			2017			2016			2018			2017
Total revenues	$	394.9		$	369.9		$	767.4		$	723.2		$	408.0		$	372.5
Cost of services and products sold	293.4			316.9			581.2			600.0			311.4			288.3
Selling, general and administrative expenses	55.6			49.5			110.7			100.3			57.1			53.9
Research and development expenses	1.3			1.0			2.2			1.8			1.2			0.8
Other expenses	2.1			1.2			3.0			10.4
Other expenses, net													1.8			0.9
Operating income from continuing operations	42.5			1.3			70.4			10.7			36.5			28.6
Interest income	0.5			0.6			1.0			1.1			0.5			0.5
Interest expense	(12.4		)	(13.8		)	(24.1		)	(26.2		)	(9.6		)	(11.7		)
Change in fair value to the unit adjustment liability and loss on dilution of equity method investment	—			(1.5		)	—			(13.7		)
Defined benefit pension income (expense)													0.8			(0.7		)
Income tax expense	(11.2		)	(12.0		)	(17.5		)	(9.8		)	(8.3		)	(6.3		)
Equity income (loss) of unconsolidated entities, net	—			(0.7		)	—			2.5
Income (loss) from continuing operations	19.3			(26.1		)	29.8			(35.4		)
Income from discontinued operations	0.4			1.8			—			1.5
Net income (loss)	19.7			(24.3		)	29.9			(33.9		)
Total other comprehensive income (loss)	(0.9		)	7.3			16.5			27.0
Total comprehensive income (loss)	18.9			(17.0		)	46.4			(6.9		)
Diluted earnings (loss) per common share from continuing operations attributable to Harsco Corporation common stockholders	0.22			(0.35		)	0.34			(0.48		)
Income from continuing operations													20.0			10.5
Loss from discontinued operations													(0.5		)	(0.4		)
Net income													19.6			10.1
Total other comprehensive income													6.2			17.4
Total comprehensive income													25.7			27.5
Diluted earnings per common share from continuing operations attributable to Harsco Corporation common stockholders													0.22			0.11
Effective income tax rate for continuing operations	36.8		%	(89.4		)%	36.9		%	(35.1		)%	29.2		%	37.3		%

Comparative Analysis of Consolidated Results

Revenues

Revenues for the ~~second~~first quarter of ~~2017~~2018 increased ~~$25.0~~$35.5 million or ~~6.7%~~ ~~from the second quarter of 2016. Revenue for the six months of 2017 increased $44.2 million or 6.1%~~9.5% from the first ~~six months~~quarter of ~~2016. Changes in~~2017. Foreign currency translation increased revenues by approximately $19 million for the ~~periods presented were attributable~~first quarter of 2018 compared with the same period in the prior year. Refer to the ~~following significant items:~~

Change in Revenues — 2017 vs. 2016 Three Months Ended Six Months Ended
(In millions) June 30, 2017 June 30, 2017
Net effects of price/volume changes in the Harsco Metals & Minerals Segment, primarily attributable to volume changes. $ 10.8
33.8
Net effects of price/volume changes in the Harsco Industrial Segment, primarily attributable to volume changes. 7.5
12.0
Net impacts of price/volume changes in the Harsco Rail Segment, primarily attributable to volume changes. 12.3
11.2
Net impact of new and lost contracts (including exited underperforming contracts) in the Harsco Metals & Minerals Segment. (1.1 ) (2.4 )
Impact of foreign currency translation. (4.8 ) (10.3 )
Other. 0.3
(0.1 )
Total change in revenues — 2017 vs. 2016 $ 25.0
$ 44.2

segment results discussion above for information pertaining to factors positively affecting and negatively impacting revenues.

