UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~____________________~~

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, ~~2009~~2010

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ~~_____~~ to ~~_____~~

Commission File Number ~~1-3970~~ 001-03970

HARSCO CORPORATION

(Exact name of registrant as specified in its charter)

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

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

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

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

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

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

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

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

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

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

Class		Outstanding at October ~~30, 2009~~31, 2010
Common stock, par value $1.25 per share		~~80,316,209~~ 80,506,644

Table of Contents

HARSCO CORPORATION

FORM 10-Q

INDEX

			Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements
	Condensed Consolidated Statements of Income (Unaudited)		3
	Condensed Consolidated Balance Sheets (Unaudited)		4
	Condensed Consolidated Statements of Cash Flows (Unaudited)		5
	Condensed Consolidated Statements of Equity (Unaudited)		6
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)		7
	Notes to Condensed Consolidated Financial Statements (Unaudited)		8 ~~– 22~~- 24

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22	24 – 4042

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41	42

Item 4.	Controls and Procedures	41	42


PART II – OTHER INFORMATION

Item 1.	Legal Proceedings		42

Item 1A.	Risk Factors		42

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42	43

Item 3.	Defaults Upon Senior Securities	42	43

Item 4.	~~Submission of Matters to a Vote of Security Holders~~ (Removed and Reserved)	42	43

Item 5.	Other Information		43

Item 6.	Exhibits	43	44

SIGNATURES
~~SIGNATURES~~		44 45

2 ~~- -~~

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

Three Months Ended
September 30

Nine Months Ended
September 30

(In thousands, except per share amounts) 2009 2008 (a) 2009 2008 (a)
Revenues from continuing operations:
Service revenues
$ 612,432 $ 876,633 $ 1,791,081 $ 2,673,751
Product revenues
131,789 168,264 427,005 458,524
Total revenues
744,221 1,044,897 2,218,086 3,132,275
Costs and expenses from continuing operations:
Cost of services sold
472,943 644,401 1,385,054 1,968,990
Cost of products sold
81,652 117,940 279,061 316,102
Selling, general and administrative expenses
125,443 153,518 381,354 470,482
Research and development expenses
861 1,177 2,236 3,738
Other (income) expense
6,898 (6,012 ) 6,427 (6,129 )
Total costs and expenses
687,797 911,024 2,054,132 2,753,183

Operating income from continuing operations
56,424 133,873 163,954 379,092

Equity in income of unconsolidated entities, net 128 282 280 932
Interest income 888 1,066 1,944 2,866
Interest expense (15,822 ) (19,650 ) (46,621 ) (55,844 )

Income from continuing operations before income taxes
41,618 115,571 119,557 327,046

Income tax expense (6,525 ) (30,048 ) (20,508 ) (89,236 )

Income from continuing operations
35,093 85,523 99,049 237,810

Discontinued operations:
Loss from discontinued business
(17,183 ) (852 ) (21,094 ) (1,438 )
Income tax benefit (expense)
5,391 (2,834 ) 6,609 (2,588 )
Loss from discontinued operations (11,792 ) (3,686 ) (14,485 ) (4,026 )
Net Income 23,301 81,837 84,564 233,784
Less: Net income attributable to noncontrolling interests
(3,119 ) (1,553 ) (5,182 ) (6,578 )
Net Income attributable to Harsco Corporation $ 20,182 $ 80,284 $ 79,382 $ 227,206

Amounts attributable to Harsco Corporation common stockholders:
Income from continuing operations, net of tax
$ 31,974 $ 83,970 $ 93,867 $ 231,232
Loss from discontinued operations, net of tax
(11,792 ) (3,686 ) (14,485 ) (4,026 )
Net income attributable to Harsco Corporation common stockholders
$ 20,182 $ 80,284 $ 79,382 $ 227,206

Weighted average shares of common stock outstanding 80,315 84,089 80,285 84,244
Basic earnings per common share attributable to Harsco Corporation common stockholders:
Continuing operations
$ 0.40 $ 1.00 $ 1.17 $ 2.74
Discontinued operations
(0.15 ) (0.04 ) (0.18 ) (0.05 )
Basic earnings per share attributable to Harsco Corporation common stockholders $ 0.25 $ 0.95 (b) $ 0.99 $ 2.70 (b)

Diluted weighted average shares of common stock outstanding 80,631 84,537 80,557 84,712
Diluted earnings per common share attributable to Harsco Corporation common stockholders:
Continuing operations
$ 0.40 $ 0.99 $ 1.17 $ 2.73
Discontinued operations
(0.15 ) (0.04 ) (0.18 ) (0.05 )
Diluted earnings per share attributable to Harsco Corporation common stockholders $ 0.25 $ 0.95 $ 0.99 $ 2.68
Cash dividends declared per common share $ 0.200 $ 0.195 $ 0.600 $ 0.585

~~(a)~~

On January 1, 2009, the Company adopted changes issued by the Financial Accounting Standards Board related to consolidation accounting and reporting. These changes, among others, require that minority interests be renamed noncontrolling interests and that a company present a consolidated net income measure that includes the amount attributable to such noncontrolling interests for all periods presented. Results have been reclassified accordingly.

~~(b)~~

~~Does not total due to rounding.~~

	Three Months Ended September 30						Nine Months Ended September 30
(In thousands, except per share amounts)	2010			2009			2010			2009
Revenues from continuing operations:
Service revenues	$	627,901		$	612,432		$	1,865,333		$	1,791,081
Product revenues	124,500			131,789			415,994			427,005
Total revenues	752,401			744,221			2,281,327			2,218,086

Costs and expenses from continuing operations:
Cost of services sold	493,181			472,943			1,481,099			1,385,054
Cost of products sold	81,569			81,652			263,597			279,061
Selling, general and administrative expenses	131,405			125,443			401,496			381,354
Research and development expenses	1,293			861			2,979			2,236
Other (income) expense	883			6,898			(2,020		)	6,427
Total costs and expenses	708,331			687,797			2,147,151			2,054,132

Operating income from continuing operations	44,070			56,424			134,176			163,954

Interest income	737			888			1,849			1,944
Interest expense	(15,709		)	(15,822		)	(47,239		)	(46,621		)

Income from continuing operations before income taxes and equity income	29,098			41,490			88,786			119,277
Income tax expense	(7,391		)	(6,525		)	(23,295		)	(20,508		)
Equity in income of unconsolidated entities, net	120			128			309			280
Income from continuing operations	21,827			35,093			65,800			99,049
Discontinued operations:
Loss from discontinued business	(1,406		)	(17,183		)	(6,195		)	(21,094		)
Income tax benefit	511			5,391			2,716			6,609
Loss from discontinued operations	(895		)	(11,792		)	(3,479		)	(14,485		)
Net Income	20,932			23,301			62,321			84,564
Less: Net income attributable to noncontrolling interests	(753		)	(3,119		)	(4,445		)	(5,182		)
Net Income attributable to Harsco Corporation	$	20,179		$	20,182		$	57,876		$	79,382

Amounts attributable to Harsco Corporation common stockholders:
Income from continuing operations, net of tax	$	21,074		$	31,974		$	61,355		$	93,867
Loss from discontinued operations, net of tax	(895		)	(11,792		)	(3,479		)	(14,485		)
Net income attributable to Harsco Corporation common stockholders	$	20,179		$	20,182		$	57,876		$	79,382

Weighted average shares of common stock outstanding	80,574			80,315			80,559			80,285
Basic earnings per common share attributable to Harsco Corporation common stockholders:
Continuing operations	$	0.26		$	0.40		$	0.76		$	1.17
Discontinued operations	(0.01		)	(0.15		)	(0.04		)	(0.18		)
Basic earnings per share attributable to Harsco Corporation common stockholders	$	0.25		$	0.25		$	0.72		$	0.99

Diluted weighted average shares of common stock outstanding	80,762			80,631			80,747			80,557

Diluted earnings per common share attributable to Harsco Corporation common stockholders:
Continuing operations	$	0.26		$	0.40		$	0.76		$	1.17
Discontinued operations	(0.01		)	(0.15		)	(0.04		)	(0.18		)
Diluted earnings per share attributable to Harsco Corporation common stockholders	$	0.25		$	0.25		$	0.72		$	0.99
Cash dividends declared per common share	$	0.205		$	0.200		$	0.615		$	0.600

See accompanying notes to unaudited condensed consolidated financial statements.

3 ~~- -~~

Table of Contents

HARSCO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands)

September 30
2009

December 31
2008 (a)

ASSETS
Current assets:
Cash and cash equivalents
$ 97,707 $ 91,336
Trade accounts receivable, net
640,870 648,880
Other receivables
27,497 46,032
Inventories
300,874 309,530
Other current assets
106,783 104,430
Assets held-for-sale
657 5,280
Total current assets
1,174,388 1,205,488
Property, plant and equipment, net 1,493,119 1,482,833
Goodwill 668,017 631,490
Intangible assets, net 133,792 141,493
Other assets 68,011 101,666
Total assets
$ 3,537,327 $ 3,562,970
LIABILITIES
Current liabilities:
Short-term borrowings
$ 38,586 $ 117,854
Current maturities of long-term debt
4,050 3,212
Accounts payable
218,680 262,783
Accrued compensation
70,333 85,237
Income taxes payable
8,563 13,395
Dividends payable
16,063 15,637
Insurance liabilities
24,206 36,553
Advances on contracts
130,538 144,237
Other current liabilities
230,790 209,518
Total current liabilities
741,809 888,426
Long-term debt 919,187 891,817
Deferred income taxes 34,049 35,442
Insurance liabilities 62,345 60,663
Retirement plan liabilities 190,758 190,153
Other liabilities 55,042 46,497
Total liabilities
2,003,190 2,112,998
COMMITMENTS AND CONTINGENCIES
EQUITY
Harsco Corporation stockholders’ equity:

Preferred stock, Series A junior participating cumulative preferred stock — —
Common stock
139,186 138,925
Additional paid-in capital
136,160 137,083
Accumulated other comprehensive loss
(152,067 ) (208,299 )
Retained earnings
2,110,374 2,079,170
Treasury stock
(735,016 ) (733,203 )
Total Harsco Corporation stockholders’ equity
1,498,637 1,413,676
Noncontrolling interests
35,500 36,296
Total equity
1,534,137 1,449,972
Total liabilities and equity
$ 3,537,327 $ 3,562,970

~~(a)~~

On January 1, 2009, the Company adopted changes issued by the Financial Accounting Standards Board related to consolidation accounting and reporting. These changes, among others, require that minority interests be renamed noncontrolling interests and that a company present such noncontrolling interests as equity for all periods presented. Results have been reclassified accordingly.

(In thousands)	September 30 2010			December 31 2009
ASSETS
Current assets:
Cash and cash equivalents	$	330,337		$	94,184
Trade accounts receivable, net	657,880			598,318
Other receivables	28,848			30,865
Inventories	278,922			291,174
Other current assets	163,818			154,797
Total current assets	1,459,805			1,169,338
Property, plant and equipment, net	1,428,705			1,510,801
Goodwill	698,261			699,041
Intangible assets, net	129,157			150,746
Other assets	128,819			109,314
Total assets	$	3,844,747		$	3,639,240
LIABILITIES
Current liabilities:
Short-term borrowings	$	4,960		$	57,380
Current maturities of long-term debt	319,803			25,813
Accounts payable	237,275			215,504
Accrued compensation	84,047			67,652
Income taxes payable	26,655			5,931
Dividends payable	16,503			16,473
Insurance liabilities	24,764			25,533
Advances on contracts	101,625			149,413
Other current liabilities	209,414			187,403
Total current liabilities	1,025,046			751,102
Long-term debt	850,586			901,734
Deferred income taxes	76,593			90,993
Insurance liabilities	64,417			61,660
Retirement plan liabilities	231,553			250,075
Other liabilities	58,755			73,842
Total liabilities	2,306,950			2,129,406
COMMITMENTS AND CONTINGENCIES
EQUITY
Harsco Corporation stockholders’ equity:
Common stock	139,497			139,234
Additional paid-in capital	140,737			137,746
Accumulated other comprehensive loss	(182,571		)	(201,684		)
Retained earnings	2,141,560			2,133,297
Treasury stock	(737,106		)	(735,016		)
Total Harsco Corporation stockholders’ equity	1,502,117			1,473,577
Noncontrolling interests	35,680			36,257
Total equity	1,537,797			1,509,834
Total liabilities and equity	$	3,844,747		$	3,639,240

See accompanying notes to unaudited condensed consolidated financial statements.

4 ~~- -~~

Table of Contents

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Nine Months Ended
September 30

(In thousands) 2009 2008 (a)

Cash flows from operating activities:
Net income
$ 84,564 $ 233,784
Adjustments to reconcile net income to net

cash provided (used) by operating activities:

Depreciation
208,014 237,769
Amortization
20,627 23,104
Equity in income of unconsolidated entities, net
(280 ) (932 )
Dividends or distributions from unconsolidated entities
200 484
Other, net
2,688 4,826
Changes in assets and liabilities, net of acquisitions

and dispositions of businesses:

Accounts receivable
55,251 (104,498 )
Inventories
23,230 (48,226 )
Accounts payable
(55,162 ) 13,082
Accrued interest payable
20,935 26,948
Accrued compensation
(19,439 ) (11,669 )
Other assets and liabilities
(63,934 ) 7,360

Net cash provided by operating activities
276,694 382,032

Cash flows from investing activities:
Purchases of property, plant and equipment
(123,072 ) (380,878 )
Purchases of businesses, net of cash acquired
(12,732 ) (15,539 )
Proceeds from sales of assets
11,521 20,700
Other investing activities
(3,016 ) 9,305

Net cash used by investing activities
(127,299 ) (366,412 )

Cash flows from financing activities:
Short-term borrowings, net
(84,303 ) (19,109 )
Current maturities and long-term debt:

Additions
292,996 792,552
Reductions
(296,854 ) (713,945 )
Cash dividends paid on common stock
(47,750 ) (49,336 )
Dividends paid to noncontrolling interests
(2,466 ) (4,906 )
Purchase of noncontrolling interests
(12,953 ) —
Contributions of equity from noncontrolling interest
5,332 —
Common stock issued-options
444 1,537
Common stock acquired for treasury
— (52,962 )
Other financing activities
— (889 )

Net cash used by financing activities
(145,554 ) (47,058 )

Effect of exchange rate changes on cash 2,530 (493 )

Net increase (decrease) in cash and cash equivalents 6,371 (31,931 )

Cash and cash equivalents at beginning of period 91,336 121,833

Cash and cash equivalents at end of period $ 97,707 $ 89,902

~~(a)~~

On January 1, 2009, the Company adopted changes issued by the Financial Accounting Standards Board related to consolidation accounting and reporting. These changes, among others, require that minority interests be renamed noncontrolling interests for all periods presented. Results have been reclassified accordingly.

	Nine Months Ended September 30
(In thousands)	2010			2009

Cash flows from operating activities:
Net income	$	62,321		$	84,564
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	209,428			208,014
Amortization	27,033			20,627
Equity in income of unconsolidated entities, net	(309		)	(280		)
Dividends or distributions from unconsolidated entities	176			200
Other, net	(17,271		)	2,688
Changes in assets and liabilities, net of acquisitions and dispositions of businesses:
Accounts receivable	(57,299		)	55,251
Inventories	8,606			23,230
Accounts payable	14,524			(55,162		)
Accrued interest payable	21,252			20,935
Accrued compensation	16,429			(19,439		)
Other assets and liabilities	(48,910		)	(63,934		)

Net cash provided by operating activities	235,980			276,694

Cash flows from investing activities:
Purchases of property, plant and equipment	(129,942		)	(123,072		)
Purchases of businesses, net of cash acquired	(27,643		)	(12,732		)
Proceeds from sales of assets	18,421			11,521
Other investing activities	(3,093		)	(3,016		)

Net cash used by investing activities	(142,257		)	(127,299		)

Cash flows from financing activities:
Short-term borrowings, net	(50,919		)	(84,303		)
Current maturities and long-term debt:
Additions	499,267			292,996
Reductions	(251,646		)	(296,854		)
Cash dividends paid on common stock	(49,460		)	(47,750		)
Dividends paid to noncontrolling interests	(5,020		)	(2,466		)
Purchase of noncontrolling interest	(1,159		)	(12,953		)
Contributions of equity from noncontrolling interests	442			5,332
Common stock issued-options	820			444
Other financing activities	(369		)	—

Net cash provided (used) by financing activities	141,956			(145,554		)

Effect of exchange rate changes on cash	474			2,530

Net increase in cash and cash equivalents	236,153			6,371

Cash and cash equivalents at beginning of period	94,184			91,336

Cash and cash equivalents at end of period	$	330,337		$	97,707

See accompanying notes to unaudited condensed consolidated financial statements.

5 ~~- -~~

Table of Contents

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

Harsco Corporation Stockholders’ Equity
(In thousands, except share and per share amounts) Common Stock
Additional
Paid-in
Capital
Retained Earnings Accumulated Other Comprehensive Income (Loss) Noncontrolling Interest (a) Total Equity
Issued Treasury
Beginning Balances, January 1, 2008 $ 138,665 $ (603,169 ) $ 128,622 $ 1,903,049 $ (129 ) $ 38,023 $ 1,605,061
Net income 227,206 6,578 233,784
Cash dividends declared:
Common @ $0.585 per share
(49,187 ) (49,187 )
Noncontrolling interests
(4,906 ) (4,906 )
Translation adjustments, net of deferred income taxes of $26,818 (34,906 ) 199 (34,707 )
Cash flow hedging instrument adjustments, net of deferred income taxes of $(3,035) 7,420 7,420
Pension liability adjustments, net of deferred income taxes of $(9,153) 21,853 21,853
Marketable securities unrealized loss, net of deferred income taxes of $21 (38 ) (38 )
Stock options exercised, 102,076 shares 128 2,681 2,809
Net issuance of stock – vesting of restricted stock units, 56,847 shares 108 (1,457 ) (8 ) (1,357 )
Treasury shares repurchased, 1,053,633 shares (52,962 ) (52,962 )
Amortization of unearned compensation on restricted stock units, net of forfeitures 4,099 4,099
Balances, September 30, 2008 $ 138,901 $ (657,588 ) $ 135,394 $ 2,081,068 $ (5,800 ) $ 39,894 $ 1,731,869

Beginning Balances, January 1, 2009 $ 138,925 $ (733,203 ) $ 137,083 $ 2,079,170 $ (208,299 ) $ 36,296 $ 1,449,972
Net income 79,382 5,182 84,564
Cash dividends declared:
Common @ $0.600 per share
(48,178 ) (48,178 )
Noncontrolling interests
(2,466 ) (2,466 )
Translation adjustments, net of deferred income taxes of $(15,654) 94,278 297 94,575
Cash flow hedging instrument adjustments, net of deferred income taxes of $10,121 (27,486 ) (27,486 )
Purchase of subsidiary shares from noncontrolling interests (3,905 ) (9,141 ) (13,046 )
Contributions of equity from noncontrolling interest 5,332 5,332
Pension liability adjustments, net of deferred income taxes of $4,775 (10,569 ) (10,569 )
Marketable securities unrealized loss, net of deferred income taxes of $(5) 9 9
Stock options exercised, 54,000 shares 67 (423 ) 863 507
Net issuance of stock – vesting of restricted stock units, 101,918 shares 194 (1,390 ) (616 ) (1,812 )
Amortization of unearned compensation on restricted stock units, net of forfeitures 2,735 2,735
Balances, September 30, 2009 $ 139,186 $ (735,016 ) $ 136,160 $ 2,110,374 $ (152,067 ) $ 35,500 $ 1,534,137

~~(a)~~

On January 1, 2009, the Company adopted changes issued by the Financial Accounting Standards Board related to consolidation accounting and reporting. These changes, among others, require that minority interests be renamed noncontrolling interests and that a company present such noncontrolling interests as equity for all periods presented. Results have been reclassified accordingly.

	Harsco Corporation Stockholders’ Equity
(In thousands, except share and per	Common Stock					Additional			Retained			Accumulated Other Comprehensive			Noncontrolling
share amounts)	Issued		Treasury			Paid-in Capital			Earnings			Income (Loss)			Interests			Total
Beginning Balances, January 1, 2009	$	138,925	$	(733,203	)	$	137,083		$	2,079,170		$	(208,299	)	$	36,296		$	1,449,972
Net income									79,382						5,182			84,564
Cash dividends declared:
Common @ $0.600 per share									(48,178		)							(48,178		)
Noncontrolling interests															(2,466		)	(2,466		)
Translation adjustments, net of deferred income taxes of ($15,654)												94,278			297			94,575
Cash flow hedging instrument adjustments, net of deferred income taxes of $10,121												(27,486		)				(27,486		)
Purchase of subsidiary shares from noncontrolling interest						(3,905		)							(9,141		)	(13,046		)
Contributions of equity from noncontrolling interest															5,332			5,332
Pension liability adjustments, net of deferred income taxes of $4,775												(10,569		)				(10,569		)
Marketable securities unrealized gains, net of deferred income taxes of ($5)												9						9
Stock options exercised, 54,000 shares	67		(423		)	863												507
Net issuance of stock – vesting of restricted stock units, 101,918 shares	194		(1,390		)	(616		)										(1,812		)
Amortization of unearned compensation on restricted stock units, net of forfeitures						2,735												2,735
Balances, September 30, 2009	$	139,186	$	(735,016	)	$	136,160		$	2,110,374		$	(152,067	)	$	35,500		$	1,534,137

	Harsco Corporation Stockholders’ Equity
												Accumulated Other
(In thousands, except share and per	Common Stock					Additional			Retained			Comprehensive			Noncontrolling
share amounts)	Issued		Treasury			Paid-in Capital			Earnings			Income (Loss)			Interests			Total
Beginning Balances, January 1, 2010	$	139,234	$	(735,016	)	$	137,746		$	2,133,297		$	(201,684	)	$	36,257		$	1,509,834
Net income									57,876						4,445			62,321
Cash dividends declared:
Common @ $0.615 per share									(49,613		)							(49,613		)
Noncontrolling interests															(5,020		)	(5,020		)
Translation adjustments, net of deferred income taxes of $5,214												(8,205		)	(288		)	(8,493		)
Cash flow hedging instrument adjustments, net of deferred income taxes of $(3,590)												10,576						10,576
Contributions of equity from noncontrolling interests															442			442
Purchase of subsidiary shares from noncontrolling interest						(1,003		)							(156		)	(1,159		)
Pension liability adjustments, net of deferred income taxes of $(6,965)												16,741						16,741
Marketable securities unrealized gains, net of deferred income taxes of ($1)												1						1
Stock options exercised, 101,698 shares	127		(836		)	1,732												1,023
Net issuance of stock – vesting of restricted stock units, 69,515 shares	136		(1,254		)	(188		)										(1,306		)
Amortization of unearned compensation on restricted stock units, net of forfeitures						2,450												2,450
Balances, September 30, 2010	$	139,497	$	(737,106	)	$	140,737		$	2,141,560		$	(182,571	)	$	35,680		$	1,537,797

See accompanying notes to unaudited condensed consolidated financial statements.

