UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM			10-Q



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

For the Quarterly Period Ended ~~March 31,~~September 30, 2020



☐			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~~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~~-763-7064

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $1.25 per share

HSC

New York Stock Exchange

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 ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically 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 ☒ NO ☐

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

☒

Accelerated filer

☐

Non-accelerated filer

☐

(Do not check if a smaller reporting company)

Smaller reporting company

☐

Emerging growth company

☐

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. ☐

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

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 ~~April 30,~~October 31, 2020
Common stock, par value $1.25 per share						~~78,884,749~~78,916,106

Table of Contents

HARSCO CORPORATION

FORM 10-Q

INDEX

Table of Contents

Glossary of Defined Terms

Unless the context requires otherwise, "Harsco," the "Company," "we," "our," or "us" refers to Harsco Corporation on a consolidated basis. The Company also uses several other terms in this Quarterly Report on Form 10-Q, which are further defined below:


Term						Description
AOCI						Accumulated Other Comprehensive Income (Loss)
AXC						The former Harsco Industrial Air-X-Changers business
CARES Act						Coronavirus Aid, Relief, and Economic Security Act
CCIRs						Cross-currency interest rate swaps
Clean Earth						CEHI Acquisition Corporation and Subsidiaries
COVID-19						The COVID-19 coronavirus pandemic
Credit Agreement						Credit Agreement governing the Senior Secured Credit Facilities
DEA						United States Drug Enforcement Agency
DTSC						California Department of Toxic Substances Control
EBITDA						Earnings before interest, tax, depreciation and amortization
ESOL						Stericycle Environmental Solutions business
FASB						Financial Accounting Standards Board
IBORs						Interbank offered rates
ICMS						Type of value-added tax in Brazil
IKG						The former Harsco Industrial IKG business
ISDA						International Swaps and Derivatives Association
LIBOR						London Interbank Offered Rates
New Term Loan						$280 million term loan raised in March 2020 under the Senior Secured Credit Facilities, maturing on June 28, 2024
Notes						5.75% Notes due July 31, 2027
OCI						Other Comprehensive Income (Loss)
Original Term Loan						Term loan issued under the Senior Secured Credit Facilities, maturing on December 8, 2024
PA DEP						Pennsylvania Department of Environmental Protection
PK						The former Harsco Industrial Patterson-Kelley business
Revolving Credit Facility						Multi-year revolving credit facility under the Senior Secured Credit Facility, with a facility limit of $700 million
ROU						Right of use
SBB						Federal railway system of Switzerland
SCE						Supreme Council for Environment in Bahrain
SEC						Securities and Exchange Commission
Senior Secured Credit Facilities						Primary source of borrowings comprised of the Revolving Credit Facility, Original Term Loan and New Term Loan
SPRA						State Revenue Authorities from the State of São Paulo, Brazil
TSDF						Treatment, storage, and disposal facility permits issued under the Resource Conservation and Recovery Act
U.S. GAAP						Accounting principles generally accepted in the U.S.

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HARSCO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


(In thousands)	September 30 2020		December 31 2019
ASSETS
Current assets:
Cash and cash equivalents	$	83,859	$	57,259
Restricted cash	2,283		2,473
Trade accounts receivable, net	400,994		309,990

Other receivables	38,325		21,265
Inventories	170,037		156,991
Current portion of contract assets	53,256		31,166
Current portion of assets held-for-sale	0		22,093
Other current assets	66,219		51,575
Total current assets	814,973		652,812

Property, plant and equipment, net	640,887		561,786
Right-of-use assets, net	96,800		52,065
Goodwill	881,911		738,369
Intangible assets, net	443,682		299,082


Deferred income tax assets	11,871		14,288
Assets held-for-sale	0		32,029
Other assets	55,365		17,036
Total assets	$	2,945,489	$	2,367,467
LIABILITIES
Current liabilities:
Short-term borrowings	$	10,246	$	3,647
Current maturities of long-term debt	2,753		2,666
Accounts payable	230,948		176,755

Accrued compensation	41,320		37,992
Income taxes payable	3,872		18,692

Insurance liabilities	11,589		10,140
Current portion of advances on contracts	42,763		53,906


Current portion of operating lease liabilities	26,577		12,544
Current portion of liabilities of assets held-for-sale	0		11,344
Other current liabilities	169,898		137,208
Total current liabilities	539,966		464,894
Long-term debt	1,246,395		775,498

Insurance liabilities	16,267		18,515
Retirement plan liabilities	151,230		189,954


Advances on contracts	43,273		6,408
Operating lease liabilities	67,995		36,974
Liabilities of assets held-for-sale	0		12,152
Environmental liabilities	29,747		5,600
Deferred tax liabilities	43,178		24,242
Other liabilities	41,024		43,571
Total liabilities	2,179,075		1,577,808

Table of Contents

(In thousands) March 31
2020 December 31
2019
ASSETS

Current assets:

Cash and cash equivalents $ 66,488
$ 57,259
Restricted cash 2,300
2,473
Trade accounts receivable, net 320,710
309,990
Other receivables 18,685
21,265
Inventories 167,890
156,991
Current portion of contract assets 50,499
31,166
Current portion of assets held-for-sale 540
22,093
Other current assets 53,668
51,575
Total current assets 680,780
652,812
Property, plant and equipment, net 533,349
561,786
Right-of-use assets, net 50,491
52,065
Goodwill 727,882
738,369
Intangible assets, net 294,720
299,082
Deferred income tax assets 9,476
14,288
Assets held-for-sale —
32,029
Other assets 50,472
17,036
Total assets $ 2,347,170
$ 2,367,467
LIABILITIES

Current liabilities:

Short-term borrowings $ 4,820
$ 3,647
Current maturities of long-term debt 2,758
2,666
Accounts payable 181,760
176,755
Accrued compensation 33,492
37,992
Income taxes payable 15,956
18,692
Insurance liabilities 9,844
10,140
Current portion of advances on contracts 47,822
53,906
Current portion of operating lease liabilities 12,421
12,544
Current portion of liabilities of assets held-for-sale —
11,344
Other current liabilities 141,877
137,208
Total current liabilities 450,750
464,894
Long-term debt 789,619
775,498
Insurance liabilities 17,019
18,515
Retirement plan liabilities 164,499
189,954
Advances on contracts 53,775
6,408
Operating lease liabilities 35,561
36,974
Liabilities of assets held-for-sale —
12,152
Other liabilities 77,077
73,413
Total liabilities 1,588,300
1,577,808
COMMITMENTS AND CONTINGENCIES


(In thousands)	September 30 2020		December 31 2019
COMMITMENTS AND CONTINGENCIES
HARSCO CORPORATION STOCKHOLDERS’ EQUITY
Preferred stock	0		0
Common stock	144,268		143,400
Additional paid-in capital	206,113		200,595
Accumulated other comprehensive loss	(597,052)		(587,622)
Retained earnings	1,804,061		1,824,100
Treasury stock	(843,098)		(838,893)
Total Harsco Corporation stockholders’ equity	714,292		741,580
Noncontrolling interests	52,122		48,079
Total equity	766,414		789,659
Total liabilities and equity	$	2,945,489	$	2,367,467

(In thousands) March 31
2020 December 31
2019
HARSCO CORPORATION STOCKHOLDERS’ EQUITY

Preferred stock —
—
Common stock 144,219
143,400
Additional paid-in capital 201,856
200,595
Accumulated other comprehensive loss (616,476 ) (587,622 )
Retained earnings 1,824,241
1,824,100
Treasury stock (842,987 ) (838,893 )
Total Harsco Corporation stockholders’ equity 710,853
741,580
Noncontrolling interests 48,017
48,079
Total equity 758,870
789,659
Total liabilities and equity $ 2,347,170
$ 2,367,467

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands, except per share amounts)	2020		2019		2020			2019
Revenues from continuing operations:
Service revenues	$	384,279	$	316,667	$	1,021,196		$	784,190
Product revenues	125,119		106,488		334,324			319,765
Total revenues	509,398		423,155		1,355,520			1,103,955
Costs and expenses from continuing operations:
Cost of services sold	313,136		239,519		835,277			608,230
Cost of products sold	99,043		71,970		257,512			220,634
Selling, general and administrative expenses	87,954		63,197		241,224			187,104
Research and development expenses	568		1,341		2,620			3,210

Other expenses, net	3,633		383		9,074			409
Total costs and expenses	504,334		376,410		1,345,707			1,019,587
Operating income from continuing operations	5,064		46,745		9,813			84,368
Interest income	604		445		1,613			1,569
Interest expense	(15,794)		(12,819)		(43,396)			(24,429)
Unused debt commitment and amendment fees	0		(158)		(1,920)			(7,593)

Defined benefit pension income (expense)	1,859		(1,356)		5,171			(4,166)
Income (loss) from continuing operations before income taxes and equity income	(8,267)		32,857		(28,719)			49,749
Income tax benefit (expense)	1,654		(12,601)		4,640			(17,814)
Equity income of unconsolidated entities, net	9		81		176			151
Income (loss) from continuing operations	(6,604)		20,337		(23,903)			32,086
Discontinued operations:
Gain on sale of discontinued business	0		527,980		18,371			527,980
Income (loss) from discontinued businesses	(1,531)		272		(1,232)			23,958
Income tax expense related to discontinued businesses	(204)		(110,732)		(9,803)			(112,701)
Income (loss) from discontinued operations	(1,735)		417,520		7,336			439,237
Net income (loss)	(8,339)		437,857		(16,567)			471,323
Less: Net income attributable to noncontrolling interests	(1,239)		(2,506)		(3,472)			(6,633)
Net income (loss) attributable to Harsco Corporation	$	(9,578)	$	435,351	$	(20,039)		$	464,690
Amounts attributable to Harsco Corporation common stockholders:
Income (loss) from continuing operations, net of tax	$	(7,843)	$	17,831	$	(27,375)		$	25,453
Income (loss) from discontinued operations, net of tax	(1,735)		417,520		7,336			439,237
Net income (loss) attributable to Harsco Corporation common stockholders	$	(9,578)	$	435,351	$	(20,039)		$	464,690
Weighted-average shares of common stock outstanding	79,000		79,666		78,916			79,966
Basic earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations	$	(0.10)	$	0.22	$	(0.35)		$	0.32
Discontinued operations	(0.02)		5.24		0.09			5.49
Basic earnings (loss) per share attributable to Harsco Corporation common stockholders	$	(0.12)	$	5.46	$	(0.25)	(a)	$	5.81
Diluted weighted-average shares of common stock outstanding	79,000		81,110		78,916			81,749
Diluted earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations	$	(0.10)	$	0.22	$	(0.35)		$	0.31
Discontinued operations	(0.02)		5.15		0.09			5.37
Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders	$	(0.12)	$	5.37	$	(0.25)	(a)	$	5.68

Three Months Ended
March 31
(In thousands, except per share amounts) 2020 2019
Revenues from continuing operations:

Service revenues $ 291,339
$ 229,520

Product revenues 107,502
100,382

Total revenues 398,841
329,902

Costs and expenses from continuing operations:

Cost of services sold 236,319
181,871

Cost of products sold 80,149
69,309

Selling, general and administrative expenses 72,499
56,406

Research and development expenses 1,260
749

Other expenses, net 5,733
1,743

Total costs and expenses 395,960
310,078

Operating income from continuing operations 2,881
19,824

Interest income 193
533

Interest expense (12,649 ) (5,507 )
Unused debt commitment and amendment fees (488 ) —

Defined benefit pension income (expense) 1,589
(1,338 )
Income (loss) from continuing operations before income taxes and equity income (8,474 ) 13,512

Income tax benefit (expense) 682
(1,219 )
Equity income of unconsolidated entities, net 96
21

Income (loss) from continuing operations (7,696 ) 12,314

Discontinued operations:

Gain on sale of discontinued business 18,462
—

Income (loss) from discontinued businesses (225 ) 13,750

Income tax expense related to discontinued businesses (9,314 ) (3,527 )
Income from discontinued operations 8,923
10,223

Net income 1,227
22,537

Less: Net income attributable to noncontrolling interests (1,086 ) (1,840 )
Net income attributable to Harsco Corporation $ 141
$ 20,697

Amounts attributable to Harsco Corporation common stockholders:
Income (loss) from continuing operations, net of tax $ (8,782 ) $ 10,474

Income from discontinued operations, net of tax 8,923
10,223

Net income attributable to Harsco Corporation common stockholders $ 141
$ 20,697

Weighted-average shares of common stock outstanding 78,761
79,907

Basic earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations $ (0.11 ) $ 0.13

Discontinued operations 0.11
0.13

Basic earnings (loss) per share attributable to Harsco Corporation common stockholders $ —

$ 0.26

Diluted weighted-average shares of common stock outstanding 78,761
81,653

Diluted earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations $ (0.11 ) $ 0.13

Discontinued operations 0.11
0.13

Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders $ —
$ 0.25
(a)


~~(a)~~	(a) Does not total due to rounding

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

HARSCO CORPORATION

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



	Three Months Ended
	September 30
(In thousands)	2020		2019
Net income (loss)	$	(8,339)	$	437,857
Other comprehensive income (loss):
Foreign currency translation adjustments, net of deferred income taxes of $2,418 and $(1,834) in 2020 and 2019, respectively	17,527		(22,780)
Net loss on cash flow hedging instruments, net of deferred income taxes of $(125) and $54 in 2020 and 2019, respectively	(263)		(314)
Pension liability adjustments, net of deferred income taxes of $(323) and $(340) in 2020 and 2019, respectively	(9,153)		13,880
Unrealized gain (loss) on marketable securities, net of deferred income taxes of $(4) and $2 in 2020 and 2019, respectively	9		(6)
Total other comprehensive income (loss)	8,120		(9,220)
Total comprehensive income (loss)	(219)		428,637
Less: Comprehensive income attributable to noncontrolling interests	(2,795)		(821)
Comprehensive income (loss) attributable to Harsco Corporation	$	(3,014)	$	427,816

Three Months Ended
March 31
(In thousands) 2020 2019
Net income $ 1,227
$ 22,537
Other comprehensive income (loss):

Foreign currency translation adjustments, net of deferred income taxes of $(4,082) and $1,131 in 2020 and 2019, respectively
(58,566 ) 9,454
Net loss on cash flow hedging instruments, net of deferred income taxes of $517 and $945 in 2020 and 2019, respectively (1,687 ) (3,147 )
Pension liability adjustments, net of deferred income taxes of $(1,710) and $(342) in 2020 and 2019, respectively 30,269
(1,791 )
Unrealized gain (loss) on marketable securities, net of deferred income taxes of $8 and $(5) in 2020 and 2019, respectively (18 ) 15
Total other comprehensive income (loss) (30,002 ) 4,531
Total comprehensive income (loss) (28,775 ) 27,068
Less: Comprehensive (income) loss attributable to noncontrolling interests 61
(2,260 )
Comprehensive income (loss) attributable to Harsco Corporation $ (28,714 ) $ 24,808



	Nine Months Ended
	September 30
(In thousands)	2020		2019
Net income (loss)	$	(16,567)	$	471,323
Other comprehensive income (loss):
Foreign currency translation adjustments, net of deferred income taxes of $(2,323) and $(2,086) in 2020 and 2019, respectively	(35,244)		(22,276)
Net loss on cash flow hedging instruments, net of deferred income taxes of $141 and $1,195 in 2020 and 2019, respectively	(1,622)		(4,485)
Pension liability adjustments, net of deferred income taxes of $(2,356) and $(1,061) in 2020 and 2019, respectively	28,037		25,651
Unrealized gain (loss) on marketable securities, net of deferred income taxes of $8 and $(6) in 2020 and 2019, respectively	(22)		19
Total other comprehensive loss	(8,851)		(1,091)
Total comprehensive income (loss)	(25,418)		470,232
Less: Comprehensive income attributable to noncontrolling interests	(4,053)		(4,768)
Comprehensive income (loss) attributable to Harsco Corporation	$	(29,471)	$	465,464

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Nine Months Ended September 30
(In thousands)	2020		2019
Cash flows from operating activities:
Net income (loss)	$	(16,567)	$	471,323
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	93,864		89,681
Amortization	24,721		11,941
Deferred income tax expense	2,346		11,500
Equity income of unconsolidated entities, net	(176)		(151)
Dividends from unconsolidated entities	0		125
Gain on sale from discontinued business	(18,371)		(527,980)

Loss on early extinguishment of debt	0		5,314
Other, net	(336)		2,187
Changes in assets and liabilities, net of acquisitions and dispositions of businesses:
Accounts receivable	26,308		(12,395)
Income tax refunds receivable	(11,168)		0
Inventories	(11,801)		(43,477)
Contract assets	(26,775)		(5,269)
Right-of-use assets	18,195		11,204
Accounts payable	(1,488)		5,615
Accrued interest payable	(9,984)		7,398
Accrued compensation	1,795		(12,802)
Advances on contracts	19,145		(17,067)