Cost of Services and Products Sold

Cost of services and products sold for the ~~second~~first quarter of ~~2017 decreased $23.5~~2018 increased $23.1 million or ~~7.4% from the second quarter of 2016. Cost of services and products for the first six months of 2017 decreased $18.8 million or 3.1%~~8.0% from the first ~~six months~~quarter of ~~2016.~~2017. 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 — 2017 vs. 2016 Three Months Ended Six Months Ended
(In millions) June 30, 2017 June 30, 2017
Decreased costs due to estimated loss provision in the Harsco Rail Segment during prior year. $ (40.1 ) $ (40.1 )
Impact of foreign currency translation. (4.1 ) (8.6 )
Increased costs due to changes in revenues (exclusive of the effects of foreign currency translation and fluctuations in commodity costs included in selling prices). 22.0
34.5
Other. (1.3 ) (4.6 )
Total change in cost of services and products sold — 2017 vs. 2016 $ (23.5 ) $ (18.8 )



Change in Cost of Services and Products Sold — 2018 vs. 2017	Three Months Ended
(In millions)	March 31, 2018
Impact of foreign currency translation.	$	15.2
Increased costs due to changes in revenues (exclusive of the effects of foreign currency translation and including fluctuations in commodity costs included in selling prices).	8.3
Other.	(0.4		)
Total change in cost of services and products sold — 2018 vs. 2017	$	23.1

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the ~~second~~first quarter of ~~2017~~2018 increased ~~$6.1~~$3.1 million or ~~12.3% from the second quarter of 2016. Selling, general and administrative expenses for the first six months of 2017 increased $10.4 million or 10.4%~~5.8% from the first ~~six months~~quarter of ~~2016. These increases were~~2017. This increase was primarily related to ~~higher~~increased compensation ~~expense related~~and professional fees needed to support and execute the ~~timing~~Company's growth strategy; and the impact of stock-based compensation issuances and higher expected incentive compensation; increased commissions in the Harsco Industrial Segment; higher bad debt expense in the Metals & Minerals Segment; and increased professional fees.foreign currency translation.

Other 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, net is included in Note 13, Other Expenses, Net in Part I, Item 1, Financial Statements.


	Three Months Ended						Six Months Ended						Three Months Ended
	June 30						June 30						March 31
(In thousands)	2017			2016			2017			2016			2018		2017
Employee termination benefit costs	$	1,695		$	1,194		$	2,448		$	6,966		$	1,443	$	753
Harsco Metals & Minerals Segment separation costs	—			10			—			3,297
Net gains (a)	(88		)	(105		)	(210		)	(757		)	—		(122		)
Other costs to exit activities	247			36			347			218			364		100
Impaired asset write-downs	281			23			281			116			9		—
Other	(63		)	89			100			530			6		163
Other expenses	$	2,072		$	1,247		$	2,966		$	10,370
Other expenses, net													$	1,822	$	894

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


(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 ~~second~~first quarter ~~and first six months~~ of ~~2017~~2018 decreased ~~$1.4 million and~~ $2.1 million ~~respectively,~~or 17.8%, compared with the ~~second~~first quarter ~~and first six months of 2016.~~2017. The decrease primarily relates to reduced interest rates per the Company's ~~overall decreased~~Senior Secured Credit Facility, which was amended in December 2017, and lower year-over-year debt ~~levels, partially offset by an increase in interest rates associated with the Company's debt.~~outstanding.

~~Change in Fair Value to~~Defined Benefit Pension Income (Expense)

Defined benefit pension income for the ~~Unit Adjustment Liability and Loss on Dilution of Equity Method Investment~~

The Change in fair value to the unit adjustment liability and loss on dilution of equity method investment during the second quarter and first six months of 2017 decreased $1.5 million and $13.7 million, respectively, compared with the second quarter and first six months of 2016. The decreases relate to losses associated with the Company's first quarter of ~~2016 election not to make the quarterly cash payments to the Company's partner in the Infrastructure strategic venture~~2018 was $0.8 million, compared with defined benefit pension expense of $0.7 million for the ~~remainder~~first quarter of ~~2016, which did not repeat in~~ 2017. In September 2016, the Company sold its remaining, approximately 26% interest in Brand Energy & Infrastructure Services. See Note 4, Equity Method Investments and Note 11, Derivative Instruments, Hedging Activities and Fair Value, in Part I, Item 1, Financial Statements for additional information.