6 ~~- -~~

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HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

Three Months Ended
September 30

(In thousands) 2009 2008 (a)

Net income $ 23,301 $ 81,837

Other comprehensive income (loss):
Foreign currency translation adjustments, net of deferred income taxes
44,565 (127,855 )

Net gains (losses) on cash flow hedging instruments, net of deferred income taxes of $779 and ($2,341) in 2009 and 2008, respectively
(1,902 ) 5,730

Reclassification adjustment for gain on cash flow hedging instruments included in net income, net of deferred income taxes of ($325) and $2 in 2009 and 2008, respectively
606 (3 )

Pension liability adjustments, net of deferred income taxes of ($4,221)and ($7,188) in 2009 and 2008, respectively
9,334 17,916

Unrealized gain on marketable securities, net of deferred income taxes of ($7) and $0 in 2009 and 2008, respectively
13 1

Total other comprehensive income (loss) 52,616 (104,211 )

Total comprehensive income (loss) 75,917 (22,374 )

Less: Comprehensive (income) loss attributable to noncontrolling interests (3,005 ) 2,228

Comprehensive income (loss) attributable to Harsco Corporation $ 72,912 $ (20,146 )

Nine Months Ended
September 30

(In thousands) 2009 2008 (a)

Net income $ 84,564 $ 233,784

Other comprehensive income (loss):
Foreign currency translation adjustments, net of deferred income taxes
94,575 (34,707 )

Net gains (losses) on cash flow hedging instruments, net of deferred income taxes of $9,325 and ($3,040) in 2009 and 2008, respectively
(26,010 ) 7,430

Reclassification adjustment for gain on cash flow hedging instruments included in net income, net of deferred income taxes of $796 and $5 in 2009 and 2008, respectively
(1,476 ) (10 )

Pension liability adjustments, net of deferred income taxes of $4,775 and ($9,153) in 2009 and 2008, respectively
(10,569 ) 21,853

Unrealized gain (loss) loss on marketable securities, net of deferred income taxes of ($5) and $21 in 2009 and 2008, respectively
9 (38 )

Total other comprehensive income (loss) 56,529 (5,472 )

Total comprehensive income 141,093 228,312

Less: Comprehensive income attributable to noncontrolling interests (5,479 ) (6,777 )

Comprehensive income attributable to Harsco Corporation $ 135,614 $ 221,535

~~(a)~~

	Three Months Ended September 30
(In thousands)	2010			2009

Net income	$	20,932		$	23,301

Other comprehensive income (loss):
Foreign currency translation adjustments	90,599			44,565

Net gains (losses) on cash flow hedging instruments, net of deferred income taxes of ($382) and $779 in 2010 and 2009, respectively	1,089			(1,902		)

Reclassification adjustment for losses on cash flow hedging instruments included in net income, net of deferred income taxes ($325) in 2009	1			606

Pension liability adjustments, net of deferred income taxes of $4,130 and ($4,221) in 2010 and 2009, respectively	(8,745		)	9,334

Unrealized gain on marketable securities, net of deferred income taxes of ($3) and ($7) in 2010 and 2009, respectively	4			13

Total other comprehensive income	82,948			52,616

Total comprehensive income	103,880			75,917

Less: Comprehensive income attributable to noncontrolling interests	(1,616		)	(3,005		)

Comprehensive income attributable to Harsco Corporation	$	102,264		$	72,912

	Nine Months Ended September 30
(In thousands)	2010			2009

Net income	$	62,321		$	84,564

Other comprehensive income (loss):
Foreign currency translation adjustments	(8,493		)	94,575

Net gains (losses) on cash flow hedging instruments, net of deferred income taxes of ($3,580) and $9,325 in 2010 and 2009, respectively	10,560			(26,010		)

Reclassification adjustment for (gains) losses on cash flow hedging instruments included in net income, net of deferred income taxes of ($10) and $796 in 2010 and 2009, respectively	16			(1,476		)

Pension liability adjustments, net of deferred income taxes of ($6,965) and $4,775 in 2010 and 2009, respectively	16,741			(10,569		)

Unrealized gain on marketable securities, net of deferred income taxes of ($2) and ($5) in 2010 and 2009, respectively	3			9

Reclassification adjustment for gain on marketable securities, net of deferred income taxes of $1 in 2010	(2		)	—

Total other comprehensive income	18,825			56,529

Total comprehensive income	81,146			141,093

Less: Comprehensive income attributable to noncontrolling interests	(4,157		)	(5,479		)

Comprehensive income attributable to Harsco Corporation	$	76,989		$	135,614

See accompanying notes to unaudited condensed consolidated financial statements.

7 ~~- -~~

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HARSCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

A. Basis of Presentation

The unaudited condensed consolidated financial statements and notes included in this report have been prepared by management of Harsco Corporation (the “Company”). In the opinion of management, all adjustments (all of which ~~with the exception of the adjustments mentioned below,~~ are of a normal recurring nature) that are necessary for a fair presentation are reflected in the condensed consolidated financial ~~statements.~~statements and notes. The December 31, ~~2008~~2009 Condensed Consolidated Balance Sheet information contained in this Form 10-Q was derived from the ~~2008~~2009 audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America for a year-end report. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s ~~2008~~2009 Annual Report on Form 10-K.

~~Operating results~~

The Company is involved in the normal course of business with variable interest entities (“VIE”) that are operating entities in the Harsco Infrastructure and ~~cash flows for~~Harsco Metals Segments. Generally, VIEs are utilized in countries with foreign ownership requirements or to facilitate the ~~three~~Company’s entry into targeted growth markets. The Company considers itself to be the primary beneficiary in substantially all VIEs in which it is involved and ~~nine months ended September 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.~~

~~In accordance with changes to consolidation accounting and reporting issued by the Financial Accounting Standards Board (“FASB”) and adopted by~~accordingly, consolidates them in its financial statements. VIEs in which the Company ~~on January 1, 2009, prior year~~is not considered to be the primary beneficiary are accounted for under the equity method and reported in the Company’s Consolidated Balance Sheet as other assets. The Company’s maximum exposure to loss with respect to all VIEs is limited to the carrying amounts ~~have been retrospectively adjusted~~reported in the Company’s Consolidated Balance Sheet and any unfunded commitment. Neither the carrying amounts nor the unfunded commitments related to ~~conform with the current year presentation. See Note J, “Recently Adopted and Recently Issued Accounting Standards,” for a further description of~~ these ~~changes.~~

VIEs are considered material.

During the third quarter of 2009, the Company recorded non-cash, out-of-period adjustments that had the net effect of reducing after-tax income by $9 million or $0.11 per diluted share. The adjustments ~~correct~~corrected errors generated principally by the improper recognition of certain revenues and ~~delaying~~ the delayed recognition of certain expenses by one subsidiary, in one country, during the ~~past~~prior three years. Based upon the Company’s investigation, which ~~is substantially~~was completed by December 31, 2009, these errors primarily related to the failure to receive advance customer agreement and to invoice on a timely basis for additional work performed for two customers. The Company assessed the individual and aggregate impact of these adjustments on ~~the current year~~2009 and all prior periods and determined that the cumulative effect of the adjustments was not material to the full year 2009 results and did not result in a material misstatement to any previously issued annual or quarterly financial statements. Consequently, the Company recorded the $9 million net adjustment in the ~~current~~third quarter of 2009 and ~~has~~did not ~~revised~~revise any previously issued annual financial statements or interim financial data.

Segment information for prior periods has been reclassified to conform with the current presentation. The Harsco Rail operating segment, which was previously a component of the All Other Category, is now reported separately.

The Company’s management has evaluated all activity of the Company and concluded that subsequent events are properly reflected in the Company’s unaudited condensed consolidated financial statements and notes as required by standards for accounting and disclosure of subsequent events.

Operating results and cash flows for the three and nine months ended September 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010.

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B. Review of Operations by Segment

Three Months Ended
September 30, 2009

Three Months Ended
September 30, 2008

(In thousands) Revenues
Operating Income
(Loss)
Revenues
Operating Income
(Loss)

Harsco Infrastructure Segment $ 279,450 $ 22,503 $ 393,292 $ 59,998

Harsco Metals Segment 275,093 (4,420 ) 423,831 33,287

Segment Totals 554,543 18,083 817,123 93,285

All Other Category – Harsco Minerals & Rail 189,618 39,624 227,714 41,975

General Corporate 60 (1,283 ) 60 (1,387 )

Totals $ 744,221 $ 56,424 $ 1,044,897 $ 133,873

~~- 8 - -~~

Nine Months Ended
September 30, 2009

Nine Months Ended
September 30, 2008

(In thousands) Revenues
Operating Income
(Loss)
Revenues
Operating Income
(Loss)

Harsco Infrastructure Segment $ 871,962 $ 66,267 $ 1,201,292 $ 155,970

Harsco Metals Segment 772,958 (3,014 ) 1,286,037 99,608

Segment Totals 1,644,920 63,253 2,487,329 255,578

All Other Category – Harsco Minerals & Rail 572,986 105,725 644,766 127,953

General Corporate 180 (5,024 ) 180 (4,439 )

Totals $ 2,218,086 $ 163,954 $ 3,132,275 $ 379,092

	Three Months Ended September 30, 2010					Three Months Ended September 30, 2009
(In thousands)	Revenues		Operating Income (Loss)			Revenues		Operating Income (Loss)

Harsco Infrastructure Segment	$	253,569	$	(13,643	)	$	279,450	$	22,503

Harsco Metals Segment	313,214		19,443			275,093		(4,420		)

Harsco Rail Segment	70,675		14,401			77,237		14,785

Segment Totals	637,458		20,201			631,780		32,868

All Other Category - Harsco Minerals & Harsco Industrial	114,863		24,928			112,381		24,839

General Corporate	80		(1,059		)	60		(1,283		)

Total	$	752,401	$	44,070		$	744,221	$	56,424

	Nine Months Ended September 30, 2010					Nine Months Ended September 30, 2009
(In thousands)	Revenues		Operating Income (Loss)			Revenues		Operating Income (Loss)

Harsco Infrastructure Segment	$	766,851	$	(46,467	)	$	871,962	$	66,267

Harsco Metals Segment	927,104		55,674			772,958		(3,014		)

Harsco Rail Segment	252,404		56,429			231,378		44,005

Segment Totals	1,946,359		65,636			1,876,298		107,258

All Other Category - Harsco Minerals & Harsco Industrial	334,788		70,777			341,608		61,720

General Corporate	180		(2,237		)	180		(5,024		)

Total	$	2,281,327	$	134,176		$	2,218,086	$	163,954

Reconciliation of Segment Operating Income to Consolidated Income from Continuing Operations

Before Income Taxes and Equity Income

	Three Months Ended September 30						Nine Months Ended September 30
(In thousands)	2010			2009			2010			2009

Segment Operating Income	$	20,201		$	32,868		$	65,636		$	107,258

All Other Category - Harsco Minerals & Harsco Industrial	24,928			24,839			70,777			61,720

General Corporate	(1,059		)	(1,283		)	(2,237		)	(5,024		)

Operating income from continuing operations	44,070			56,424			134,176			163,954

Interest income	737			888			1,849			1,944

Interest expense	(15,709		)	(15,822		)	(47,239		)	(46,621		)

Income from continuing operations before income taxes and equity income	$	29,098		$	41,490		$	88,786		$	119,277

Three Months Ended
September 30

Nine Months Ended
September 30

(In thousands) 2009 2008 2009 2008

Segment Operating Income $ 18,083 $ 93,285 $ 63,253 $ 255,578

All Other Category – Harsco Minerals & Rail 39,624 41,975 105,725 127,953

General Corporate (1,283 ) (1,387 ) (5,024 ) (4,439 )

Operating income from continuing operations 56,424 133,873 163,954 379,092

Equity in income of unconsolidated entities, net 128 282 280 932

Interest income 888 1,066 1,944 2,866

Interest expense (15,822 ) (19,650 ) (46,621 ) (55,844 )

Income from continuing operations before income taxes $ 41,618 $ 115,571 $ 119,557 $ 327,046

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C. Accounts Receivable and Inventories

At September 30, ~~2009~~2010 and December 31, ~~2008,~~2009, Trade accounts receivable of ~~$640.9~~$657.9 million and ~~$648.9~~$598.3 million, respectively, were net of ~~an allowance~~allowances for doubtful accounts of ~~$30.1~~$21.2 million and ~~$27.9~~$24.5 million, respectively. The provision for doubtful accounts was ~~$2.6~~$2.3 million and ~~$3.5~~$2.6 million for the three months ended September 30, ~~2009~~2010 and ~~2008,~~2009, respectively. For the nine months ended September 30, ~~2009~~2010 and ~~2008,~~2009, the provision for doubtful accounts was ~~$10.8~~$7.0 million and ~~$6.7~~$10.8 million, respectively. Other receivables of $28.8 million and $30.9 million at September 30, 2010 and December 31, 2009, respectively, include insurance claim receivables, employee receivables, tax claim receivables and other miscellaneous receivables not included in Trade accounts receivable, net.

~~- 9 - -~~

~~Inventories consist of the following:~~

Inventories
(In thousands)
September 30
2009

December 31
2008

Finished goods $ 147,187 $ 156,490
Work-in-process 24,446 21,918
Raw materials and purchased parts 85,284 83,372
Stores and supplies 43,957 47,750

Total Inventories $ 300,874 $ 309,530

	Inventories
(In thousands)	September 30 2010		December 31 2009

Finished goods	$	129,449	$	146,104
Work-in-process	26,484		19,381
Raw materials and purchased parts	82,421		84,542
Stores and supplies	40,568		41,147

Total inventories	$	278,922	$	291,174

D. Property, Plant and Equipment

~~Property, plant and equipment consists of the following:~~

(In thousands)
September 30
2009

December 31
2008

Land and improvements $ 45,574 $ 41,913
Buildings and improvements 199,263 167,606
Machinery and equipment 3,108,658 2,905,398
Uncompleted construction 68,012 75,210
Gross property, plant and equipment 3,421,507 3,190,127
Less accumulated depreciation (1,928,388 ) (1,707,294 )
Net property, plant and equipment $ 1,493,119 $ 1,482,833

(In thousands)	September 30 2010			December 31 2009
Land and improvements	$	47,269		$	46,198
Buildings and improvements	199,587			207,280
Machinery and equipment	3,138,000			3,146,358
Uncompleted construction	60,855			50,252
Gross property, plant and equipment	3,445,711			3,450,088
Less accumulated depreciation	(2,017,006		)	(1,939,287		)
Property, plant and equipment, net	$	1,428,705		$	1,510,801

E. Goodwill and Other Intangible Assets

Goodwill by Segment

(In thousands)	Harsco Infrastructure Segment			Harsco Metals Segment			Harsco Rail Segment		All Other Category – Harsco Minerals & Harsco Industrial		Consolidated Totals
Balance as of December 31, 2009	$	266,119		$	315,745		$	8,979	$	108,198	$	699,041

Goodwill acquired during year (a)	11,419			—			—		—		11,419

Changes to Goodwill (b)	(1,587		)	—			320		—		(1,267		)

Foreign currency translation	(6,679		)	(4,533		)	—		280		(10,932		)

Balance as of September 30, 2010	$	269,272		$	311,212		$	9,299	$	108,478	$	698,261

(a)Relates to the acquisition of Bell Scaffolding Group, see Note F, “Acquisitions.”

(b)Relates to opening balance sheet adjustments.

The ~~following table reflects~~Company determined that as of September 30, 2010, no interim impairment testing was necessary. The Company’s annual goodwill impairment testing will be completed during the ~~changes~~fourth quarter of 2010. There can be no assurance that

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goodwill impairment testing will not result in a charge to earnings. Should the Company experience a further degradation in the overall markets served by the Harsco Infrastructure Segment, impairment losses for assets associated with this Segment may be required. Any necessary impairment could result in the write down of the carrying ~~amounts~~value of goodwill to its implied fair value.

Intangible Assets by ~~segment for the nine months ended September 30, 2009:~~

Goodwill by Segment
(In thousands) Harsco Infrastructure Segment Harsco Metals Segment All Other Category – Harsco Minerals & Rail Consolidated Totals

Balance as of December 31, 2008 $ 220,547 $ 299,613 $ 111,330 $ 631,490

Changes to goodwill (68 ) 480 1,746 2,158

Foreign currency translation 15,566 15,447 3,356 34,369
Balance as of September 30, 2009 $ 236,045 $ 315,540 $ 116,432 $ 668,017

~~- 10 - -~~

Category

	September 30, 2010				December 31, 2009
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer relationships	$	162,485	$	77,629	$	165,092	$	61,547

Non-compete agreements	1,378		1,304		1,440		1,346

Patents	6,989		4,811		7,043		4,597

Other	78,398		36,349		73,143		28,336

Total	$	249,250	$	120,093	$	246,718	$	95,826

Acquired Intangible Assets (a)

(In thousands)	Gross Carrying Amount		Residual Value	Weighted-average Amortization Period

Customer relationships	$	211	None	7 years

Trade name	4,592		None	5 years

Total	$	4,803

~~The following table reflects intangible assets by major category:~~

Intangible Assets
September 30, 2009 December 31, 2008
(In thousands)
Gross Carrying
Amount

Accumulated
Amortization

Gross Carrying
Amount

Accumulated
Amortization

Customer relationships $ 148,052 $ 56,180 $ 138,752 $ 40,821

Non-compete agreements 1,426 1,310 1,414 1,196

Patents 7,022 4,496 6,316 4,116

Other 65,497 26,019 60,495 19,309
Total $ 221,997 $ 88,005 $ 206,977 $ 65,442

~~During~~

(a)Relates to the ~~first nine months~~acquisition of ~~2009, the Company acquired the following intangible assets (by major class) which are subject to amortization.~~

Acquired Intangible Assets
(In thousands)
Gross Carrying
Amount
Residual Value
Weighted-average
Amortization Period

Customer relationships $ 931 None 6 years

Patents 425 None 15 years

Other $ 640 None 2 years
Total $ 1,996

Bell Scaffolding Group, see Note F, “Acquisitions.”

Amortization expense for intangible assets was $8.3 million and $24.8 million for the third quarter and first nine months of 2010, respectively. This compares with $6.5 million and $19.0 million for the third quarter and first nine months of 2009, ~~respectively. This compares with $7.1 million and $21.6 million for the third quarter and first nine months of 2008,~~ respectively. The following table shows the estimated amortization expense for the next five fiscal years based on current intangible ~~assets:~~

(In thousands) 2009 2010 2011 2012 2013

Estimated amortization expense (a) $25,500 $24,500 $23,400 $11,100 $9,700

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

(In thousands)	2010		2011		2012		2013		2014

Estimated amortization expense	$	32,700	$	30,800	$	17,200	$	15,400	$	13,700

F. Acquisitions ~~and Dispositions~~

~~Acquisitions~~

In ~~April 2009,~~January 2010, the Company acquired Bell Scaffolding Group (“Bell”), an Australia-based infrastructure solutions provider serving the noncontrolling interests of three of its Asia Pacific region consolidated subsidiaries in the Harsco Metals Segment for $12.9 million. The acquisition of these partnership interests was accounted for as an equity transaction since the Company retained its controlling interest in the subsidiaries.

In August 2009, the Company acquired the noncontrolling interests of four of its Eastern Europe region consolidated subsidiaries in the Harsco Infrastructure Segment for $0.6 million. The acquisition of these partnership interests was accounted for as an equity transaction since the Company retained its controlling interest in the subsidiaries.

~~In September 2009, the Company formed a partnership in Saudi Arabia that will provide highly-engineered scaffolding and formwork systems and expert installation services to the~~industrial, infrastructure and commercial construction markets. The Company contributed $5.3 million to form this partnership, which has been included in the Harsco Infrastructure Segment. In September 2009, the partnership acquired the net assets of Saudi Express Transport LLC, a Saudi Arabia-based provider of similar services thatsectors. Bell’s capabilities range from technical design and support through supply and erect contracts. Bell generated revenues of approximately ~~$22~~$40 million in ~~2008.~~

~~- 11 - -~~

~~In October~~ 2009 the Company acquired Nicol UK Ltd., a United Kingdom-based multi-disciplined provider of industrial maintenance services, multi-craft site services, and scaffolding to major petrochemical, energy and industrial clients. This business generated revenues of approximately $25 million in 2008 and has been included in the Harsco Infrastructure Segment.

Inclusion of the pro-forma financial information for ~~the above transactions~~this transaction is not necessary due to the immaterial size of the ~~acquisitions.~~acquisition.

Certain of the Company’s acquisitions include contingent consideration features for which defined goals must be met by the acquired business in order for payment of the consideration. Each quarter until settlement of the contingency, the Company assesses the likelihood that an acquired business will achieve the goals and the resulting fair value of the contingency. The Company has consummated acquisitions whereby the purchase price included contingent consideration based on the performance of the business during 2010 and 2011. As of September 30, 2010, the Company’s assessment of these performance goals resulted in a reduction to the previously recognized contingent consideration liability of $1.0 million and $10.6 million for the three months and nine months ended September 30, 2010, respectively. These reductions result from, among other things, difficult end-market conditions for the business, which are

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expected to continue for the remainder of 2010. In accordance with accounting standards for acquisitions, this adjustment was recognized in operating income in the Condensed Consolidated Income Statement as a component of the Other (income) expense line item. As the fair value is evaluated on a quarterly basis, any future adjustments (increases or decreases) will also be included in operating income.

Net Income Attributable to the Company and Transfers to Noncontrolling Interest

The purpose of the following schedule is to disclose the effects of changes in the Company’s ownership interest in its subsidiaries on the Company’s equity.

Three Months Ended
September 30

Nine Months Ended
September 30

(In thousands) 2009 2008 2009 2008

Net income attributable to the Company $ 20,182 $ 80,284 $ 79,382 $ 227,206

Decrease in the Company’s paid-in capital for purchase of partnership interests (1,681 ) — (3,905 ) —

Change from net income attributable to the Company and transfers to noncontrolling interest $ 18,501 $ 80,284 $ 75,477 $ 227,206

~~Dispositions~~

~~On December 7, 2007,~~ In September 2010, the Company ~~sold~~acquired an increased ownership share of a consolidated subsidiary located in the United Arab Emirates from a noncontrolling interest partner. The acquisition was accounted for as an equity transaction since the Company retained its ~~Gas Technologies Segment~~controlling interest in the subsidiary.

	Three Months Ended September 30						Nine Months Ended September 30
(In thousands)	2010			2009			2010			2009

Net income attributable to the Company	$	20,179		$	20,182		$	57,876		$	79,382
Decrease in the Company’s paid-in capital for purchase of partnership interests	(1,003		)	(1,681		)	(1,003		)	(3,905		)

Change from net income attributable to the Company and transfers to noncontrolling interest	$	19,176		$	18,501		$	56,873		$	75,477

G. Debt and Credit Agreements

In September 2010, the Company completed a $250 million bond offering that bears interest at 2.7% and matures in October 2015. The net proceeds of this issuance were used to ~~Wind Point Partners, a private equity investment firm. The terms~~repay, in part, 200 million British pound sterling-denominated notes (approximately $316 million) that matured October 27, 2010. Additional commercial paper borrowings were made to repay the remainder of the ~~sale include a total purchase price~~British pound sterling-denominated notes in excess of ~~$340 million, including $300 million paid in cash at closing and $40 million payable in~~ the ~~form of an earnout contingent on~~proceeds from the Gas Technologies group achieving certain performance targets in 2008 or 2009. The thresholds for achieving the earnout for 2008 were not met and the Company does not expect them to be met for 2009. The Company recorded a $26.4 million after-tax gain on the sale in the fourth quarter of 2007. The Company recorded $14.5 million in after-tax charges in Discontinued Operations in the first nine months of 2009 related to the settlement of working capital adjustment claims and other costs associated with arbitration proceedings as described in Note G, “Commitments and Contingencies.”

G.2010 bond issuance.

H. Commitments and Contingencies

Environmental

The Company is involved in a number of environmental remediation investigations and ~~clean-ups~~cleanups and, along with other companies, has been identified as a “~~potentially~~“potentially responsible ~~party~~”party” for certain waste disposal sites. While each of these matters is subject to various uncertainties, it is probable that the Company will agree to make payments toward funding certain of these activities and it is possible that some of these matters will be decided unfavorably to the Company. The Company has evaluated its potential liability, and its financial exposure is dependent upon such factors as the continuing evolution of environmental laws and regulatory ~~requirements,~~requirements; the availability and application of ~~technology,~~technology; the allocation of cost among potentially responsible ~~parties,~~parties; the years of remedial activity required and the remediation methods selected. The Condensed Consolidated Balance Sheets at September 30, ~~2009~~2010 and December 31, ~~2008 include~~2009 included accruals in Other current liabilities of ~~$4.2~~$3.6 million and ~~$3.2~~$3.1 million, respectively, for environmental matters. ~~There were no amounts~~The amount charged against pre-tax income related to environmental matters intotaled $0.9 million for the third quarter of ~~2009 as compared with $0.2~~2010. There was less than $0.1 million incharged against pre-tax income related to environmental matters for the ~~same period~~third quarter of ~~2008.~~2009. Amounts charged against pre-tax income for the first nine months of 2010 and 2009 totaled $1.6 million and $1.2 million, ~~and $1.0 million for 2009 and 2008,~~ respectively.

The Company and an unrelated third party received a notice of violation in November 2007 from the United States Environmental Protection Agency (“the EPA”), in connection with an alleged violation by the Company and such third party of certain applicable federally enforceable air pollution control requirements in connection with the operation of a slag processing area located on the third party’s Pennsylvania facility. The Company and such third party have promptly taken steps to remedy the situation. The Company and the third party have reached an agreement in principle with the EPA to resolve this matter and are in the process of finalizing this agreement. The Company anticipates that its portion of any penalty would exceed $0.1 million. However, the Company does not expect that any sum it may have to pay in connection with this matter would have a material adverse effect on its financial position, results of operations or cash flows.

~~- 12 - -~~

The Company evaluates its liability for future environmental remediation costs on a quarterly basis. 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 sum it may have to pay in connection with environmental matters in excess of the amounts recorded or disclosed above would have a material adverse effect on its financial position, results of operations or cash flows.

Gas Technologies Divestiture

In October 2009, the Company and Taylor-Wharton International (“TWI”), the purchaser of the Company’s Gas Technologies business, satisfactorily resolved certain claims and counterclaims that had been submitted to arbitration. The claims and counterclaims related both to net working capital adjustments associated with the divestiture and to alleged breach of certain representations and warranties made by the Company. The settlement and related costs and

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fees were reflected in the $15.1 million after-tax loss from discontinued operations recorded by the Company for the twelve months ended December 31, 2009.

In November 2009, TWI filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. As part of its filing, TWI filed a motion to reject certain executory contracts, including the parties’ Asset and Stock Purchase Agreement dated as of December 7, 2007 (the “ASPA”). TWI, however, did not seek to reject the settlement agreement finalized in October 2009 between the Company and TWI.