Operating lease liabilities	(17,864)		(10,919)
Retirement plan liabilities, net	(23,902)		(18,800)
Income taxes payable - Gain on sale of discontinued businesses	(10,342)		102,940
Other assets and liabilities	4,676		(20,339)
Net cash provided by operating activities	42,276		50,029
Cash flows from investing activities:
Purchases of property, plant and equipment	(79,096)		(147,071)
Purchases of businesses, net of cash acquired	(432,855)		(623,495)
Proceeds from sale of discontinued business, net	37,219		599,685
Proceeds from sales of assets	4,473		7,560
Expenditures for intangible assets	(169)		(1,246)
Net proceeds from settlement of foreign currency forward exchange contracts	536		1,453
Payments for interest rate swap terminations	0		(2,758)
Other investing activities, net	(197)		0
Net cash used by investing activities	(470,089)		(165,872)
Cash flows from financing activities:
Short-term borrowings, net	1,712		(1,417)
Current maturities and long-term debt:
Additions	580,903		781,987
Reductions	(111,999)		(604,616)

Dividends paid to noncontrolling interests	0		(3,103)


Sale of noncontrolling interests	0		4,026
Common stock acquired for treasury	0		(25,752)
Stock-based compensation - Employee taxes paid	(4,188)		(11,202)
Payment of contingent consideration	(2,342)		0


Deferred financing costs	(1,928)		(11,073)
Other financing activities, net	(1,368)		0
Net cash provided by financing activities	460,790		128,850
Effect of exchange rate changes on cash and cash equivalents, including restricted cash	(6,567)		(2,234)
Net increase in cash and cash equivalents, including restricted cash	26,410		10,773
Cash and cash equivalents, including restricted cash, at beginning of period	59,732		67,146
Cash and cash equivalents, including restricted cash, at end of period	$	86,142	$	77,919

Table of Contents

Three Months Ended
March 31
(In thousands) 2020 2019
Cash flows from operating activities:

Net income $ 1,227
$ 22,537
Adjustments to reconcile net income to net cash provided (used) by operating activities:

Depreciation 29,933
30,204
Amortization 6,557
3,045
Deferred income tax expense 4,412
595
Equity income of unconsolidated entities, net (96 ) (21 )
Gain on sale from discontinued business (18,462 ) —
Other, net (2,007 ) (279 )
Changes in assets and liabilities:

Accounts receivable (22,050 ) (3,270 )
Inventories (16,412 ) (14,448 )
Contract assets (20,311 ) 6,770
Right-of-use assets 3,429
3,895
Accounts payable 12,308
3,099
Accrued interest payable (9,891 ) 89
Accrued compensation (2,752 ) (19,924 )
Advances on contracts 40,464
(3,406 )
Operating lease liabilities (3,358 ) (3,913 )
Retirement plan liabilities, net (15,534 ) (9,403 )
Income taxes payable - Gain on sale of discontinued businesses 3,843
—
Other assets and liabilities (2,836 ) (732 )
Net cash provided (used) by operating activities (11,536 ) 14,838
Cash flows from investing activities:

Purchases of property, plant and equipment (27,894 ) (36,407 )
Purchases of businesses, net of cash acquired (4,157 ) 680
Proceeds from sale of business, net 37,219
—
Proceeds from sales of assets 2,185
1,177
Expenditures for intangible assets

(58 ) —
Net proceeds (payments) from settlement of foreign currency forward exchange contracts 11,327
(4,091 )
Net cash provided (used) by investing activities 18,622
(38,641 )
Cash flows from financing activities:

Short-term borrowings, net 3,697
(3,578 )
Current maturities and long-term debt:

Additions 52,875
56,998
Reductions (38,709 ) (1,700 )
Sale of noncontrolling interests —
876
Stock-based compensation - Employee taxes paid (3,437 ) (8,237 )
Deferred financing costs (1,632 ) —
Net cash provided by financing activities 12,794
44,359
Effect of exchange rate changes on cash and cash equivalents, including restricted cash (10,824 ) (17 )
Net increase in cash and cash equivalents, including restricted cash 9,056
20,539
Cash and cash equivalents, including restricted cash, at beginning of period 59,732
67,146
Cash and cash equivalents, including restricted cash, at end of period $ 68,788
$ 87,685
Supplementary cash flow information:
Change in accrual for purchases of property, plant and equipment included in accounts payable $ (281 ) $ 6,473


	Nine Months Ended September 30
(In thousands)	2020		2019

Supplementary cash flow information:
Change in accrual for purchases of property, plant and equipment included in accounts payable	$	3,060	$	5,917

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)


	Harsco Corporation Stockholders’ Equity
	Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests
(In thousands, except share amounts)	Issued		Treasury										Total
Balances, December 31, 2018	$	141,842	$	(795,821)	$	190,597	$	1,298,752	$	(567,107)	$	45,113	$	313,376
Adoption of new accounting standard							21,429		(21,429)				0
Net income							20,697				1,840		22,537



Total other comprehensive income, net of deferred income taxes of $1,729									4,111		420		4,531



Sale of subsidiary shares to noncontrolling interest											876		876





Stock appreciation rights exercised, net 927 shares	2		(8)		(2)								(8)
Vesting of restricted stock units and other stock grants, net 94,229 shares	198		(1,456)		(198)								(1,456)
Vesting of performance share units, net 529,213 shares	1,136		(8,235)		(1,149)								(8,248)

Amortization of unearned portion of stock-based compensation, net of forfeitures					3,664								3,664
Balances, March 31, 2019	143,178		(805,520)		192,912		1,340,878		(584,425)		48,249		335,272

Net income							8,642				2,287		10,929
Cash dividends declared:

Noncontrolling interests											(4,690)		(4,690)
Total other comprehensive income (loss), net of deferred income taxes of $(1,569)									4,196		(598)		3,598


Contributions receivable from noncontrolling interest (a)											3,150		3,150






Stock appreciation rights exercised, net 10,216 shares	18		(108)		(18)								(108)
Vesting of restricted stock units and other stock grants, net 99,134 shares	198		(1,375)		(198)								(1,375)

Amortization of unearned portion of stock-based compensation, net of forfeitures					2,338								2,338
Balances, June 30, 2019	143,394		(807,003)		195,034		1,349,520		(580,229)		48,398		349,114

Net income							435,351				2,506		437,857



Total other comprehensive loss, net of deferred income taxes of $(2,118)									(7,530)		(1,690)		(9,220)




Strategic venture exit											(3,694)		(3,694)




Stock appreciation rights exercised, net 103 shares			(1)										(1)
Vesting of restricted stock units and other stock grants, net 984 shares	2		(19)		(2)								(19)
Treasury shares repurchased, 1,417,556 shares			(25,752)										(25,752)
Amortization of unearned portion of stock-based compensation, net of forfeitures					2,975								2,975
Balances, September 30, 2019	$	143,396	$	(832,775)	$	198,007	$	1,784,871	$	(587,759)	$	45,520	$	751,260

(a) Cash contribution was received during July 2019.

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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, December 31, 2018 $ 141,842
$ (795,821 ) $ 190,597
$ 1,298,752
$ (567,107 ) $ 45,113
$ 313,376
Adoption of new accounting standards

21,429
(21,429 ) —
Net income

20,697

1,840
22,537
Total other comprehensive income, net of deferred income taxes of $1,729 4,111
420
4,531
Sale of subsidiary shares to noncontrolling interest

876
876
Stock appreciation rights exercised, net 927 shares 2
(8 ) (2 ) (8 )
Vesting of restricted stock units and other stock grants, net 94,229 shares 198
(1,456 ) (198 )

(1,456 )
Vesting of performance share units, net 529,213 shares
1,136
(8,235 ) (1,149 ) (8,248 )
Amortization of unearned portion of stock-based compensation, net of forfeitures

3,664

3,664
Balances, March 31, 2019 $ 143,178
$ (805,520 ) $ 192,912
$ 1,340,878
$ (584,425 ) $ 48,249
$ 335,272


	Harsco Corporation Stockholders’ Equity
(In thousands, except share amounts)	Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests
	Issued		Treasury										Total
Balances, December 31, 2019	$	143,400	$	(838,893)	$	200,595	$	1,824,100	$	(587,622)	$	48,079	$	789,659

Net income							141				1,086		1,227




Total other comprehensive loss, net of deferred income taxes of $(5,267)									(28,854)		(1,148)		(30,002)










Vesting of restricted stock units and other stock grants, net 104,840 shares	230		(889)		(230)								(889)
Vesting of performance share units, net 265,151 shares	589		(3,205)		(589)								(3,205)

Amortization of unearned portion of stock-based compensation, net of forfeitures					2,080								2,080
Balances, March 31, 2020	144,219		(842,987)		201,856		1,824,241		(616,476)		48,017		758,870
Net income (loss)							(10,602)		$	—	1,147		(9,455)




Total other comprehensive income, net of deferred income taxes of $(1,229)									12,858		173		13,031









Stock appreciation rights exercised, net 6,744 shares	8		(16)		(8)								(16)
Vesting of restricted stock units and other stock grants, net 14,211 shares	18				(18)								0


Amortization of unearned portion of stock-based compensation, net of forfeitures					2,086								2,086
Balances, June 30, 2020	144,245		(843,003)		203,916		1,813,639		(603,618)		49,337		764,516
Net income (loss)							(9,578)		$	—	1,239		(8,339)
Cash dividends declared:

Noncontrolling interests											(8)		(8)

Total other comprehensive income, net of deferred income taxes of $1,966									6,566		1,554		8,120









Stock appreciation rights exercised, net 1,609 shares	3		(8)		(3)								(8)
Vesting of restricted stock units and other stock grants, net 10,910 shares	20		(87)		(20)								(87)


Amortization of unearned portion of stock-based compensation, net of forfeitures					2,220								2,220
Balances, September 30, 2020	$	144,268	$	(843,098)	$	206,113	$	1,804,061	$	(597,052)	$	52,122	$	766,414

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

Accumulated Other
Comprehensive
Loss

Noncontrolling
Interests

Issued Treasury Total
Balances, December 31, 2019 $ 143,400
$ (838,893 ) $ 200,595
$ 1,824,100
$ (587,622 ) $ 48,079
$ 789,659
Net income

141

1,086
1,227
Total other comprehensive loss, net of deferred income taxes of $(5,267) (28,854 ) (1,148 ) (30,002 )
Vesting of restricted stock units and other stock grants, net 104,840 shares 230
(889 ) (230 )

(889 )
Vesting of performance share units, net 265,151 shares 589
(3,205 ) (589 ) (3,205 )
Amortization of unearned portion of stock-based compensation, net of forfeitures

2,080

2,080
Balances, March 31, 2020 $ 144,219
$ (842,987 ) $ 201,856
$ 1,824,241
$ (616,476 ) $ 48,017
$ 758,870

See accompanying notes to unaudited condensed consolidated financial statements.

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HARSCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Basis of Presentation

~~Harsco Corporation (the "Company")~~The Company has prepared these unaudited condensed consolidated financial statements in accordance with ~~accounting principles generally accepted in the~~ U.S. ~~("U.S. GAAP")~~GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the ~~Securities and Exchange Commission (the "SEC").~~SEC. Accordingly, the unaudited condensed consolidated financial statements do not include all information and disclosure required by U.S. GAAP for annual financial statements. The December 31, 2019 Condensed Consolidated Balance Sheet information contained in this Quarterly Report on Form 10-Q was derived from the 2019 audited consolidated financial statements. 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, 2019. 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.

Restricted Cash

The Company had restricted cash of $2.3 million and $2.5 million at September 30, 2020 and December 31, 2019, respectively, and the restrictions are primarily related to collateral provided for certain guarantees of the Company's performance.

Acquisition of ESOL

On April 6, 2020 the Company completed the previously announced acquisition of ESOL, an established waste transportation, processing and services provider with a comprehensive portfolio of disposal solutions for customers primarily across the industrial, retail and healthcare markets, from Stericycle, Inc. for $429.0 million in cash, inclusive of post-closing adjustments. See Note 3, Acquisitions and Dispositions, for additional information.

Segment Reporting

The Company reports information about operating segments using the "management approach," which is based on the way management organizes and reports the segments within the enterprise for making operating decisions and assessing performance. The Company's reportable segments are identified based upon differences in products, service and markets served. The operations of ESOL are combined and included as part of the Harsco Clean Earth Segment.

Impact of COVID-19

Beginning in early 2020, overall global economic conditions were significantly impacted by COVID-19. The continuing impact of COVID-19 on the Company varies by end market as well as local conditions (including applicable government mandates) and is continually evolving. The ultimate duration and impact of COVID-19 on the Company and its customers' operations is presently unclear, though the Company continues to operate as a provider of certain essential services in the U.S. and other countries. The Company continues to take significant and proactive actions to protect all stakeholders and to minimize the operational and financial impacts of COVID-19 where possible.

The Company did not record any long-lived asset impairments, indefinite-lived asset impairments, goodwill impairments, significant inventory write-downs or incremental accounts receivable reserves for current expected credit losses during the three months or nine months ended September 30, 2020, however such charges are possible in future periods, which could have an adverse effect on the Company's future results of operations, cash flows, or financial condition.

Discontinued Operations

In January 2020 the Company sold ~~Harsco Industrial~~ IKG ~~("IKG")~~ and, together with the 2019 sales of ~~Harsco Industrial Air-X-Changers ("AXC")~~AXC and ~~Harsco Industrial Patterson-Kelly ("PK"),~~PK, this ~~completes~~completed the divestiture of the former Harsco Industrial Segment originally announced in May 2019. These disposals represent a strategic shift and accelerated the transformation of the Company's portfolio of businesses into a leading provider of environmental solutions and services. As a result of these disposals (i) the carrying value of the remaining assets and liabilities of the Harsco Industrial Segment ~~have been~~were classified as Assets held-for-sale and Liabilities of assets held-for-sale on the Company's December 31, 2019 Condensed Consolidated Balance ~~Sheets;~~Sheet; (ii) the operating results of the Harsco Industrial Segment, costs directly related to the disposals, an allocation of interest expense associated with mandatory debt repayments required as a result of the disposals and the write-off of deferred financing costs resulting from the mandatory repayment have been reflected in the Company's Condensed Consolidated Statements of Operations as discontinued operations for all periods presented; and (iii) all disclosures have been updated to reflect these changes. See Note 3, Acquisitions and Dispositions, for additional information.

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Reclassifications

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

2. Recently Adopted and Recently Issued Accounting Standards

The following accounting standards have been adopted in 2020:

On January 1, 2020 the Company adopted changes issued by the ~~Financial Accounting Standards Boards ("FASB")~~FASB which updated the impairment model for credit losses by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. Provisions for receivables will be recorded as Allowance for expected credit losses, replacing the previously utilized Allowance for doubtful accounts. In addition, these changes required certain expanded disclosures. Other than changes in disclosure, these changes did not have a material impact on the Company's condensed consolidated financial statements as the calculation of expected credit losses did not yield results that were materially different from the methodology previously utilized by the Company. See Note 4, Accounts Receivable and Note Receivable for additional information.

On January 1, 2020 the Company adopted changes issued by the FASB that removed the second step of the annual goodwill impairment test, which ~~requires~~required 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. These changes did not have a material impact on the Company's condensed consolidated financial statements.

On January 1, 2020 the Company adopted changes issued by the FASB which modified the disclosure requirements for fair value measurements. The amendments in this update remove the requirement to disclose the amount of, and reasons for, transfers between Level 1 and Level 2 of the fair value hierarchy; and the policy for timing of transfers between levels and the valuation processes for Level 3 fair value measurements. The changes require disclosure of changes in unrealized gains and losses for

the period included in ~~other comprehensive income (loss)~~OCI for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. Other than required expanded disclosures, the adoption of these changes did not have a material impact on the Company's condensed consolidated financial statements.

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

In December 2019 the FASB issued changes which are intended to reduce complexity and simplify the accounting for income taxes in accordance with U.S. GAAP by removing certain exceptions related to investments, intraperiod allocations and interim calculations and clarifying existing guidance to improve consistent application. The changes become effective for the Company on January 1, ~~2021 with early adoption permitted.~~2021. Management ~~is currently evaluating the impact of~~does not believe these changes will have a material impact on its condensed consolidated financial statements.

In March 2020 the FASB issued changes that ~~provides~~provide companies with optional guidance to ease the potential accounting burden associated with transitioning from reference rates that are expected to be discontinued. In response to the concerns about risks of ~~interbank offered rates (IBORs)~~IBORs and, particularly, the risk of cessation of ~~the London Interbank Offered Rate ("LIBOR"),~~LIBOR, regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or ~~transaction based~~transaction-based and less susceptible to manipulation. The changes provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The changes can be adopted no later than December 31, 2022 with early adoption permitted. Management does not believe these changes will have a material impact on its condensed consolidated financial statements.

In August 2020, the FASB issued changes which simplified the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. Management concluded that this standard will not have an impact on its condensed consolidated financial statements.