The change primarily relates to improved returns on plan assets.

Income Tax Expense

Income tax expense related to continuing operations for the ~~second~~first quarter ~~and first six months~~ of ~~2017~~2018 was ~~$11.2~~$8.3 million, ~~and $17.5 million, respectively,~~ compared with ~~an income tax expense related to continuing operations of $12.0~~$6.3 million and $9.8 million, respectively, for the second quarter and first six months of 2016. The income tax expense for the second quarter of 2017 compared with the second quarter of 2016 decreased primarily due to the income tax benefit recognized for the stock based compensation that vested in the second quarter of 2017 as a result of the adoption of the new accounting for employee share-based payment transaction effective January 1, 2017, and the income tax expense recognized for the valuation allowance on deferred tax assets in certain foreign jurisdictions in 2016 not recurring in 2017. The income tax expense for the first ~~six months~~quarter of ~~2017 compared with the first six months of 2016~~2017. Income tax expense increased primarily due to the increase in income in profitable jurisdictions and was partially offset by the changes in ~~2017, as well as the expiration of the statute of limitations for uncertain~~U.S. tax ~~positions in certain foreign jurisdictions in 2016 not recurring in 2017.~~law.

Income ~~(Loss)~~ from Continuing Operations

Income from continuing operations was ~~$19.3~~$20.0 million ~~and $29.8 million, respectively,~~ in the ~~second~~first quarter ~~and first six months~~ of ~~2017~~2018 compared with ~~a loss from continuing operations of $26.1~~$10.5 million ~~and $35.4 million, respectively,~~ in the ~~second~~first quarter ~~and first six months~~ of ~~2016.~~2017. This change is primarily ~~due~~related to improved demand for air-cooled heat exchangers in the Harsco Rail Segment's estimated loss provision of $40.1 million related to the Company's contracts with SBB recorded in the second quarter of 2016 which did not repeat in 2017; the change in fair value to the unit adjustment liabilityIndustrial Segment; increased global steel production and ~~loss on dilution of equity method investment recorded during 2016 which did not repeat in 2017, and higher operating income~~demand for mill services in the Harsco Metals & Minerals ~~Segment.~~Segment; and the effect of foreign currency translation.

Total Other Comprehensive Income ~~(Loss)~~

Total other comprehensive ~~loss~~income was ~~$0.9~~$6.2 million in ~~the second~~first quarter of ~~2017 and total other comprehensive income was $16.5 million in the first six months of 2017,~~2018, compared with total other comprehensive income of ~~$7.3~~$17.4 million ~~and $27.0 million, respectively in the second~~first quarter ~~and first six months~~ of ~~2016. This decrease is primarily due to the net~~2017. The primary driver of this change was unfavorable ~~impact of~~ foreign currency translation ~~including translation on~~of cumulative unrecognized actuarial losses on ~~pension obligations, as well as~~ the Company's ~~proportionate share of Brand's comprehensive income in 2016 which did not repeat in 2017.~~pension obligations.

Liquidity and Capital Resources

~~Overview~~Cash Flow Summary

The Company has sufficient financial liquidity and borrowing 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 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 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; frequent evaluation of customer and business-partner credit risk; and Continuous Improvement initiatives aimed at improving the effective and efficient use of working capital, particularly in accounts receivable and inventories.

~~During the first six months of 2017, the Company generated $46.8 million in operating cash flow, an increase from the $28.7 million generated in the first six months of 2016.~~

The Company invested $40.7 million in capital expenditures, mostly for the Harsco Metals & Minerals Segment, in the first six months of 2017 compared with $32.2 million in the first six months of 2016. The Company generated $1.5 million in cash flow from asset sales in the first six months of 2017 compared with $5.1 million in the first six months of 2016. Asset sales have been a normal part of the Company's business model, primarily for the Harsco Metals & Minerals Segment.