In May and June 2010, the bankruptcy court entered orders confirming TWI’s plan of reorganization and approving TWI’s rejection of certain executory contracts, including the ASPA. On June 15, 2010, reorganized TWI emerged from bankruptcy.

The Company recorded a pre-tax charge of $5.0 million in the second quarter of 2010 related to potential and contingent claims arising as a result of the rejection of the ASPA. This charge was recorded in Loss from Discontinued Operations. Claims are inherently uncertain and, as a result, potential claims could be resolved at an amount significantly above the amount recorded.

Value-Added Tax Dispute

The Company is involved in a value-added and services (“ICMS”) tax dispute with the State Revenue Authorities from the State of São Paulo, Brazil (the “SPRA”). In October 2009, the Company received notification of the SPRA’s administrative decision regarding the levying of ICMS in the State of São Paulo in relation to services provided to one of the Company’s customers in the State between January 2004 and May 2005. The assessment from the SPRA is approximately $12 million, including tax, penalty and interest and could increase to reflect additional interest accrued since December 2007.

The Company believes that it does not have liability for this assessment and will vigorously contest it under various alternatives, including judicial appeal. Any ultimate final determination of this assessment is not likely to have a material adverse effect on the Company’s annual results of operations, cash flows or financial condition.

Other

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

The Company believes that the claims against it are without merit. The Company has never been a producer, manufacturer or processor of asbestos fibers. Any component within a Company product ~~which~~that may have contained asbestos would have been purchased from a supplier. Based on scientific and medical evidence, the Company believes that any asbestos exposure arising from normal use of any Company product never presented any harmful levels of airborne asbestos exposure, and moreover, the type of asbestos contained in any component that was used in those products was protectively encapsulated in other materials and is not associated with the types of injuries alleged in the pending suits. Finally, in most of the depositions taken of plaintiffs to date in the litigation against the Company, plaintiffs have failed to specifically identify any Company products as the source of their asbestos exposure.

The majority of the asbestos complaints pending against the Company have been filed in New York. Almost all of the New York complaints contain a standard claim for damages of $20 million or $25 million against the approximately 90 defendants, regardless of the individual plaintiff’s alleged medical condition, and without specifically identifying any Company product as the source of plaintiff’s asbestos exposure.

As of September 30, ~~2009,~~2010, there are ~~26,142~~20,085 pending asbestos personal injury claims filed against the Company. Of these cases, ~~25,623 were~~19,593 are pending in the New York Supreme Court for New York County in New York State. The other claims, totaling ~~519,~~492, are filed in various counties in a number of state courts, and in certain Federal District Courts (including New York), and those complaints generally assert lesser amounts of damages than the New York State court cases or do not state any amount claimed.

As of September 30, ~~2009,~~2010, the Company has obtained dismissal by stipulation, or summary judgment prior to trial, in ~~18,232~~24,573 cases.

In view of the persistence of asbestos litigation nationwide, ~~which has not yet been sufficiently addressed either politically or legally,~~ the Company expects to continue to receive additional claims. However, there have been developments during the past several years, both by certain state legislatures and by certain state courts, which could favorably affect the Company’s ability to defend these asbestos claims in those jurisdictions. These developments include procedural changes, docketing changes, proof of damage requirements and other changes

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that require plaintiffs to follow specific procedures in bringing their claims and to show proof of damages before they can proceed with their claim. An example is the action taken by the New York Supreme Court (a trial court), which is responsible for managing all asbestos cases pending within New York County in the State of New York. This Court issued an order in December 2002 that created a Deferred or Inactive Docket for all pending and future asbestos claims filed by plaintiffs who cannot demonstrate that they have a malignant condition or discernable physical impairment, and an Active or In Extremis Docket for plaintiffs who are able to show such medical condition. As a result of this order, the majority of the asbestos cases filed against the Company in New York County have been moved to the Inactive Docket until such time as the plaintiffs can show that they have incurred a physical impairment. As of September 30, ~~2009,~~2010, the Company has been listed as a defendant in ~~394~~750 Active or In Extremis asbestos cases in New York County. The Court’s Order has been challenged by plaintiffs.

Except with regard to the legal costs in a few limited, exceptional cases, the Company’s insurance carrier has paid all legal and settlement costs and expenses to date. 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 on these claims.

The Company intends to continue its practice of vigorously defending these cases as they are listed for trial. It is not possible to predict the ultimate outcome of asbestos-related lawsuits, claims and proceedings due to the unpredictable nature of personal injury litigation. Despite this uncertainty, and although results of operations and cash flows for a given period could be adversely affected by asbestos-related lawsuits, claims and proceedings, management believes that the ultimate outcome of these cases will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

~~- 13 - -~~

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 accruals, 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 ~~which~~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 in the Company’s Consolidated Balance Sheets. See Note 1, “Summary of Significant Accounting Policies,” of the Company’s Form 10-K for the year ended December 31, ~~2008,~~2009, for additional information on Accrued Insurance and Loss Reserves.

~~Gas Technologies Divestiture~~

~~In October 2009, the Company and Taylor-Wharton International, the purchaser~~

Table of the Company’s Gas Technologies business, satisfactorily resolved the open claims and counterclaims that were submitted to arbitration. The claims and counterclaims related to both net working capital adjustments associated with the divestiture and the alleged breach of certain representations and warranties made by the Company. The settlement and related costs and fees were reflected in the $14.5 million after-tax loss from discontinued operations for the nine months ended September 30, 2009.

~~Value-Added Tax Dispute~~

The Company is involved in a value added and services (“ICMS”) tax dispute with the State Revenue Authorities from the State of São Paulo, Brazil (the “SPRA”). In October 2009, the Company received notification of the SPRA’s administrative decision regarding the levying of ICMS in the State of São Paulo in relation to services provided to one of the Company’s customers in the State between January 2004 and May 2005. The assessment from the SPRA is approximately $12.0 million, including tax, penalty and interest and could increase to reflect additional interest accrued since December 2007.

The Company believes that it does not have liability for this assessment and will vigorously contest it under various alternatives, including judicial appeal. Any ultimate final determination of this assessment would not have a material adverse effect on the Company’s annual results of operations, cash flows or financial condition.

H. Contents

I.Reconciliation of Basic and Diluted Shares

Three Months Ended Nine Months Ended
September 30 September 30
(Amounts in thousands, except per share data) 2009 2008 2009 2008

Income from continuing operations attributable to Harsco Corporation common stockholders $ 31,974 $ 83,970 $ 93,867 $ 231,232

Weighted average shares outstanding - basic 80,315 84,089 80,285 84,244

Dilutive effect of stock-based compensation 316 448 272 468

Weighted average shares outstanding - diluted 80,631 84,537 80,557 84,712

Earnings from continuing operations per common share, attributable to Harsco Corporation common stockholders:

Basic $ 0.40 $ 1.00 $ 1.17 $ 2.74

Diluted $ 0.40 $ 0.99 $ 1.17 $ 2.73

	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands, except per share amounts)	2010		2009		2010		2009

Income from continuing operations attributable to Harsco Corporation common stockholders	$	21,074	$	31,974	$	61,355	$	93,867

Weighted average shares outstanding - basic	80,574		80,315		80,559		80,285

Dilutive effect of stock-based compensation	188		316		188		272

Weighted average shares outstanding - diluted	80,762		80,631		80,747		80,557

Earnings from continuing operations per common share, attributable to Harsco Corporation common stockholders:
Basic	$	0.26	$	0.40	$	0.76	$	1.17

Diluted	$	0.26	$	0.40	$	0.76	$	1.17

At September 30, 2010, approximately 500 and 12,000 restricted stock units outstanding were not included in the three months and nine months computation of diluted earnings per share, respectively, because the effect was antidilutive. At September 30, 2009, all restricted stock units outstanding were included in the three months calculation of diluted earnings per share, but ~~29 thousand~~approximately 29,000 restricted stock units were not included in the nine months calculation because the effect was antidilutive. All outstanding stock options at September 30, 2009 and all outstanding stock options and restricted stock units at September 30, 2008 were included in the computation of diluted earnings per share for the respective three month and nine month periods.

~~- 14 - -~~

J.Employee Benefit Plans

	Three Months Ended September 30
Defined Benefit Net Periodic Pension Cost	U. S. Plans						International Plans
(In thousands)	2010			2009			2010			2009

Defined benefit plans:
Service cost	$	518		$	447		$	1,009		$	1,062
Interest cost	3,500			3,523			11,925			11,296
Expected return on plan assets	(4,146		)	(3,647		)	(11,567		)	(10,939		)
Recognized prior service costs	84			88			90			92
Recognized losses	650			857			3,023			2,477
Amortization of transition liability	—			—			14			9
Curtailment/settlement (gain) loss	179			—			17			(79		)
Defined benefit plans net periodic pension cost	$	785		$	1,268		$	4,511		$	3,918

	Nine Months Ended September 30
Defined Benefit Net Periodic Pension Cost	U. S. Plans						International Plans
(In thousands)	2010			2009			2010			2009

Defined benefit plans:
Service cost	$	1,558		$	1,311		$	2,999		$	2,998
Interest cost	10,522			10,331			35,129			32,245
Expected return on plan assets	(12,463		)	(10,693		)	(34,059		)	(31,212		)
Recognized prior service costs	254			257			269			264
Recognized losses	1,954			2,512			8,897			6,756
Amortization of transition liability	—			—			41			23
Curtailment/settlement (gain) loss	179			—			50			(79		)
Defined benefit plans net periodic pension cost	$	2,004		$	3,718		$	13,326		$	10,995

Three Months Ended September 30
Defined Benefit Net Periodic Pension Cost (Income) U. S. Plans International Plans
(In thousands) 2009 2008 2009 2008

Defined benefit plans:
Service cost
$ 447 $ 373 $ 1,062 $ 2,281
Interest cost
3,523 3,727 11,296 13,202
Expected return on plan assets
(3,647 ) (5,862 ) (10,939 ) (15,337 )
Recognized prior service costs
88 83 92 244
Recognized losses
857 292 2,477 2,742
Amortization of transition liability
— — 9 9
Curtailment gain
— — (79 ) —
Defined benefit plans net periodic pension
cost (income) – continuing operations
$ 1,268 $ (1,387 ) $ 3,918 $ 3,141

Nine Months Ended September 30
Defined Benefit Net Periodic Pension Cost (Income) U. S. Plans International Plans
(In thousands) 2009 2008 2009 2008

Defined benefit plans:
Service cost
$ 1,311 $ 1,367 $ 2,998 $ 7,082
Interest cost
10,331 11,470 32,245 41,141
Expected return on plan assets
(10,693 ) (17,951 ) (31,212 ) (47,823 )
Recognized prior service costs
257 250 264 753
Recognized losses
2,512 876 6,756 8,561
Amortization of transition liability
— — 23 28
Curtailment/settlement gain
— (866 ) (79 ) —
Defined benefit plans net periodic pension
cost (income)
3,718 (4,854 ) 10,995 9,742
Less Discontinued Operations included in above — (694 ) — —
Defined benefit plans net periodic pension
cost (income) – continuing operations
$ 3,718 $ (4,160 ) $ 10,995 $ 9,742

~~Defined benefit net periodic pension cost in the nine months ended September 30, 2009 was $9.1 million higher, when compared with the first nine months~~

Table of 2008. This was principally due to lower than expected plan assets at the 2008 plan measurement date which resulted in a decrease in expected return on plan assets. Net periodic pension cost from continuing operations for the full year ending December 31, 2009 is expected to be approximately $20 million, compared with $8.2 million for the year ended December 31, 2008.

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In the quarter ended September 30, ~~2009,~~2010, the Company contributed ~~$0.4~~$0.5 million and ~~$4.2~~$3.5 million tofor the U.S. and international defined benefit pension plans, respectively. In the nine months ended September 30, ~~2009,~~2010, the Company contributed ~~$2.3~~$1.3 million and ~~$14.7~~$13.3 million tofor the U.S. and international defined benefit pension plans, respectively. The Company currently anticipates contributing ~~approximately $1~~an additional $0.9 million and ~~$11~~$14.6 million for the U.S. and international defined benefit pension plans, respectively, during the remainder of ~~2009.~~

2010.

In the quarter ended September 30, ~~2009,~~2010, the ~~Company contributed $4.8 million and $5.6 million~~Company’s contributions to ~~multiemployer~~multi-employer and defined contribution pension plans were $5.4 million and $4.7 million, respectively. In the nine months ended September 30, ~~2009,~~2010, the Company contributed ~~$16.8~~$16.4 million and ~~$11.1~~$10.3 million to multiemployer and defined contribution plans, respectively.

~~- 15 - -~~

K. Recently Adopted and Recently Issued Accounting Standards

The following accounting standards were adopted in ~~2009:~~

2010:

On ~~September 30, 2009,~~January 1, 2010, the Company adopted changes issued by the ~~FASB to the authoritative hierarchy of~~Financial Accounting Standards Board (“FASB”) on accounting ~~principles generally accepted in the United States~~for variable interest entities (“~~GAAP”~~VIE”). These changes ~~established~~require an enterprise to perform an analysis to determine whether the ~~FASB Accounting Standards Codification~~TM ~~(“Codification”)~~enterprise’s variable interest or interests give it a controlling financial interest in a VIE; to require ongoing reassessments of whether an enterprise is the primary beneficiary of a VIE; to eliminate the solely quantitative approach previously required for determining the primary beneficiary of a VIE; to add an additional reconsideration event for determining whether an entity is a VIE when any changes in facts and circumstances occur such that holders of the equity investment at risk, as a group, lose the ~~source~~power from voting rights or similar rights of ~~authoritative~~those investments to direct the activities of the entity that most significantly impact the entity’s economic performance; and to require enhanced disclosures that will provide users of financial statements with more transparent information about an enterprise’s involvement in a VIE. Other than additional disclosure requirements concerning VIEs, the adoption of these changes had no impact on the Company’s consolidated financial statements.

Effective January 1, 2010, the Company adopted changes to the FASB’s previously-issued guidance on accounting ~~principles recognized~~for noncontrolling interests in consolidated financial statements. These changes were issued by the FASB on January 6, 2010 and clarify the accounting and reporting guidance for noncontrolling interests and changes in ownership interests of a consolidated subsidiary. An entity is required to ~~be applied by nongovernmental entities~~deconsolidate a subsidiary when the entity ceases to have a controlling financial interest in the ~~preparation~~subsidiary. Upon deconsolidation of ~~financial statements~~a subsidiary, an entity recognizes a gain or loss on the transaction and measures any retained investment in ~~conformity~~the subsidiary at fair value. The gain or loss includes any gain or loss associated with ~~GAAP. Rules and interpretive releases~~the difference between the fair value of the ~~Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The FASB will no longer issue new standards~~retained investment in the ~~form~~subsidiary and its carrying amount at the date the subsidiary is deconsolidated. In contrast, an entity is required to account for a decrease in its ownership interest of ~~Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts; instead~~a subsidiary that does not result in a change of control of the ~~FASB will issue Accounting Standards Updates. Accounting Standards Updates will not be authoritative in their own right~~subsidiary as ~~they will only serve to update the Codification. These changes and the Codification itself do not change GAAP.~~an equity transaction. The adoption of these changes had no impact on the Company’s consolidated financial ~~statements, other than the manner in which new accounting standards are referenced.~~

~~On June 30, 2009,~~statements.

Effective January 1, 2010, the Company adopted changes issued by the FASB on January 21, 2010 related to disclosure requirements for fair value measurements. The changes require a reporting entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. The changes also clarify existing disclosure requirements related to how assets and liabilities should be grouped by class and valuation techniques used for recurring and nonrecurring fair value measurements. The adoption of these changes had no impact on the Company’s consolidated financial statements.

Effective January 1, 2010, the Company adopted changes issued by the FASB on February 24, 2010 to the accounting for and disclosure of events that occur after the balance sheet date, but before financial statements are issued or are available to be ~~issued. Specifically, these~~issued, generally referred to as “subsequent events.” These changes ~~set forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions~~clarified that ~~may occur for potential recognition or disclosure in the financial statements, the circumstances under which~~ an entity ~~should recognize events~~that is required to file or ~~transactions occurring after the balance sheet date in~~furnish its financial statements with the Securities and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The adoption of these changes had no impact on the Company’s consolidated financial statements as the Company’s existing method of accounting for and disclosing subsequent events didExchange Commission is not ~~significantly change.~~

~~On June 30, 2009, the Company adopted changes issued by the FASB that require a publicly traded company~~required to disclose the ~~fair value of its financial instruments whenever summarized financial information for interim reporting periods is issued. Such disclosures include the fair value of all financial instruments, for~~date through which it is practicable to estimate that value, whether recognized or not recognized in the statement of financial position; the related carrying amount of these financial instruments; and the method(s) and significant assumptions used to estimate the fair value.subsequent events have been evaluated. Other than the ~~required disclosures included in Note K, “Derivative Instruments, Hedging Activities and Fair Value,”~~elimination of disclosing this date, the adoption of these changes had no impact on the Company’s consolidated financial statements.

~~On January 1, 2009, the Company adopted changes issued by the FASB related to disclosures about an entity’s derivative and hedging activities, including:~~

·	~~how and why an entity uses derivative instruments,~~

·	~~how derivative instruments and related hedged items are accounted for, and~~

·	~~how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows.~~

Other than the required disclosures included in Note K, “Derivative Instruments, Hedging Activities and Fair Value,” the adoption of these changes had no material impact on the Company’s consolidated financial statements.

On January 1, 2009, the Company adopted changes issued by the FASB related to the consolidation accounting and reporting for a noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. These changes define a noncontrolling interest, previously called a minority interest, as the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. These changes require, among other items, that a noncontrolling interest be included in the consolidated statement of financial position within equity separate from the parent’s equity; consolidated net income to be reported at amounts inclusive of both the parent’s and noncontrolling interest’s shares and, separately, the amounts of consolidated net income attributable to the parent and noncontrolling interest all on the consolidated statement of operations; and if a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be measured at fair value and a gain or loss be recognized in net income based on such fair value. The presentation and disclosure requirements of these changes have been applied retrospectively. Other than the change in presentation of noncontrolling interests, the adoption of these changes had no material impact on the Company’s consolidated financial statements.

On January 1, 2009, the Company adopted changes issued by the FASB related to the fair value accounting and reporting of nonfinancial assets and nonfinancial liabilities that are not recognized or disclosed at fair value in the financial statements on at least an annual basis. These changes define fair value, establish a framework for measuring fair value in GAAP, and expand disclosures about fair value measurements. This standard applies to other GAAP that require or permit fair value measurements and is to be applied prospectively with limited exceptions. The adoption of these changes as they relate to nonfinancial assets and nonfinancial liabilities had no impact on the Company’s consolidated financial

~~- 16 - -~~

statements. These provisions will be applied at such time when a nonrecurring, fair value measurement of a nonfinancial asset or nonfinancial liability is required, which may result in a fair value that could be materially different than would have been calculated prior to the adoption of these changes.

Effective January 1, 2009, the Company adopted changes issued by the FASB on April 1, 2009 related to the accounting for business combinations. These changes apply to all assets acquired and liabilities assumed in a business combination that arise from certain contingencies and requires (i) an acquirer to recognize at fair value, at the acquisition date, an asset acquired or liability assumed in a business combination that arises from a contingency if the acquisition-date fair value of that asset or liability can be determined during the measurement period; otherwise the asset or liability should be recognized at the acquisition date if certain defined criteria are met; (ii) contingent consideration arrangements of an acquiree assumed by the acquirer in a business combination be recognized initially at fair value; (iii) subsequent measurements of assets and liabilities arising from contingencies be based on a systematic and rational method depending on their nature and contingent consideration arrangements be measured subsequently; and (iv) disclosures of the amounts and measurement basis of such assets and liabilities and the nature of the contingencies. These changes are effective for the Company for all business combinations after December 31, 2008. The effect of its adoption will depend on the nature of contingencies in business combinations after the effective date.

The following accounting standards ~~were~~have been issued ~~in 2009~~ and become effective for the Company at various future dates:

In October 2009, the FASB issued changes related to the accounting for revenue recognition when multiple-deliverable revenue arrangements are present. The changes eliminate the residual method of revenue allocation and require revenue to be allocated using the relative selling price method. This method ~~allows~~requires a vendor to use its best estimate of selling price if neither ~~vendor specific~~vendor-specific objective evidence nor third-party evidence of selling price exists when evaluating multiple deliverable arrangements. These changes must be adopted no later than January 1, 2011 and may be adopted prospectively for revenue arrangements entered into or materially modified after the date of adoption or retrospectively for

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all revenue arrangements for all periods presented. ~~The Company~~Management is currently evaluating the requirements of these changes and has not yet determined the impact on the Company’s consolidated financial statements.

In ~~June 2009,~~January 2010, the FASB issued changes ~~related~~ to ~~the accounting~~disclosure requirements for ~~variable interest entities. These~~fair value measurements. The changes require ~~an enterprise:~~

·	~~to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest~~a reporting entity to disclose, in ~~a variable interest entity;~~

·	~~to require ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity;~~

·	~~to eliminate the quantitative approach previously required for determining the primary beneficiary of a variable interest entity;~~

to add an additional reconsideration event for determining whether an entity is a variable interest entity when any changes in facts and circumstances occur such that holders of the equity investment at risk, as a group, lose the power from voting rights or similar rights of those investments to direct the activities of the entity that most significantly impact the entity’s economic performance; and

·	~~to provide enhanced disclosures that will provide users of financial statements with more transparent information about an enterprise’s involvement in a variable interest entity.~~

~~These changes become effective for~~ the ~~Company on January 1, 2010 and are not expected to have a material effect on the Company’s consolidated financial statements.~~

In December 2008, the FASB issued changes related to employers’ disclosures about postretirement benefit plan assets. These changes require disclosure of how investment allocation decisions are made; major categories of plan assets; inputs and valuation techniques used to measure fair value of plan assets; the effectreconciliation of fair value measurements using significant unobservable inputs (Level 3), separate information about purchases, sales, issuances, and settlements (that is, on ~~changes in plan assets; and significant concentrations of risk within plan assets.~~a gross basis rather than as one net number). These changes become effective for the ~~Company’s year-end December 31, 2009 consolidated financial statements. As these changes only require enhanced disclosures,~~Company beginning January 1, 2011. Other than the ~~adoption of~~additional disclosure requirements, management has determined these changes will ~~only~~not have an impact ~~notes to~~on the Company’s consolidated financial statements.

L. Derivative Instruments, Hedging Activities and Fair Value

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

~~- 17 - -~~

All derivative instruments are recorded on the ~~balance sheet~~Condensed Consolidated Balance Sheet at fair value. Changes in the fair value of derivatives used to hedge foreign-currency-denominated balance sheet items are reported directly in earnings along with offsetting transaction gains and losses on the items being hedged. Derivatives used to hedge forecasted cash flows associated with foreign currency commitments or forecasted commodity purchases may be accounted for as cash flow hedges as deemed appropriate and if the criteria for hedge accounting are met. Gains and losses on derivatives designated as cash flow hedges are deferred as a separate component of equity and reclassified to earnings in a manner that matches the timing of the earnings impact of the hedged transactions. Generally, ~~these~~at September 30, 2010, such deferred gains and losses ~~are~~will be reclassified to earnings within ~~one year of the balance sheet date.~~three months for commodity contract derivatives and over 10 to 15 years for foreign currency forward exchange contracts. The ineffective portion of all hedges, if any, is recognized currently in earnings.