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3. Acquisitions and Dispositions

ESOL

On April 6, 2020 the Company completed the previously announced acquisition of 100% of ESOL, an established waste transportation, processing and services provider with a comprehensive portfolio of disposal solutions for customers primarily across the industrial, retail and healthcare markets from Stericycle, Inc. for $429.0 million of cash consideration, inclusive of post-closing adjustments. In addition, as part of the acquisition, the Company entered into a non-compete agreement with Stericycle, Inc. Concurrent to the ESOL acquisition, the Company entered into an agreement with Stericycle Inc. related to certain Stericycle, Inc. customers who receive services from both ESOL and other Stericycle, Inc. businesses under a single contractual arrangement. The revenue pertaining to services rendered to these customers are invoiced centrally through Stericycle, Inc. billing systems and ESOL's portion of the revenue, less a management fee, is then distributed to the Company.

The preliminary fair value recorded for the assets acquired and liabilities assumed for ESOL is as follows:


	Preliminary Valuation
(In millions)	April 6 2020		Measurement Period Adjustments		September 30 2020
Cash and cash equivalents	$	0.4	$	0	$	0.4
Trade accounts receivable	124.1		(0.9)		123.2
Inventory	5.0		0		5.0
Other current assets	0.7		(0.4)		0.3
Property, plant and equipment	105.3		0		105.3
Right-of-use assets	56.0		0		56.0
Goodwill	152.0		(8.1)		143.9
Intangible assets	161.0		0		161.0
Other assets	0.2		0		0.2
Accounts payable	(48.6)		(0.4)		(49.0)
Accrued expenses	(17.5)		0		(17.5)
Current portion of operating lease liabilities	(16.6)		0		(16.6)
Other current liabilities	(6.4)		0		(6.4)
Environmental liabilities	(24.4)		0		(24.4)
Deferred income taxes	(15.5)		0		(15.5)
Operating lease liabilities	(39.4)		0		(39.4)
Total identifiable net assets of ESOL	436.3		(9.8)		426.5
Non-compete agreement	2.5		—		2.5
Total identifiable net assets of ESOL, including non-compete agreement	$	438.8	$	(9.8)	$	429.0

The goodwill is primarily attributed to expected operational efficiencies and synergies from the expanded geographical scale of hazardous waste processing facilities resulting from combining the ESOL business with the existing Clean Earth business of the Company, as well as the value associated with the assembled workforce of ESOL. The Company expects $36.8 million of goodwill to be deductible for income tax purposes through 2030.

The following table details the preliminary valuation of identifiable intangible assets and amortization periods for ESOL and the non-compete agreement entered into by the Company upon acquisition of ESOL:


		Preliminary Valuation
(Dollars in millions)	Weighted-Average Amortization Period	April 6 2020		Measurement Period Adjustments		September 30 2020
Permits and rights	22 years	$	138.0	$	0	$	138.0
Customer relationships	10 years	23.0		0		23.0
Total identifiable intangible assets of ESOL		161.0		0		161.0
Non-compete agreement	4 years	2.5		—		2.5
Total identifiable intangible assets acquired		$	163.5	$	0	$	163.5

The Company valued the identifiable intangible assets using methodologies under the income approach including the multi-period excess earnings method, the distributor method, and the with-and-without method. The purchase price allocation for ESOL is not final and the fair value of intangible assets and goodwill may vary significantly from those reflected in the Company's condensed consolidated financial statements at September 30, 2020.

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ESOL contributed revenue of $236.7 million and operating income of $4.7 million for the nine months ended September 30, 2020. The operations of ESOL have been combined and included as part of the Harsco Clean Earth Segment.

The three and nine months September 30, 2020 include ESOL direct acquisition and integration costs of $10.6 million and $41.0 million, respectively, which are included in the Selling, general and administrative expenses, within the Corporate function, in the Company's Condensed Consolidated Statements of Operations. In addition to the acquisition and integration costs reflected in the Company's Condensed Consolidated Statements of Operations, the debt issuance costs associated with the issuance of debt to fund the acquisition are reflected, net of amortization subsequent to the acquisition date, as Long-term debt on the Company's Condensed Consolidated Balance Sheets.

Clean Earth

On June 28, 2019 the Company acquired 100% of the outstanding stock of ~~CEHI Acquisition Corporation and Subsidiaries ("~~Clean ~~Earth"),~~Earth, one of the largest U.S. providers of specialty waste processing and beneficial reuse solutions for hazardous ~~wastes,~~waste, contaminated materials and dredged volumes, for an enterprise valuation of approximately $625 million on a cash free, debt free basis, subject to normal working capital adjustments. The Company transferred approximately $628 million of cash consideration and agreed to reimburse the sellers for any usage of assumed net operating losses in a post-closing period for up to five ~~years,~~years. During the three months ended September 30, 2020, the Company expensed an additional $2.4 million related to the expected reimbursement of these net operating losses of which the present value ~~of which~~ is now estimated at approximately $8$11 million.

See Footnote 17, Other Expenses, net, for additional details.

The fair value recorded for the assets acquired and liabilities assumed for Clean Earth is as follows:

Preliminary Valuation
(In millions)

June 28,
2019
Measurement Period Adjustments (a) March 31
2020
Cash and cash equivalents (b)
$ 42.8
$ (39.2 ) $ 3.6
Trade accounts receivable, net 63.7
(1.2 ) 62.5
Other receivables 0.8
1.3
2.1
Other current assets 8.7
(1.4 ) 7.3
Property, plant and equipment 75.6
1.6
77.2
Right-of-use assets 14.4
11.4
25.8
Goodwill 313.8
16.3
330.1
Intangible assets 261.1
(18.9 ) 242.2
Other assets 4.0
(2.8 ) 1.2
Accounts payable (23.0 ) (0.1 ) (23.1 )
Acquisition consideration payable (b)
(39.2 ) 39.2
—
Other current liabilities (18.0 ) (1.7 ) (19.7 )
Net deferred taxes liabilities (51.2 ) 5.8
(45.4 )
Operating lease liabilities (11.1 ) (8.4 ) (19.5 )
Other liabilities (6.5 ) (2.1 ) (8.6 )
Total identifiable net assets of Clean Earth $ 635.9
$ (0.2 ) $ 635.7


~~(a)~~	~~The measurement period adjustments did not have a material impact on the Company's previously reported operating results.~~


~~(b)~~	~~Acquisition consideration payable represents a portion of the cash consideration not paid out until July 2019.~~


	Final
(In millions)	June 28 2019		Measurement Period Adjustments (a)		September 30 2020
Cash and cash equivalents (b)	$	42.8	$	(39.2)	$	3.6
Trade accounts receivable, net	63.7		(1.2)		62.5
Other receivables	0.8		1.3		2.1
Other current assets	8.7		(1.4)		7.3
Property, plant and equipment	75.6		1.4		77.0
Right-of-use assets	14.4		11.4		25.8
Goodwill	313.8		16.8		330.6
Intangible assets	261.1		(18.9)		242.2
Other assets	4.0		(2.8)		1.2
Accounts payable	(23.0)		(0.1)		(23.1)
Acquisition consideration payable (b)	(39.2)		39.2		0


Other current liabilities	(18.0)		(1.7)		(19.7)
Net deferred taxes liabilities	(51.2)		5.5		(45.7)
Operating lease liabilities	(11.1)		(8.4)		(19.5)
Other liabilities	(6.5)		(2.1)		(8.6)
Total identifiable net assets of Clean Earth	$	635.9	$	(0.2)	$	635.7

(a) The measurement period adjustments did not have a material impact on the Company's previously reported operating results.

(b) Acquisition consideration payable represents a portion of the cash consideration not paid out until July 2019.

The goodwill is attributable to strategic benefits, including enhanced operational and financial scale, as well as product and market diversification that the Company expects to realize. The Company expects $16.3 million of goodwill to be deductible for income tax purposes through 2033.

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The following table details the ~~preliminary~~ valuation of identifiable intangible assets and amortization periods for Clean Earth:


		Final
(In millions)	Weighted-Average Amortization Period	Preliminary Valuation June 28, 2019		Measurement Period Adjustments (c)		September 30 2020
Permits	18 years	$	176.1	$	(6.0)	$	170.1
Customer relationships	8 years	33.4		(12.9)		20.5
Air rights	Usage based (d)	25.6		0		25.6
Trade names	12 years	26.0		0		26.0

Total identifiable intangible assets of Clean Earth		$	261.1	$	(18.9)	$	242.2

Preliminary Valuation
(Dollars in millions) Weighted-Average Amortization Period
Preliminary
Valuation
June 28, 2019
Measurement Period Adjustments (c) March 31
2020
Permits 18 years $ 176.1
$ (6.0 ) $ 170.1
Customer relationships 8 years 33.4
(12.9 ) 20.5
Air rights Usage based (d) 25.6
—
25.6
Trade names 12 years 26.0
—
26.0
Total identifiable intangible assets of Clean Earth $ 261.1
$ (18.9 ) $ 242.2
(c) The measurement period adjustments did not have a material impact on the Company's previously reported operating results.

(d) The Company estimates that based on current usage that the expected useful life would be 27 years.


~~(c)~~	~~The measurement period adjustments did not have a material impact on the Company's previously reported operating results.~~


~~(d)~~	~~The Company estimates that based on current usage that the expected useful life would be 27 years.~~

The Company valued the identifiable intangible assets using an income-based approach that utilized either the multi-period excess earnings method or the relief from royalty method. The purchase price allocation for Clean Earth is not final and the fair value of intangible assets and goodwill may vary from those reflected in the Company's condensed consolidated financial statements at March 31, 2020.

The three and nine months ended ~~March 31, 2020 and~~September 30, 2019 include Clean Earth direct acquisition and integration costs of ~~$0.1~~$2.0 million and ~~$0.6~~$14.5 million, respectively which are included in Selling, general and administrative expenses, within the Corporate function, in the Company’s Condensed Consolidated Statements of Operations.

Pro forma financial information

The pro forma information below gives effect to the Clean Earth acquisition as if it had been completed on January 1, ~~2018.~~2018 and the ESOL acquisition as if it had been completed on January 1, 2019. The pro forma information is not necessarily indicative of the Company’s results of operations had the ~~acquisition~~acquisitions been completed on the above ~~date,~~dates, nor is it necessarily indicative of future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the ~~acquisition~~acquisitions and does not reflect the additional revenue opportunities following the ~~acquisition.~~acquisitions. The pro forma information below includes the adjustments necessary to reflect additional depreciation and amortization expense based on the estimated fair value and useful lives of intangible assets and fixed assets acquired; includes additional interest expense of approximately ~~$9.0~~$4.7 million ~~three~~for the nine months ended ~~March 31,~~September 30, 2020 and $5.6 million and $34.9 million for the three and nine months ended September 30, 2019, respectively, on the acquisition related borrowings used to finance the ~~Clean Earth acquisition~~acquisitions and excludes certain directly attributable ~~transaction~~acquisition and integration costs and historic ~~Clean Earth~~ interest expense. These pro forma adjustments are subject to change as additional analysis is performed. The values assigned to the assets acquired and liabilities assumed are based on preliminary valuations, for the ESOL acquisition, and are subject to change as the Company obtains additional information during the remaining measurement period. In addition, the historical ESOL results include $8.9 million for the nine months ended September 30, 2020 and $8.6 million and $26.5 million for the three and nine months ended September 30, 2019, respectively, of corporate expenses charged to ESOL from Stericycle.


	Three Months Ended				Nine Months Ended
	September 30				September 30
(In millions)	2020		2019		2020		2019
Pro forma revenues	$	509.4	$	572.7	$	1,486.2	$	1,650.3

Pro forma net income attributed to Harsco Corporation (including discontinued operations) (e)	(1.8)		434.9		1.0		440.9

Three Months Ended
March 31
(In millions) 2019
Pro forma revenues $ 393.5
Pro forma net income (including discontinued operations) 15.6
(e) Pro forma net income for the three and nine months ended September 30, 2019 includes a $417.5 million after-tax gain on the sale of AXC.

Harsco Industrial Segment

In January 2020 the Company sold IKG for ~~$85~~$85.0 million, including a note receivable with a face value of $40.0 million (initial fair value $34.3 million), ~~subject to post-closing adjustments,~~ and recognized aan $18.4 million pre-tax gain on ~~the~~ sale ~~of $18.5 million pre-tax~~ (or approximately $9 million after-tax). ~~Together~~This disposal, along with the ~~2019 sales~~disposals of AXC and PK ~~this completes the divestiture of the former Harsco Industrial Segment originally announced~~ in ~~May 2019. These disposals~~2019, represent a strategic shift and ~~accelerated~~accelerates the transformation of the Company's portfolio of businesses into a ~~leading provider of~~global, market-leading, single-thesis environmental solutions ~~and services.~~platform. See Note 4, Accounts Receivable and Note Receivable, for additional information related to the note receivable.

The Harsco Industrial Segment has historically been a separate reportable segment with primary operations in North America and Latin America. In accordance with U.S. GAAP, the results of the former Harsco Industrial Segment are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for the three and nine months ended ~~March 31,~~September 30, 2020 and 2019.

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Certain key selected financial information included in net income (loss) from discontinued operations for the former Harsco Industrial Segment is as follows:


	Three Months Ended				Nine Months Ended
	September 30				September 30
(In millions)	2020		2019		2020		2019
Amounts for the former Harsco Industrial Segment:
Total revenues	$	0	$	39,855	$	10,203	$	274,037
Cost of products sold	0		28,174		8,082		201,188
Gain on sale from discontinued business	0		527,980		18,371		527,980
Income (loss) from discontinued business	(716)		803		(593)		24,877
Additional amounts allocated to the former Harsco Industrial Segment:
Selling, general and administrative expenses (f)	$	521	$	1,994	$	1,710	$	5,521
Interest expense (g)	0		0		0		11,237
Loss on early extinguishment of debt (h)	0		5,314		0		5,314

Three Months Ended
March 31
(In millions) 2020 2019
Amounts directly attributable to the former Harsco Industrial Segment:
  Total revenues $ 10,203
$ 117,386
  Cost of products sold 8,082
87,695
  Income from discontinued business 218
14,192
Additional amounts allocated to the former Harsco Industrial Segment:
  Selling, general and administrative expenses (e)
$ 1,266
$ —
  Interest expense (f)
—
4,232

~~(e)~~(f) The Company has allocated directly attributable transaction costs to discontinued operations. In addition, this caption includes costs directly attributable to retained contingent liabilities of the Harsco Industrial Segment.

~~(f)~~(g) The Company has allocated interest expense, including a portion of the amount reclassified into income for the Company's interest rate swaps and amortization of deferred financing costs resulting from the AXC disposal, as part of discontinued operations.

(h) The Company has allocated the $5.3 million write-off of deferred financing costs to discontinued operations as it is directly attributable to the mandatory repayment of the Original Term Loan that resulted from the AXC disposal.

The Company has retained corporate overhead expenses previously allocated to the Harsco Industrial Segment of ~~$1.4~~$0.7 million for the three months ended ~~March 31,~~September 30, 2019 and $3.4 million for the nine months ended September 30, 2019, as part of Selling, general and administrative expenses, on the Company's Condensed Consolidated Statements of Operations.

The following is selected financial information included on the Company's Condensed Consolidated Statements of Cash Flows attributable to the former Harsco Industrial Segment:


	Nine Months Ended
	September 30
(In millions)	2020		2019
Non-cash operating items
Depreciation and amortization	$	0	$	3,301
Cash flows from investing activities
Purchases of property, plant and equipment	106		6,151

Three Months Ended
March 31
(In millions) 2020 2019
Non-cash operating items
Depreciation and amortization $ —
$ 2,025
Cash flows from investing activities
Purchases of property, plant and equipment 106
2,175

4. Accounts Receivable and Note Receivable

Accounts receivable are stated at net realizable value which represents the face value of the receivable less an allowance for expected credit losses. The allowance for expected credit losses is maintained for expected lifetime losses resulting from the inability or unwillingness of customers to make required payments.

The Company’s expected credit loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers' trade accounts receivables. When required, the Company adjusts the loss-rate methodology to account for current conditions and reasonable and supportable expectations of future economic and market conditions. The Company generally assesses future economic conditions for a period which corresponds with the contractual life of its accounts ~~receivables.~~receivable. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default.

Prior to the adoption of the ~~new~~expected credit loss allowance methodology on January 1, 2020, the Company established an allowance for doubtful accounts based upon a specific-identification method as well as historical collection experience, as appropriate.

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Accounts receivable consist of the following:


(In thousands)	September 30 2020		December 31 2019
Trade accounts receivable	$	409,928	$	323,502
Less: Allowance for expected credit losses and doubtful accounts (a) (b)	(8,934)		(13,512)

Trade accounts receivable, net	$	400,994	$	309,990

Other receivables (c)	$	38,325	$	21,265

(In thousands) March 31
2020 December 31
2019
Trade accounts receivable $ 333,725
$ 323,502
Less: Allowance for expected credit losses and doubtful accounts (13,015 ) (13,512 )
Trade accounts receivable, net $ 320,710
$ 309,990
Other receivables (a)
$ 18,685
$ 21,265


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

(a) The decrease in the allowance for expected credit losses and doubtful accounts is the final write-off of previously fully-reserved balances in the Harsco Environmental Segment.

(b) Upon the acquisition of ESOL, trade accounts receivable totaling $136.2 million were recorded at a fair value of $123.2 million as of the acquisition date, due primarily to expected credit losses as of the acquisition date of $13.0 million which were netted against the gross receivable balance as of the acquisition date.