Net cash outflows related to the Company's borrowings were $20.4 million in the first six months of 2017 principally due to improved cash flows, compared with net cash outflows of $23.6 million in the first six months of 2016, which included the proceeds received from the termination of cross-currency interest rate swaps ("CCIRs") of $16.6 million. The Company’s consolidated net debt to consolidated adjusted earnings before interest, tax, depreciation and amortization ("EBITDA") ratio, as defined by the Credit Agreement, was 2.2 to 1.0 at June 30, 2017.

~~Sources and Uses of Cash~~

The Company’s principal sources of liquidity are cash provided by operations and borrowings under its credit facility which consists of a term loan and revolver (the "Senior Secured Credit 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 for potential growth opportunities, such as disciplined organic growth, higher-return service 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 available credit at June 30, 2017:

June 30, 2017
(In millions) Facility Limit
Outstanding
Balance
Outstanding Letters of Credit
Available
Credit
Multi-year revolving credit facility $ 400.0
$ 90.0
$ 43.5
$ 266.5

At June 30, 2017, the Company had $637.3 million of borrowings under the Senior Secured Credit Facilities, consisting of $547.3 million under the Term Loan Facility and $90.0 million under the Revolving Credit Facility. Of this balance, $631.8 million was classified as long-term debt and $5.5 million was classified as current maturities of long-term debt on the Condensed Consolidated Balance Sheet at June 30, 2017. At December 31, 2016, the Company had $648.0 million of borrowings under the Senior Secured Credit Facility, consisting of $550.0 million under the Term Loan Facility and $98.0 million under the Revolving Credit Facility. At December 31, 2016, of this balance, $642.5 million was classified as long-term debt and $5.5 million was classified as current maturities of long-term debt on the Condensed Consolidated Balance Sheet.

~~Working Capital Position~~

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

(Dollars in millions) June 30
2017 December 31
2016
Increase
(Decrease)
Current Assets

Cash and cash equivalents $ 58.1
$ 69.8
$ (11.7 )
Restricted cash 4.7
2.0
2.6
Trade accounts receivable, net 289.3
236.6
52.7
Other receivables 22.3
21.1
1.3
Inventories 201.9
187.7
14.2
Other current assets 32.8
33.1
(0.3 )
Total current assets 609.1
550.3
58.8
Current Liabilities

Short-term borrowings and current maturities 22.2
29.8
(7.6 )
Accounts payable 118.6
108.0
10.7
Accrued compensation 44.2
46.7
(2.4 )
Income taxes payable 7.7
4.3
3.4
Advances on contracts and other customer advances 124.9
117.3
7.6
Other current liabilities 147.1
121.6
25.5
Total current liabilities 464.9
427.7
37.2
Working Capital $ 144.2
$ 122.6
$ 21.6
Current Ratio (a)
1.3 :1 1.3 :1

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

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

Working capital was positively affected by an increase in Trade accounts receivable, net of $52.7 million, primarily due to increased sales for all segments and the timing of sales and collections in the Harsco Rail Segment and the effect of foreign currency translation; and

Working capital was positively affected by an increase in Inventories of $14.2 million, primarily due to the Harsco Rail Segment related to the continued inventory build for the SBB contract and the effect of foreign currency translation, partially offset by other shipments in the Harsco Rail Segment.

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

Working capital was negatively impacted by an increase in Other Liabilities of $25.5 million, primarily due to the timing of settlement of the Company's foreign currency exchange forward contracts; and

~~Working capital was negatively impacted by an increase in Accounts payable of $10.7 million, primarily due to the timing of 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, the order backlog for the Company's railway track maintenance services and 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.