The fair ~~value~~values of outstanding derivative contracts recorded as assets and liabilities in the accompanying ~~September 30, 2009~~ Condensed Consolidated Balance ~~Sheet~~Sheets were as follows:

	Fair Values of Derivative Contracts
(In thousands)	Other current assets		Other assets		Other current liabilities

At September 30, 2010:
Derivatives designated as hedging instruments:
Commodity contracts	$	36	$	—	$	—
Cross-currency interest rate swap	—		32,406		—
Foreign currency forward exchange contracts	—		—		5
Total derivatives designated as hedging instruments	$	36	$	32,406	$	5

Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts	$	2,820	$	—	$	4,040

At December 31, 2009:
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts	$	—	$	—	$	14
Cross-currency interest rate swap	—		7,357		—
Total derivatives designated as hedging instruments	$	—	$	7,357	$	14

Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts	$	2,187	$	—	$	590

Fair Values of Derivative Contracts
At September 30, 2009
(In thousands) Other current assets Other assets Other current liabilities
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts $ — $ — $ 36
Commodity contracts 212 — 1,449
Cross-currency interest rate swap — 7,779 —
Total derivatives designated as hedging instruments $ 212 $ 7,779 $ 1,485
Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts $ 1,233 $ — $ 1,035

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The effect of derivative instruments on the Condensed Consolidated Statements of Income and the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2010 and 2009 was as follows:

Derivatives Designated as Hedging Instruments
(In thousands) Amount of Loss Recognized in Other Comprehensive Income (“OCI”) on Derivative - Effective Portion Location of Loss Reclassified from Accumulated OCI into Income - Effective Portion Amount of Loss Reclassified from Accumulated OCI into Income - Effective Portion Location of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing Amount of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing
For the three months ended
September 30, 2009:

Foreign currency forward exchange contracts $ (57 ) Cost of services and products sold $ (8 ) $ —
Commodity contracts (1,130 ) Service Revenues (923 ) Service Revenues 259
Cross-currency interest rate swap (1,494 ) — Cost of services and products sold (7,920 ) (a)
$ (2,681 ) $ (931 ) $ (7,661 )

~~- 18 - -~~

Derivatives Designated as Hedging Instruments

(In thousands)	Amount of Gain (Loss) Recognized in Other Comprehensive Income (“OCI”) on Derivative - Effective Portion			Location of Gain (Loss) Reclassified from Accumulated OCI into Income - Effective Portion	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income - Effective Portion			Location of Gain (Loss) Recognized in Income on Derivative -Ineffective Portion and Amount Excluded from Effectiveness Testing	Amount of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing
For the three months ended September 30, 2010:
Foreign currency forward exchange contracts	$	5			$	—			$	—
Commodity contracts	40			Cost of services and products sold	(1		)	Cost of services and products sold	26
Cross-currency interest rate swap	1,426				—			Cost of services and products sold	(23,052		) (a)

	$	1,471			$	(1	)		$	(23,026	)

For the three months ended September 30, 2009:
Foreign currency forward exchange contracts	$	(57	)	Cost of services and products sold	$	(8	)		$	—
Commodity contracts	(1,130		)	Service revenues	(923		)	Service revenues	259
Cross-currency interest rate swap	(1,494		)		—			Cost of services and products sold	(7,920		) (a)

	$	(2,681	)		$	(931	)		$	(7,661	)

Derivatives Designated as Hedging Instruments
(In thousands) Amount of Loss Recognized in Other Comprehensive Income (“OCI”) on Derivative - Effective Portion Location of Gain Reclassified from Accumulated OCI into Income - Effective Portion Amount of Gain Reclassified from Accumulated OCI into Income - Effective Portion Location of Loss Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing Amount of Loss Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing
For the nine months ended
September 30, 2009:

Foreign currency forward exchange contracts $ (54 ) $ — $ —
Commodity contracts (3,334 ) Service Revenues 2,272 Service Revenues (243 )
Cross-currency interest rate swap (31,947 ) — Cost of services and products sold (9,707 ) (a)
$ (35,335 ) $ 2,272 $ (9,950 )

~~(a)~~

~~The net losses offset foreign currency fluctuation effects on the debt principal.~~

Derivatives Not Designated as Hedging Instruments
Amount of Loss Recognized in Income on Derivative
(In thousands) Location of Loss Recognized in Income on Derivative For the Three Months Ended September 30, 2009 For the Nine Months Ended September 30, 2009
Foreign currency forward exchange contracts Cost of services and products sold $ (1,946 ) $ (8,704 )

~~Note:~~

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

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Derivatives Designated as Hedging Instruments

(In thousands)	Amount of Gain (Loss) Recognized in Other Comprehensive Income (“OCI”) on Derivative - Effective Portion			Location of Gain (Loss) Reclassified from Accumulated OCI into Income - Effective Portion	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income - Effective Portion			Location of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing	Amount of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing
For the nine months ended September 30, 2010:
Foreign currency forward exchange contracts	$	144			$	—			$	—
Commodity contracts	7			Cost of services and products sold	(26		)	Cost of services and products sold	6
Cross-currency interest rate swap	13,989				—			Cost of services and products sold	11,059		(a)

	$	14,140			$	(26	)		$	11,065

For the nine months ended September 30, 2009:
Foreign currency forward exchange contracts	$	(54	)		$	—			$	—
Commodity contracts	(3,334		)	Service revenues	2,272			Service revenues	(243		)
Cross-currency interest rate swap	(31,947		)		—			Cost of services and products sold	(9,707		) (a)

	$	(35,335	)		$	2,272			$	(9,950	)

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

Derivatives Not Designated as Hedging Instruments

	Location of Gain (Loss) Recognized in	Amount of Gain (Loss) Recognized in Income on Derivative for the Three Months Ended September 30 (a)
(In thousands)	Income on Derivative	2010			2009

Foreign currency forward exchange contracts	Cost of services and products sold	$	(5,495	)	$	(1,946	)

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

Derivatives Not Designated as Hedging Instruments

	Location of Gain (Loss) Recognized in	Amount of Gain (Loss) Recognized in Income on Derivative for the Nine Months Ended September 30 (a)
(In thousands)	Income on Derivative	2010		2009

Foreign currency forward exchange contracts	Cost of services and products sold	$	2,591	$	(8,704	)

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

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Commodity Derivatives

The Company periodically uses derivative instruments to hedge cash flows associated with purchase or selling price exposure to certain commodities. The Company’s commodity derivative activities are subject to the management, direction and control of the Company’s Risk Management Committee, which approves the use of all commodity derivative instruments.

At September 30, ~~2009,~~2010, the Company’s open commodity derivative contract positions qualified as cash flow hedges under the requirements for hedge accounting and consisted of unsecured swap contracts maturing ~~monthly through~~in December ~~2009.~~2010. The notional value of these contracts is equal to the hedged volume multiplied by the strike price of the derivative and totaled ~~$4.7~~$0.3 million. All contracts are with major financial institutions. In the event of non-performance by the other parties to the contracts, the Company may be exposed to credit loss. The Company evaluates the ~~credit worthiness~~credit-worthiness of the counterparties and does not expect default by them.

There were no commodity derivative contracts outstanding at December 31, 2009.

Although earnings volatility may occur between fiscal quarters due to hedge ineffectiveness, or if the derivatives do not qualify as cash flow hedges under hedge accounting standards, the economic substance of the derivatives provides more predictable cash flows by reducing the Company’s exposure to the commodity price fluctuations.

Foreign Currency Forward Exchange Contracts

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

~~- 19 - -~~

The Company uses derivative instruments to hedge cash flows related to foreign currency fluctuations. At September 30, 2010 and December 31, 2009, the Company had ~~$207.1~~$301.9 million and $122.1 million, respectively, of contracted notional amounts of unsecured foreign currency forward exchange contracts outstanding. These contracts are part of a worldwide program to minimize foreign currency exchange operating income and balance sheet ~~exposure.~~exposure by offsetting foreign currency exposures of certain future payments between the Company and its various subsidiaries, vendors or customers. The ~~unsecured~~ contracts outstanding at September 30, ~~2009~~2010 mature at various times within ~~six~~five months and are with major financial institutions. The Company may be exposed to credit loss in the event of non-performance by the contract counterparties. The Company evaluates the credit worthiness of the counterparties and does not expect default by them. Foreign currency forward exchange contracts are used to hedge commitments, such as foreign currency debt, firm purchase commitments and foreign currency cash flows for certain export ~~sales~~sale transactions.

The following tables summarize, by major currency, the contractual notional amounts of the ~~Company~~’’sCompany’s foreign currency forward exchange contracts in U.S. dollars ~~as of~~at September 30, 2010 and December 31, 2009. The “Buy” amounts represent the U.S. dollar equivalent of commitments to purchase foreign currencies, and the “Sell” amounts represent the U.S. dollar equivalent of commitments to sell foreign currencies.

Foreign Currency Forward Exchange Contracts
(In thousands) As of September 30, 2009
Type U.S. Dollar Equivalent Maturity Recognized Gain (Loss)
British pounds sterling Sell $ 32,429 October 2009 $ 419
British pounds sterling Buy 49,538 October 2009 through March 2010 (581 )
Euros Sell 46,272 October 2009 341
Euros Buy 73,463 October 2009 through November 2009 44
Other currencies Sell 3,179 October 2009 through December 2009 (66 )
Other currencies Buy 2,217 October 2009 through December 2009 5
Total
$ 207,098 $ 162

~~Note:~~ Recognized gains and losses offset amounts recognized in cost of ~~service~~services and products sold principally as a result of intercompany or third party foreign currency exposures.

Foreign Currency Forward Exchange Contracts

At September 30, 2010
(In thousands)	Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)
British pounds sterling	Sell	$	38,770	October 2010	$	(303	)
British pounds sterling	Buy	30,430		October 2010	445
Euros	Sell	104,278		October 2010 through November 2010	(3,373		)
Euros	Buy	112,201		October 2010 through November 2010	1,877
Other currencies	Sell	8,486		October 2010 through February 2011	(130		)
Other currencies	Buy	7,749		October 2010	259
Total		$	301,914		$	(1,225	)

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Foreign Currency Forward Exchange Contracts

At December 31, 2009
(In thousands)	Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)
British pounds sterling	Sell	$	715	January 2010 through March 2010	$	(18	)
British pounds sterling	Buy	3,354		January 2010	67
Euros	Sell	72,068		January 2010 through February 2010	1,820
Euros	Buy	38,967		January 2010	(346		)
Other currencies	Sell	4,155		January 2010 through February 2010	72
Other currencies	Buy	2,867		January 2010 through March 2010	(12		)
Total		$	122,126		$	1,583

In addition to foreign currency forward exchange contracts, the Company designates certain loans as hedges of net investments in foreign subsidiaries. The Company recorded gains of $36.6 million and $15.0 million during the three months ended September 30, 2010 and 2009, respectively, and a loss of $15.5 million and a gain of $15.0 million during the nine months ended September 30, 2010 and 2009, respectively, in Accumulated other comprehensive loss, which is a separate component of stockholders’ equity, related to hedges of net investments.

Cross-Currency Interest Rate Swap

In May 2008, the Company entered into a ten-year, $250.0 million cross-currency interest rate swap in conjunction with a debt issuance in order to lock in a fixed euro interest rate for $250.0 million of the issuance. Under the swap, the Company receives interest based on a fixed U.S. dollar rate and pays interest on a fixed euro rate on the outstanding notional principal amounts in dollars and euros, respectively. The cross-currency interest rate swap is recorded in the ~~consolidated balance sheet~~Condensed Consolidated Balance Sheets at fair value, with changes in value attributed to the effect of the swaps’ interest spread recorded in Accumulated other comprehensive loss, ~~or income,~~ which is a separate component of equity. Changes in value attributed to the effect of foreign currency fluctuations are recorded in the ~~income statement~~Condensed Consolidated Income Statement and offset currency fluctuation effects on the debt principal.

Fair Value of Derivative Assets and Liabilities and Other Financial Instruments

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

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

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

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

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

~~- 20 - -~~

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

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

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

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

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The following table indicates the different financial instruments of the Company at September 30, ~~2009~~2010 and December 31, ~~2008, all of the Company’s derivative assets and liabilities were classified as~~ 2009.

Level 2 inFair Value Measurements

(In thousands)	September 30 2010		December 31 2009
Assets
Foreign currency forward exchange contracts	$	2,820	$	2,187
Commodity derivatives	36		—
Cross-currency interest rate swap	32,406		7,357

Liabilities
Foreign currency forward exchange contracts	4,045		604

Level 3 Fair Value Measurements

(In thousands)	September 30 2010		December 31 2009
Liabilities
Contingent consideration for acquisitions	$	3,620	$	9,735

The following table reconciles the ~~fair value hierarchy. These assets~~beginning and ending balances for liabilities ~~had~~measured on a ~~fair value of $9.2 million~~recurring basis using unobservable inputs (Level 3) for the three months and ~~$2.5 million, respectively, at~~nine months ended September 30, ~~2009 and $61.2 million and $4.0 million, respectively, at December 31, 2008.~~

2010. There were no Level 3 liabilities for the corresponding periods in 2009.

Level 3 Liabilities - Contingent Consideration

(In thousands)	Three Months Ended September 30 2010			Nine Months Ended September 30 2010
Balance at beginning of period	$	4,722		$	9,735
Acquisitions during the period	—			4,618
Fair value adjustments included in earnings	(1,102		)	(10,733		)
Balance September 30, 2010	$	3,620		$	3,620

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

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and short-term borrowings approximate fair value due to the short-term maturities of these assets and liabilities. At September 30, ~~2009,~~2010, and December 31, ~~2008,~~2009, total fair value of long-term debt, including current maturities, was ~~$968~~$1,237.7 million and ~~$900~~$965.5 million, respectively, compared to carrying value of ~~$923~~$1,170.4 million and ~~$895~~$927.5 million, respectively. Fair values for debt are based on quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities.

~~L. 2008~~

M. Restructuring Programs

2010 Restructuring Program

As a result of the ~~deepening~~continued financial and economic ~~crisis,~~downturn, the Company ~~initiated~~implemented additional actions in 2010 to further reduce its cost structure and close certain facilities. The Harsco Infrastructure and Harsco Metals Segments recorded net pre-tax restructuring charges totaling $2.4 million and $14.4 million in the quarter and nine months ended

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September 30, 2010, respectively, in the Other (income) expense line of the Condensed Consolidated Income Statements. These restructuring actions are expected to be completed over the next 12 months, but principally during the remainder of 2010.

Through September 30, 2010, the Company completed workforce reductions related to these actions of 261 employees of a total expected workforce reduction of 416 employees. Remaining workforce reductions and costs to exit activities are targeted for completion during the remainder of 2010.

The Company anticipates that a comprehensive restructuring ~~program~~plan will be developed, approved and announced in the fourth quarter of ~~2008.~~2010 with resulting cost reductions that should benefit the operating results for 2011 and beyond in the Harsco Infrastructure Segment. The plan is being developed to further streamline and reduce the cost base in this business to better align it to expected near-term end-market conditions and could materially impact the fourth quarter 2010 results. In October 2010, a plan to rationalize certain North America products was approved. This will result in the disposal of rental assets and reduce pre-tax income by approximately $9 million (net of scrap or sale proceeds) in the fourth quarter of 2010.

2008 Restructuring Program

The 2008 program was designed to improve organizational efficiency and enhance profitability and ~~shareholder~~stockholder value by generating sustainable operating expense savings. Under this program, the Company is principally ~~exiting~~exited certain underperforming contracts with customers, ~~closing~~closed certain facilities and ~~reducing~~reduced the global workforce. Restructuring costs were incurred primarily in the Harsco Metals and Harsco Infrastructure Segments and recorded in the Other (income) expense line of the Condensed Consolidated Income Statements. In the fourth quarter of 2008, the Company recorded net pre-tax restructuring and other related charges totaling $36.1 million, including $28.0 million in Other expense, $5.8 million reduction in services revenue, a net $1.5 million related to pension curtailments and $0.8 million of other costs. ~~Restructuring actions are expected to be completed by December 31, 2009.~~

Through September 30, ~~2009,~~2010, the Company has completed substantially all workforce reductions ~~of 1,291 employees of a total expected workforce reduction of~~under the 2008 restructuring program totaling 1,429 employees related to ~~the fourth quarter 2008~~this restructuring program. ~~The majority of~~Remaining exit activities relate to the ~~remaining workforce reductions~~Harsco Metals Segment and ~~exit activities~~ are targeted for completion during ~~2009.~~

~~- 21 - -~~

2010. These restructuring activities were not completed in 2009 due to continued negotiations with labor unions and customers that resulted in changes to estimates of the amount of restructuring costs and the timing of their settlement.

The restructuring accrual at September 30, ~~2009~~2010 and the activity for the nine months then ended ~~September 30, 2009 attributable to each~~by segment is as follows:

(In thousands)	Accrual December 31 2009		2010 Restructuring Program Charges		Adjustments to Previously Recorded Restructuring Charges (a)			Cash Expenditures			Remaining Accrual September 30 2010

Harsco Infrastructure Segment
Employee termination benefit costs	$	122	$	6,306	$	—		$	(5,269	)	$	1,159
Cost to exit activities	—		5,139		—			(4,374		)	765
Total Harsco Infrastructure Segment	122		11,445		—			(9,643		)	1,924

Harsco Metals Segment
Employee termination benefit costs	3,317		2,180		(7		)	(4,667		)	823
Cost to exit activities	186		786		(55		)	(268		)	649
Total Harsco Metals Segment	3,503		2,966		(62		)	(4,935		)	1,472

Total	$	3,625	$	14,411	$	(62	)	$	(14,578	)	$	3,396

(a)Adjustments to previously recorded cost to exit activities resulted from changes in facts and circumstances in the implementation of these activities.

(In thousands) Accrual December 31 2008 Adjustments to Previously Recorded Restructuring Charges* Cash Expenditures Remaining Accrual September 30 2009

Harsco Infrastructure Segment
Employee termination benefit costs $ 1,806 $ 215 $ (1,641 ) $ 380
Cost to exit activities 1,963 (999 ) (863 ) 101
Total Harsco Infrastructure Segment 3,769 (784 ) (2,504 ) 481

Harsco Metals Segment
Employee termination benefit costs 9,888 — (6,807 ) 3,081
Cost to exit activities 656 (150 ) (198 ) 308
Total Harsco Metals Segment 10,544 (150 ) (7,005 ) 3,389

All Other Category - Harsco Minerals & Rail
Employee termination benefit costs 531 215 (746 ) —
Total All Other Category - Harsco Minerals & Rail 531 215 (746 ) —

Corporate
Employee termination benefit costs 113 — (113 ) —
Cost to exit activities 2,448 — (933 ) 1,515
Total Corporate 2,561 — (1,046 ) 1,515

Total $ 17,405 $ (719 ) $ (11,301 ) $ 5,385

~~Adjustments to previously recorded cost to exit activities resulted from changes in facts and circumstances that led to changes in estimated costs.~~

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The majority of the remaining cash expenditures of ~~$5.4~~$3.4 million related to ~~the 2008~~these actions are expected to be paid ~~within~~throughout the remainder of 2010. There were no significant restructuring actions in 2009.

N. Income Taxes

Income tax expense from continuing operations increased due to lower earnings from continuing operations in jurisdictions with lower tax rates, resulting in an increase in the effective income tax rate from continuing operations. The effective income tax rate relating to continuing operations for the three and nine months ended September 30, 2010 was 25.4% and 26.2%, respectively, compared with 15.7% and 17.2%, respectively, for the three and nine months ended September 30, 2009. The effective income tax rate for the first nine months of 2009 reflected net discrete tax benefits recognized in the first quarter related to a change in the permanent reinvestment of prior-year undistributed earnings.

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, including resolutions of any related appeals or litigation processes, based on technical merits. The unrecognized income tax benefit at September 30, 2010 was $47.6 million including interest and penalties. Within the next twelve months, it is reasonably possible that up to $8.3 million of such amount will be recognized upon settlement of tax examinations and the expiration of various statutes of limitation.

O. Other (Income) Expense

This income statement classification includes restructuring costs for employee termination benefits and costs to exit activities; impaired asset write-downs; net gains or losses on the disposal of non-core assets; and business combination accounting adjustments related to recent acquisitions by the Company.

	Three Months Ended September 30						Nine Months Ended September 30
(In thousands)	2010			2009			2010			2009

Restructuring costs	$	2,089		$	7,199		$	14,494		$	12,387

Gains from sale of non-core assets	(758		)	(969		)	(6,612		)	(6,754		)

Contingent consideration adjustments	(989		)	—			(10,620		)	—

Other	541			668			718			794

Other (income) expense	$	883		$	6,898		$	(2,020	)	$	6,427

For the three ~~months.~~

~~M. Subsequent Events~~

~~The Company’s management has evaluated all activity of the Company through November 5, 2009 (the issue date of the consolidated financial statements)~~months and ~~concluded that subsequent events are properly reflected~~nine months ended September 30, 2010, restructuring costs were incurred principally in the ~~Company’s financial statements and notes as required by standards for accounting and disclosure of subsequent events.~~

Harsco Infrastructure Segment.

~~ITEM 2.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

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 financial statements as well as the Company’s annual Form 10-K for the year ended December 31, ~~2008,~~2009, which included additional information about the Company’s critical accounting policies, contractual obligations, practices and the transactions that support the financial results, and provided a more comprehensive summary of the Company’s outlook, trends and strategies for ~~2009~~2010 and beyond.

~~- 22 - -~~

Throughout this discussion, segment information for prior periods has been reclassified to conform with the current presentation. The Harsco Rail operating segment, which was previously a component of the All Other Category, is now reported separately.

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Forward-Looking Statements

The nature of the Company’s business and the many countries in which it operates subject it to changing economic, competitive, regulatory and technological conditions, risks and uncertainties. In accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary remarks regarding important factors ~~which,~~that, among others, could cause future results to differ materially from the forward-looking statements, expectations and assumptions expressed or implied herein. Forward-looking statements contained herein could include, among other things, statements about our management confidence and strategies for performance; expectations for new and existing products, technologies and opportunities; and expectations regarding growth, sales, cash flows, earnings and Economic Value Added (“EVA®”). These statements can be identified by the use of such terms as “may,” “could,” “expect,” “anticipate,” “intend,” ~~“believe,”~~“believe” or other comparable terms.

Factors ~~which~~that could cause results to differ include, but are not limited to: (1) changes in the worldwide business environment in which the Company operates, including general economic conditions; (2) changes in currency exchange rates, interest rates, commodity and fuel costs and capital costs; (3) changes in the performance of stock 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, tax and import tariff standards; (5) market and competitive changes, including pricing pressures, market demand and acceptance for new products, services and technologies; (6) 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; (7) the seasonal nature of the business; (8) our ability to successfully enter into new contracts and complete new acquisitions or joint ventures in the timeframe ~~contemplated;~~contemplated or at all; (9) the integration of the Company’s strategic acquisitions; (10) the amount and timing of repurchases of the Company’s common stock, if any; (11) the ongoing global financial and credit crisis, which could result in our customers curtailing development projects, construction, production and capital expenditures, which, in turn, could reduce the demand for our products and services and, accordingly, our sales, margins and profitability; (12) the financial condition of our customers, including the ability of customers (especially those that may be highly leveraged and those with inadequate liquidity) to maintain their credit availability; (13) our ability to successfully implement cost-reduction initiatives; and ~~(13)~~(14) other risk factors listed from time to time in the Company’s SEC reports. A further discussion of these, along with other potential factors, can be found in Part I, Item 1A, “Risk Factors,” of the Company’s Form 10-K for the year ended December 31, ~~2008.~~2009. The Company cautions that these factors may not be exhaustive and that many of these factors are beyond the Company’s ability to control or predict. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. The Company undertakes no duty to update forward-looking statements except as may be required by law.

Executive Overview

Revenues for the Company during the third quarter of ~~2009, the global recession continued to significantly impact the Company’s results. As~~2010 were $752.4 million compared with $744.2 million in 2009. The Company generated higher revenues in the ~~first half~~third quarter of ~~2009, major challenges included~~2010 in the ~~strength of the U.S. dollar compared~~Harsco Metals Segment due to ~~2008; unprecedented low~~an increase in customer steel production. This was partially offset by weaker global ~~steel production; and a lack of available credit that continued to adversely impact~~ non-residential construction ~~projects worldwide. Although~~demand within the Harsco Infrastructure Segment. Foreign currency translation decreased revenues by $15.9 million for the third quarter 2010 in comparison with last year. Incremental revenues for the Harsco Infrastructure Segment included $20.9 million from acquisitions in the Asia-Pacific, Latin America and Middle East and Africa regions for the three months ended September 30, 2010 compared with last year.

Revenues by Segment	Three Months Ended September 30							Percentage Change from 2009 to 2010
								Price/
(Dollars in millions)	2010		2009		Change			Volume		Currency		Total
Harsco Infrastructure	$	253.6	$	279.5	$	(25.9	)	(5.0	)%	(4.3	)%	(9.3	)%
Harsco Metals	313.2		275.1		38.1			15.3		(1.5	)	13.8
Harsco Rail	70.7		77.2		(6.5		)	(8.5	)	0.1		(8.4	)
All Other Category	114.9		112.4		2.5			2.0		0.2		2.2
Corporate	—		—		—			—		—		—
Total Revenues	$	752.4	$	744.2	$	8.2		3.2	%	(2.1	)%	1.1	%

Revenues for the first nine months of 2010 were $2.3 billion, $63.2 million higher than in the same period for 2009. The Company ~~has begun~~generated higher revenues for the first nine months of 2010 in the Harsco Metals Segment due to ~~see some improvement~~an increase in global steel production and ~~an abatement~~in the Harsco Rail Segment due to shipments under existing contracts. This was offset by weaker demand during the first nine months within the Harsco Infrastructure Segment due to distressed market conditions in global non-residential construction. Foreign currency translation increased revenues by $10.1 million for the first nine

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months of 2010 in comparison with last year. Incremental revenues for the Harsco Infrastructure Segment included $61.0 million from acquisitions in the Asia-Pacific, Latin America and Middle East and Africa regions for the nine months ended September 30, 2010 compared with last year.