(c) Other receivables include employee receivables, insurance receivable, tax claims and refunds and other miscellaneous items not included in Trade accounts receivable, net.

The change in the provision for expected credit losses and doubtful accounts related to trade accounts receivable was as follows:


	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands)	2020		2019		2020		2019
Provision for expected credit losses and doubtful accounts related to trade accounts receivable	$	861	$	1,116	$	1,098	$	6,539

Three Months Ended
March 31
(In thousands) 2020 2019
Increase (decrease) in provision for expected credit losses and doubtful accounts related to trade accounts receivable $ 219
$ (10 )

At ~~March 31,~~September 30, 2020 approximately ~~$3.7~~$5.6 million of the Company's trade accounts receivable ~~balance was~~were past due by twelve months or ~~more, primarily in the Clean Earth Segment,~~more. Approximately $1.1 million of ~~which the majority~~this amount is reserved, and collection of the remaining balance ~~was represented by a single customer from whom payment is expected within the next twelve months, while the rest were either fully or nearly fully reserved, although collection~~ is still ultimately expected.

In January 2020 the Company sold IKG for ~~$85~~$85.0 million including cash and a note receivable, subject to post-closing adjustments. The note receivable from the buyer has a face value of ~~$40~~$40.0 million, bearing interest at 2.50%, that is paid in kind and matures on January 31, 2027. Any unpaid principal, along with any accrued but unpaid interest is payable at maturity. Prepayment is required in case of a change in control or a percentage of excess cash flow, as defined in the note receivable agreement. Because there are no scheduled payments under the terms of the note receivable, the balance is not classified as current as of ~~March 31,~~September 30, 2020 and is included in the caption Other assets on the Condensed Consolidated Balance Sheet. The initial fair value of the note receivable was $34.3 million which was calculated using an average of various discounted cash flow scenarios based on anticipated timing of repayments (Level 3) and was a non-cash transaction. The note receivable is subsequently measured asat amortized ~~costs.~~cost. Key inputs into the valuation model include: projected timing and amount of cash flows, pro forma debt rating, option-adjusted spread and U.S. Treasury spot rate. At ~~March 31,~~September 30, 2020 the amortized cost of the note receivable was ~~$34.6~~$35.4 million, compared with a fair value of ~~$31.0~~$35.6 million.


(In thousands)	March 31 2020		December 31 2019		(In thousands)	September 30 2020		December 31 2019
Note receivable	$	34,569	$	—	Note receivable	$	35,389	$	0

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10. Employee Benefit Plans



	Three Months Ended
	September 30
Defined Benefit Pension Plans Net Periodic Pension Cost (Benefit)	U.S. Plans				International Plans
(In thousands)	2020		2019		2020		2019
Service costs	$	0	$	10	$	448	$	344
Interest costs	1,845		2,637		4,474		5,168
Expected return on plan assets	(2,842)		(2,602)		(10,405)		(8,671)
Recognized prior service costs	0		0		113		61
Recognized loss	1,225		1,395		3,737		3,326
Settlement/curtailment losses	0		0		0		0
Defined benefit pension plans net periodic pension cost (benefit)	$	228	$	1,440	$	(1,633)	$	228



	Nine Months Ended
	September 30
Defined Benefit Pension Plans Net Periodic Pension Cost (Benefit)	U.S. Plans				International Plans
(In thousands)	2020		2019		2020		2019
Service costs	$	0	$	30	$	1,303	$	1,057
Interest costs	5,535		7,939		13,104		16,380
Expected return on plan assets	(8,526)		(7,788)		(30,428)		(27,507)
Recognized prior service costs	0		0		326		192
Recognized loss	3,875		4,205		10,924		10,556

Settlement/curtailment losses	0		129		0		0
Defined benefit pension plans net periodic pension cost (benefit)	$	884	$	4,515	$	(4,771)	$	678

Three Months Ended
Company Contributions March 31
(In thousands) 2020 2019
Defined benefit pension plans (U.S.) $ 2,027
$ 1,479
Defined benefit pension plans (International) 10,060
9,270
Multiemployer pension plans 409
521
Defined contribution pension plans 3,169
3,390


	Three Months Ended				Nine Months Ended
Company Contributions	September 30				September 30
(In thousands)	2020		2019		2020		2019
Defined benefit pension plans (U.S.)	$	453	$	2,806	$	2,940	$	6,296
Defined benefit pension plans (International)	2,682		4,121		14,235		16,522
Multiemployer pension plans	390		527		1,178		1,531
Defined contribution pension plans	2,870		2,358		7,936		8,717

The Company's estimate of expected contributions to be paid during the remainder of 2020 for the U.S. and international defined benefit pension plans ~~are $6.2~~is $3.1 million and ~~$11.0~~$6.1 million, respectively. The recently enacted ~~Coronavirus Aid, Relief, and Economic Security~~CARES Act ~~(CARES Act)~~ allows for the deferral, until 2021, of certain expected pension contributions in the U.S. The Company is currently evaluating this alternative.

11. Income Taxes

Income tax benefit related to continuing operations for the three and nine months ended ~~March 31,~~September 30, 2020 was ~~$0.7~~$1.7 million ~~compared with an income~~and $4.6 million, respectively. Income tax expense related to continuing operations ~~of $1.2 million~~ for the three and nine months ended ~~March 31, 2019. The change in the income~~September 30, 2019 was $12.6 million and $17.8 million, respectively. Income tax benefit for the three and nine months ended ~~March 31,~~September 30, 2020 compared with ~~the~~ income tax expense for the ~~three months ended March 31,~~same periods in 2019 is the result of lower ~~taxable~~pretax income, primarily resulting from decreased operating income due to impacts of COVID-19 and incremental acquisition and integration costs in connection with the Company's acquisitions of approximately $8.1 million and $23.9 million for the three and nine months ended September 30, 2020, respectively, as well as a ~~net~~$2.8 million favorable income tax adjustment in connection with an increase in ~~strategic costs~~estimated usage of assumed net operating losses related to the ~~ESOL~~Clean Earth acquisition ~~partially offset by~~and a ~~decreased~~$2.8 million valuation allowance adjustment against a deferred tax asset due to a lower projected income ~~tax benefit recognized for stock-based compensation vesting during the first quarter of 2020 compared to the first quarter of~~in a certain jurisdiction in 2019. not recurring in 2020.

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 ~~March 31,~~September 30, 2020 was ~~$4.5~~$4.0 million, including interest and penalties. Within the next twelve months, it is reasonably possible that $0.3 million unrecognized income tax benefits will be recognized upon settlement of tax examinations and the expiration of various statutes of limitations.

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12. 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 byproduct 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. ~~Other than set forth herein 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.

The following table summarizes information related to the location and undiscounted amount of the Company's environmental liabilities:


(In thousands)	September 30 2020		December 31 2019
Current portion of environmental liabilities (a)	$	6,031	$	3,431
Long-term environmental liabilities	29,747		5,600
Total environmental liabilities	$	35,778	$	9,031

(a) The current portion of environmental liabilities is included in the caption Other current liabilities on the Company's Condensed Consolidated Balance Sheets.

Environmental liabilities relate primarily to the ESOL business which was acquired on April 6, 2020. As part of the ESOL acquisition, the Company assumed control of certain closed sites that were being monitored as part of ongoing environmental remediation plans. See Note 3, Acquisitions and Dispositions, for additional details.

On June 25 and 26, 2018, the DTSC conducted a compliance enforcement inspection of ESOL’s facility in Rancho Cordova, California, which was then owned by Stericycle, Inc.On February 14, 2020, the DTSC filed an action in the Superior Court for the State of California, Sacramento Division, alleging violations of California’s Hazardous Waste Control Law and the facility’s hazardous waste permit arising from the inspection.On August 27, 2020 the DTSC issued a Notice of Denial of Hazardous Waste Facility Permit Application. On September 25, 2020, the Company filed an administrative appeal. The DTSC investigation was ongoing well before the Company's acquisition of the ESOL business, and the Company was aware of the investigation and many of the issues raised in the investigation at the time of the purchase. Accordingly, the Company is indemnified for certain fines and other costs and expenses associated with this matter by Stericycle, Inc. As a result, the administrative appeal will be led by Stericycle, Inc. The Company has not accrued any amounts in respect of these alleged violations and cannot estimate the reasonably possible loss or the range of reasonably possible losses that it may incur.

As previously disclosed, the Company has had ongoing meetings with the ~~Supreme Council for Environment in Bahrain ("SCE")~~SCE over processing salt cakes, a processing 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 ~~were~~for facilities to process the salt cakes was approved by the SCE during the first quarter of 2018. The Company ~~is constructing facilities to process the salt cakes, and the Company~~ currently expects those facilities to ~~come online in~~commence operations during the fourth quarter of 2020. The Company has previously established a reserve of $7.0 million, which represents the Company's best estimate of the ultimate costs to be incurred to resolve this matter. 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.

On July 27, 2018 Brazil’s Federal and Rio de Janeiro State Public Prosecution Offices (MPF and MPE) filed a Civil Public Action against one of the Company's customers (CSN), the Company’s Brazilian subsidiary, the Municipality of Volta Redonda, Brazil, and the Instituto Estadual do Ambiente (local environmental protection agency) seeking the implementation of various measures to limit and reduce the accumulation of customer-owned slag at the site in Brazil. On August 6, 2018 the 3rd Federal Court in Volta Redonda granted the MPF and MPE an injunction against the same parties requiring, among other

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things, CSN and the Company’s Brazilian subsidiary to limit the volume of slag sent to the site. Because the customer owns the site and the slag located on the site, the Company believes that complying with this injunction is the steel producer’s responsibility. On March 18, 2019 the Court issued an order fining the Company 5,000 Brazilian reais per day (or approximately ~~$1,000~~$900 per day) and CSN 20,000 Brazilian reais per day (or approximately $4,000 per day) until the requirements of the injunction are met. On November 1, 2019 the Court issued an additional order increasing the fines assessed to the Company to 25,000 Brazilian reais per day (or approximately ~~$5,000~~$4,000 per day) and raising the fines assessed to CSN to

100,000 Brazilian reais per day (or approximately ~~$19,000~~$18,000 per day). The Court also assessed an additional fine of

10,000,000 Brazilian reais (or approximately ~~$1.9 million)~~$1,800,000) against CSN and the Company jointly. The Company is appealing the fines and the underlying injunction. Both the Company and CSN continue to have discussions with the governmental authorities on the injunction and the possible resolution of the underlying case. The Company does not believe that a loss relating to this matter is probable or estimable at this point.

On October 19, 2018 local environmental authorities issued an enforcement action against the Company concerning the Company’s operations at a customer site in Ijmuiden, Netherlands. The enforcement action alleges violations of the Company’s environmental permit at the site, which restricts the release of any visible dust emissions. The enforcement action ordered the Company to cease all violations of the permit by October 31, 2018. The authorities have issued ~~three~~3 additional enforcement actions since that time and have asserted fines of approximately ~~$0.5~~$0.7 million which the Company has recorded, with the possibility of additional fines for any future violations. The Company is vigorously contesting the enforcement action and fines and is also working with its customer to ensure the control of emissions. The Company has contractual indemnity rights from its customer, should it be required to pay the assessed fines.

On June 13, 2019 the ~~Pennsylvania Department of Environmental Protection ("~~PA ~~DEP")~~DEP indicated to the Company and a landowner who received processed slag from the Company that it plans to require action to bring the landowner’s site into compliance and to assess a civil penalty against the Company and the landowner. The Company is working with the landowner and PA DEP to determine the most effective way to address PA DEP’s concerns about the site and has established a $0.4 million reserve, which represents the Company’s best estimate of the costs to bring the landowner's site into compliance.

On March 24, 2017 the Allegheny County Health Department issued a notice of violation against the Company concerning the Company’s operations at a customer site in Natrona, Pennsylvania. On January 21, 2020 the Company paid $0.1 million to settle the civil penalties accrued up to that date. ~~In April~~On May 4, 2020, the Company paid a $5 thousand penalty and on August 21, 2020, the Company paid a $6 thousand penalty, both for alleged additional events. The Company also received ~~a penalty~~an additional assessment of ~~$4,500 for three alleged additional events.~~$8 thousand on October 23, 2020. It is possible the Company could incur additional penalties for future violations. Pursuant to the settlement agreement, the Company and its customer have also agreed to construct ~~at its customer's costs~~ and bring certain slag processing operations into a building. On October 29, 2020, one of the residents of Natrona filed a punitive class action lawsuit against the Company in the Court of Common Pleas of Allegheny County, Pennsylvania, seeking unspecified damages and injunctive relief due to alleged dust emissions at the site, which the Company believes is without merit.

DEA Investigation

Prior to the Company’s acquisition of ESOL, Stericycle, Inc, notified the Company that the DEA had served an administrative subpoena on Stericycle, Inc. and executed a search warrant at a facility in Rancho Cordova, California and an administrative inspection warrant at a facility in Indianapolis, Indiana. The Company has determined that the DEA and the DTSC have launched investigations involving, at least in part, the ESOL business of collecting, transporting, and destroying controlled substances from retail customers that transferred from Stericycle, Inc. to the Company. In connection with these investigations, the DEA also executed a search warrant on an ESOL facility in Austin Texas on July 2, 2020. The Company is cooperating with these inquiries, which relate primarily to the period before the Company owned the ESOL business. Since the acquisition of the ESOL business, the Company has performed a vigorous review of ESOL’s compliance program related to controlled substances and has made material changes to the manner in which controlled substances are transported from retail customers to DEA-registered facilities for destruction. The Company has not accrued any amounts in respect of these investigations and cannot estimate the reasonably possible loss or the range of reasonably possible losses that it may incur, if any. Investigations of this type are, by their nature, uncertain and unpredictable. While it is the Company’s position that it has recourse for some or all liabilities, if any, that arise from these matters under the ESOL purchase agreement and representations and warranties insurance policies purchased by the Company, there can be no assurances that the Company’s position will ultimately prevail.

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

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generally calculated as a percentage of the total assessed amounts due, inclusive of penalty and interest. Many of the claims relate to ~~value-added ("ICMS"),~~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"),~~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 ~~March 31,~~September 30, 2020 the principal amount of the tax assessment from the SPRA with regard to this case is approximately ~~$1.2~~$1.1 million, with penalty, interest and fees assessed to date increasing such amount by an additional ~~$16.2~~$15.0 million. On

June 4, 2018 the Appellate Court of the State of Sao Paulo ruled in favor of the SPRA but ruled that the assessed penalty should be reduced to approximately $1$1.1 million. After calculating the interest accrued on the penalty, the Company estimates that this ruling reduces the current overall potential liability for this case to approximately $7$6.4 million. All such amounts include the effect of foreign currency translation. The Company has appealed the ruling in favor of the SPRA to the Superior Court of Justice. Due to multiple court precedents in the Company’s favor, as well as the Company’s ability to appeal, the Company does not believe a loss is probable.

Another ICMS tax case involving the SPRA refers to the tax period from January 2002 to December 2003. In December 2018 the administrative tribunal hearing the case upheld the Company's liability. The Company has appealed to the judicial phase. The aggregate amount assessed by the tax authorities in August 2005 was ~~$4.9~~$4.5 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 ~~$1.2~~$1.1 million,, with penalty and interest assessed through that date increasing such amount by an additional ~~$3.7~~$3.4 million. On December 6, 2018 the administrative tribunal reduced the applicable penalties to ~~$1.2~~$0.8 million. After calculating the interest accrued on the current penalty, the Company estimates that the current overall liability for this case to be approximately ~~$10~~$9.0 million. All such amounts include the effect of foreign currency translation. Due to multiple court precedents in the Company's favor the Company does not believe a loss is probable.

The Company continues to believe that sufficient coverage for these claims exists as a result of the 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 Environmental 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. As of ~~March 31,~~September 30, 2020 and December 31, 2019 the Company has established reserves of ~~$5.0~~$4.3 million and $6.5 million, respectively, on the Company's Condensed Consolidated Balance Sheets for amounts considered to be probable and estimable.

Customer Disputes

The Company may, in the normal course of business, become involved in commercial disputes with subcontractors or customers. 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 any ongoing matters will not have a material adverse effect on the Company's financial condition, results of operations or cash flows.

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.

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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 ~~March 31,~~September 30, 2020 there were approximately ~~17,138~~17,160 pending asbestos personal injury actions filed against the Company. Of those actions, approximately ~~16,585~~16,596 were filed in the New York Supreme Court (New York County), approximately ~~118~~119 were filed in other New York State Supreme Court Counties and approximately ~~435~~445 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 ~~March 31,~~September 30, 2020 approximately 16,550 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 approximately 3546 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 costs and expenses of the asbestos actions are being paid by the 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 ~~March 31,~~September 30, 2020 the Company has obtained dismissal in approximately ~~28,245~~28,300 cases by stipulation or summary judgment prior to trial.