~~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:


	Six Months Ended						Three Months Ended
	June 30						March 31
(In millions)	2017			2016			2018			2017
Net cash provided (used) by:
Operating activities	$	46.8		$	28.7		$	(8.2	)	$	(6.1	)
Investing activities	(35.0		)	(27.7		)	(30.3		)	(16.0		)
Financing activities	(23.9		)	(18.5		)	39.2			13.2
Effect of exchange rate changes on cash and cash equivalents, including restricted cash	3.0			7.1			0.7			1.4
Net change in cash and cash equivalents, including restricted cash	$	(9.1	)	$	(10.5	)	$	1.3		$	(7.5	)

Cash ~~provided~~used by operating activities — Net cash ~~provided~~used by operating activities in the first ~~six~~three months of ~~2017~~2018 was ~~$46.8~~$8.2 million, an increase of ~~$18.1~~$2.1 million from cash ~~provided~~used by operating activities in the first ~~six~~three months of ~~2016.~~2017. The increase is primarily attributable to ~~the timing of payments related to accounts payable and inventory purchases, as well as~~ an increase in ~~cash net income,~~working capital resulting from the payment of accrued incentive compensation; higher inventories partially offset by ~~a decrease related to~~ the timing of sales and collections of accounts ~~receivable.~~receivable primarily in the Harsco Rail Segment; and an increase in cash net income.

Cash used by investing activities — Net cash used by investing activities in the first ~~six~~three months of ~~2017~~2018 was ~~$35.0~~$30.3 million, an increase of ~~$7.3~~$14.4 million from the cash used by investing activities in the first ~~six~~three months of ~~2016.~~2017. The increase was primarily due to ~~increased~~an increase in capital expenditures, primarily in the Company's Harsco Metals & Minerals ~~Segment.~~Segment and net foreign currency hedge settlement payments in the three months ended March 31, 2018, compared with the three months ended March 31, 2017.

Cash ~~used~~provided by financing activities — Net cash ~~used~~provided by financing activities in the first ~~six~~three months of ~~2017~~2018 was ~~$23.9~~$39.2 million,, an increase of ~~$5.4~~$25.9 million from cash ~~used~~provided by financing activities in the first ~~six~~three months of ~~2016~~.2017. The change was primarily due to ~~the proceeds from the termination~~net cash borrowings of ~~CCIRs in 2016, partially offset by payments related to the purchase of noncontrolling interests and payments of cash dividends that occurred in 2016 that was not repeated~~$39.4 million in the first ~~six~~three months of ~~2017, partially offset~~2018 compared with $13.3 million in the first three months of 2017.

Sources and Uses of Cash

The Company’s principal sources of liquidity are cash provided by ~~lower net~~operations and borrowings under the Senior Secured Credit Facility, augmented by cash ~~outflows related~~proceeds from asset sales. In addition, the Company has other bank credit facilities available throughout the world. The Company expects to ~~the Company's borrowings~~continue to utilize all of these sources to meet future cash requirements for operations and ~~no dividends paid in 2017.~~growth initiatives.



Summary of Senior Secured Credit Facility Borrowings: (In millions)	March 31 2018		December 31 2017
By type:
Revolving Credit Facility	$	87.0	$	41.0
Term Loan Facility	544.5		545.9
Total	$	631.5	$	586.9
By classification:
Current	$	5.5	$	5.5
Long-term	626.0		581.4
Total	$	631.5	$	586.9



	March 31, 2018
(In millions)	Facility Limit		Outstanding Balance		Outstanding Letters of Credit		Available Credit
Multi-year revolving credit facility	$	400.0	$	87.0	$	31.4	$	281.6

The Company plans to redeploy discretionary cash on a disciplined basis for potential growth opportunities, such as organic growth through higher-return service contract opportunities in attractive markets and investments to strengthen the technical and applied product capabilities for the Harsco Metals & Minerals Segment, and strategic investments or possible acquisitions including in the Harsco Rail and Harsco Industrial Segments that improve competitive positioning in core growth and technology applications and adjacent markets.

On May 2, 2018 the Company announced that the Board of Directors authorized a stock repurchase program pursuant to which the Company could repurchase shares in an amount up to $75 million. The extent to which the Company repurchases shares, and the timing of such repurchases, will depend upon a variety of factors including market conditions and other corporate considerations as determined by the Company’s management. The repurchase program may be suspended or discontinued at any time.