Revenues by Segment	Nine Months Ended September 30							Percentage Change from 2009 to 2010
(Dollars in millions)	2010		2009		Change			Price/ Volume		Currency		Total
Harsco Infrastructure	$	766.9	$	872.0	$	(105.1	)	(10.9	)%	(1.2	)%	(12.1	)%
Harsco Metals	927.1		773.0		154.1			17.7		2.2		19.9
Harsco Rail	252.4		231.4		21.0			8.6		0.5		9.1
All Other Category	334.8		341.6		(6.8		)	(2.6	)	0.6		(2.0	)
Corporate	0.1		0.1		—			—		—		—
Total Revenues	$	2,281.3	$	2,218.1	$	63.2		2.4	%	0.5	%	2.9	%

The following factors contributed positively to the Company’s results in the first nine months of 2010:

·Increased global steel production by the customers served by the Company;

·Continued strong performance of Harsco Rail resulting from increased shipments and leaner operations;

·Increased metals pricing benefitting Harsco Minerals;

·A slightly weaker U.S. dollar during 2010 compared with 2009;

·Prudent capital spending, contributing to ~~prior quarters,~~higher discretionary cash flows;

·Further implementation of internal countermeasures to improve efficiency and avoid unnecessary costs; and

·The Company’s global continuous improvement initiative.

These positive factors were partially offset by the following major challenges, ~~remain with~~emanating from the global recession which began in 2008 and continued to negatively impact the Harsco Infrastructure Segment during the first nine months of 2010:

·A lack of meaningful commercial and multi-family construction projects being cancelled or postponed due to unavailability of credit. Additionally, pricing pressures are also having a negative impact as competitors pursue remaining projects and customers seek price reductions. The Company does not anticipate substantial improvement in these business drivers in the fourth quarter of 2009. Global governments’ commitments for stimulus packages to fund infrastructure projects throughout the world have not had a major impact in most of the Company’s markets, as funds have not been disbursed or have not yet resulted in a significant increase in project starts. The Company does not expect any substantial impact from stimulus projects.

The Company’s third quarter 2009 revenues from continuing operations totaled $744.2 million, a decrease of $300.7 million or 29% from the third quarter of 2008. The Company experienced lower volume levels resulting from a deterioration of global steel markets and weaker demand for infrastructure services, particularlyactivity in the United ~~Kingdom, North America~~States and ~~several other key European countries. Foreign currency translation decreased sales by $53.2 million and accounted for approximately 18%~~across Europe due to the depressed demand;

·Reduced demand in the Gulf Region of the ~~decline~~Middle East due to the Dubai sovereign debt crisis;

·Pricing pressures as global customers continued to seek lower cost solutions and increased competition for remaining projects; and

·Postponements, deferrals and cancellation of jobs and projects.

The Company continues to execute on its geographic expansion strategy, as revenues from targeted growth markets were approximately 25% of total revenues in ~~sales.~~ the first nine months of 2010, compared with 21% for the first nine months of 2009 and 23% for calendar year 2009.

Revenues by Region	Three Months Ended September 30							Percentage Change from 2009 to 2010
(Dollars in millions)	2010		2009		Change			Price/ Volume		Currency		Total
Western Europe	$	297.3	$	310.0	$	(12.7	)	2.4	%	(6.5	)%	(4.1	)%
North America	258.9		256.6		2.3			0.7		0.2		0.9
Latin America (a)	76.0		53.0		23.0			37.8		5.6		43.4
Middle East and Africa	45.7		59.7		(14.0		)	(24.8	)	1.4		(23.4	)
Asia-Pacific	41.6		31.2		10.4			26.1		7.3		33.4
Eastern Europe	32.9		33.7		(0.8		)	4.7		(7.1	)	(2.4	)
Total Revenues	$	752.4	$	744.2	$	8.2		3.2	%	(2.1	)%	1.1	%

(a)Includes Mexico.

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Revenues by Region	Nine Months Ended September 30							Percentage Change from 2009 to 2010
(Dollars in millions)	2010		2009		Change			Price/ Volume		Currency		Total
Western Europe	$	892.7	$	923.4	$	(30.7	)	(0.7	)%	(2.6	)%	(3.3	)%
North America	826.1		823.0		3.1			(0.1	)	0.5		0.4
Latin America (a)	212.5		134.9		77.6			46.4		11.1		57.5
Middle East and Africa	151.6		172.0		(20.4		)	(14.7	)	2.8		(11.9	)
Asia-Pacific	114.7		78.6		36.1			32.6		13.3		45.9
Eastern Europe	83.7		86.2		(2.5		)	(2.6	)	(0.3	)	(2.9	)
Total Revenues	$	2,281.3	$	2,218.1	$	63.2		2.4	%	0.5	%	2.9	%

(a)Includes Mexico.

Operating income from continuing operations for the third quarter and first nine months of 2010 was $44.1 million and $134.2 million, respectively, compared with $56.4 million ~~compared~~and $164.0 million, respectively, for the same periods in 2009. The decrease in operating income was driven by the depressed non-residential construction market and pricing pressures for the first nine months of 2010 in the Harsco Infrastructure Segment. This was partially offset by increased steel production at customer sites in the Harsco Metals Segment and increased shipments in the Harsco Rail Segment coupled with ~~$133.9 million in 2008, a decrease of 58%.~~benefits from restructuring actions and countermeasures implemented over the past two years throughout the Company. Diluted earnings per share from continuing operations for the third quarter of 2010 were $0.26 compared with $0.40 ~~a 60% decrease~~for the third quarter of 2009. For the first nine months of 2010, diluted earnings per share from ~~2008.~~ continuing operations were $0.76 compared with $1.17 in the first nine months of 2009.

Third quarter 2009 results also included a net non-cash charge of $0.11 per share in the Metals Segment for adjustments to correct errors generated principally by the improper recognition of certain revenues and ~~delaying~~ the delayed recognition of certain expenses by one subsidiary, in one country, during the ~~past~~prior three years. The Company assessed the individual and aggregate impact of these adjustments on the current year and all prior periods and determined that the cumulative effect of the adjustments was not material to the full year 2009 results and it did not result in a material misstatement to any previously issued annual or quarterly financial statements. Consequently, the Company recorded the net adjustment in the current quarter and has not revised any previously issued annual financial statements or interim financial data.

~~- 23 - -~~

Revenues for the first nine months of 2009 were $2.2 billion, a decrease of $914.2 million or 29% from the first nine months of 2008. Operating income from continuing operations was $164.0 million compared with $379.1 million in the first nine months of 2008, a 57% decrease. Diluted earnings per share from continuing operations were $1.17, a 57% decrease from the first nine months of 2008. Foreign currency translation decreased revenues and operating income for the first nine months of 2009 by $309.0 million and $32.8 million, respectively, in comparison with the first nine months of 2008. Revenues from emerging markets were approximately 21% of total revenues for the first nine months of both 2009 and 2008.

In response to further deterioration of global markets during 2009, the Company supplemented its 2008 restructuring initiatives with additional countermeasures targeting expense reduction, revenue enhancement and asset optimization. The combination of the 2008 and 2009 countermeasures have enabled the Company to make substantial progress in reducing its cost structure and the related savings will continue to benefit the fourth quarter of 2009 and beyond. The Company’s actions to minimize its cost base include, but are not limited to, the following:

·	redeployment of its mobile asset base in the Harsco Infrastructure and Harsco Metals Segments to focus on market segments that remain strong and provide growth opportunities, such as the relocation of infrastructure rental assets from the United Kingdom to the Middle East and Asia Pacific;

·	~~reduction in the global workforce of approximately 4,000 employees since September 2008 and substantial reductions in discretionary spending;~~

·	~~continued expansion of the Company’s LeanSigma~~® ~~continuous improvement initiative;~~

·	~~substantial reductions in capital spending;~~

·	~~strengthening certain key positions in the global leadership team;~~

·	~~implementation of supply chain optimization initiatives; and~~

·	~~implementation of further countermeasures to improve efficiency and remove unnecessary costs.~~

The Company continues to have significant available liquidity and remains well-positioned from a financial flexibility perspective. Net cash generated from ~~operations~~operating activities was $110.3 million for the ~~third quarter and~~three months ended September 30, 2010, compared with $120.4 million in 2009. For the first nine months of 2009 is less than comparable periods in 2008, but was offset by decreased capital expenditures compared with prior years. This has allowed the Company to further enhance its balance sheet, maintain its dividend, reduce debt to the extent possible under borrowing agreements and pursue prudent, bolt-on acquisitions that are consistent with the Company’s growth strategies. During the third quarter of 2009,2010, the Company generated net cash from operating activities of ~~$120.4~~$236.0 million compared with ~~$171.6 million achieved in the third quarter of 2008. For the first nine months of 2009, the Company generated net cash from operating activities of~~ $276.7 ~~million compared with $382.0~~ million for the first nine months of ~~2008. For~~2009. Capital expenditures in 2010 were modestly higher than in 2009 as the ~~first nine months~~Company continued to effectively utilize the mobility of ~~2009,~~its asset base to reduce new capital ~~expenditures~~investments. In September 2010, the Company completed a $250 million bond offering that bears interest at 2.7% and matures in October 2015. The net proceeds of this issuance were ~~$123.1~~used to repay, in part, 200 million British pound sterling-denominated 7.25% notes (approximately $316 million) that matured October 27, 2010. This additional debt at September 30, 2010 caused the Company’s debt to capital ratio to increase to 43.3% at September 30, 2010 compared with ~~$380.9 million~~39.5% at December 31, 2009 (the lowest year-end ratio since 1998) and 38.5% at September 30, 2009. Additional commercial paper borrowings were made subsequent to September 30, 2010, to repay the remainder of the British pound sterling-denominated notes in excess of the ~~first nine months of 2008. Cash flow~~proceeds from ~~operations for all of 2009 is expected~~the 2010 bond issuance. Further information in regard to ~~be approximately $400 million and total capital expenditures are expected to be approximately $150 million. The~~the Company’s cash flows ~~are further~~is discussed in the ~~Liquidity~~“Liquidity and Capital ~~Resources~~Resources” section.

Segment ~~Overview~~Financial Highlights

Revenues	Three Months Ended September 30								Change
(Dollars in millions)	2010				2009				Amount			Percent
Harsco Infrastructure	$	253.6	33.7	%	$	279.5	37.5	%	$	(25.9	)	(9.3	)%
Harsco Metals	313.2		41.6		275.1		37.0		38.1			13.8
Harsco Rail	70.7		9.4		77.2		10.4		(6.5		)	(8.4	)
All Other Category	114.9		15.3		112.4		15.1		2.5			2.2
Total Revenues	$	752.4	100.0	%	$	744.2	100.0	%	$	8.2		1.1	%

Operating Income (Loss)	Three Months Ended September 30										Change
(Dollars in millions)	2010					2009					Amount			Percent
Harsco Infrastructure	$	(13.6	)	(30.8	)%	$	22.5		40.0	%	$	(36.1	)	(160.4	)%
Harsco Metals	19.4			44.0		(4.4		)	(7.8	)	23.8			540.9
Harsco Rail	14.4			32.7		14.8			26.2		(0.4		)	(2.7	)
All Other Category	24.9			56.4		24.8			43.9		0.1			0.4
Corporate	(1.0		)	(2.3	)	(1.3		)	(2.3	)	0.3			23.1
Total Operating Income	$	44.1		100.0	%	$	56.4		100.0	%	$	(12.3	)	(21.8	)%

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	Three Months Ended September 30
Operating Margins	2010		2009
Harsco Infrastructure	(5.4	)%	8.1	%
Harsco Metals	6.2		(1.6	)
Harsco Rail	20.4		19.1
All Other Category	21.7		22.1
Consolidated Operating Margin	5.9	%	7.6	%

Revenues	Nine Months Ended September 30								Change
(Dollars in millions)	2010				2009				Amount			Percent
Harsco Infrastructure	$	766.9	33.6	%	$	872.0	39.3	%	$	(105.1	)	(12.1	)%
Harsco Metals	927.1		40.6		773.0		34.9		154.1			19.9
Harsco Rail	252.4		11.1		231.4		10.4		21.0			9.1
All Other Category	334.8		14.7		341.6		15.4		(6.8		)	(2.0	)
Corporate	0.1		—		0.1		—		—			—
Total Revenues	$	2,281.3	100.0	%	$	2,218.1	100.0	%	$	63.2		2.9	%

Operating Income (Loss)	Nine Months Ended September 30										Change
(Dollars in millions)	2010					2009					Amount			Percent
Harsco Infrastructure	$	(46.5	)	(34.6	)%	$	66.3		40.4	%	$	(112.8	)	(170.1	)%
Harsco Metals	55.7			41.5		(3.0		)	(1.8	)	58.7			1,956.7
Harsco Rail	56.4			42.0		44.0			26.8		12.4			28.2
All Other Category	70.8			52.7		61.7			37.6		9.1			14.7
Corporate	(2.2		)	(1.6	)	(5.0		)	(3.0	)	2.8			56.0
Total Operating Income	$	134.2		100.0	%	$	164.0		100.0	%	$	(29.8	)	(18.2	)%

	Nine Months Ended September 30
Operating Margins	2010		2009
Harsco Infrastructure	(6.1	)%	7.6	%
Harsco Metals	6.0		(0.4	)
Harsco Rail	22.4		19.0
All Other Category	21.1		18.1
Consolidated Operating Margin	5.9	%	7.4	%

Harsco Infrastructure Segment:

The Harsco Infrastructure Segment ~~recorded~~generated lower revenue and operating income in the third quarter and first nine months of ~~2009~~2010 compared ~~to similar periods in 2008. The reductions in~~with 2009, ~~were~~ due principally to ~~reduced~~lower end-market demand ~~particularly~~driven by greatly reduced commercial and multi-family construction activity in the United ~~Kingdom, North America~~States, the United Arab Emirates and ~~several other key European countries, and negative foreign currency translation effects. Lower demand is being driven by~~across Europe, coupled with significant pricing pressures. In addition, the ~~continued~~ lack of available credit ~~that~~to certain customers has resulted in ~~cancelled and~~ delayed ~~nonresidential~~non-residential construction ~~projects, as well as a significant decline in export sales~~projects.

Significant Effects on Revenues (In millions)	Three Months Ended September 30			Nine Months Ended September 30
Revenues — 2009	$	279.5		$	872.0
Net decreased price and volume	(34.9		)	(155.7		)
Acquisitions	20.9			61.0
Impact of foreign currency translation	(11.9		)	(10.4		)
Revenues — 2010	$	253.6		$	766.9

Table of ~~infrastructure-related equipment. This Segment’s revenues in the third quarter of 2009 were $279.5 million compared with $393.3 million in the third quarter of 2008, a 29% decrease.~~Contents

Significant Effects on Operating income decreased by 63% to $22.5 million, from $60.0 million in the third quarter of 2008. Operating margins for the Segment declined by 720 basis points to 8.1% from 15.3% in the third quarter of 2008. Income:

·In comparison with the first nine months of 2008, this Segment’s revenue decreased by 27% to $872.0 million. Operating income in the first nine months of 2009 declined by 58% to $66.3 million from $156.0 million in the first nine months of 2008, and operating margins declined 540 basis points to 7.6% from 13.0%. Foreign currency translation decreased revenues and operating income for the first nine months of 2009 by $134.4 million and $16.7 million, respectively, in comparison with the first nine months of 2008. Harsco Infrastructure accounted for 38% and 39% of the Company’s revenues for the third quarter and the first nine months of 2009, respectively; and 40% of the operating income for both the third quarter and first nine months of 2010, the Segment’s operating results decreased due to reduced, deferred or cancelled non-residential, commercial and infrastructure construction spending, exacerbated by ongoing pricing pressures in all major markets globally and lower equipment utilization rates.

·In response to further deterioration of global infrastructure markets during the first nine months of 2010, this Segment continues to implement additional countermeasures targeting expense reduction, asset optimization and facility rationalization.

·Restructuring costs primarily relating to severance and exit-related costs during the third quarter and first nine months of 2010 were $1.7 million and $11.5 million, respectively. These were offset by a combination of property gains of $0.6 million during the third quarter of 2010 and $3.3 million for the first nine months of 2010 and contingent consideration adjustments of $1.0 million during the third quarter of 2010 and $10.6 million during the first nine months of 2010. See Note F, “Acquisitions,” in Part I, Item 1, Financial Statements for additional information on the contingent consideration adjustments.

·Foreign currency translation in the third quarter and first nine months of 2010 decreased operating income for this Segment by $0.4 million and $1.1 million, respectively, compared with the third quarter and first nine months of 2009.

~~Results~~

The Company anticipates that a comprehensive restructuring plan for the Harsco Infrastructure Segment will be developed, approved and announced in the fourth quarter of 2010. The plan is being developed to further streamline and reduce the cost base in this business to better align it to expected near-term end-market conditions and could materially impact the fourth quarter 2010 results. In October 2010, a plan to rationalize certain North America products was approved. This will result in the disposal of rental assets and reduce pre-tax income by approximately $9 million (net of scrap or sale proceeds) in the fourth quarter of 2010.

Harsco Metals Segment:

The Harsco Metals Segment ~~for~~generated higher revenues, operating income and margins in the third quarter and first nine months of 2010 compared with 2009 due principally to the increased global steel production of its customers and the overall weaker U.S. dollar.

Significant Impacts on Revenues (In millions)	Three Months Ended September 30			Nine Months Ended September 30
Revenues — 2009	$	275.1		$	773.0
Net increased price and volume	32.0			126.7
Impact of foreign currency translation	(4.2		)	17.1
Impact of 2009 out-of-period adjustment and other changes	10.3			10.3
Revenues — 2010	$	313.2		$	927.1

Significant Effects on Operating Income:

·Customers’ production in 2010 increased approximately 9% and 28% compared with the third quarter and first nine months of 2009, ~~reflected ongoing unprecedented~~respectively.

·During the third quarter and first nine months of 2010, this Segment’s operating income benefited from cost reduction initiatives; from sustained benefits from previously implemented restructuring actions; and from additional countermeasures implemented throughout 2009 and 2010 which have targeted expense reduction, revenue enhancement and asset optimization.

·Steel production moderated in the third quarter of 2010 compared to the first half of 2010, and is expected to further moderate in the fourth quarter of 2010 as the restocking of steel ~~production cuts~~inventories by service centers and end-customers returns to more historically normal levels.

·Foreign currency translation in the third quarter and first nine months of 2010 increased operating income for this Segment by $1.3 million and $2.8 million, respectively, compared with the third quarter and first nine months of 2009.

·The third quarter and first nine months of 2009 included an operating income decrease resulting from ~~lower end-market demand due~~a reversal of revenue improperly recognized and delayed recognition of certain expenses over the prior three years. The improperly recorded revenue related to the ~~global recession. Revenues~~failure to receive advance customer agreement and to invoice on a

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timely basis, for additional work performed for two customers; was isolated to a business unit in one country; and was considered a one-time event.

Harsco Rail Segment:

The Harsco Rail Segment generated higher revenues, operating income and margins in the first nine months of 2010 compared with 2009 due principally to shipments of orders to China and other parts of the world, coupled with cost reduction benefits as a result of continuous improvement initiatives.

Significant Impacts on Revenues (In millions)	Three Months Ended September 30			Nine Months Ended September 30
Revenues — 2009	$	77.2		$	231.4
Net increased (decreased) volume	(6.6		)	19.8
Impact of foreign currency translation	0.1			1.2
Revenues — 2010	$	70.7		$	252.4

Significant Effects on Operating Income:

·This Segment’s operating income for the third quarter of 2010 was relatively consistent with 2009, ~~for the Harsco Metals Segment were $275.1 million compared with $423.8 million in the third quarter of 2008, a 35% decrease. In comparison with~~while the first nine months of ~~2008,~~2010 increased substantially over 2009 due to shipments of equipment under existing contracts to China and other parts of the world, partially offset by lower grinding services and spare parts sales. Shipments in the fourth quarter of 2010 are expected to be less than previous quarters due to the scheduled timing of deliveries. This should result in significantly reduced revenue and operating income for this Segment in the fourth quarter of 2010. However, shipments to China are expected to resume in 2011 to approximate the revenue from China recorded in 2010 and global bidding activity is strong.

·During the third quarter and first nine months of 2010, this Segment’s ~~revenue~~operating income and margins also benefited from ongoing implementation of continuous improvement initiatives.

·Foreign currency translation in 2010 decreased operating income for this Segment by ~~$513.0~~$0.1 million for the third quarter and had relatively no impact on operating income for the first nine months of 2010 compared with the respective periods of 2009.

All Other Category — HarscoMinerals & Harsco Industrial:

The All Other Category (“Harsco Minerals & Harsco Industrial”) generated higher revenues and relatively consistent operating income leading to ~~$773.0 million. Volume decreases attributable~~a slight decrease in operating margin in the third quarter compared with 2009. During the first nine months of 2010, the All Other Category generated lower revenues and increased operating income leading to ~~steel production cuts drove 67%~~a higher operating margin compared with 2009. The decrease in revenues for the first nine months of 2010 was primarily due to reduced market demand for certain industrial products. However, higher metals selling prices for Harsco Minerals partially offset the ~~reduction in~~

impact of these market conditions within the operating income results.

~~LeanSigma® is a registered trademark~~

Table of ~~TBM Consulting Group, Inc.~~

~~- 24 - -~~

~~year-over-year sales; negative foreign currency translation contributed 31%~~Contents

Significant Impacts on Revenues (In millions)	Three Months Ended September 30			Nine Months Ended September 30
Revenues — 2009	$	112.4		$	341.6
Air-cooled heat exchangers	7.3			(22.7		)
Industrial grating products	(6.8		)	(17.7		)
Roofing granules and abrasives	(3.1		)	(0.3		)
Minerals and recycling technologies	5.9			33.6
Impact of foreign currency translation	0.1			2.2
Other changes not individually discussed	(0.9		)	(1.9		)
Revenues — 2010	$	114.9		$	334.8

Significant Effects on Operating Income:

·The air-cooled heat exchangers business experienced an increase in operating income in the third quarter, but an overall decrease during the first nine months of 2010 compared with 2009 due to reduced customer demand earlier in the ~~decline; and~~year. There has been modest improvement in demand through the ~~remainder was attributable~~year within the natural gas industry.

·Operating income in the industrial grating products business decreased in 2010 due to lower demand stemming from the ~~revenue reversal adjustment. Including this adjustment, this Segment generated operating losses of $4.4 million and $3.0 million during~~economic downturn as compared with the third quarter and first nine months of 2009, ~~respectively. This is compared with operating~~partially offset by lower raw material costs.

·Operating income ~~of $33.3 million~~for the minerals and ~~$99.6 million~~recycling technologies business increased in the third quarter and first nine months of 2008, respectively. Foreign currency translation decreased revenues and operating income for the first nine months of 2009 by $156.6 million and $13.9 million, respectively, in comparison with the first nine months of 2008. Harsco Metals accounted for 37% and 35% of the Company’s revenues for the third quarter and the first nine months of 2009, respectively.

~~The All Other Category (“Harsco Minerals & Rail”), revenues in the third quarter of 2009 were $189.6 million~~2010 compared with $227.7 million in the third quarter of 2008, a decrease of 17%. Operating income decreased by 6% to $39.6 million, from $42.0 million in the third quarter of 2008 due principally to volume and commodity price declines in the minerals business and an overall market decline in the industrial grating products business. Despite the revenue and income decline, operating margins for the All Other Category increased by 250 basis points to 20.9% from 18.4% in the third quarter of 2008. Comparing the first nine months of 2009 to the first nine months of 2008, revenues decreased 11% to $573.0 million from $644.8 million, respectively, and operating income decreased 17% to $105.7 million from $128.0 million, respectively. Operating margins for the first nine months of 2009 decreased 130 basis points to 18.5% from 19.8% in the first nine months of 2008. The Harsco Rail business recorded increased revenues in the third quarter and first nine months of 2009 compared with the prior year periods due to shipments of equipment to China under contracts with the China Ministry of Railways. The minerals business continued to be adversely impacted by a lack of metals production and fluctuating commoditysignificantly higher metal prices and the industrial products business experienced an overall market decline as customers reduced stock levels from high 2008 inventory levels. The All Other Category accounted for 26% of the Company’s revenues for both the third quarter and first nine months of 2009; and 70% and 65% of the operating income for the third quarter and first nine months of 2009, respectively.

~~Outlook Overview~~

The Company’s operations span several industries and products as more fully discussed in Part I, Item 1, “Business,” of the Company’s Form 10-K for the year-ended December 31, 2008. On a macro basis, the Company is affected by: non-residential and infrastructure construction and infrastructure maintenance and capital improvement activities; worldwide steel production; industrial production volume and maintenance activity; and the general business trend towards the outsourcing of services. The overall outlook for the fourth quarter of 2009 and beyond for most of these business drivers remains challenging due to the impact of the global recession. While some signs of recovery have begun to appear, it appears more substantial benefits of a general economic upswing and government stimulus packages will be delayed into 2010.