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

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

Insurance liabilities are recorded when it is probable that a liability has been incurred for a particular event and the amount of loss associated with the event can be reasonably estimated. Insurance reserves have been estimated based primarily upon actuarial calculations and reflect the undiscounted estimated liabilities for ultimate losses, including claims incurred but not reported. Inherent in these estimates are assumptions that are based on the Company's history of claims and losses, a detailed analysis of existing claims with respect to potential value, and current legal and legislative trends. If actual claims differ from those projected by management, changes (either increases or decreases) to insurance reserves may be required and would be recorded through income in the period the change was determined. When a recognized liability is covered by third-party insurance, the Company records an insurance claim receivable to reflect the covered liability. Insurance claim receivables are included in Other receivables on the Company's Condensed Consolidated Balance Sheets. See Note 1, Summary of Significant Accounting Policies, to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for additional information on Accrued insurance and loss reserves.

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13. Reconciliation of Basic and Diluted Shares

Three Months Ended
March 31
(In thousands, except per share amounts) 2020 2019
Income (loss) from continuing operations attributable to Harsco Corporation common stockholders $ (8,782 ) $ 10,474
Weighted-average shares outstanding:
  Weighted-average shares outstanding - basic 78,761
79,907
  Dilutive effect of stock-based compensation —
1,746
  Weighted-average shares outstanding - diluted 78,761
81,653
Earnings (loss) from continuing operations per common share, attributable to Harsco Corporation common stockholders:
Basic $ (0.11 ) $ 0.13
Diluted $ (0.11 ) $ 0.13


	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands, except per share amounts)	2020		2019		2020		2019
Income (loss) from continuing operations attributable to Harsco Corporation common stockholders	$	(7,843)	$	17,831	$	(27,375)	$	25,453
Weighted-average shares outstanding:
Weighted-average shares outstanding - basic	79,000		79,666		78,916		79,966
Dilutive effect of stock-based compensation	0		1,444		0		1,783
Weighted-average shares outstanding - diluted	79,000		81,110		78,916		81,749

Earnings (loss) from continuing operations per common share, attributable to Harsco Corporation common stockholders:
Basic	$	(0.10)	$	0.22	$	(0.35)	$	0.32

Diluted	$	(0.10)	$	0.22	$	(0.35)	$	0.31

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


	Three Months Ended			Three Months Ended		Nine Months Ended
	March 31			September 30		September 30
(In thousands)	2020	2019	(In thousands)	2020	2019	2020	2019
Restricted stock units	749	—	Restricted stock units	691	0	723	0

Stock appreciation rights	2,643	608	Stock appreciation rights	2,383	599	2,499	460
Performance share units	940	233	Performance share units	857	265	894	166

Table of ~~the acquisition date for the major classes of assets acquired and liabilities assumed and other disclosures.~~Contents

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

The following discussion should be read in conjunction with the accompanying unaudited condensed consolidated financial statements as well as the audited consolidated financial statements of ~~Harsco Corporation (the "Company"),~~the Company, including the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 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 2020 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, together with the number of 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;~~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 changes in general economic conditions or changes due to ~~the~~ COVID-19 ~~coronavirus pandemic~~ and governmental and market reactions to ~~the COVID-19 coronavirus pandemic;~~COVID-19; (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 and amounts; (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) potential severe volatility in the capital markets; (14) failure to retain key management and employees; (15) the amount and timing of repurchases of the Company's common stock, if any; (16) the outcome of any disputes with customers, contractors and subcontractors; (17) the financial condition of the Company's customers, including the ability of customers (especially those that may be highly leveraged, have inadequate liquidity or whose business is significantly impacted by ~~the COVID-19 coronavirus pandemic)~~COVID-19) to maintain their credit availability; (18) implementation of environmental remediation matters; (19) risk and uncertainty associated with intangible assets and (20) 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, 2019, 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.

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Executive Overview

The Company is a market-leading, global provider of environmental solutions for industrial, retail and ~~specialty~~medical waste streams, and innovative equipment and technology for the rail sector. The Company's operations consist of three reportable segments: Harsco Environmental, Harsco Clean Earth and Harsco ~~Rail and the~~Rail. The Company is working towards transforming Harsco into a single-thesis environmental solutions company that is a global leader in the markets ~~we serve.~~the Company serves. The Harsco Environmental Segment operates primarily under long-term contracts, providing critical environmental services and material processing to the global steel and metals industries, including zero waste solutions for manufacturing byproducts within the metals industry. The Harsco Clean Earth Segment provides waste management services including transportation, specialty waste processing, recycling and beneficial reuse solutions for hazardous ~~wastes,~~waste, contaminated materials and dredged volumes. 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.

In ~~February~~April 2020 the Company completed the previously announced ~~that it entered into a definitive agreement to acquire the~~acquisition of ESOL, from Stericycle, ~~Environmental Solutions business ("ESOL")~~Inc., for $429.0 million in cash, inclusive of post-closing adjustments. ESOL is an established ~~hazardous~~ waste transportation, processing and ~~processing~~services provider with a comprehensive portfolio of disposal solutions ~~provider, from Stericycle, Inc. Under~~for customers primarily across the ~~terms~~industrial, retail and healthcare markets. ESOL's network includes thirteen permitted TSDF facilities and forty-eight 10-day transfer facilities serving more than ninety thousand customer locations utilizing a fleet of ~~the agreement, the Company will acquire ESOL for $462.5 million, subject to customary purchase price adjustments. This transaction closed on April 6, 2020.~~more than seven hundred vehicles. The acquisition of ESOL furthers Harsco’s transformation into a global, market-leading, single-thesis environmental solutions platform. The results of ESOL ~~will be reflected~~are included in the Harsco Clean Earth Segment.

In March 2020, the Company raised ~~a new term loan facility of $280~~$280.0 million ("pursuant to the New Term ~~Loan")~~Loan as a new tranche under ~~the~~its existing Senior Secured Credit Facilities. ~~There were no borrowings outstanding under the New Term Loan at March 31, 2020.~~ The New Term Loan was fully drawn on April 6, 2020 to partially fund the ESOL acquisition. Borrowings under the New Term Loan bear interest at a rate per annum ranging from 150 to 225 basis points over adjusted LIBOR (as defined in the Credit ~~Agreement governing the Senior Secured Credit Facilities)~~Agreement). The New Term Loan will mature on June 28, 2024. The Company ~~also~~capitalized $1.9 million of fees related to the issuance of the New Term Loan.

In both March 2020 and June 2020, the Company amended the Senior Secured Credit Facilities to ~~among other things,~~ increase the net debt to consolidated adjusted ~~earnings before interest, tax, depreciation and amortization ("EBITDA")~~EBITDA ratio covenant. As a result of these amendments, the net debt to consolidated adjusted EBITDA ratio covenant has been increased to ~~5.0~~5.75 through ~~December 2020, which decreases to 4.5 through December~~March 2021 and ~~4.0 for periods thereafter.~~then decreasing quarterly until reaching 4.75 in December 2021. There is no change to the previously agreed interest rates as long as the Company's total leverage ratio does not equal or exceed 4.50 at which time it would increase by 25 basis points. During the nine months ended September 30, 2020, the Company recognized $1.9 million of fees and expenses related to the amended Senior Secured Credit Facilities in the caption Unused debt commitment and amendment fees on the Condensed Consolidated Statement of Operations.

In January 2020 the Company sold ~~Harsco Industrial~~ IKG ~~("IKG")~~ for ~~$85~~$85.0 million, including a note receivable with a face value of $40.0 million (initial fair value $34.3 million)~~, subject to post-closing adjustments,~~ and recognized a gain on sale of ~~$18.5~~$18.4 million pre-tax (or approximately $9 million after-tax). This disposal, along with the disposals of ~~the former Harsco Industrial Air-X-Changers~~AXC and ~~Harsco Industrial Patterson-Kelley~~PK in 2019, ~~represent a strategic shift and accelerate~~accelerated the transformation of the ~~Company's portfolio of businesses~~Company into a global, market-leading, single-thesis environmental solutions platform.

Beginning in March 2020 overall global economic conditions ~~have been~~were significantly impacted by COVID-19. Business conditions have slowly improved since the ~~COVID-19 coronavirus pandemic. The initial impact~~mid-point of the second quarter, with the ongoing COVID-19 ~~coronavirus pandemic on the Company varied~~impacts varying by end market ~~and~~as well as local conditions (including applicable government mandates). The ultimate duration and impact of ~~the~~ COVID-19 ~~coronavirus pandemic~~ on the Company and its customers' operations is presently unclear, though the Company ~~continues~~expects impacts to ~~operate~~continue for at least the next few quarters. The Company is operating as a provider of certain essential services, ~~in U.S.~~ and ~~most other countries. The Company has taken significant and proactive~~it continues to take actions to protect all stakeholders and to minimize the operational and financial impacts of ~~the~~ COVID-19 ~~coronavirus pandemic.~~where possible. Work safety and flexibility measures have been ~~implemented as the Company strives to keep facilities operational.~~implemented. In addition, the Company is also focused on actions to adjust its cost structure, reduce capital and operating expenditures, and to preserve its financial flexibility and liquidity position. Please refer to the below discussion of business outlook and Part II, Item 1A, "Risk Factors" for additional information related to the potential impacts of ~~the~~ COVID-19 ~~coronavirus pandemic~~ on the Company.

Highlights from the ~~first~~third quarter and nine months ended ~~March 31,~~September 30, 2020 include (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 for the ~~first~~third quarter and nine months ended ~~March 31,~~September 30, 2020 increased approximately ~~21%~~20% and 23%, respectively, compared with the ~~first~~third quarter and nine months ended ~~March 31,~~September 30, 2019. The primary drivers for ~~this increase~~these increases were the ~~acquisition~~acquisitions of Clean Earth and ESOL as well as increased revenue related to ~~maintenance-of-way~~maintenance-of-

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way equipment sales in the Harsco Rail Segment, partially offset by ~~the impact of foreign currency translation and modestly~~ lower customer ~~productions~~production in the Harsco Environmental Segment, inclusive of the impacts from COVID-19, and the ~~COVID-19 coronavirus pandemic.~~impact of foreign currency translation.

•Operating income from continuing operations for the ~~first~~third quarter and nine months ended ~~March 31,~~September 30, 2020 decreased approximately ~~85%~~89% and 88%, respectively, compared with the ~~first~~third quarter and nine months ended ~~March 31,~~September 30, 2019. The primary drivers for ~~this decrease~~these decreases were ~~incremental strategic costs of approximately $11 million, primarily to support the ESOL acquisition,~~ decreased customer production levels in the Harsco Environmental Segment, inclusive of the impacts of COVID-19; incremental acquisition and integration costs primarily related to the ~~COVID-19 coronavirus pandemic,~~ESOL acquisition; the timing and mix of sales in the Harsco Rail Segment and severance costs, primarily incurred during the first quarter of 2020, of approximately $5$6 million in the Harsco Environmental ~~Segment and the mix of maintenance-of-way equipment sales in the Harsco Rail~~ Segment. These decreases were partially offset by the inclusion of ~~Clean Earth~~ operating ~~results;~~results for ESOL, as well as lower selling, general and administrative expenses in the Harsco Environmental and Harsco Rail Segments, and ~~costs incurred~~ in Corporate (exclusive of the ~~Harsco Rail Segment during 2019 that did not repeat in 2020 related to the consolidation of U.S. manufacturing~~aforementioned incremental acquisition and ~~distribution into a single facility.~~integration costs).

•Diluted loss per common share from continuing operations attributable to Harsco Corporation for the ~~first~~third quarter ended ~~March 31,~~September 30, 2020 ~~were $0.11,~~was $0.10, a decrease ~~of approximately 185%~~ compared with the Diluted earnings per common share from continuing operations of $0.22 during ~~first~~third quarter ended ~~March 31,~~September 30, 2019. Diluted loss per common share from continuing operations attributable to Harsco Corporation for the nine months ended September 30, 2020 was $0.35 compared with the Diluted earnings per common share from continuing operations of $0.31 during the nine months ended September 30, 2019. In addition to the factors noted above for revenue and operating income from continuing operations, the primary driver of this decrease was increased interest ~~expense.~~expense partially offset by a decrease in debt-related transaction expenses, defined benefit pension income and the effect of income taxes.

•

Cash flows used by operating activities for the three months ended March 31, 2020 were $11.5 million, a decrease of $26.4 million compared with the Cash flows from operating activities for the three months ended March 31,

•Cash flows from operating activities for the nine months ended September 30, 2020 were $42.3 million, a decrease of $7.8 million compared with the Cash flows from operating activities for the nine months ended September 30, 2019. The primary drivers for this decrease were lower net income (excluding the impacts of the IKG sale), including the incremental acquisition and integration costs principally related to the ESOL acquisition; partially offset by favorable changes in net working capital, primarily due to additional customer advances in the Harsco Rail Segment; improved collection of accounts receivable and timing of inventories. The decrease also includes the impact of taxes paid related to the sale of AXC and the timing of income taxes receivable.

•Capital expenditures for purchases of property, plant and equipment for the nine months ended September 30, 2020 were $79.1 million, a decrease of $68.0 million or 46.2% compared with the first nine months of 2019. The decrease was the result of the Company's goal of maintaining financial flexibility and strengthening cash flow during COVID-19.

~~The primary driver for this decrease was lower net income (excluding the impacts of the IKG sale), including the strategic costs principally related to the ESOL acquisition.~~

Looking forward, the Company expects a positive long-term outlook across all businesses, however results ~~during the evolving COVID-19 coronavirus pandemic~~ will likely continue to be negatively ~~impacted.~~ impacted by COVID-19 in the coming quarters. The Company is continuing to work diligently and safely to provide customers with services and products, however it anticipates the current slow-down in customer demand will persist and the ultimate extent and duration of such impacts on the Company's businesses is not presently known.

The Company’s view for the remainder of 2020 and beyond is supported by the ~~below~~following 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, 2019 together with those described at the beginning of this section as well as in Part II, Item 1A, "Risk ~~Factors."~~Factors":

As a result of the evolving impact of the COVID-19 coronavirus pandemic on the global economy, the Company is anticipating a further slow-down in customer demand and increased business disruption, the extent and duration of which is not presently known. The Company continues to operate in most countries around the world in which it has a presence, including as a provider of essential services in the U.S., and the Company is continuing to work diligently and safely to provide customers with services and products.

•The Harsco Environmental Segment continues to operate in ~~most~~essentially all countries ~~around~~throughout the world in which it has a presence to support critical metal production, although the Company ~~expects~~has been impacted by an overall decline in global steel ~~production, including a limited number of~~demand. Several customer mill locations where ~~mills are~~production was temporarily ~~idled.~~idled during March and April 2020, as a result of COVID-19, have restarted though overall production remains below normalized levels and will remain so until underlying demand recovers. Estimated customer mill utilization decreased by 11% and 14% for the third quarter and nine months ended September 30, 2020, respectively, compared with the same periods in the prior year. Over the longer-term the Company expects that the Harsco Environmental ~~Segment~~Segment's return to growth will be driven by investments, innovation and economic growth that supports higher customer steel production. ~~In addition, new site (contract) contributions are expected to outpace site exits during 2020.~~

•The Harsco Clean Earth Segment locations ~~are currently~~continue operating as an essential services provider, ~~throughout the U.S., enabling the business to continue to perform~~by performing critical environmental services, ~~despite mandated closures for non-essential businesses in certain states. However, in~~throughout the U.S. In the near term, however, it is likely that ~~a decrease~~recent decreases in construction and industrial related activity, resulting from ~~the~~ COVID-19, ~~coronavirus pandemic, may~~will impact the contaminated materials ~~line~~and hazardous waste lines of business. The ~~immediate~~ impact of ~~the~~ COVID-19 ~~coronavirus pandemic~~ on the hazardous waste line of business, including the recently ~~announced~~completed ESOL acquisition, ~~will vary by ultimate end market with~~has been less significant given that certain end-markets such as medical waste and retail ~~as well as~~have recovered more quickly or proven more resilient. In addition, the dredged materials line of business ~~being more resilient.~~is expected to be less impacted by COVID-19 and has seen an increase in volumes for the first nine months of 2020 when compared with the same period in the prior year. Over the longer-term the Company expects growth opportunities, including the recently completed ESOL transaction, positive market trends, operational synergy opportunities and the less cyclical and recurring nature of this business to provide favorable returns on the Company's recent investments.

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•The Harsco Rail Segment continues to fulfill orders critical to global transportation and ~~is on track to increase~~has increased capacity during ~~the remainder of~~ 2020 through the implementation of its Supply Chain Operation Recovery program, ~~to a level required~~allowing the business to deliver on its ~~backlog.~~backlog in the coming years. In the near term, the Harsco Rail Segment ~~may~~has begun to be impacted by a decrease in certain short-cycle equipment, aftermarket and ~~equipment~~technology sales as a result of ~~the~~ COVID-19, ~~coronavirus pandemic,~~ primarily in the U.S., which is likely to continue in the coming quarters. Overall, the Harsco Rail Segment is supported by record backlog ~~which grew during the first quarter of 2020,~~ and the longer-term outlook for this business remains strong.