Debt Covenants

The Senior Secured Credit ~~Agreement~~Facility contains a consolidated net debt to consolidated adjusted ~~EBITDA~~earnings before interest, tax depreciation and amortization ("EBITDA") ratio covenant, which is not to exceed 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 3.5 to 1.0 after December 31, ~~2017.~~2018. At ~~June 30, 2017,~~March 31, 2018, the Company was in compliance with these covenants, as the total net leverage ratio was ~~2.2~~1.9 to 1.0 and total interest coverage ratio was ~~5.4~~6.6 to 1.0. Based on balances and covenants in effect at ~~June 30, 2017,~~March 31, 2018, the Company could increase net debt by ~~$410.8~~$550.1 million, ~~(although the Company only has $266.5 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 ~~$109.5~~$146.7 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. In addition, the Senior Secured Credit Facility imposes certain restrictions including, but not limited to, restrictions as to the types and amounts of debt or liens that may be incurred by the Company, limitations on dividend payments and certain acquisitions by the Company.

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 ~~June 30, 2017,~~March 31, 2018, the Company's consolidated cash and cash equivalents ~~including restricted cash,~~ included ~~$61.1~~$63.3 million held by non-U.S. subsidiaries. At ~~June 30, 2017,~~March 31, 2018, approximately ~~15%~~1.1% of the Company's consolidated cash and cash equivalents had ~~either restrictions imposed by banking institutions or~~ regulatory restrictions that would preclude the transfer of funds with and among subsidiaries. ~~The~~Non-U.S. subsidiaries also held $17.6 million of cash and cash equivalents ~~held by non-U.S. subsidiaries also included $11.8 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 3. 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, ~~2016.~~2017.

ITEM 4. CONTROLS AND PROCEDURES

The Company’s adoption of ASC 606, Revenue from Contracts with Customers, required the implementation of new accounting processes, which changed the Company's internal controls over revenue recognition. The Company has completed the design of these controls and they have been implemented as of March 31, 2018. Other than these changes, 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 first quarter of 2018.

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 ~~June 30, 2017.~~March 31, 2018. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective at June 30, 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 second quarter of 2017.March 31, 2018.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information on legal proceedings is included in Note 9,8, Commitments and Contingencies, in Part I, Item 1, Financial Statements.

ITEM 1A. RISK FACTORS

The Company's risk factors as of ~~June 30, 2017~~March 31, 2018 have not changed materially from those described in Part 1, Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

2017.

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
10		Form of PSU Award Agreement (for awards granted on or after March 2, 2018) (incorporated by reference to the Company's Current Report on Form 8-K dated March 8, 2018).
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 March 31, 2018 filed with the Securities and Exchange Commission on May 2, 2018, 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; (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	~~August 3, 2017~~May 2, 2018	/s/ PETER F. MINAN
		Peter F. Minan
		Senior Vice President and Chief Financial Officer
		(On behalf of the registrant and as Principal Financial Officer)

DATE	May 2, 2018	/s/ SAMUEL C. FENICE
		Samuel C. Fenice
		Vice President and ~~Chief~~Corporate Controller
		(Principal Accounting Officer)

~~EXHIBIT INDEX~~



~~Exhibit~~ ~~Number~~		~~Description~~
~~10.1~~		~~Amendment No. 1 to the 2013 Equity and Incentive Compensation Plan, effective as of April 25, 2017 (incorporate by reference to the Company's Current Report on Form 8-K filed May 1, 2017).~~
~~31.1~~		~~Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).~~
~~31.2~~		~~Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).~~
32		~~Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief Financial Officer).~~
~~101~~		The following financial statements from Harsco Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 filed with the Securities and Exchange Commission on August 3, 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.