The overall strength of the U.S. dollar in 2009 compared to 2008 is expected to have a significant negative impact on the Company’s performance for the full year 2009. While the U.S. dollar weakened in the third quarter of 2009, the positive impact that a weakened U.S. dollar may provide in the fourth quarter is not expected to offset the effect of the stronger U.S. dollar for the first nine months of 2009. Additionally, the Company’s pension plans’ assets declined in value at December 31, 2008, consistent with the weakening economy, resulting in significantly increased defined benefit net periodic pension cost during 2009. Therefore, net periodic pension cost is expected to be approximately $3 million higher ~~in the fourth quarter of 2009 compared with the fourth quarter of 2008.~~

In the fourth quarter of 2008, the Company implemented a restructuring program designed to improve organizational efficiency and enhance profitability and stockholder value. The restructuring program included exiting certain underperforming contracts with customers in the metals business, closing certain facilities and reducing the Company’s global workforce. The actions taken in 2008 were supplemented by additional countermeasurescustomer demand.

·Countermeasures targeting expense reduction, revenue enhancement and asset optimization continue to be implemented in these businesses, positively contributing to operating income and operating margins in 2010.

·Certain commodity prices, which affect the Harsco Minerals business, have increased in comparison with last year and are expected to have a positive effect on fourth quarter 2010 results.

·Foreign currency translation did not have a significant effect on operating income for this category in the third quarter or first nine months of 2010 compared with the respective periods for 2009.

Outlook, Trends and Strategies

Challenges experienced throughout ~~2009. The cost savings~~2010 in the Harsco Infrastructure Segment are expected to continue through the end of the year. Recovery is still not evident in many of the non-residential and commercial construction markets served by the Harsco Infrastructure Segment, as the global economic recession and market uncertainty have resulted in infrastructure project delays, scope reductions or cancellations. Austerity measures being implemented by governments and companies in Europe, particularly in the United Kingdom, coupled with increased competitive pricing pressures and lower equipment utilization rates are expected to continue to negatively impact the Harsco Infrastructure Segment’s operating results.

In the Harsco Metals Segment, global steel production in 2010 has recovered from record lows experienced in 2009, but third quarter 2010 activity moderated from the ~~combination~~first half of the ~~2008~~year. Steel production is expected to further moderate in the fourth quarter of 2010 as the restocking of steel inventories by service centers and ~~2009 countermeasures will manifest themselves throughout~~end-customers returns to more historically normal levels. Certain commodity prices, which affect the ~~remainder~~Harsco Minerals business, have increased in comparison with last year and are expected to have a positive effect on fourth quarter 2010 results. The timing of ~~2009 and beyond. Targeted reductions~~rail equipment deliveries in ~~capital spending, coupled with redeployment~~the Harsco Rail Segment, which were accelerated into the first six months of ~~equipment from slowing markets into strategically important, growing markets will also help control cash flow and contribute~~2010 at the request of a major customer, is expected to ~~liquidity. The~~result in lower operating income for the Harsco Rail Segment in the fourth quarter of 2010. However, shipments are expected to resume at previous annual levels in 2011.

Despite a level of uncertainty remaining in global economic conditions, especially in the Harsco Infrastructure Segment, the Company ~~is confident~~believes it continues to be well-positioned to capitalize on opportunities in the near to long-term based on its strong balance sheet, available liquidity and ability to generate strong operating cash flows, position it to take advantage of reversing economic trends as they occur. Current economic conditions may provide the Company with expansion opportunities to pursue its prudent acquisition strategy of seeking bolt-on acquisitions.

The long-term outlook across the global footprint of the Harsco Infrastructure business remains positive. The near-term outlook however, is challenging due to the global economic climate, principally the lack of available credit that has resulted in cancelled or delayed projects, pricing pressures and the lack of stimulus spending for infrastructure projects. This Segment will leverage its global breadth and mobile asset base to relocate equipment to focus on: emerging markets as well as ~~market segments that remain stable~~its demonstrated ability to execute appropriate countermeasures. Countermeasures such as ~~infrastructure maintenance services; institutional services such as hospitals~~ongoing cost-reduction initiatives; the Company’s globally integrated enterprise initiative (“One Harsco”); and ~~education; and global infrastructure work. Operating performance for this Segment in~~ the long term is expected to continue to benefit from: the execution of numerous global government stimulus packages which are expected to fund much needed infrastructure projects; selective strategic investments and acquisitions in existing and new

~~- 25 - -~~

~~markets; enterprise business optimization opportunities including new technology applications; consolidated procurement, logistics and supply chain initiatives; and LeanSigma continuous improvement.~~

The long-term outlook for the Harsco Metals Segment remains stable as the global steel market is expected to grow at more historical rates over the long-term. The key factor behind this anticipated growth is the demand from emerging economies for significant infrastructure development needs. The near-term outlook, however, is cautious because of the uncertainty of economic recovery in the U.S. and Europe. The global recession deeply cut into demand for steel and associated steel production. Steel demand has begun to show signs of stabilization and a mild recovery is anticipated in 2010. It is expected that some of the negative impact from steel volume reductions will be mitigated by improved overall contract performance, new contract signings and cost optimization initiatives being implemented by the Company. The Segment continues to engage in enterprise business optimization initiatives including the LeanSigmaCompany’s continuous improvement program ~~which over time is expected to result in broad-scale improvement in business practices~~have significantly reduced, and consequently, operating margin. In addition, new contract signings and start-ups, as well as the Company’s geographic expansion strategy, particularly in emerging markets, are expected to gradually have a positive effect on results in the longer term.

For the All Other Category (Harsco Minerals & Rail), the long-term outlook also remains positive, as recovery from the global recession will provide opportunity to expand activity in the businesses. The near-term outlook for the minerals business will benefit if steel production levels continue their gradual improvement. The Company’s railway track maintenance services and equipment business continues to have a strong order backlog, although quarterly performance could be influenced by the timing of completed unit deliveries. The industrial products businesses willshould continue to show some short-term weakness as end market drivers remain soft due to the slow pace of the industrial recovery in North America. Longer term, the Company also anticipates new contract opportunities for its minerals business and potential geographic expansion opportunities within its industrial products businesses.

Revenues by Region

Total Revenues
Three Months Ended
September 30

Percentage Change From
2008 to 2009

(Dollars in millions) 2009 2008 Volume/Price Currency Total
Western Europe $ 310.0 $ 450.8 (23.4 )% (7.8 )% (31.2 )%
North America 256.6 363.2 (29.0 ) (0.4 ) (29.4 )
Middle East and Africa 59.7 69.4 (14.3 ) 0.3 (14.0 )
Latin America (a) 53.0 72.5 (17.5 ) (9.4 ) (26.9 )
Eastern Europe 33.7 54.5 (21.8 ) (16.4 ) (38.2 )
Asia Pacific 31.2 34.5 (7.5 ) (2.1 ) (9.6 )
Total $ 744.2 $ 1,044.9 (23.7 )% (5.1 )% (28.8 )%

~~(a)~~

~~Includes Mexico~~

Revenues by Region

Total Revenues
Nine Months Ended
September 30

Percentage Change From
2008 to 2009

(Dollars in millions) 2009 2008 Volume/Price Currency Total
Western Europe $ 923.4 $ 1,416.9 (19.9 )% (14.9 )% (34.8 )%
North America 823.0 1,057.1 (21.1 ) (1.0 ) (22.1 )
Middle East and Africa 172.0 197.5 (11.0 ) (1.9 ) (12.9 )
Latin America (a) 134.9 202.5 (16.7 ) (16.7 ) (33.4 )
Eastern Europe 86.2 152.1 (20.6 ) (22.7 ) (43.3 )
Asia Pacific 78.6 106.2 (12.3 ) (13.7 ) (26.0 )
Total $ 2,218.1 $ 3,132.3 (19.3 )% (9.9 )% (29.2 )%

~~(a)~~

~~Includes Mexico~~

~~2009 Highlights~~

~~The following significant items affected the Company overall during the third quarter and first nine months of 2009, in comparison with the third quarter and first nine months of 2008:~~

~~Company Wide:~~

·	~~Revenues and operating income were impacted by the global recession as:~~

~~- 26 - -~~

the average value of the U.S. dollar increased significantly from 2008 to 2009, accounting for 18% and 34% of the sales decline for the third quarter and nine month comparisons, respectively; and 6% and 15% of the decline in operating income for the third quarter and nine month comparisons, respectively;

o	~~global steel production, which declined in the latter part of 2008, remained at unprecedented low levels; and~~

o	restrictive lending and credit practices continued to adversely affect non-residential construction projects worldwide, coupled with pricing pressure as customers seek price breaks and competitors pursue a limited number of available projects.

During 2009, the Company’s operating income benefitted from the restructuring actions implemented in the fourth quarter of 2008. Operational improvements were also recognized as a result of additional countermeasures implemented during the first nine months of 2009 targeting expense reduction, revenue enhancement and asset optimization. Cost savings from the combination of the 2008 and 2009 countermeasures will manifest themselves throughout the fourth quarter of 2009 and beyond with significant annualized benefits.

·	~~Defined benefit net periodic pension cost increased $9.1 million for the nine months ended September 30, 2009 compared with 2008.~~

·	Due to strong operating cash flows and controlled capital spending, the Company repaid debt of $88.2 million in the first nine months of 2009. However, this was offset by the effect of foreign currency translation as balance sheet debt declined by $51.1 million in the same period.

·	Cash flow from operations for the first nine months of 2009 was $276.7 million. This was more than sufficient to fund the cash requirements for investing activities of $127.3 million while also providing excess funds to reduce, ~~debt.~~

~~Harsco Infrastructure Segment:~~

Three Months
Ended September 30

Nine Months
Ended September 30

(Dollars in millions) 2009 2008 2009 2008
Revenues $ 279.5 $ 393.3 $ 872.0 $ 1,201.3
Operating income 22.5 60.0 66.3 156.0
Operating margin percent 8.1 % 15.3 % 7.6 % 13.0 %

Harsco Infrastructure Segment – Significant Impacts on Revenues
Three Months
Ended September 30

Nine Months
Ended September 30

(In millions)
Revenues – 2008 $ 393.3 $ 1,201.3
Impact of foreign currency translation (24.3 ) (134.4 )
Net decreased volume (90.3 ) (197.4 )
Acquisitions 0.8 2.5
Revenues – 2009 $ 279.5 $ 872.0

~~Harsco Infrastructure Segment – Significant Impacts on Operating Income:~~

In the third quarter and first nine months of 2009, the Segment’s operating results decreased due to reduced non-residential, commercial and infrastructure construction spending, particularly in the United Kingdom, North America and several other key European countries. This was partially offset by continued strength in emerging economies in the Middle East and Asia Pacific regions, as well as global industrial maintenance. The Company has benefited from its capital investments made in these markets in prior years and its ability to redeploy equipment throughout the globe.

·	In response to further deterioration of global infrastructure markets during 2009, this Segment implemented additional countermeasures targeting expense reduction, revenue enhancement, asset optimization and facility rationalization.

·	Foreign currency translation in the third quarter and the first nine months of 2009 decreased operating income for this Segment by $3.0 million and $16.7 million, respectively, compared with the third quarter and first nine months of 2008.

~~- 27 - -~~

~~Harsco Metals Segment:~~

Three Months
Ended September 30

Nine Months
Ended September 30

(Dollars in millions) 2009 2008 2009 2008
Revenues $ 275.1 $ 423.8 $ 773.0 $ 1,286.0
Operating (loss) income (4.4 ) 33.3 (3.0 ) 99.6
Operating margin percent (1.6 )% 7.9 % (0.4 )% 7.7 %

Harsco Metals Segment – Significant Impacts on Revenues
Three Months
Ended September 30

Nine Months
Ended September 30

(In millions)
Revenues – 2008 $ 423.8 $ 1,286.0
Net decreased volume (113.5 ) (346.1 )
Impact of foreign currency translation (24.9 ) (156.6 )
Principally out-of-period adjustment and other changes (10.3 ) (10.3 )
Revenues – 2009 $ 275.1 $ 773.0

~~Harsco Metals Segment – Significant Effects on Operating Income:~~

·	Revenues, operating income and margins for the third quarter and the first nine months of 2009 were negatively affected by unprecedented declines in global steel production and the stronger U.S. dollar in 2009 compared with the same periods of 2008.

During the third quarter and the first nine months of 2009, the Company’s operating income benefitted from the restructuring actions implemented in the fourth quarter of 2008. Operational improvements were also recognized as a result of additional countermeasures implemented during 2009 targeting expense reduction, revenue enhancement and asset optimization.

The reversal of revenue improperly recognized over the prior three years resulted in an operating income decrease for the third quarter and first nine months of 2009. The improperly recorded revenue related to the failure to receive advance customer agreement and to invoice on a timely basis, for additional work performed for two customers; was isolated to a business unit in one country; and is considered a one-time event.

·	Foreign currency translation in the third quarter and first nine months of 2009 decreased operating income for this Segment by $1.3 million and $13.9 million, respectively, compared with the third quarter and first nine months of 2008.

~~All Other Category – Harsco Minerals & Rail:~~

Three Months
Ended September 30

Nine Months
Ended September 30

(Dollars in millions) 2009 2008 2009 2008
Revenues $ 189.6 $ 227.7 $ 573.0 $ 644.8
Operating income 39.6 42.0 105.7 128.0
Operating margin percent 20.9 % 18.4 % 18.5 % 19.8 %

~~- 28 - -~~

All Other Category – Harsco Minerals & Rail –
Significant Impacts on Revenues

Three Months
Ended September 30

Nine Months
Ended September 30

(In millions)
Revenues – 2008 $ 227.7 $ 644.8
Railway track maintenance services and equipment 8.8 41.5
Minerals and recycling technologies (1.3 ) (31.6 )
Industrial grating products (15.6 ) (35.2 )
Impact of foreign currency translation (4.0 ) (18.0 )
Air-cooled heat exchangers (24.8 ) (24.9 )
Other changes not individually discussed (1.2 ) (3.6 )
Revenues – 2009 $ 189.6 $ 573.0

~~All Other Category – Harsco Minerals & Rail – Significant Impacts on Operating Income:~~

·	The railway track maintenance services and equipment business operating income increased for the quarter and the first nine months of 2009 due principally to shipments of equipment to China under contracts with the China Ministry of Railways.

Operating income for the minerals business improved in the third quarter relative to the first half of 2009 due to an increase in customer demand and an increase in metal prices. Despite this third quarter improvement, the nine month results were lower in 2009 due to overall lower metal prices, continued steel mill production declines and product mix.

The air-cooled heat exchangers business experienced a significant decline in operating income in the third quarter of 2009 due to cutbacks by customers within North America resulting from depressed natural gas prices combined with unfavorable economic conditions. This decline started in the second quarter of 2009 and offset increases resulting from efficiencies in labor and overhead, coupled with lower commodity costs that contributed to increased operating income in the first several months of 2009.

·	~~The economic downturn and customer decreases in inventory levels compared with 2008 contributed to a reduction in operating income for the industrial grating products business.~~

·	~~Countermeasures targeting expense reduction, revenue enhancement and asset optimization have been implemented.~~

·	Foreign currency translation in the third quarter and first nine months of 2009 decreased operating income for the All Other Category by $0.7 million and $3.1 million, respectively, compared with the third quarter and first nine months of 2008.

~~Outlook, Trends and Strategies~~

~~Company Wide:~~

Economic uncertainty continues throughout the world as a result of the global recession. Since the fourth quarter of 2008, the Company has faced several major challenges arising from the Great Recession.

In the third quarter of 2009, certain negative economic trends began to abate, as overall steel production at mills served by the Company’s operations showed a modest sequential quarterly increase and the U.S. dollar has recently weakened against certain major currencies. While improving steel production and a slightly weaker U.S. dollar positively contribute to the outlook for the Company, expectations are that many of the challenges stemming from the global recession will continue for the remainder of 2009 and into the first half of 2010.

Benefits from government monetary and fiscal stimulus packages, designed as a primary driver of the global economic recovery, have not yet materialized in many of the Company’s key markets. The timing of those benefits cannot be predicted with any certainty.

~~Responding to these challenges, the Company has and will continue to proactively and aggressively implement countermeasures to reinforce 2009 and future performance.~~

~~- 29 - -~~

Although global economic conditions remain uncertain, the Company believes it is well-positioned to capitalize on opportunities and execute strategic initiatives based on its strong balance sheet, available liquidity and its ability to generate strong operating cash flows. The Company is confident that its cost reduction countermeasures, along with its LeanSigma continuous improvement program, has significantly reduced the Company’s cost structure and further ~~enhanced~~enhance its financial ~~strength. Additionally, the~~strength without sacrificing quality of output. The Company’s expansion of its global footprint ~~with expansion~~ in ~~emerging~~targeted growth markets;

Table of Contents

its diversity of services and products in industries that are fundamental to global growth; its long-term mill services and minerals supply contracts; the portability and mobility of its infrastructure services equipment; and its large infrastructure services customer base help mitigate ~~its~~the Company’s overall long-term exposure to changes in the economic outlook in any ~~one~~ single economy. However, ~~continued or~~any further deterioration of global economies could still have an adverse impact on the Company’s operating results.

~~Looking to the remainder of 2009 and beyond,~~

Additionally, the following significant items, risks, trends and strategies are expected to affect the ~~Company:~~

The Company will continue its disciplined focus on expanding its industrial services businesses, especially in emerging economies and other targeted markets. Growth is expected to be achieved through the provision of additional services to existing customers, new contracts in both developed and emerging markets, and targeted, strategic, bolt-on acquisitions in strategic countries and market sectors. Additionally, new higher-margin service and sales opportunities in the minerals and rail businesses will be pursued globally.

·	~~Management will continue to be very selective and disciplined in allocating capital, choosing projects with the highest Economic Value Added (“EVA”) potential.~~

Global governments have enacted stimulus packages to fund much needed infrastructure projects throughout the world. However, any substantial near-term benefit from stimulus packages is uncertain, particularly in the United States and the United Kingdom. When stimulus package funding becomes available, the Harsco Infrastructure Segment and the Harsco Rail business are well positioned with their engineering expertise and the Company’s capital investment base to take advantage of any expected opportunities. Steel production is also likely to increase, benefitting the Harsco Metals Segment.

·	Continued implementation of the Company’s enterprise-wide LeanSigma continuous improvement program around the world should provide long-term benefits and improve the overall performance of the Company through a reduced cost structure and increased efficiency.

In addition to LeanSigma, the Company will continue its efforts to further enhance margins for most businesses through enterprise-wide business optimization initiatives including: improved supply-chain and logistics management; capital use optimization; and added emphasis on global procurement and marketing.

The Company will place a strong focus on corporate-wide expansion into emerging economies in the coming years to better balance its geographic footprint. More specifically, the Company’s global growth strategies include steady, targeted expansion, particularly in the Middle East and Africa, Asia Pacific and Latin America to further complement the Company’s already-strong presence throughout Western Europe and North America. This strategy is expected to result in a significant increase to the Company’s presence in these markets to approximately 30% of total Company revenues over the next several years and closer to 40% in the longer-term. Revenues in these markets were 24% of the Company’s total revenues for the third quarter of 2009 compared with 22% for the third quarter of 2008; and 21% for the first nine months of both 2009 and 2008. Over time, the improved geographic footprint will also benefit the Company through further diversification of its customer base.

Volatility in energy and commodity costs (e.g., crude oil, natural gas, steel, etc.) and worldwide demand for these commodities could impact the Company’s operations. Cost increases could result in reduced operating income for certain products and services, to the extent that such costs cannot be passed on to customers. Cost decreases could result in increased operating income to the extent that such cost savings do not need to be passed to customers. However, volatility in energy and commodity costs may provide additional service opportunities for the Harsco Metals Segment and severalCompany for the fourth quarter of 2010 and beyond:

·The near-term outlook for the Harsco Infrastructure Segment is impacted by a continued lack of meaningful activity in non-residential, commercial and multifamily construction markets, particularly in Europe, the Gulf Region of the Middle East and the United States. This lack of activity is expected to continue to present challenging business conditions for this Segment. The Company expects the Harsco Infrastructure Segment to incur an operating loss in the fourth quarter of 2010 that will approximate or exceed the third quarter 2010 operating loss.

·The Company anticipates that a comprehensive restructuring plan will be developed, approved and announced in the fourth quarter of 2010 with resulting cost reductions that should benefit the operating results for 2011 and beyond in the Harsco Infrastructure Segment. The plan is being developed to further streamline and reduce the cost base in this business to better align it to expected near-term end-market conditions and could materially impact the fourth quarter 2010 results. In October 2010, a plan to rationalize certain North America products was approved. This will result in the disposal of rental assets and reduce pre-tax income by approximately $9 million (net of scrap or sale proceeds) in the fourth quarter of 2010. The Company’s annual goodwill impairment testing will be completed during the fourth quarter of 2010. Should the Company experience a further degradation in the overall markets served by the Harsco Infrastructure Segment, impairment losses for assets associated with this Segment may be required. Any necessary impairment could result in the write down of the carrying value of goodwill to its implied fair value.

·The Company has initiated strategies to reposition the Harsco Infrastructure business and is focusing increasingly on projects in the global industrial maintenance and infrastructure construction sectors; developing this business in economies outside the U.S. and Europe that have greater prospects for both near-term and long-term growth; and reducing the branch structure which will result in cost savings realized mostly in 2011 and beyond.

·The Company anticipates that tightening environmental regulations will compel customers to address their production waste streams as an opportunity to maximize environmental compliance. This should provide additional revenue opportunities for the Harsco Metals Segment and for the Harsco Minerals businesses in the All Other Category. The Company will continue to pursue growth opportunities in environmental services as increasing regulatory and public demand for environmental solutions creates additional outsourced opportunities in slag management.

·The Harsco Rail Segment has a strong backlog for 2011 due principally to ongoing production of rail grinding machines under existing orders.

·International demand for railway track maintenance services, solutions and equipment is expected to be strong in both the near-term and the long-term. The Harsco Rail Segment expects to develop a larger presence in certain developing countries as track construction and maintenance needs grow. Global bidding activity has been strong.

·In the Harsco Minerals businesses in the All Other Category (Harsco Minerals & Rail) as customers may tend to outsource more services to reduce overall costs. Volatility may also provide opportunities in the Harsco Infrastructure Segment for additional petrochemical plant maintenance and capital improvement projects. In addition to embracing opportunities for revenue enhancement, the Company is implementing programs to help mitigate these costs as part of its on-going enterprise-wide optimization initiatives noted above.

The stronger U.S. dollar in the first nine months of 2009 compared with 2008 created a negative effect on the Company’s sales, operating income and equity from foreign currency translation. If the U.S. dollar strengthens compared to 2008, particularly in relationship to the euro, the impact on the Company would generally be negative in terms of reduced revenue, operating income and equity. Should the U.S. dollar weaken in relationship to these currencies, the effect on the Company would generally be positive in terms of higher revenue, operating income and equity. Additionally, even if the U.S. dollar maintains its September 30, 2009 value for the remainder of 2009, the Company’s full year revenue and operating income will be negatively impacted in comparison to 2008.

Since December 2007, the Company has taken advantage of historically low long-term interest rates and reduced variable rate debt from 49% of its total borrowings to 5% at September 30, 2009. This decrease resulted from the repayment of commercial paper borrowings during the second quarter of 2008 with the proceeds from the May 2008

~~- 30 - -~~

U.S. senior notes offering, coupled with strong operating cash flows in 2008 and additional reductions in commercial paper and other borrowings during the first nine months of 2009. The Company manages the mix of fixed-rate and floating-rate debt to preserve adequate funding flexibility, as well as to control the effect of interest-rate changes on consolidated interest expense. At September 30, 2009, a one percentage point change in variable interest rates would change interest expense by $0.4 million per year. Strategies to further reduce related risks are under consideration.

Total defined benefit net periodic pension expense for 2009 will be substantially higher than in 2008 due to the decline in pension asset values during the second half of 2008. This decline was due to the financial crisis and the deterioration of global economic conditions. To mitigate a portion of this overall increased cost for 2009, the Company implemented additional plan design changes for the U.K. defined benefit pension plan so that accrued service would no longer be granted for periods after December 31, 2008. Additional plan design changes were made for the U.S. defined benefit pension plans so that salary continuation would no longer be included in the calculation of employee pension benefits. These actions were part of the Company’s overall strategy to reduce net periodic pension expense and volatility.

As the Company continues the strategic expansion of its global footprint, the 2009 effective income tax rate is expected to be lower than the 2008 effective income tax rate. The effective income tax rate from continuing operations decreased to 15.7% and 17.2% for the third quarter and first nine months of 2009, respectively, compared with 26.0% and 27.3% for the third quarter and first nine months of 2008, respectively. The decrease in the effective income tax rate for these 2009 periods compared with 2008 reflected a decline in earnings in jurisdictions with higher tax rates and certain net discrete tax benefits recognized in 2009. In the third quarter of 2009, these net discrete benefits related primarily to the recognition of previously unrecognized tax benefits in certain foreign jurisdictions. Net discrete benefits recognized prior to the third quarter related primarily to the permanent reinvestment of additional earnings for certain non-U.S. subsidiaries. Due to the expansion of the Company’s global footprint within emerging markets, the effective income tax rate for the fourth quarter of 2009, before discrete items, is expected to be approximately 22% to 24%.