•The Company ~~anticipates moderately higher selling, general and administrative costs~~announced plans, in ~~the Harsco Rail Segment, necessary~~April 2020, to ~~support anticipated volume increases and growth.~~

~~The Company anticipates lowering~~lower 2020 capital expenditures by approximately $75 million from an originally expected range of $170 million to $180 million, exclusive of the ESOL acquisition, with the goal of preserving positive free cash flow (cash flows from operations; deduct capital expenditures; add back proceeds from asset ~~sales)~~sales; add back transaction-related expenditures) for the year.

~~The~~•Additionally, the Company ~~anticipates additional~~has made, and will continue to make, corporate cost reductions during 2020 to partially offset the impact of COVID-19. The Company has developed a tiered approach to potential supplemental cost mitigation efforts should the impacts of COVID-19 ~~coronavirus pandemic.~~become more severe or prolonged in nature.

•In the third quarter of 2020, a customer of the Harsco Environmental Segment in China ceased steel making operations at its steel mill site in order to relocate the operations to a new site, as a result of a government mandate to improve environmental conditions of the area. The Company will continue to provide services to the same customer at the new site. The net book value of the idled equipment associated with the previous location is approximately $18 million. The customer has entered into an agreement with the government where it will receive compensation for the losses the customer has incurred as a result of the forced shutdown. Based on the long-term relationship with the customer, the Company believes it will fully recover the book value of the equipment thus has not recorded a provision for asset impairment as of September 30, 2020. However, the Company will continue to evaluate changes in facts and circumstances and record any impairment charge when and if indicated.

•Interest expense for 2020 is expected to increase due to higher average debt balances during 2020 and the impact of a higher weighted-average interest rate resulting from the issuance of the ~~5.75%~~ Notes in 2019 and the New Term Loan.

•Net periodic pension cost will decrease by approximately $12 million during 2020 which will primarily be reflected in the caption Defined benefit pension (income) expense on the Condensed Consolidated Statement of Operations. The decrease is primarily the result of higher plan asset values at December 31, 2019.

Results of Operations

Segment Results


	Three Months Ended						Nine Months Ended
	September 30						September 30
(In millions, except percentages)	2020			2019			2020			2019
Revenues:
Harsco Environmental	$	222.5		$	260.9		$	668.1		$	791.5
Harsco Clean Earth	194.1			87.6			434.5			87.6

Harsco Rail	92.8			74.6			253.0			224.8

Total Revenues	$	509.4		$	423.2		$	1,355.5		$	1,104.0
Operating Income (Loss):
Harsco Environmental	$	12.3		$	32.8		$	36.4		$	84.9
Harsco Clean Earth	8.9			11.3			12.9			11.3

Harsco Rail	4.1			12.1			19.2			26.9
Corporate	(20.2)			(9.5)			(58.7)			(38.8)
Total Operating Income	$	5.1		$	46.7		$	9.8		$	84.4
Operating Margins:
Harsco Environmental	5.5		%	12.6		%	5.4		%	10.7		%
Harsco Clean Earth	4.6			12.9		%	3.0			12.9		%

Harsco Rail	4.4			16.2		%	7.6			12.0		%
Consolidated Operating Margin	1.0		%	11.0		%	0.7		%	7.6		%

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Three Months Ended
March 31
(In millions, except percentages) 2020 2019
Revenues:
     Harsco Environmental $ 241.6
$ 261.3
Harsco Clean Earth 78.8
—
     Harsco Rail 78.5
68.6
Total Revenues $ 398.8
$ 329.9
Operating Income (Loss):
     Harsco Environmental $ 10.5
$ 24.5
Harsco Clean Earth 4.2
—
     Harsco Rail 6.5
5.4
     Corporate (18.4 ) (10.1 )
Total Operating Income: $ 2.9
$ 19.8
Operating Margins:
     Harsco Environmental 4.4 % 9.4 %
Harsco Clean Earth 5.4
—
     Harsco Rail 8.2
7.9
Consolidated Operating Margin 0.7 % 6.0 %

Harsco Environmental Segment:


	March 31, 2020				September 30, 2020
Significant Effects on Revenues (In millions)	Three Months Ended			Significant Effects on Revenues (In millions)	Three Months Ended		Nine Months Ended
Revenues — 2019	$	261.3		Revenues — 2019	$	260.9	$	791.5
Impact of foreign currency translation.	(10.6		)
Net impact of new and lost contracts.	(6.8		)
Net effects of price/volume changes, primarily attributable to volume changes.	(2.3		)
Net effects of price/volume changes, primarily attributable to volume changes				Net effects of price/volume changes, primarily attributable to volume changes	(28.1)		(71.5)
Impact of foreign currency translation				Impact of foreign currency translation	(0.3)		(23.8)
Net impact of new and lost contracts				Net impact of new and lost contracts	(7.5)		(23.2)

Other				Other	(2.5)		(4.9)
Revenues — 2020	$	241.6		Revenues — 2020	$	222.5	$	668.1

March 31, 2020
Significant Effects on Revenues (In millions)
Three Months Ended
Revenues — 2019 $ 68.6
Net effect of price/volume changes, primarily attributable to volume changes. 10.7
Impact of foreign currency translation. (0.8 )
Revenues — 2020 $ 78.5

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Factors Positively Affecting Operating Income:

•Increased railway contracting services, primarily related to the start of a new contract ~~start~~ in the U.S., increased operating income during the ~~first quarter of~~nine months ended September 30, 2020 compared with the same period in the prior year.

•Results for the ~~first~~third quarter ofand nine months ended September 30, 2019 included ~~$2.6~~$0.8 million and $4.6 million, respectively, of costs associated with the consolidation of U.S. manufacturing and distribution into ~~once~~one facility that did not repeat during the ~~first~~third quarter and nine months ended of September 30, 2020.

•Lower selling, general and administrative expenses improved operating income by $1.3 million and $4.1 million during the third quarter and nine months ended September 30, 2020, respectively, compared to the same periods in the prior year.

Factors Negatively Impacting Operating Income:

•The mix of maintenance-of-way equipment sales, as well as the timing and mix of after-market parts sales, decreased operating income during the ~~first~~third quarter ofand nine months ended September 30, 2020 compared with the same ~~period~~periods in the prior ~~year.~~year as a result of lower end market demand.

•Incremental costs directly related to COVID-19 of $0.3 million and $0.6 million for the third quarter and nine months ended September 30, 2020 decreased operating income compared with the same periods in the prior year.

Corporate Costs:

In addition to the factors highlighted above that positively affected or negatively impacted segment operating income, the Company's Corporate function was impacted by incremental acquisition related and integration costs of approximately $8.0 million and $23.8 million during the quarter and nine months ended September 30, 2020, primarily related to the acquisition of ESOL, as well as an increase in the contingent consideration for the Clean Earth acquisition related to an increase in expected values of assumed net operating losses (offset by an income tax benefit). These increased costs were partially offset by decreases in other selling, general and administrative costs, including lower compensation expense and cost reduction actions due to COVID-19.

Consolidated Results


	September 30
	Three Months Ended						Nine Months Ended
(In millions, except per share amounts)	2020			2019			2020			2019
Total revenues	$	509.4		$	423.2		$	1,355.5		$	1,104.0
Cost of services and products sold	412.2			311.5			1,092.8			828.9
Selling, general and administrative expenses	88.0			63.2			241.2			187.1
Research and development expenses	0.6			1.3			2.6			3.2


Other expenses, net	3.6			0.4			9.1			0.4
Operating income from continuing operations	5.1			46.7			9.8			84.4
Interest income	0.6			0.4			1.6			1.6
Interest expense	(15.8)			(12.8)			(43.4)			(24.4)
Unused debt commitment and amendment fees	—			(0.2)			(1.9)			(7.6)

Defined benefit pension income (expense)	1.9			(1.4)			5.2			(4.2)
Income tax benefit (expense)	1.7			(12.6)			4.6			(17.8)
Equity income of unconsolidated entities, net	—			0.1			0.2			0.2
Income (loss) from continuing operations	(6.6)			20.3			(23.9)			32.1
Gain on sale of discontinued business	—			528.0			18.4			528.0
Income (loss) from discontinued businesses	(1.5)			0.3			(1.2)			24.0
Income tax expense related to discontinued operations	(0.2)			(110.7)			(9.8)			(112.7)
Income (loss) from discontinued operations	(1.7)			417.5			7.3			439.2
Net income (loss)	(8.3)			437.9			(16.6)			471.3
Total other comprehensive income (loss)	8.1			(9.2)			(8.9)			(1.1)
Total comprehensive income (loss)	(0.2)			428.6			(25.4)			470.2
Diluted earnings (loss) per common share from continuing operations attributable to Harsco Corporation common stockholders	(0.10)			0.22			(0.35)			0.31
Effective income tax rate for continuing operations	20.0		%	38.4		%	16.2		%	35.8		%

March 31
Three Months Ended
(In millions, except per share amounts) 2020 2019
Total revenues $ 398.8
$ 329.9
Cost of services and products sold 316.5
251.2
Selling, general and administrative expenses 72.5
56.4
Research and development expenses 1.3
0.7
Other expenses, net 5.7
1.7
Operating income from continuing operations 2.9
19.8
Interest income 0.2
0.5
Interest expense (12.6 ) (5.5 )
Unused debt commitment and amendment fees (0.5 ) —
Defined benefit pension income (expense) 1.6
(1.3 )
Income tax benefit (expense) 0.7
(1.2 )
Equity income of unconsolidated entities, net 0.1
—
Income (loss) from continuing operations (7.7 ) 12.3
Gain on sale of discontinued business 18.5
—
Income (loss) from discontinued businesses (0.2 ) 13.8
Income tax expense related to discontinued operations (9.3 ) (3.5 )
Income from discontinued operations 8.9
10.2
Net income 1.2
22.5
Total other comprehensive income (loss) (30.0 ) 4.5
Total comprehensive income (loss) (28.8 ) 27.1
Diluted earnings (loss) per common share from continuing operations attributable to Harsco Corporation common stockholders (0.11 ) 0.13
Effective income tax rate for continuing operations 8.0 % 9.0 %

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Comparative Analysis of Consolidated Results

Revenues

Revenues for the ~~first~~third quarter of 2020 increased ~~$68.9~~$86.2 million or ~~20.9%~~20.4% from the third quarter of 2019. Revenues for the first nine months of 2020 increased $251.6 or 22.8% from the third quarter of 2019. Foreign currency translation increased revenues by $0.5 million and decreased revenues by ~~approximately $11~~$24.4 million for the ~~first~~third quarter ofand nine months ended September 30, 2020, respectively, compared with the same ~~period~~periods in the prior year. Refer to the discussion of segment results 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 ~~first~~third quarter of 2020 increased ~~$65.3~~$100.7 million or ~~26.0%~~32.3% from the third quarter of 2019. Cost of services and products sold for the first nine months of 2020 increased $263.9 or 31.8% from the first ~~quarter~~nine months of 2019. The changes in cost of services and products sold were attributable to the following significant items:


	September 30, 2020
(In millions)	Three Months Ended		Nine Months Ended
Impact of ESOL and Clean Earth acquisitions	$	103.0	$	302.4
Change in costs due to changes in revenues (exclusive of the ESOL and Clean Earth acquisitions and effects of foreign currency translation and including fluctuations in commodity costs included in selling prices)	(8.9)		(23.6)
Impact of foreign currency translation	0.8		(18.5)
Other	5.8		3.6

Total change in cost of services and products sold — 2020 vs. 2019	$	100.7	$	263.9

March 31, 2020
(In millions) Three Months Ended
Impact of Clean Earth acquisition $ 63.4
Increased costs due to changes in revenues (exclusive of the Clean Earth acquisition and effects of foreign currency translation and including fluctuations in commodity costs included in selling prices) 12.9
Impact of foreign currency translation (9.3 )
Other (1.7 )
Total change in cost of services and products sold — 2020 vs. 2019 $ 65.3

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the ~~first~~third quarter of 2020 increased ~~$16.1~~$24.8 million or ~~28.5%~~39.2% from the third quarter of 2019. Selling, general and administrative expenses for the first nine months of 2020 increased $54.1 million or 28.9% from the first ~~quarter~~nine months of 2019. This increase primarily relates to incremental ~~strategic~~acquisition related and integration costs ~~of approximately $11 million~~during the nine months ended September 30, 2020, primarily related to the acquisition of ESOL and the inclusion of selling, general and administrative expenses associated with the ESOL and Clean Earth ~~acquisition~~acquisitions, which occurred in April 2020 and June ~~2019.~~2019, respectively. These increases were partially offset by decreased compensation expense resulting from lower incentive accruals, a provision for doubtful accounts of $6.1 million related to a U.K. customer that entered administration during the nine months ended September 30, 2019 that did not repeat in 2020 and decreased travel and entertainment expenses.

Other Expenses, Net

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


	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands)	2020		2019		2020		2019

Employee termination benefit costs	$	798	$	1,591	$	6,694	$	5,107


Other costs to exit activities	13		918		478		3,265
Impaired asset write-downs	2		129		75		343
Contingent consideration adjustments	2,437		(906)		2,437		(4,417)

Net gains	(7)		(1,353)		(255)		(3,624)
Other	390		4		(355)		(265)
Other expenses, net	$	3,633	$	383	$	9,074	$	409

Three Months Ended
March 31
(In thousands) 2020 2019
Employee termination benefit costs $ 5,455
$ 2,519
Other costs to exit activities 176
1,155
Impaired asset write-downs 69
214
Contingent consideration adjustments —
369
Net gains (19 ) (2,271 )
Other 52
(243 )
Other expenses, net $ 5,733
$ 1,743

Interest Expense

Interest expense during the third quarter and first ~~quarter~~nine months of 2020 increased by ~~$7.1~~$3.0 million and $19.0 million, respectively, compared with the third quarter and first ~~quarter~~nine months 2019. This increase primarily relates to higher outstanding borrowings and weighted average interest rates ~~primarily~~ related to the June 2019 issuance of the ~~5.75% Notes.~~Notes and the April 2020 issuance of the New Term Loan.

Unused Debt Commitment and Amendment Fees

During the ~~first quarter of~~nine months ended September 30, 2020, the Company recognized ~~$0.5~~$1.9 million of fees and expenses related to the amended Senior Secured Credit Facilities in the caption Unused debt commitment and amendment fees on the Condensed Consolidated Statement of Operations.

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During the first nine months of 2019, the Company recognized $6.7 million of expenses for fees and other costs ~~primarily~~related to the unused bridge financing commitment that the Company arranged in the event that the Notes were not issued prior to the acquisition of Clean Earth. Additionally, the Company recognized $0.8 million of expenses related to the amendment of the ~~Senior Secured Credit Facilities.~~Term Loan Facility.

Defined Benefit Pension Income (Expense)

Defined benefit pension income for the ~~first~~third quarter of 2020 was ~~$1.6~~$1.9 million, compared with defined benefit pension expense of ~~$1.3~~$1.4 million for the third quarter of 2019. Defined benefit pension income for the first nine months of 2020 was $5.2 million, compared with defined benefit pension expense of $4.2 million for the first ~~quarter~~nine months of 2019. These changes are primarily the result of higher plan asset values at

December 31, 2019.

Income Tax Expense

Income tax benefit related to continuing operations for the third quarter and first ~~quarter~~nine months of 2020 was ~~$0.7~~$1.7 million and $4.6 million, respectively, compared with income tax expense related to continuing operations for the third quarter and first nine months of ~~$1.2~~2019 was $12.6 million and $17.8 million, respectively. This change primarily resulted from decreased operating income due to impacts of COVID-19 and incremental acquisition related and integration costs in connection with the Company's acquisitions of approximately $8.1 million and $23.9 million for the third quarter and first ~~quarter of 2019. This change is the result of lower taxable~~nine months ended September 30, 2020, respectively, as well as a $2.8 million favorable income ~~primarily resulting from a net~~tax adjustment in connection with an increase in ~~strategic costs~~estimated usage of assumed net operating losses related to the ~~ESOL~~Clean Earth acquisition ~~partially offset by~~and a ~~decreased~~$2.8 million valuation allowance adjustment against a deferred tax asset due to a lower projected income ~~tax benefit recognized for stock-based compensation vesting during the first quarter of 2020 compared to the first quarter of 2019.~~in a certain jurisdiction in 2019 not recurring in 2020.

Income (Loss) from Continuing Operations

The Loss from continuing operations was ~~$7.7~~$6.6 million and $23.9 million for the third quarter and first ~~quarter~~nine months of 2020, respectively, compared with Income from continuing operations of ~~$12.3~~$20.3 million inand $32.1 million for the third quarter and the first ~~quarter~~nine months of ~~2019.~~2019, respectively, The primary drivers for ~~this decrease, including segment operating results and selling, general and administrative expenses~~these decreases are noted above.

Gain on Sale of Discontinued Business

In January 2020 the Company sold IKG and recognized a gain on sale of ~~$18.5~~$18.4 million pre-tax (or approximately $9 million after-tax).

In July 2019, the Company completed the previously announced sale of AXC for $600 million in cash. This transaction resulted in a gain on sale of $528.0 million pre-tax (approximately $418 million after tax) which has been recorded in the Company's Condensed Consolidated Statements of Operations as discontinued operations for the three and nine months ended ~~March 31, 2020.~~September 30, 2019.