(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
Six Months Ended June 30, 2017:
Foreign currency forward exchange contracts	$	763		Product revenues / Cost of services and products sold	$	(185	)		$	—
Interest rate swaps	(2,543		)		—				—
Cross currency interest rate swaps	(123		)	Interest expense	493			Cost of services and products sold	(317		)	(a)
	$	(1,903	)		$	308			$	(317	)
Six Months Ended June 30, 2016:
Foreign currency forward exchange contracts	$	(630	)	Product revenues / Cost of services and products sold	$	(409	)		$	—
Cross currency interest rate swaps	(2,151		)	Interest expense	224			Cost of services and products sold	4,219			(a)
	$	(2,781	)		$	(185	)		$	4,219



			Interest Rates
(In millions)	Contractual Amount		Receive	Pay
Maturing 2017	$	1.4	Floating U.S. dollar rate	Fixed rupee rate



	Three Months Ended
Revenues by Segment	June 30
(In millions)	2017		2016		Change		%
Harsco Metals & Minerals	$	259.3	$	253.6	$	5.7	2.3	%
Harsco Industrial	73.6		66.3		7.3		11.0
Harsco Rail	62.0		50.1		11.9		23.7
Corporate	—		—		—		—
Total revenues	$	394.9	$	369.9	$	25.0	6.7	%



	Three Months Ended
Revenues by Region	June 30
(In millions)	2017		2016		Change			%
North America	$	186.7	$	159.4	$	27.2		17.1	%
Western Europe	104.3		110.6		(6.2		)	(5.6	)
Latin America (includes Mexico)	45.8		45.0		0.8			1.8
Asia-Pacific	41.5		34.5		7.0			20.3
Middle East and Africa	10.0		12.2		(2.3		)	(18.7	)
Eastern Europe	6.6		8.2		(1.6		)	(19.6	)
Total revenues	$	394.9	$	369.9	$	25.0		6.7	%



	Three Months Ended
Operating Income (Loss) by Segment	June 30
(In millions)	2017			2016			Change			%
Harsco Metals & Minerals	$	32.2		$	30.9		$	1.3		4.0	%
Harsco Industrial	9.2			7.3			1.9			25.4
Harsco Rail	8.0			(31.9		)	39.9			124.9
Corporate	(6.8		)	(5.0		)	(1.9		)	(37.3	)
Total operating income	$	42.5		$	1.3		$	41.2		3,132.4	%



Change in Revenues — 2017 vs. 2016	Three Months Ended			Six Months Ended
(In millions)	June 30, 2017			June 30, 2017
Net effects of price/volume changes in the Harsco Metals & Minerals Segment, primarily attributable to volume changes.	$	10.8		33.8
Net effects of price/volume changes in the Harsco Industrial Segment, primarily attributable to volume changes.	7.5			12.0
Net impacts of price/volume changes in the Harsco Rail Segment, primarily attributable to volume changes.	12.3			11.2
Net impact of new and lost contracts (including exited underperforming contracts) in the Harsco Metals & Minerals Segment.	(1.1		)	(2.4		)
Impact of foreign currency translation.	(4.8		)	(10.3		)
Other.	0.3			(0.1		)
Total change in revenues — 2017 vs. 2016	$	25.0		$	44.2



(Dollars in millions)	June 30 2017			December 31 2016			Increase (Decrease)
Current Assets
Cash and cash equivalents	$	58.1		$	69.8		$	(11.7	)
Restricted cash	4.7			2.0			2.6
Trade accounts receivable, net	289.3			236.6			52.7
Other receivables	22.3			21.1			1.3
Inventories	201.9			187.7			14.2
Other current assets	32.8			33.1			(0.3		)
Total current assets	609.1			550.3			58.8
Current Liabilities
Short-term borrowings and current maturities	22.2			29.8			(7.6		)
Accounts payable	118.6			108.0			10.7
Accrued compensation	44.2			46.7			(2.4		)
Income taxes payable	7.7			4.3			3.4
Advances on contracts and other customer advances	124.9			117.3			7.6
Other current liabilities	147.1			121.6			25.5
Total current liabilities	464.9			427.7			37.2
Working Capital	$	144.2		$	122.6		$	21.6
Current Ratio (a)	1.3		:1	1.3		:1