Currently, a majority of the Company’s revenue is generated from customers located outside the United States, and a substantial portion of the Company’s assets and employees are located outside the United States. U.S. income tax and foreign withholding taxes have not been provided on undistributed earnings for certain non-U.S. subsidiaries, because such earnings are intended to be indefinitely reinvested in the operations of those subsidiaries. Several U.S. legislation proposals have been announced that would substantially reduce (or have the effect of substantially reducing) the Company’s ability to defer U.S. taxes on profit permanently reinvested outside the United States. Proposals to date could have a negative impact on the Company’s financial position and operating results. Additionally, they could have a negative impact on the Company’s ability to compete in the global marketplace. The probability of any of these proposals being enacted cannot be predicted with any certainty. Indications are that reform in 2010 is still likely but such reform may be structured with more of the business community’s concerns in mind. Nonetheless, the Company is working with legislators with the goal of achieving a balanced and fair approach to tax reform. The Company continues to monitor legislation to be in position to structure operations in a manner that will reduce the impact of enacted changes.

Building on record 2008 operating cash flows, the Company expects continued strong cash flows from operating activities for the remainder of 2009 and 2010. The Company also plans to significantly reduce the amount of cash invested for capital expenditures during 2009 to approximately $150 million compared with the $458 million expended in 2008. The Company believes that in the current economic environment, the mobile nature of its capital investment pool will facilitate strategic growth initiatives in the near term, lessening the need for growth capital expenditures for 2009 and beyond.

~~Harsco Infrastructure Segment:~~

Fluctuations in the U.S. dollar impact the Harsco Infrastructure Segment, as approximately 80% of this business operates outside the United States. If the U.S. dollar would strengthen as it has overall from 2008 to 2009, sales and operating income would generally be reduced. If the U.S. dollar were to continue to weaken, as it has during the third quarter of 2009, sales and operating income would generally improve.

The near-term outlook for the Harsco Infrastructure Segment is impacted by continued uncertainty in the global credit markets, which has caused projects to be deferred or cancelled, and thus contributed to pricing pressure. The current weakness in the commercial construction market, particularly in the U.K., other parts of Europe and in North America, is expected to be partially offset by a steady level of activity from the Company’s infrastructure maintenance services, institutional and global infrastructure projects, and continued overall performance in the Gulf region of the Middle East.

The Company will continue to emphasize prudent expansion of its geographic presence in this Segment through entering new markets and further expansion in emerging economies, and will continue to leverage its value-added services and highly engineered forming, shoring and scaffolding systems to grow the business. The Infrastructure Segment’s mobile capital investment base is also available to take advantage of these opportunities as they occur.

·	~~The Company will continue to diversify this business, focusing on growth in institutional and global infrastructure projects and infrastructure maintenance projects.~~

~~- 31 - -~~

·	Operating performance for this Segment in the long term is expected to benefit from the execution of global government stimulus packages which should fund much-needed infrastructure projects throughout the world.

Benefits from the 2008 restructuring program and additional countermeasures implemented in 2009 should improve the operational efficiency and enhance profitability of the Harsco Infrastructure Segment in 2010 and beyond. Initiatives included overall reduction in the global workforce, substantial reduction of discretionary spending and facility rationalization, among others.

The Company will continue to implement its LeanSigma continuous improvement program and other key initiatives including: global procurement and logistics; the sharing of engineering knowledge and resources; optimizing the business under one standardized administrative and operating model at all locations worldwide; and on-going analysis for other potential synergies across the operations.

·	Further declines in the economy and, more specifically, the construction industry may impact the ability of customers to meet their obligations to the Company on a timely basis and could adversely impact the realizability of receivables, particularly if customers file for bankruptcy protection.

~~Harsco Metals Segment:~~

·	A strengthening U.S. dollar would generally adversely impact, and a weakening U.S. dollar would generally improve, the sales and operating income of the Harsco Metals Segment as approximately 85% of the Segment operates outside the United States.

In conjunction with the economic uncertainty of the global recession, steel demand declined around the world and steel companies significantly scaled back production in late 2008 and 2009. These customer actions have had a significant negative impact on the Harsco Metals Segment’s results in 2009. While the Metals’ Segment’s customers showed sequential improvement in production in the third quarter of 2009, coupled with signs of stabilization in several markets, overall global demand for steel remains weak compared to 2008. Steel production cuts of this depth and breadth are not expected to be sustainable for long periods of time. The Company anticipates a continued modest recovery in steel production in the fourth quarter of 2009 compared to 2008, even with seasonal shutdowns over holiday periods, as the industry benefits from the tail winds of restocking historically depleted inventories and government stimulus programs. However, a significant improvement in this Segment’s operations is not foreseen until 2010 and beyond.

Benefits from the 2008 restructuring program and additional countermeasures implemented in 2009 should continue to improve the operational efficiency and enhance profitability of the Harsco Metals Segment in 2009 and beyond. Initiatives so far have included: improved terms or exit from underperforming contracts with customers and underperforming operations; defined benefit pension plan design changes; overall reduction in the global workforce; and a substantial reduction of discretionary spending.

·	The Company will continue to place significant emphasis on improving operating margins of this Segment and continue to execute a geographic expansion strategy in emerging markets in the Middle East and Africa, Latin America and Asia Pacific.

·	~~The Company will continue to pursue growth opportunities in environmental services as awareness of environmental issues creates additional outsourced functions in slag management.~~

Further consolidation in the global steel industry is possible. Should additional consolidations occur involving some of the steel industry’s larger companies that are customers of the Company, it could result in an increase in concentration of revenues and credit risk for the Company. If a large customer were to experience financial difficulty, or file for bankruptcy protection, it could adversely impact the Company’s income, cash flows and asset valuations. As part of its credit risk management practices, the Company closely monitors the credit standing and accounts receivable position of its customer base. Further consolidation may also increase pricing pressure on the Company and the competitive risk of services contracts which are due for renewal. Conversely, such consolidation may provide additional service opportunities for the Company as the Company believes it is well-positioned competitively. As a result of this customer concentration, a key strategy of the Company is to diversify its customer base.

All Other Category, –improved customer production levels comparable with the prior year should have an overall positive effect on certain reclamation and recycling services in the near-term.

· Also in the All Other Category, the air-cooled heat exchangers business continues to explore international opportunities in addition to further growth in its customary North American markets. Increased industrial use due to improving economic conditions will influence the price and demand for natural gas and, consequently, the demand for heat exchanger equipment. Weather trends can also impact this business as demand for heat exchanger equipment tends to increase in colder weather and decrease in warmer weather.

·The Company announced in January 2010 that it has embarked upon a business transformation initiative designed to create significant operating and cost efficiencies by improving the Company’s internal supply chain planning, logistics, scheduling and integration throughout its worldwide operations. This project is expected to contribute to the Company’s Economic Value Added (“EVA®”) growth. Although there will be implementation expenses and capital expenditures, in each year of implementation the benefits are expected to exceed the costs.

·The Company’s actuarial assumptions used to determine net periodic pension cost for defined benefit pension plans are established at December 31 each year. Currently, a low global interest rate environment indicates that discount rates at December 31, 2010, could be lower than the global weighted average of 6.1% used for establishing net periodic pension cost for 2010. A lower discount rate would generally result in an increased pension liability and higher net periodic pension cost. This could be partially offset by returns on pension plan assets higher than those previously assumed. Should the interest rate environment and discount rates remain at a lower level at December 31, 2010, to the extent that the resulting effects are not offset by higher returns on pension plan assets, the Company expects that net periodic pension cost for 2011 will be higher than in 2010.

·The Company will continue to place a strong focus on corporate-wide expansion into targeted growth markets to grow and better balance its geographic footprint. More specifically, the Company’s global growth strategies include steady, targeted expansion, particularly in the Gulf Region of the Middle East and Africa, Asia-Pacific and Latin America to further complement the Company’s already-strong presence throughout Europe and North America. Growth is also expected to be achieved through the provision of additional services to existing customers; new contracts in both developed and targeted growth markets; and targeted, strategic acquisitions in strategic countries and market sectors. Additionally, new higher-margin service and sales opportunities in the Harsco Minerals ~~& Rail:~~and Harsco Rail businesses are being pursued globally. This strategy is expected to develop a significant increase to the Company’s presence in these markets to achieve approximately 30% of total Company revenues from targeted growth markets over the near-

The Company will emphasize prudent global expansion of its minerals business for extracting high-value metallic content from slag and responsibly handling and recycling residual materials. Environmental services provide growth opportunities in the minerals business as additional outsourced functions in slag management of stainless steel and other high-value metals arise.

·	Continued low production levels will have an overall negative effect on certain reclamation and recycling services in the fourth quarter of 2009, while metal price increases experienced in the third quarter of 2009, if sustained, will have a positive effect on those results.

Certain businesses in this Category are dependent on a small group of key customers. The loss of one of these customers due to competition or due to financial difficulty, or the filing for bankruptcy protection could adversely impact the Company’s income, cash flows and asset valuations. As part of its credit risk management practices, the Company closely monitors the credit standing and accounts receivable position of its customer base.

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Table of Contents

term and closer to 40% in the longer-term. Over time, the improved geographic footprint will also benefit the Company through further diversification of its customer base.

·The Company expects continued strong cash flows from operating activities, although 2010 will be less than 2009. The Company also expects to maintain discipline to limit capital expenditures through its ability to redeploy equipment to new projects, without jeopardizing growth opportunities. The Company believes that, in the current economic environment, the mobile nature of its capital investment pool will facilitate strategic growth initiatives in the near-term, lessening the need for growth capital expenditures, particularly for the Harsco Infrastructure business. New or renewed contracts in the Harsco Metals Segment, or the Minerals business, may require higher incremental capital investments. Geographic expansion in all businesses may also require higher capital investments.

·Management will continue to be very selective and disciplined in allocating capital, choosing projects with the highest EVA potential.

·Fluctuations in the U.S. dollar can have significant impacts in the Harsco Infrastructure and Harsco Metals Segments, as approximately 80% to 85% of the revenues generated in these businesses are outside the United States. If the U.S. dollar weakens sales and operating income would generally improve. If the U.S. dollar were to strengthen, sales and operating income would generally be reduced.

·Volatility in energy and commodity costs (e.g., diesel fuel, natural gas, steel, etc.) and worldwide demand for these commodities could impact the Company’s operations, both in cost increases or decreases to the extent that such increases or decreases are not passed on to customers. However, volatility in energy and commodity costs may provide additional service opportunities for the Harsco Metals Segment and several businesses in the All Other Category as customers may outsource more services to reduce overall costs. Volatility may also affect opportunities in the Harsco Infrastructure Segment for additional industrial plant maintenance and capital improvement projects.

·The Company has maintained a capital structure with a balance sheet debt to capital ratio approximating 40% for the last several years. That ratio increased to 43.3% at September 30, 2010 as a result of the Company’s completion of a $250 million bond offering in September 2010. The net proceeds of this issuance were used to repay, in part, 200 million British pound sterling-denominated notes (approximately $316 million) that matured October 27, 2010. Additional commercial paper borrowings were made to repay the remainder of the British pound sterling-denominated notes in excess of the proceeds from the 2010 bond issuance. The debt to capital ratio declined following the repayment of the pound sterling notes.

·Currently, a majority of the Company’s revenue is generated from customers located outside the United States, and a substantial portion of the Company’s assets and employees are located outside the United States. U.S. income tax and foreign withholding taxes have not been provided on undistributed earnings for certain non-U.S. subsidiaries, because such earnings are intended to be indefinitely reinvested in the operations of those subsidiaries. Several U.S. legislative proposals have been announced that would have the effect of substantially reducing the Company’s ability to defer U.S. taxes on profit permanently reinvested outside the United States. Proposals to date, if enacted, could have a negative impact on the Company’s financial position and operating results. Additionally, they could have a negative impact on the Company’s ability to compete in the global marketplace. The probability of any of these proposals being enacted cannot be predicted with any certainty. The Company is working with legislators, trade groups and manufacturing groups with the goal of achieving a balanced and fair approach to tax reform, regardless of when reform occurs. The Company continues to monitor legislation to be in position to structure operations in a manner that will reduce the impact of enacted changes.

·The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act became law during the first quarter of 2010. These new laws will have an impact on the Company’s future costs for providing health care benefits to its employees when the laws begin to impact the Company in 2013 and beyond. The Company determined that the impact of the new laws on postretirement medical plans will be immaterial to its financial position, results of operations and cash flows. The Company is assessing the extent to which the new laws will affect its future health care and related employee benefit plan costs for active employees.

·The Harsco Minerals business generates value by collecting and processing boiler slag, a coal combustion by-product (“CCP”) into commercially useful products that put this material to beneficial use such as roofing materials or blasting abrasives. In May 2010, the Environmental Protection Agency (“EPA”) released a proposed rule that set out two different options with regard to the regulation of CCPs produced by coal-fired utility boilers. One option would regulate CCPs as hazardous waste when the CCPs are destined for disposal in landfills and surface impoundments. The second option would regulate the disposal of CCPs as solid waste by issuing minimum national criteria for proper management of these nonhazardous, solid wastes. Neither proposal changes the EPA’s prior determination that beneficially used CCPs, including the Company’s products, are exempt from the hazardous waste regulations. The adoption, terms and timing of any new regulation controlling disposal of CCPs remain uncertain, however, and there can be no assurance that any CCP regulation will continue to provide for an exemption for beneficial use of CCPs. The Company will continue to closely monitor the EPA’s proposal and file public comments as appropriate.

U.S. railway track maintenance service opportunities are expected to increase over the next one to four years from the American Recovery and Reinvestment Act of 2009 as many states have budget proposals for track services under this stimulus package. International demand for the railway track maintenance services and equipment business’s products and services is expected to be strong in both the near term and the long term. In addition, further implementation of LeanSigma continuous improvement initiatives are expected to improve margins on a long-term basis.

Worldwide supply and demand for steel and other commodities impact raw material costs for certain businesses in this Category. The Company has implemented strategies to help mitigate the potential impact that changes in steel and other commodity prices could have on operating income. If steel or other commodity costs associated with the Company’s manufactured products increase and the costs cannot be passed on to the Company’s customers, operating income would be adversely affected. Conversely, reduced steel and other commodity costs would improve operating income to the extent such savings do not have to be passed to customers.

The air-cooled heat exchangers business continues to explore international opportunities in addition to further growth in its customary North American markets. The Company’s first sales of air-cooled heat exchangers in the Asia Pacific region are anticipated in the near term. Overall sales are expected to be negatively impacted by a lower level of industrial demand for natural gas expected for the remainder of 2009 and possibly into 2010 as a result of lower natural gas prices and the global recession. Recent low natural gas prices have curtailed the need for additional gas compression and coolers to support that compression. Increased industrial use due to improving economic conditions, as well as weather patterns over the winter months will influence the price and demand for natural gas and, consequently, the demand for heat exchanger equipment.

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Results of Operations

Three Months
Ended September 30

Nine Months
Ended September 30

(In millions, except per share and percentages) 2009 2008 (a) 2009 2008 (a)
Revenues from continuing operations $ 744.2 $ 1,044.9 $ 2,218.1 $ 3,132.3
Cost of services and products sold 554.6 762.3 1,664.1 2,285.1
Selling, general and administrative expenses 125.4 153.5 381.4 470.5
Other (income) expense 6.9 (6.0 ) 6.4 (6.1 )
Operating income from continuing operations 56.4 133.9 164.0 379.1
Interest expense 15.8 19.7 46.6 55.8
Income tax expense from continuing operations 6.5 30.0 20.5 89.2
Income from continuing operations 35.1 85.5 99.1 237.8
Loss from discontinued operations (11.8 ) (3.7 ) (14.5 ) (4.0 )
Net income attributable to Harsco Corporation 20.2 80.3 79.4 227.2
Diluted earnings per common share from continuing operations attributable to Harsco Corporation common stockholders 0.40 0.99 1.17 2.73
Effective income tax rate for continuing operations 15.7 % 26.0 % 17.2 % 27.3 %

~~(a)~~

~~- 33 - -~~

	Three Months Ended September 30
							Change
(Dollars are in millions, except per share amounts)	2010			2009			Amount			%
Revenues from continuing operations	$	752.4		$	744.2		$	8.2		1.1
Cost of services and products sold	574.8			554.6			20.2			3.6
Selling, general and administrative expenses	131.4			125.4			6.0			4.8
Other expense	0.9			6.9			(6.0		)	(87.2	)
Operating income from continuing operations	44.1			56.4			(12.3		)	(21.9	)
Interest expense	15.7			15.8			(0.1		)	(0.7	)
Income tax expense from continuing operations	7.4			6.5			0.9			13.3
Income from continuing operations	21.8			35.1			(13.3		)	(37.8	)
Loss from discontinued operations	0.9			11.8			10.9			92.4
Net income attributable to Harsco Corporation	20.2			20.2			—			—
Diluted earnings per common share from continuing operations attributable to Harsco Corporation common stockholders	0.26			0.40			(0.14		)	(35.0	)
Diluted earnings per common share attributable to Harsco Corporation common stockholders	0.25			0.25			—			—
Effective income tax rate for continuing operations	25.4		%	15.7		%

	Nine Months Ended September 30
							Change
(Dollars are in millions, except per share amounts)	2010			2009			Amount			%
Revenues from continuing operations	$	2,281.3		$	2,218.1		$	63.2		2.9
Cost of services and products sold	1,744.7			1,664.1			80.6			4.8
Selling, general and administrative expenses	401.5			381.4			20.1			5.3
Other (income) expense	(2.0		)	6.4			(8.4		)	(131.4	)
Operating income from continuing operations	134.2			164.0			(29.8		)	(18.2	)
Interest expense	47.2			46.6			0.6			1.3
Income tax expense from continuing operations	23.3			20.5			2.8			13.6
Income from continuing operations	65.8			99.0			(33.2		)	(33.6	)
Loss from discontinued operations	3.5			14.5			11.0			76.0
Net income attributable to Harsco Corporation	57.9			79.4			(21.5		)	(27.1	)
Diluted earnings per common share from continuing operations attributable to Harsco Corporation common stockholders	0.76			1.17			(0.41		)	(35.0	)
Diluted earnings per common share attributable to Harsco Corporation common stockholders	0.72			0.99			(0.27		)	(27.3	)
Effective income tax rate for continuing operations	26.2		%	17.2		%

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Comparative Analysis of Consolidated Results

Revenues

~~Revenues~~

The change in revenues for the third quarter and first nine months of ~~2009 decreased $300.7 million or 29%~~2010 from the third quarter ~~of 2008. Revenues for the~~and first nine months of 2009 ~~decreased $914.2 million or 29% from the first nine months of 2008. These decreases were~~was attributable to the following significant items:

Changes in Revenues – 2009 vs. 2008
Three Months Ended
September 30

Nine Months
Ended
September 30

(In millions)
Net decreased volume in the Harsco Metals Segment principally due to the deterioration of the global steel markets and decline in steel production. $ (106.1 ) $ (345.8 )
Effect of foreign currency translation. (53.2 ) (309.0 )
Net decreased volume (excluding acquisitions) in the Harsco Infrastructure Segment principally due to weaker demand in Europe, particularly in the United Kingdom. (90.5 ) (197.3 )
Decreased revenues in the industrial grating products business due to weaker demand and lower commodity pricing. (15.5 ) (35.2 )
Decreased revenues of the minerals business due to weaker demand and lower commodity pricing. (1.3 ) (31.6 )
Decreased revenues of air-cooled heat exchangers business due to a weaker natural gas market. (24.8 ) (24.9 )
Increased revenues in the Harsco Rail business principally due to shipments of equipment to China. 8.9 41.5
Effect of business acquisitions in the Harsco Infrastructure Segment. 0.8 2.5
Out-of-period adjustment in the Harsco Metals Segment and other changes across the various units not already mentioned. (19.0 ) (14.4 )
Total Change in Revenues – 2009 vs. 2008 $ (300.7 ) $ (914.2 )

Change in Revenues — 2010 vs. 2009	Three Months Ended September 30			Nine Months Ended September 30
(In millions)
Net increased volumes in the Harsco Metals Segment due principally to increased steel production by the Company’s customers.	$	42.3		$	137.0
Effect of business acquisitions in the Harsco Infrastructure Segment.	20.9			61.0
Net increased revenues in the reclamation and recycling services business due to higher commodity pricing and increased volume.	5.9			33.6
Net changes in revenues in the Harsco Rail Segment due principally to the timing of and an overall higher level of rail equipment shipments to China in 2010.	(6.6		)	19.8
Effect of foreign currency translation.	(15.9		)	10.1
Lower volume in the roofing granules and abrasives business.	(3.1		)	(0.3		)
Decreased revenues of industrial grating products from reduced demand coupled with lower pricing levels.	(6.8		)	(17.7		)
Net reduced demand for air-cooled heat exchangers due to a weaker natural gas market in the first half of 2010, with improvement in the third quarter of 2010.	7.3			(22.7		)
Net decreased revenues in the Harsco Infrastructure Segment due to lower rentals and sales and reduced pricing, principally due to lower activity levels and project deferrals, postponements and cancellations of non-residential construction activity globally as a result of economic decline.	(34.9		)	(155.7		)
Other (minor changes across the various units not already mentioned).	(0.9		)	(1.9		)
Total Change in Revenues — 2010 vs. 2009	$	8.2		$	63.2

Cost of Services and Products Sold

~~Cost~~

The change in cost of services and products sold for the third quarter and first nine months of ~~2009 decreased $207.8 million or 27% and $621.0 million or 27%, respectively,~~2010 from the ~~comparable 2008 periods. These decreases were~~third quarter and first nine months of 2009 was attributable to the following significant items:

Changes in Cost of Services and Products Sold – 2009 vs. 2008
Three Months Ended
September 30

Nine Months
Ended
September 30

(In millions)
Decreased costs due to lower revenues (exclusive of the effect of foreign currency translation and business acquisitions, and including the impact of increased commodity costs included in selling prices). $ (170.7 ) $ (411.7 )
Effect of foreign currency translation. (38.7 ) (224.4 )
Effect of business acquisitions. 0.6 1.7
Other (product/service mix and increased equipment maintenance costs, partially offset by enterprise business optimization initiatives and volume-related efficiencies). 1.0 13.4
Total Change in Cost of Services and Products Sold – 2009 vs. 2008 $ (207.8 ) $ (621.0 )

~~- 34 - -~~

Change in Cost of Services and Products Sold — 2010 vs. 2009	Three Months Ended September 30			Nine Months Ended September 30
(In millions)
Effect of business acquisitions	$	11.8		$	44.8
Increased costs due to changes in revenues coupled with lower high-margin rentals in the Harsco Infrastructure Segment (exclusive of the effect of foreign currency translation and business acquisitions, and including the impact of increased commodity and energy costs included in selling prices).	16.1			24.3
Effect of foreign currency translation.	(13.2		)	6.2
Other, net (due primarily to product mix).	5.5			5.3
Total Change in Cost of Services and Products Sold — 2010 vs. 2009	$	20.2		$	80.6

Table of Contents

Selling, General and Administrative Expenses

~~Selling,~~

The change in selling, general and administrative expenses for the third quarter and first nine months of ~~2009 decreased $28.1 million or 18% and $89.1 million or 19%, respectively,~~2010 from ~~the comparable 2008 periods. These decreases were attributable to the following significant items:~~

Changes in Selling, General and Administrative
Expenses – 2009 vs. 2008

Three Months Ended
September 30

Nine Months Ended
September 30

(In millions)
Effect of foreign currency translation. $ (9.5 ) $ (51.8 )
Decreased compensation expense. (9.2 ) (17.8 )
Reduced travel expenses due to discretionary spending reductions. (2.5 ) (9.1 )
Lower professional fees. (2.6 ) (6.9 )
Increased directors’ fees and expenses. 2.0 3.1
Increased commissions. 0.4 2.5
Effect of business acquisitions. — 0.5
Other (due to spending reductions). (6.7 ) (9.6 )
Total Change in Selling, General and Administrative Expenses – 2009 vs. 2008 $ (28.1 ) $ (89.1 )

~~Other (Income) Expense~~

This income statement classification includes impaired asset write-downs, employee termination benefit costs and costs to exit activities, offset by net gains on the disposal of non-core assets. Net Other expense was $6.9 million and $6.4 million for the third quarter and first nine months of 2009 ~~respectively.~~ was attributable to the following significant items:

Change in Selling, General and Administrative Expenses — 2010 vs. 2009	Three Months Ended September 30			Nine Months Ended September 30
(In millions)
Effect of business acquisitions.	$	10.3		$	18.7
Higher professional fees due to globally integrated enterprise initiatives.	0.5			3.6
Effect of foreign currency translation.	(3.8		)	0.2
Lower bad debt expense.	(0.2		)	(4.1		)
Other, net.	(0.8		)	1.7
Total Change in Selling, General and Administrative Expenses — 2010 vs. 2009	$	6.0		$	20.1

Other (Income) Expense

This ~~compares with~~income statement classification includes restructuring costs for employee termination benefits and costs to exit activities; impaired asset write-downs; net ~~Other income~~gains or losses on the disposal of ~~$6.0~~non-core assets; and business combination accounting adjustments related to recent acquisitions by the Company.