Income (Loss) from Discontinued Operations

The operating results of the former Harsco Industrial Segment, costs directly ~~related~~attributable to these ~~disposals,~~operations, an allocation of interest expense associated with mandatory debt repayments required as a result of the disposals and the write-off of deferred financing costs resulting from the mandatory repayment have been reflected as discontinued operations in the Company's Condensed Consolidated Statement of Operations for all periods presented. See Note 3, Acquisitions and Dispositions, in Part I, Item 1, Financial Statements.

Total Other Comprehensive Income (Loss)

Total other comprehensive income was $8.1 million and other comprehensive loss was ~~$30.0~~$8.9 million in the third quarter and first ~~quarter~~nine months of 2020, respectively, compared with ~~total~~Total other comprehensive ~~income~~loss of ~~$4.5~~$9.2 million and $1.1 million in the ~~first~~third quarter ~~of 2019. For~~and the first ~~quarter~~nine months of ~~2020 the~~2019, respectively. The primary driver of ~~this~~the decrease for the comparative nine month period is due to the strengthening of the U.S. dollar against certain currencies ~~including~~inclusive of the impact of foreign currency translation of cumulative unrecognized actuarial losses on the Company’s pension obligations. The increase for the third quarter of 2020 is due primarily to these currencies partially recovering their value during the third quarter.

Liquidity and Capital Resources

In March 2020 the Company raised athe $280 million New Term Loan ~~of $280 million~~ as a new tranche under the existing Senior Secured Credit Facilities. ~~There were no borrowings outstanding under the New Term Loan at March 31, 2020.~~ The New Term Loan was fully drawn on April 6, 2020 to partially fund the acquisition of ESOL. See Note 3, Acquisition and Dispositions, for additional information related to the ESOL acquisition. Borrowings under the New Term Loan bear interest at a rate per annum ranging from 150 to 225 basis points over adjusted LIBOR (as defined in the Credit ~~Agreement governing the Senior Secured Credit Facilities)~~Agreement). The New Term Loan will mature on June 28, 2024. ~~The~~

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In both March 2020 and June 2020, the Company ~~also~~ amended the Senior Secured Credit Facilities to ~~among other things,~~ increase the net debt to consolidated adjusted EBITDA ratio covenant. As a result of these amendments, the net debt to consolidated adjusted EBITDA ratio covenant has been increased to ~~5.0~~5.75 through ~~December 2020, which decreases to 4.5 through December~~March 2021 and ~~4.0 for periods thereafter.~~then decreasing quarterly until reaching 4.75 in December 2021. There is no change to the previously agreed interest rates as long as the Company's total leverage ratio does not equal or exceed 4.50, at which time it would increase by 25 basis points.

Cash Flow Summary

The global economy ~~has been under stress due~~continues to be impacted by COVID-19, the ~~impact of the COVID-19 coronavirus pandemic, the~~ultimate extent and duration of which is not presently known, and the Company expects its liquidity to continue to be negatively impacted in the near term. As a result, the Company has taken significant proactive actions to minimize the operational and financial impacts. In addition, the Company is focused on actions to include adjusting its cost structure, ~~reduce~~reducing discretionary capital and operating expenditures ~~improve~~and improving working capital ~~and~~management in order to preserve its financial flexibility and liquidity position.

The Company currently expects to have sufficient financial liquidity and borrowing capacity to support the strategies within each of its businesses, inclusive of the impacts of ~~the COVID-19 coronavirus pandemic and the financing of the ESOL acquisition.~~COVID-19. The Company currently expects operational and business needs to be met by cash provided by operations, which may be supplemented with borrowings principally under the Senior Secured Credit Facility, due to historic patterns of seasonal cash flow, the funding of various projects and the impact of ~~the COVID-19 coronavirus pandemic.~~COVID-19.

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

Three Months Ended
March 31
(In millions) 2020 2019
Net cash provided (used) by:

Operating activities $ (11.5 ) $ 14.8
Investing activities 18.6
(38.6 )
Financing activities 12.8
44.4
Effect of exchange rate changes on cash and cash equivalents, including restricted cash (10.8 ) —
Net change in cash and cash equivalents, including restricted cash $ 9.1
$ 20.5


	Nine Months Ended
	September 30
(In millions)	2020		2019
Net cash provided (used) by:
Operating activities	$	42.3	$	50.0
Investing activities	(470.1)		(165.9)
Financing activities	460.8		128.9
Effect of exchange rate changes on cash and cash equivalents, including restricted cash	(6.6)		(2.2)
Net change in cash and cash equivalents, including restricted cash	$	26.4	$	10.8

Net cash provided ~~(used)~~ by operating activities — Net cash ~~used by operating activities in the first three months of 2020 was $11.5 million, a decrease of $26.4 million from net cash~~ provided by operating activities in the first ~~three~~nine months of 2020 was $42.3 million, a decrease of $7.8 million from the first nine months of 2019. The primary drivers for this decrease were lower ~~cash~~ net income (excluding the impacts of the IKG sale), including ~~approximately $14 million of transaction related~~the incremental acquisition and integration costs principally ~~associated with~~related to the ESOL ~~acquisition,~~acquisition; partially offset by ~~the decreases~~favorable changes in net working capital, primarily due ~~principally~~ to additional customer advances ~~received by~~in the Harsco Rail ~~Segment.~~Segment; improved collection of accounts receivable and timing of inventories. The decrease also includes the impact of taxes paid related to the sale of AXC and the timing of income taxes receivable.

Net cash ~~provided (used by)~~used by investing activities — Net cash ~~provided by investing activities in the first three months of 2020 was $18.6 million, an increase of $57.3 million from the net cash~~ used by investing activities in the first ~~three~~nine months of 2020 was $470.1 million, an increase of $304.2 million from the first nine months of 2019. The increase ~~was primarily due to the~~reflected reduced proceeds from the sale of ~~the~~businesses (AXC and PK in 2019 compared with IKG ~~business, net proceeds from the settlement of foreign currency forward exchange~~in 2020), partially offset by decreased cash paid for businesses acquired (Clean Earth in 2019 compared with ESOL in 2020) and ~~a decrease in the purchases of property, plant and equipment,~~reduced capital expenditures, primarily in the Harsco Environmental Segment.

Net cash provided by financing activities — Net cash provided by financing activities in the first ~~three~~nine months of 2020 was ~~$12.8~~$460.8 million, ~~a decrease~~an increase of ~~$31.6~~$331.9 million from ~~net cash provided by financing activities in~~ the first ~~three~~nine months of 2019. The ~~change~~increase was primarily due to ~~lower~~higher net cash borrowings of ~~$17.9~~$470.6 million in the first ~~three~~nine months of 2020 compared with net cash borrowings of ~~$51.7~~$176.0 million in the ~~three~~first nine months of ~~2019; partially offset by a decrease~~2019 resulting from the investing activities; decreases in ~~payment~~the payments of deferred financing costs and decreases in payments of employee taxes related to stock-based compensation vesting.

Effect of exchange rate changes on cash and cash equivalents, including restricted cash — The decrease is due to the impact of the significant strengthening of the U.S. dollar against certain currencies during the first ~~quarter~~nine months of 2020 on the global cash balances held by the Company in these currencies, including balances held in the Company’s multicurrency cash pool. The most significant impacts were the ~~Australian dollar,~~Mexican peso, the ~~Mexican peso,~~Brazilian real, the Canadian dollar and the ~~Brazilian real.~~Australian dollar.

Sources and Uses of Cash

The Company’s principal sources of liquidity are cash provided by operations and borrowings under the Senior Secured Credit Facility, augmented by cash proceeds from asset sales. In addition, the Company has other bank credit facilities available throughout the world. The Company expects to continue to utilize all of these sources to meet future cash requirements for operations and growth initiatives.

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Summary of Senior Secured Credit Facility Borrowings(a):
(In millions)
March 31
2020 December 31
2019
By type:
     Revolving Credit Facility $ 80.0
$ 67.0
     Term Loan Facility 218.2
218.2
5.75% Notes 500.0
500.0
     Total $ 798.2
$ 785.2


~~(a)~~	~~All amounts outstanding under the Senior Secured Credit Facility are classified as long-term on the Company's Condensed Consolidated Balance Sheets at both March 31, 2020 and December 31, 2019.~~


Summary of Senior Secured Credit Facilities(a): (In millions)	September 30 2020		December 31 2019
By type:
Revolving Credit Facility	$	254.0	$	67.0
New Term Loan	280.0		—
Original Term Loan	218.2		218.2
5.75% Notes	500.0		500.0
Total	$	1,252.2	$	785.2

March 31, 2020
(In millions) Facility Limit
Outstanding
Balance
Outstanding Letters of Credit
Available
Credit
Multi-year revolving credit facility $ 700.0
$ 80.0
$ 25.4
$ 594.6
(a) All amounts outstanding under the Senior Secured Credit Facilities are classified as long-term on the Company's Condensed Consolidated Balance Sheets at both June 30, 2020 and December 31, 2019.


	September 30, 2020
(In millions)	Facility Limit		Outstanding Balance		Outstanding Letters of Credit		Available Credit


Multi-year revolving credit facility	$	700.0	$	254.0	$	25.4	$	420.6

Debt Covenants

The Senior Secured Credit Facility contains a consolidated net debt to consolidated adjusted EBITDA ratio covenant, which is not to exceed ~~5.0~~5.75 through ~~December 2020, which decreases to 4.5 through December~~March 2021 and ~~to 4.0 for periods thereafter;~~then decreasing quarterly until reaching 4.75 in December 2021, and a minimum consolidated adjusted EBITDA to consolidated interest charges ratio covenant, which is not to be less than 3.0. At ~~March 31,~~September 30, 2020 the Company was in compliance with these covenants, as the total net debt to adjusted EBITDA ratio (as defined in the Credit Agreement) was ~~2.6~~4.5 and total interest coverage ratio was ~~5.9.~~4.8. Based on balances and covenants in effect at ~~March 31,~~September 30, 2020 the Company could increase net debt by ~~$675.1~~$329.5 million and remain in compliance with these debt covenants. Alternatively, adjusted EBITDA could decrease by ~~$135.0~~$57.3 million, and the Company would remain in compliance with these covenants. The Company has estimated the negative impact of COVID-19 on its financial position, results of operations and cash flows, and believes it will continue to maintain compliance with these covenants. However, due to the inherent uncertainty of ~~the~~ COVID-19 ~~pandemic~~ on the Company’s businesses, the Company’s estimates of ~~the achievement of~~compliance with these covenants could change in the future.

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.

At ~~March 31,~~September 30, 2020 the Company's consolidated cash and cash equivalents included ~~$60.5~~$81.7 million held by non-U.S. subsidiaries. At ~~March 31,~~September 30, 2020 ~~less than 2%~~approximately 1% of the Company's consolidated cash and cash equivalents had regulatory restrictions that would preclude the transfer of funds with and among subsidiaries. Non-U.S. subsidiaries also held ~~$22.2~~$29.7 million of cash and cash equivalents 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.

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, 2019.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of ~~March 31,~~September 30, 2020, an evaluation was performed, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Rule 13a-15 under the Securities and Exchange Act of 1934, as ~~amended (the "Exchange Act").~~amended. Based upon that evaluation, and subject to the exclusion below related to ESOL, such officers concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Securities and Exchange Act of 1934, as amended (1) is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and (2) is accumulated and communicated to the Company's management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.

In accordance with interpretive guidance issued by SEC staff, companies are allowed to exclude acquired businesses from the assessment of internal control over financial reporting during the first year after completion of an acquisition and from the assessment of disclosure controls and procedures to the extent subsumed in such internal control over financial reporting (the “Internal Controls Guidance”). In accordance with the Internal Controls Guidance, as the Company acquired ESOL on April 6, 2020, management's evaluation and conclusion as to the effectiveness of the Company's disclosure controls and procedures as of September 30, 2020 excluded the portion of disclosure controls and procedures that are subsumed by internal control over financial reporting of ESOL. ESOL’s assets represented approximately 11% of the Company’s consolidated total assets, excluding the effects of purchase accounting, and its revenues represented approximately 25% of the Company's consolidated total revenues, as of and for the quarter ended September 30, 2020.

Changes in Internal Control Over Financial Reporting

On June 28, 2019, the Company acquired ~~CEHI Acquisition Corporation and Subsidiaries ("~~Clean ~~Earth").~~Earth. The Company has completed the process of transitioning Clean Earth to the Company's internal control over financial reporting. The Company will include Clean Earth in the assessment of internal control over financial reporting as of December 31, 2020.

On April 6, 2020 the Company acquired ESOL from Stericycle, Inc. As a result, the Company is currently integrating ~~Clean Earth's~~ESOL's operations into its overall system of internal control over financial reporting. Under the guidelines established by the ~~Securities and Exchange Commission,~~SEC, companies are permitted to exclude acquisitions from their assessment of internal control over financial reporting during the ~~first~~ year of acquisition. ~~The~~Accordingly, the Company expects to ~~include Clean Earth in~~exclude ESOL from the assessment of internal control over financial reporting ~~for~~as of December 31, 2020.

Prior to the acquisition of ESOL, Stericycle, Inc. had identified two material weaknesses related to ESOL's internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement in annual or interim financial statements will not be prevented or detected on a timely basis. The first material weakness relates to not fully implementing and monitoring general information technology controls in the areas of user access and program change management for systems supporting Stericycle Inc.'s internal control process, including ESOL. The second material weakness relates to not fully designing, implementing and monitoring controls relevant to revenue and cost of disposal processes, including certain general information technology controls. While the Company has undertaken additional compensating processes and controls, the Company is not yet in a position to conclude that the material weaknesses have been remediated as of September 30, 2020. As a result, there is a risk that a material error may not be detected by the Company's internal control structure that could result in a material misstatement to ESOL's reported financial results, which are consolidated with the Company's results. The Company's management is in the process of remediating these material weaknesses.

Other than the foregoing, there were no changes in the Company's internal control over financial reporting during the Company's most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

The Company's risk factors as of ~~March 31,~~September 30, 2020 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, 2019, except for the risk factor below.

Outbreaks of disease and health epidemics, such as ~~the~~ COVID-19, ~~coronavirus pandemic,~~ could have a negative impact on the Company's business revenues, financial position, results of operations and/or stock price.

In late December 2019 a notice of pneumonia of unknown cause originating from Wuhan, Hubei province of China was reported to the World Health Organization. A novel coronavirus called ~~COVID-19~~coronavirus disease 2019 was identified, with cases soon confirmed in multiple provinces in China, as well as in several other countries. On March 2, 2020, the World Health Organization declared the coronavirus outbreak a “pandemic”, which is disease that is widespread around the world with an impact on society. Since that time the virus has been identified in virtually every country, travel to and from most countries has been suspended or restricted by air carriers and foreign governments, and extended shutdowns of certain businesses and other activities in many countries ~~including the United States and Europe, continue.~~have occurred and/or remain ongoing. This has led to disruptions in global supply chains, as well as steep downturns and price volatility in equity markets.

~~The~~ COVID-19 ~~coronavirus pandemic~~ continues to impact worldwide economic activity and pose the risk that the Company or its employees, contractors, suppliers, customers and other business partners may be prevented from conducting certain business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities or otherwise elected by ~~companies~~the Company or its customers as a preventive ~~measure.~~measure to limit the spread of coronavirus disease. In addition, mandated government authority measures or other measures elected by companies as preventative measures may lead to the Company's customers being unable to complete purchases or other activities. For example, a limited number of Company operations in South America have currently been shut down as the result of government decrees that have been issued in those countries. Certain Company operations have also been temporarily restricted or halted in Europe, North American and South America due to customer operational decisions.

~~The~~ COVID-19 ~~coronavirus pandemic~~ may have an adverse effect on the Company's operations and, given the uncertainty around the extent and timing of the potential future spread or mitigation and around the imposition or relaxation of protective measures, the Company cannot reasonably estimate the impact to the Company's future results of operations, cash flows, financial condition or stock price.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On May 2, 2018 the Company announced that the Board of Directors adopted a share repurchase program, authorizing the Company to repurchase up to $75,000,000 of outstanding shares of the Company’s common stock through April 24, 2021. The Company did not purchase any shares of common stock under this program during the quarter ended ~~March 31,~~September 30, 2020. The approximate dollar value of shares that may yet be purchased under the share repurchase program is $13,151,485. When and if appropriate, repurchases are made in open market transactions, depending on market conditions. Share repurchases may not occur and may be discontinued at any time.

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ITEM 6. EXHIBITS

The following exhibits are included as part of this report by reference:



Exhibit Number		Description
~~2.1~~31.1		Sale and Purchase Agreement by and among Harsco Corporation, Harsco Mexico Holding, S.A. de C.V. and Sidero Inc., dated as of January 9, 2020 (incorporated by reference to the Company's Current Report on Form 8-K dated January 15, 2020, Commission File Number 001-03970).*
~~2.2~~	~~Amendment to Sale and Purchase Agreement, dated January 30, 2020, by and among Harsco Corporation, Harsco Mexico Holding, S.A. de C.V. and Sidero Inc.~~
~~2.3~~	Stock Purchase Agreement, dated as of February 6, 2020 by and among Stericycle, Inc., CEI Holding , LLC and solely with respect to Section 11.16 thereof, Harsco Corporation (incorporated by reference to the Company's Current Report on Form 8-K dated February 12, 2020, Commission File Number 001-03970).*
~~10.1~~	Amendment No. 5, dated March 31, 2020, among Harsco Corporation, the subsidiaries of the Company party thereto, Citibank N.A., as administrative agent and collateral agent, and the lenders party thereto (incorporated by reference to the Company's Current Report on Form 8-K dated March 31, 2020, Commission File Number 001-03970).
~~10.2~~	~~Form of RSU Award Agreement (for awards granted on or after March 10, 2020).~~
~~10.3~~	~~Form of PSU Award Agreement (for awards granted on or after March 10, 2020).~~
~~10.4~~	~~Form of SAR Award Agreement (for awards granted on or after March 10, 2020).~~
~~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 (Chairman, President and 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 (Chairman, President and Chief Executive Officer and Chief Financial Officer).
101.Def		Definition Linkbase Document
101.Pre		Presentation Linkbase Document
101.Lab		Labels Linkbase Document
101.Cal		Calculation Linkbase Document
101.Sch		Schema Document
101.Ins		Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

* Schedules and similar exhibits, attachments and annexes have been omitted pursuant to Item 601(b)(2)

Table of ~~Regulation S-K. The Company will furnish copies of any such schedules exhibits, attachments and annexes to the U.S. Securities and Exchange Commission upon request.~~Contents

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)



									~~HARSCO CORPORATION~~
			~~(Registrant)~~




~~DATE~~			~~May 8,~~



DATE	November 3, 2020	/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 8,~~November 3, 2020	/s/ SAMUEL C. FENICE
		Samuel C. Fenice
		Vice President and Corporate Controller
		(Principal Accounting Officer)

4150



		Page
PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements	34
	Condensed Consolidated Balance Sheets (Unaudited)	34
	Condensed Consolidated Statements of Operations (Unaudited)	56
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	67
	Condensed Consolidated Statements of Cash Flows (Unaudited)	78
	Condensed Consolidated Statements of Equity (Unaudited)	810
	Notes to Condensed Consolidated Financial Statements (Unaudited)	912

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2937

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3746

Item 4.	Controls and Procedures	3847


PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	3948

Item 1A.	Risk Factors	3948

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3948







Item 6.	Exhibits	4049


SIGNATURES		4150



(In thousands)	March 31 2020		December 31 2019
Finished goods	$	13,138	$	14,550
Work-in-process	10,795		13,088
Raw materials and purchased parts	118,637		104,488
Stores and supplies	25,320		24,865
Total inventories	$	167,890	$	156,991


(In thousands)	September 30 2020		December 31 2019
Finished goods	$	14,736	$	14,550
Work-in-process	13,489		13,088

Raw materials and purchased parts	111,754		104,488
Stores and supplies	30,058		24,865
Total inventories	$	170,037	$	156,991


(In thousands)	September 30 2020		December 31 2019
Land	$	75,777	$	30,409
Land improvements	18,748		19,155
Buildings and improvements	225,406		182,795
Machinery and equipment	1,511,120		1,518,652
Uncompleted construction	64,408		55,592
Gross property, plant and equipment	1,895,459		1,806,603
Less: Accumulated depreciation	(1,254,572)		(1,244,817)
Property, plant and equipment, net	$	640,887	$	561,786



(In thousands)	March 31 2020			December 31 2019
Land	$	29,811		$	30,409
Land improvements	17,822			19,155
Buildings and improvements	180,907			182,795
Machinery and equipment	1,418,493			1,518,652
Uncompleted construction	57,327			55,592
Gross property, plant and equipment	1,704,360			1,806,603
Less: Accumulated depreciation	(1,171,011		)	(1,244,817		)
Property, plant and equipment, net	$	533,349		$	561,786



	Preliminary Valuation
(In millions)	June 28, 2019			Measurement Period Adjustments (a)			March 31 2020
Cash and cash equivalents (b)	$	42.8		$	(39.2	)	$	3.6
Trade accounts receivable, net	63.7			(1.2		)	62.5
Other receivables	0.8			1.3			2.1
Other current assets	8.7			(1.4		)	7.3
Property, plant and equipment	75.6			1.6			77.2
Right-of-use assets	14.4			11.4			25.8
Goodwill	313.8			16.3			330.1
Intangible assets	261.1			(18.9		)	242.2
Other assets	4.0			(2.8		)	1.2
Accounts payable	(23.0		)	(0.1		)	(23.1		)
Acquisition consideration payable (b)	(39.2		)	39.2			—
Other current liabilities	(18.0		)	(1.7		)	(19.7		)
Net deferred taxes liabilities	(51.2		)	5.8			(45.4		)
Operating lease liabilities	(11.1		)	(8.4		)	(19.5		)
Other liabilities	(6.5		)	(2.1		)	(8.6		)
Total identifiable net assets of Clean Earth	$	635.9		$	(0.2	)	$	635.7


~~(a)~~	~~Cash flows for Three Months Ended March 31, 2019 include ROU assets of approximately $34 million that were recorded upon adoption at January 1, 2019.~~



(In thousands)	March 31 2020		December 31, 2019
Operating Leases:
Operating lease right-of-use assets	$	50,491	$	52,065
Current portion of operating lease liabilities	12,421		$	12,544
Operating lease liabilities	35,561		36,974
Finance Leases:
Property, plant and equipment, net	$	4,291	$	3,519
Current maturities of long-term debt	1,346		$	1,237
Long-term debt	2,984		2,218


	September 30 2020		December 31 2019

Other information:
Weighted average remaining lease term - Operating leases (in years)	8.10		11.57
Weighted average remaining lease term - Finance leases (in years)	3.73		4.01
Weighted average discount rate - Operating leases	6.1	%	6.3	%
Weighted average discount rate - Finance leases	4.1	%	4.2	%


(In thousand)	Operating Leases			Finance Leases			(In thousand)	Operating Leases		Finance Leases
Year Ending December 31^st:
2020 (excluding the three months ended March 31, 2020)	$	11,458		$	1,069
Year Ending December 31:							Year Ending December 31:
2020 (excluding the nine months ended September 30, 2020)							2020 (excluding the nine months ended September 30, 2020)	$	8,126	$	361
2021	11,527			1,198			2021	27,315		1,330
2022	7,615			941			2022	20,639		1,072
2023	5,369			748			2023	15,818		869
2024	3,210			587			2024	10,655		702
After 2024	32,018			43			After 2024	41,421		113
Total lease payments	71,197			4,586			Total lease payments	123,974		4,447
Less: Imputed interest	(23,215		)	(256		)	Less: Imputed interest	(29,402)		(209)
Total	$	47,982		$	4,330		Total	$	94,572	$	4,238


(In thousands)	Harsco Environmental Segment			Harsco Clean Earth Segment			Harsco Rail Segment		Consolidated Totals			(In thousands)	Harsco Environmental Segment		Harsco Clean Earth Segment		Harsco Rail Segment		Consolidated Totals
Balance at December 31, 2019	$	395,113		$	330,230		$	13,026	$	738,369		Balance at December 31, 2019	$	395,113	$	330,230	$	13,026	$	738,369
Changes to goodwill (a)	1,785			(129		)	—		1,656			Changes to goodwill (a)	1,480		144,283		0		145,763
Foreign currency translation	(12,143		)	—			—		(12,143		)	Foreign currency translation	(2,221)		0		0		(2,221)
Balance at March 31, 2020	$	384,755		$	330,101		$	13,026	$	727,882
Balance at September 30, 2020												Balance at September 30, 2020	$	394,372	$	474,513	$	13,026	$	881,911


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


(In thousands)	Balance Sheet Location	Fair Value of Derivatives Designated as Hedging Instruments		Fair Value of Derivatives Not Designated as Hedging Instruments		Total Fair Value
September 30, 2020
Asset derivatives (Level 2):
Foreign currency exchange forward contracts	Other current assets	$	2,178	$	509	$	2,687


Total		$	2,178	$	509	$	2,687


	Amount Recognized in Other Comprehensive Income (“OCI”) on Derivatives						Location of Amount Reclassified from Accumulated OCI into Income		Amount Reclassified from Accumulated OCI into Income - Effective Portion or Equity										Amount Recognized in OCI on Derivatives							Location of Amount Reclassified from AOCI into Income			Amount Reclassified from AOCI into Income - Effective Portion or Equity
	Three Months Ended							Three Months Ended										Three Months Ended										Three Months Ended
	March 31							March 31										September 30										September 30
(In thousands)	2020			2019				2020				2019			(In thousands)			2020				2019						2020				2019
Foreign currency exchange forward contracts	$	2,037		$	(712	)		Product revenues		$	(1,404	)		$	(32	)	Foreign currency exchange forward contracts			$	(1,244)			$	808		Product revenues				$	174		$	(512)

Interest rate swaps	(3,578		)	(3,309		)		Interest expense		378				(301		)	Interest rate swaps			(95)				(930)			Interest expense				739			(76)
Cross-currency interest rate swaps (a)	58			(52		)		Interest expense		305				314
CCIRs (a)																CCIRs (a)			(24)				51				Interest expense				312			291
	$	(1,483	)	$	(4,073	)			$	(721	)		$	(19	)				$	(1,363)			$	(71)						$	1,225		$	(297)



	Amount Recognized in OCI on Derivatives				Location of Amount Reclassified from AOCI into Income	Amount Reclassified from Accumulated OCI into Income - Effective Portion or Equity
	Nine Months Ended					Nine Months Ended
	September 30					September 30
(In thousands)	2020		2019			2020		2019
Foreign currency exchange forward contracts	$	834	$	765	Product revenues/Cost of services sold	$	(1,562)	$	(933)
Interest rate swaps	—		—		Income from discontinued businesses	0		2,741
Interest rate swaps	(3,835)		(8,566)		Interest expense	1,849		(648)
CCIRs (a)	39		53		Interest expense	912		908
	$	(2,962)	$	(7,748)		$	1,199	$	2,068


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


	Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain (Loss) Recognized in Income on Derivatives (b)
		Three Months Ended				Nine Months Ended
		September 30				September 30
(In thousands)		2020		2019		2020		2019

Foreign currency exchange forward contracts	Cost of services and products sold	$	(12,279)	$	10,642	$	(5,001)	$	15,735



	Location of Gain Recognized in Income on Derivatives	Amount of Gain Recognized in Income on Derivatives (b)
		Three Months Ended
		March 31
(In thousands)		2020		2019
Foreign currency exchange forward contracts	Cost of services and products sold	$	5,542	$	2,323


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


~~(a)~~	The Company's acquisition of Clean Earth closed on June 28, 2019. The operating results of the former Harsco Industrial Segment has been reflected as discontinued operations in the Company's Condensed Consolidated Statement of Operations for all periods presented. See Note 3, Acquisitions and Dispositions, for additional details.



	Three Months Ended
	March 31, 2019
(In thousands)	Harsco Environmental Segment		Harsco Clean Earth Segment		Harsco Rail Segment		Corporate		Consolidated Totals
Primary Geographical Markets (a) (b):
North America	$	73,349	$	—	$	50,365	$	—	$	123,714
Western Europe	98,221		—		10,013		—		108,234
Latin America (c)	36,991		—		591		—		37,582
Asia-Pacific	34,138		—		7,621		—		41,759
Middle East and Africa	13,915		—		—		—		13,915
Eastern Europe	4,698		—		—		—		4,698
Total Revenues	$	261,312	$	—	$	68,590	$	—	$	329,902

Key Product and Service Groups (a):
Environmental services related to resource recovery for metals manufacturing and related logistical services	$	224,061	$	—	$	—	$	—	$	224,061
Applied products	30,390		—		—		—		30,390
Environmental systems for aluminum dross and scrap processing	6,861		—		—		—		6,861
Railway track maintenance equipment	—		—		33,608		—		33,608
After-market parts and services; safety and diagnostic technology	—		—		31,301		—		31,301
Railway contracting services	—		—		3,681		—		3,681
Waste processing and reuse solutions	—		—		—		—		—
Total Revenues	$	261,312	$	—	$	68,590	$	—	$	329,902


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


	Nine Months Ended
	September 30, 2019
(In thousands)	Harsco Environmental Segment		Harsco Clean Earth Segment		Harsco Rail Segment		Consolidated Totals
Primary Geographical Markets (a) (b):
North America	$	229,537	$	87,639	$	172,566	$	489,742
Western Europe	290,125		0		30,960		321,085
Latin America (c)	108,390		0		1,915		110,305
Asia-Pacific	104,446		0		19,342		123,788
Middle East and Africa	44,959		0		0		44,959
Eastern Europe	14,076		0		0		14,076
Total Revenues	$	791,533	$	87,639	$	224,783	$	1,103,955


Key Product and Service Groups (a):
Environmental services related to resource recovery for metals manufacturing and related logistical services	$	673,244	$	0	$	0	$	673,244
Applied products	98,966		0		0		98,966
Environmental systems for aluminum dross and scrap processing	19,323		0		0		19,323
Railway track maintenance equipment	0		0		102,801		102,801
After market parts and services; safety and diagnostic technology	0		0		105,101		105,101
Railway contracting services	0		0		16,881		16,881
Waste processing, recycling, reuse and transportation solutions	0		87,639		0		87,639
Total Revenues	$	791,533	$	87,639	$	224,783	$	1,103,955


	Components of AOCI, Net of Tax
(In thousands)	Cumulative Foreign Exchange Translation Adjustments			Effective Portion of Derivatives Designated as Hedging Instruments			Cumulative Unrecognized Actuarial Losses on Pension Obligations			Unrealized Gain (Loss) on Marketable Securities		Total
Balance at December 31, 2018	$	(159,810)		$	1,389		$	(408,655)		$	(31)	$	(567,107)
Adoption of new accounting standard	—			0			(21,429)		(a)	—		(21,429)
OCI before reclassifications	(20,513)		(b)	(5,889)		(c)	11,630		(b)	19		(14,753)
Amounts reclassified from AOCI, net of tax	(1,763)			1,404			14,021			0		13,662



Total OCI	(22,276)			(4,485)			25,651			19		(1,091)
OCI attributable to noncontrolling interests	1,868			0			0			0		1,868
OCI attributable to Harsco Corporation	(20,408)			(4,485)			25,651			19		777
Balance at September 30, 2019	$	(180,218)		$	(3,096)		$	(404,433)		$	(12)	$	(587,759)



	Components of Accumulated Other Comprehensive Income (Loss) - Net of Tax
(In thousands)	Cumulative Foreign Exchange Translation Adjustments				Effective Portion of Derivatives Designated as Hedging Instruments				Cumulative Unrecognized Actuarial Losses on Pension Obligations				Unrealized Gain (Loss) on Marketable Securities			Total
Balance at December 31, 2018	$	(159,810	)		$	1,389			$	(408,655	)		$	(31	)	$	(567,107	)
Adoption of new accounting standard	—				—				(21,429		)	(a)	—			(21,429		)
Other comprehensive income (loss) before reclassifications	11,725			(b)	(3,084		)	(c)	(6,573		)	(b)	15			2,083
Amounts reclassified from accumulated other comprehensive loss, net of tax	(2,271		)		(63		)		4,782				—			2,448
Total other comprehensive income (loss)	9,454				(3,147		)		(1,791		)		15			4,531
Other comprehensive income attributable to noncontrolling interests	(420		)		—				—				—			(420		)
Other comprehensive income (loss) attributable to Harsco Corporation	9,034				(3,147		)		(1,791		)		15			4,111
Balance at March 31, 2019	$	(150,776	)		$	(1,758	)		$	(431,875	)		$	(16	)	$	(584,425	)


~~(a)~~	~~Represents the adoption of the new accounting standard on January 1, 2019 related to stranded tax effects from the Tax Cuts and Jobs Act.~~



(In thousands)	Three Months Ended						Affected Caption on the Company's Condensed Consolidated Statements of Operations
(In thousands)	March 31 2020			March 31 2019
Recognition of cumulative foreign currency translation adjustments:
Gain on substantial liquidation of subsidiaries (d)	$	—		$	(2,271	)	Other expenses, net
Loss on substantial liquidation of subsidiaries (d)	12,906			—			Gain on sale of discontinued business
Amortization of cash flow hedging instruments:
Foreign currency exchange forward contracts	$	(1,404	)	$	(32	)	Product revenues
Cross-currency interest rate swaps	305			314			Interest expense
Interest rate swaps	378			(301		)	Interest expense
Total before tax	(721		)	(19		)
Tax expense	76			(44		)
Total reclassification of cash flow hedging instruments, net of tax	$	(645	)	$	(63	)
Amortization of defined benefit pension items (e):
Recognized losses	$	5,080		$	5,058		Defined benefit pension income (expense)
Recognized prior-service costs	107			66			Defined benefit pension income (expense)
Pension liability transfer - discontinued business	5,363			—			Gain on sale of discontinued business
Total before tax	10,550			5,124
Tax benefit	(1,710		)	(342		)
Total reclassification of defined benefit pension items, net of tax	$	8,840		$	4,782


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