	Three Months Ended September 30						Nine Months Ended September 30
(In thousands)	2010			2009			2010			2009

Restructuring costs	$	2,089		$	7,199		$	14,494		$	12,387

Gains from sale of non-core assets	(758		)	(969		)	(6,612		)	(6,754		)

Contingent consideration adjustments	(989		)	—			(10,620		)	—

Other	541			668			718			794

Other (income) expense	$	883		$	6,898		$	(2,020	)	$	6,427

For the three months and nine months ended September 30, 2010, restructuring costs were incurred principally in the Harsco Infrastructure Segment.

Interest Expense

This decrease of $0.1 million and ~~$6.1~~increase of $0.6 million in the third quarter and first nine months of ~~2008, respectively. The income~~2010, respectively, compared with 2009 reflects positive effects from foreign currency translation in ~~2008 related principally to net gains on the sale of non-core assets and the expense in 2009 related principally to employee termination benefit costs.~~

~~Interest Expense~~

~~Interest expense for~~ the third quarter of 2009 decreased $3.8 million or 20% from the third quarter of 2008. For the first nine months of 2009, interest expense decreased $9.2 million or 17% from the first nine months of 2008. This decrease was principally2010, as well as slightly higher overall debt levels in 2010 due to ~~reduced debt levels coupled with foreign currency translation that lowered interest expense by $0.9 million and $4.8 million for the third quarter and first nine months of 2009, respectively.~~

recent acquisitions.

Income Tax Expense from Continuing Operations

Income tax expense from continuing operations decreased $23.5 million or 78% in the third quarter of 2009 compared with the third quarter of 2008. Similarly, income tax expense from continuing operations decreased $68.7 million or 77% in the first nine months of 2009 compared with the first nine months of 2008. These declines were

This increase was due to lower earnings from continuing operations in jurisdictions with lower tax rates and a ~~decrease~~consequential increase in the effective income tax rate from continuing operations. The effective income tax ~~rates~~rate relating to continuing operations for the third quarter of 2010 was 25.4% compared with 15.7% ~~and~~for the third quarter of 2009. For the first nine months of 2010 the effective income tax rate relating to continuing operations was 26.2% compared with 17.2% for the first nine months of 2009. The effective income tax rate for the first nine months of 2009 reflected net discrete tax benefits recognized in the first quarter of 2009 related to a change in the permanent reinvestment of prior-year undistributed earnings.

Income from Continuing Operations

This decrease resulted from lower rentals and sales in the Harsco Infrastructure Segment due to decreased global construction activity; partially offset by increased volume in the Harsco Metals Segment resulting from increased steel production, and net changes in revenues in the Harsco Rail Segment due principally to the timing of and an overall higher level of rail equipment shipments to China in 2010.

Table of Contents

Loss from Discontinued Operations

The loss from discontinued operations was $0.9 million and $3.5 million in the third quarter and first nine months of ~~2009,~~2010, respectively, compared with 26.0% and 27.3% for the third quarter and first nine months of 2008, respectively. The decrease in the effective income tax rate for these 2009 periods compared with 2008 reflected a decline in earnings in jurisdictions with higher tax rates and certain net discrete tax benefits recognized in 2009. In the third quarter of 2009, these net discrete benefits related primarily to the recognition of previously unrecognized tax benefits in certain foreign jurisdictions. Net discrete benefits recognized prior to the third quarter related primarily to the permanent reinvestment of additional earnings for certain non-U.S. subsidiaries.

~~Income from Continuing Operations~~

Income from continuing operations decreased $50.4 million or 59% in the third quarter of 2009 compared with the third quarter of 2008. Income from continuing operations decreased $138.8 million or 58% in the first nine months of 2009 compared with the first nine months of 2008. These decreases resulted from slowed demand for most of the Company’s services and products as a result of the global recession and the effect of unfavorable foreign currency translation.

~~Loss from Discontinued Operations~~

~~The loss from discontinued operations~~losses of $11.8 million and $14.5 million in the third quarter and first nine months of 2009, ~~respectively, compared with losses of $3.7 million and $4.0 million in the third quarter and first nine months of 2008,~~ respectively. Discontinued operations consisted of the Company’s Gas Technologies Segment, the sale of which was

~~- 35 - -~~

completed in December 2007. The loss incurred in 2010 includes a pre-tax charge of $5.0 million related to potential and contingent claims, as more fully described in Note H, “Commitments and Contingencies,” in the accompanying Notes to the Condensed Consolidated Financial Statements. The loss in 2009 ~~related~~was due to the resolution of ~~the~~ open claims and counterclaims that ~~were~~had been submitted to ~~arbitration.~~

~~Net Income Attributable~~arbitration related to ~~Harsco Corporation and Earnings Per Share~~

~~Net income attributable to Harsco Corporation~~the disposition of ~~$20.2 million and diluted earnings per share of $0.25 in~~ the ~~third quarter of 2009 were lower than~~Gas Technologies Segment, coupled with the ~~third quarter of 2008 by $60.1 million or 75% and $0.70 or 74%, respectively. Net income attributable to Harsco Corporation of $79.4 million and diluted earnings per share of $0.99 in~~tax effect from the first nine months of 2009 were lower than the first nine months of 2008 by $147.8 million or 65% and $1.69 or 63%, respectively. These decreases are primarily due to lower income from continuing operations for the reasons described above.

final purchase price allocation.

Liquidity and Capital Resources

Overview

Global financial markets, ~~that~~which have been under stress since 2008 due to poor financial institution lending and investment practices and sharp declines in real estate values, have ~~started to show signs of improvement~~improved for certain ~~high-quality~~highly rated credit issuers. However, ~~during the nine months of 2009,~~ tightened credit conditions for the funding of non-residential construction projects, particularly commercial construction, along with the sovereign debt crisis in Europe and the Middle East and recent economic austerity measures implemented in the United Kingdom have restrained growth in ~~that sector~~the Harsco Infrastructure Segment. These unfavorable conditions in the credit markets continue to affect some of the Company’s current and ~~that continues today.~~potential customers. In response to these changes in global economic conditions, the Company ~~has undertaken several~~continues to implement capital efficiency initiatives to ~~conserve capital and~~ enhance liquidity ~~including:~~including the following: prudently reducing capital spending to only critical projects where the highest returns can be achieved while redeploying existing capital investments; optimizing worldwide cash positions; reducing or eliminating discretionary spending; and ~~additional scrutiny~~frequent evaluation of customer and ~~tightening of~~business-partner credit ~~terms with customers. The~~risk.

Despite the global financial market environment, the Company continues to have sufficient available liquidity and has been able to ~~issue~~obtain any necessary financing. On September 20, 2010, the Company successfully issued $250 million 5-year notes bearing interest at 2.7%. The proceeds of this offering were used to repay, in part, 200 million British pound sterling-denominated notes (approximately $316 million) that matured October 27, 2010. Additional commercial paper ~~as needed.~~borrowings were made to repay the remainder of the British pound sterling-denominated notes in excess of the proceeds of the 2010 bond issuance. The Company currently expects operational and business needs to be covered by cash from operations ~~in 2009~~for the remainder of 2010 and beyond.

During the first nine months of ~~2009,~~2010, the Company generated ~~$276.7~~$236.0 million in operating cash, ~~28%~~a decrease from the $276.7 million generated in the first nine months of 2009. The results in 2010 compared with 2009 reflect lower ~~than~~levels of income generated by the ~~$382.0~~Harsco Infrastructure Segment as a result of the ongoing global economic situation.

In the first nine months of 2010, the Company invested $129.9 million in capital expenditures (46% of which were for revenue-growth projects), compared to the $123.1 million invested in the first nine months of 2009, and paid $49.5 million in stockholder dividends compared with $47.8 million paid in the first nine months of 2009.

The Company’s net cash borrowings increased $196.7 million in the first nine months of ~~2008. This decrease was primarily~~2010 due to ~~lower net income, net payments~~the September bond issuance of accounts payable due to reduced spending levels and a reduction in advances on contracts due to shipments in 2009. These decreases were partially offset by lower receivables as a result of lower sales volume and a reduction of inventory levels due to targeted reductions and reduced replenishment activities.

In the first nine months of 2009, the Company invested $123.1 million in capital expenditures (60% of which were for revenue-growth projects) and paid $47.8 million in stockholder dividends. This is compared with $380.9 million of capital expenditures and $49.3 million in stockholder dividends paid in the first nine months of 2008.

~~The Company’s net cash borrowings decreased $88.2 million in the first nine months of 2009. Debt as presented on the balance~~$250 million. Balance sheet debt, which is affected by foreign currency translation, ~~decreased $51.1~~increased $190.4 million from December 31, ~~2008.~~2009. The debt to total capital ratio ~~decreased~~increased from ~~41.1%~~39.5% at December 31, ~~2008~~2009 (the lowest year-end ratio since 1998) to 43.3% at September 30, 2010. The September 30, 2010 ratio was higher than the 38.5% ratio at September 30, 2009 ~~as a result of~~due to the ~~lower debt and increased equity at~~ September ~~30, 2009.~~

2010 bond issuance.

Despite ~~current~~the ongoing global economic conditions, the Company expects to generate strong operating cash flows for ~~the full year of~~2010, although at a level less than in 2009. The Company plans to sustain its balanced portfolio through its strategy of redeploying discretionary ~~cash~~cash: for disciplined organic growth and international ~~diversification in the Harsco Infrastructure Segment;~~or market-segment diversification; for strategic acquisitions, but not until 2011 or later; for growth in long-term, high-return and high-renewal-rate services contracts for the Harsco Metals Segment, principally in ~~emerging economies~~targeted growth markets or for customer diversification; and for organic growth and international diversification in the All Other Category (Harsco Minerals & ~~Rail); and for targeted, bolt-on acquisitions in the industrial services businesses.~~Harsco Industrial) through strategic alliances or joint ventures. The Company also foresees continuing its long and consistent history of paying dividends to stockholders.

The Company continues toits focus on improving working capital management. ~~Specifically, short-term and long-term~~Globally integrated enterprise ~~business optimization programs~~initiatives are being used to continue to further improve the effective and efficient use of working capital, particularly accounts receivable and inventories in the Harsco Infrastructure, Harsco Metals and Harsco ~~Metals~~Rail Segments.

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Sources and Uses of Cash

The Company’s principal sources of liquidity are cash from operations and borrowings under its various credit agreements, augmented periodically by cash proceeds from non-core asset sales. The primary drivers of the Company’s cash flow from operations are the Company’s sales and income. The Company’s long-term Harsco Metals contracts, in addition to the backlog of certain equipment orders and the long-term nature of certain service contracts within the Harsco Rail Segment, provide a predictable ~~level of minimum~~ cash flows for several years into the future. (See the “Certainty of Cash Flows” section for additional information on estimated future revenues of Harsco Metals and Harsco Rail contracts and order backlogs for the Company’s manufacturing ~~businesses and railway track maintenance services and equipment business).~~businesses.) Cash returns on capital investments made in prior years, for which no cash is currently required, are a significant source of cash from operations. Depreciation expense related to these investments is a non-cash charge. The Company also continues to

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~~focus on maintaining~~ maintain working capital at a manageable level based upon the requirements and seasonality of the businesses.

Major uses of operating cash flows and borrowed funds include: capital investments, principally in the ~~industrial services business;~~Harsco Metals and Harsco Infrastructure Segments; payroll costs and related benefits; dividend payments; pension funding payments; inventory purchases for the manufacturing businesses; income tax payments; debt principal and interest payments; insurance premiums and payments of self-insured casualty losses; and machinery, equipment, automobile and facility rental payments. Cash is also used for targeted, ~~bolt-on~~strategic acquisitions as the appropriate opportunities arise.

Resources available for cash requirements –— The Company meets its ~~on-going~~ongoing cash requirements for operations and growth initiatives by utilizing cash from operations, by accessing the public debt markets and by borrowing from banks. Public markets in the United States and Europe are accessed through ~~its~~the Company’s commercial paper programs and through discrete-term note issuance to investors. Various bank credit facilities are available throughout the world. On September 20, 2010, the Company successfully issued $250 million 5-year notes bearing interest at 2.7%. The ~~Company’s~~proceeds of this offering were used to repay, in part, 200 million British pound sterling-denominated notes ~~mature in~~(approximately $316 million) that matured October 27, 2010. ~~The Company plans to utilize operating cash flows and, if necessary, new public~~Additional commercial paper borrowings were made to repay ~~these notes.~~the remainder of the British pound sterling-denominated notes in excess of the proceeds of the 2010 bond issuance. The Company expects to utilize ~~both the~~ public debt markets, ~~and~~ bank facilities and cash from operations to meet its cash requirements in the future.

The following table ~~illustrates~~details the amounts outstanding under credit facilities and commercial paper programs and available credit at September 30, ~~2009:~~2010:

Summary of Credit Facilities and Commercial Paper Programs	September 30, 2010
(In millions)	Facility Limit		Outstanding Balance		Available Credit

U.S. commercial paper program	$	550.0	$	—	$	550.0

Euro commercial paper program	272.6		—		272.6

Multi-year revolving credit facility (a)	570.0		—		570.0

Bilateral credit facility (b)	30.0		—		30.0

Totals at September 30, 2010	$	1,422.6	$	—	$	1,422.6	(c)

Summary of Credit Facilities and Commercial Paper Programs
(In millions) Facility Limit
Outstanding
Balance

Available
Credit

U.S. commercial paper program $ 550.0 $ 10.9 $ 539.1

Euro commercial paper program 291.4 7.3 284.1

Multi-year revolving credit facility (a) 450.0 — 450.0

364-day revolving credit facility (a) (b) 220.0 — 220.0

Bilateral credit facility (c) 30.0 — 30.0

Totals at September 30, 2009 $ 1,541.4 $ 18.2 $ 1,523.2 (d)

~~(a)~~

~~U.S.-based program~~

~~(b)~~

~~The Company does not intend on renewing this facility that expired in November 2009.~~

~~(c)~~

~~International-based program~~

~~(d)~~

Although the Company has significant available credit, for practical purposes, the Company limits aggregate commercial paper and credit facility borrowings at any one time to a maximum of $700 million (the aggregate amount of the back-up facilities).

(a)U.S.-based program.

(b)International-based program.

(c)Although the Company has significant available credit, for practical purposes, the Company limits aggregate commercial paper and credit facility borrowings at any one-time to a maximum of $600 million (the aggregate amount of the back-up facilities).

For more information on the Company’s credit facilities and long-term notes, see Note 6, “Debt and Credit Agreements,” to the Company’s Form 10-K for the year ended December 31, ~~2008.~~

2009.

Credit Ratings and Outlook –— The following table summarizes the Company’s debt credit ratings at September 30, ~~2009:~~2010:

		Long-term Notes	~~U.S.–Based~~	U.S.-Based Commercial Paper	Outlook

Standard & Poor’s (S&P)	A-	~~A-2~~ A-	~~Stable~~	A-2	Negative
Moody’s	~~Baa1~~	~~P-2~~ Baa1	~~Stable~~	P-2	Negative
Fitch	A-	F2 A-		F2	Stable

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The Company’s euro-based commercial paper program has not been rated since the euro market does not require it. In September 2010, Standard & Poor’s, Moody’s and Fitch ~~ratings were reaffirmed in April 2009 and August 2009, respectively. In May 2009, Moody’s~~ reaffirmed the Company’s ~~U.S. based commercial paper ratings, but changed its ratings of the Company’s long-term notes from A3 to Baa1 and the Company’s outlook from negative to stable.~~credit ratings. A downgrade to the Company’s credit ratings may increase borrowing costs to the Company, while an improvement in the Company’s credit ratings may decrease

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borrowing costs to the Company. Additionally, a downgrade in the Company’s credit ratings may result in reduced access to credit markets.

Working Capital Position –— Changes in the Company’s working capital are reflected in the following table:

(Dollars are in millions)	September 30 2010			December 31 2009		Increase (Decrease)
Current Assets
Cash and cash equivalents	$	330.3		$	94.2	$	236.1
Trade accounts receivable, net	657.9			598.3		59.6
Other receivables, net	28.8			30.9		(2.1		)
Inventories	278.9			291.2		(12.3		)
Other current assets	163.8			154.7		9.1
Total current assets	1,459.8		(a)	1,169.3		290.5		(a)
Current Liabilities
Notes payable and current maturities	324.8			83.2		241.6
Accounts payable	237.3			215.5		21.8
Accrued compensation	84.0			67.7		16.3
Income taxes payable	26.7			5.9		20.8
Other current liabilities	352.3			378.8		(26.5		)
Total current liabilities	1,025.0		(a)	751.1		273.9		(a)
Working Capital	$	434.8		$	418.2	$	16.6
Current Ratio (b)	1.4:1			1.6:1

(Dollars are in millions)
September 30
2009

December 31
2008

Increase
(Decrease)

Current Assets
Cash and cash equivalents $ 97.7 $ 91.3 $ 6.4
Trade accounts receivable, net 640.9 648.9 (8.0 )
Other receivables 27.5 46.0 (18.5 )
Inventories 300.9 309.5 (8.6 )
Other current assets 106.8 104.5 2.3
Assets held-for-sale 0.6 5.3 (4.7 )
Total current assets 1,174.4 1,205.5 (31.1 )
Current Liabilities
Notes payable and current maturities 42.6 121.1 (78.5 )
Accounts payable 218.7 262.8 (44.1 )
Accrued compensation 70.3 85.2 (14.9 )
Income taxes payable 8.6 13.4 (4.8 )
Other current liabilities 401.6 405.9 (4.3 )
Total current liabilities 741.8 888.4 (146.6 )
Working Capital $ 432.6 $ 317.1 $ 115.5
Current Ratio
1.6:1

1.4:1

(a)Does not total due to rounding.

(b)Calculated as Current assets/Current liabilities.

Working capital increased ~~approximately 36%~~4% in the first nine months of ~~2009~~2010 due principally to ~~reduced~~the following factors:

·Cash increased $236.1 million primarily due to the cash proceeds from the September 2010 $250 million bond offering.

·Net trade accounts receivable increased $59.6 million primarily due to higher sales levels, partially offset by foreign currency translation effects.

·Other current liabilities decreased $26.5 million due principally to a decrease in customer advance payments in the Harsco Rail Segment as equipment was shipped to customers and ~~more specifically,~~ the ~~following factors:~~advances were applied to customer accounts, partially offset by an increase in other current liabilities.

These factors were partially offset by the following:

·Notes payable and current maturities increased $241.6 million due to the reclassification of the Company’s 200 million British pound sterling-denominated notes to a current liability, partially offset by the repayment of commercial paper borrowings.

·Accounts payable and accrued compensation increased $38.2 million primarily due to increased business activity in the Harsco Metals Segment.

·Income taxes payable increased $20.8 million due to the overall timing of income tax accruals and payments.

·Inventories decreased $12.3 million primarily due to the Company’s focus on reducing inventory levels based upon current market demand as well as foreign currency translation effects.

·	~~Net trade accounts receivable decreased $8.0 million primarily due to reduced sales volume in the first nine months of 2009 partially offset by foreign currency translation effects.~~

·	Other receivables decreased $18.5 million primarily due to collections of insurance proceeds related to insured claims settled during the first quarter of 2009 and an income tax refund received in the third quarter of 2009.

·	Inventories decreased $8.6 million primarily due to the Company’s focus on reducing inventory levels based upon current market demand, partially offset by the build up of inventory in the Company’s railway track maintenance services and equipment business to satisfy current international contracts.

·	~~Notes payable and current maturities decreased $78.4 million due to strong operating cash flows that facilitated repayments of short-term commercial paper borrowings and other short-term borrowings.~~

·	~~Accounts payable decreased $44.1 million primarily due to reduced spending levels partially offset by foreign currency translation.~~

·	Accrued compensation decreased $14.9 million due principally to the payment of incentive compensation earned during 2008 and a decline in current year accrual of incentive compensation based on current EVA levels.

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Certainty of Cash Flows –— The certainty of the Company’s future cash flows is underpinned by the long-term nature of the Company’s ~~metal~~metals services contracts, the order backlog for the Company’s railway track maintenance services and equipment, and the strong discretionary cash flows (operating cash flows in excess of the amounts necessary for capital expenditures to maintain current revenue levels) generated by the Company. ~~Traditionally,~~Historically, the Company has utilized these discretionary cash flows for growth-related capital ~~expenditures.~~expenditures, strategic acquisitions and for debt repayment. As the Company has demonstrated ~~this year,~~since the end of 2008, it has the ability to substantially reduce its capital expenditures ~~without negatively impacting~~due to the ~~business.~~mobility of its existing capital investment base. The existing base can be redeployed for use in growth projects, thus limiting the need for new investment. The Company has continued to grow in countries with increased demand through prudent ~~relocation~~redeployment of its existing equipment.

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The types of products and services that the Company provides are not subject to rapid technological change, which increases the stability of related cash flows. Additionally, it is believed by the Company that each of the ~~Company’s~~ businesses in its balanced portfolio isare among the ~~top three companies (relative to sales)~~leaders in the industries ~~and markets~~ the Company serves. Due to these factors, the Company is confident in its future ability to generate positive cash flows from operations.

Cash Flow Summary

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

Summarized Cash Flow Information

	Nine Months Ended September 30
(In millions)	2010			2009
Net cash provided by (used in):
Operating activities	$	236.0		$	276.7
Investing activities	(142.3		)	(127.3		)
Financing activities	142.0			(145.6		)
Effect of exchange rate changes on cash	0.5			2.5
Net change in cash and cash equivalents	$	236.2		$	6.4	(a)

Nine Months Ended
September 30

(In millions) 2009 2008
Net cash provided by (used in):
Operating activities
$ 276.7 $ 382.0
Investing activities
(127.3 ) (366.4 )
Financing activities
(145.6 ) (47.1 )
Effect of exchange rate changes on cash
2.5 (0.5 )
Net change in cash and cash equivalents
$ 6.4 (a) $ (31.9 ) (a)

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

rounding.

Cash From Operating Activities – —Net cash provided by operating activities in the first nine months of ~~2009~~2010 was ~~$276.7~~$236.0 million, a decrease of ~~$105.3~~$40.7 million from the first nine months of ~~2008.~~2009. The decrease ~~was~~resulted primarily from the following:

·The timing of net trade receivable collections due to the ~~following:~~timing of sales in the Harsco Metals, Harsco Rail, and Harsco Minerals Segments;

·	~~Lower net income in 2009 compared with 2008.~~

·	~~Higher accounts payable payments due to reduced spending levels in 2009.~~

·	~~Reduction in advances on contracts due to shipments in 2009.~~

·Reduction in customer advance payments on contracts due to shipments of equipment by the Harsco Rail Segment in 2010; and

·Lower net income in 2010 as compared with 2009 primarily attributable to the Harsco Infrastructure Segment.

These decreases were partially offset by the following:

·	~~Reduction in net trade receivables due to reduced sales volume.~~

·	~~Initiatives to reduce inventory levels coupled with reduced spending on inventory throughout the Company based upon current market demand.~~

·The timing of payments and increased business activity year over year that resulted in higher accounts payable levels in 2010; and

·Lower incentive compensation payments in 2010 compared with 2009 due to lower earned incentive compensation.

Cash Used in Investing Activities – —In the first nine months of ~~2009,~~2010, cash used in investing activities was ~~$127.3~~$142.3 million consisting primarily of capital investments of ~~$123.1~~$129.9 million and ~~$12.7~~$27.6 million used ~~in purchase of businesses offset by $11.5 million of net cash received~~ for ~~the sale of non-core assets and businesses.~~strategic acquisitions. Capital investments ~~declined $257.8~~increased $6.9 million compared with ~~2008, reflecting management’s initiatives~~the first nine months of 2009, as the Company continues to ~~conserve~~efficiently use capital and enhance liquidity through prudent reduction of capital investments. Growth capital constituted ~~60%~~46% of investments made in the first nine months of ~~2009,~~2010, with investments made predominantly in the ~~industrial services businesses.~~Harsco Metals Segment and, to a lesser extent, the Harsco Infrastructure Segment. Throughout the remainder of ~~2009 and for~~ 2010, the Company plans to continue to manage its balanced portfolio and consider opportunities to invest in value creation ~~projects including prudent, targeted, bolt-on acquisitions, principally in the Harsco Infrastructure business.~~projects. Additionally, the Company intends to increase growth investments ~~into the All Other Category (Harsco Minerals & Rail)~~ in the ~~remainder of 2009~~Harsco Metals and Rail Segments, most likely in 2011 and beyond, as ~~this group continues~~these businesses continue to expand globally.

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Cash Used in Financing Activities – —The following table summarizes the Company’s debt and capital positions at September 30, ~~2009~~2010 and December 31, ~~2008.~~2009.

(Dollars are in millions)	September 30 2010			December 31 2009
Notes Payable and Current Maturities	$	324.8		$	83.2
Long-term Debt	850.6			901.7
Total Debt	1,175.4			984.9
Total Equity	1,537.8			1,509.8
Total Capital	$	2,713.2		$	2,494.7
Total Debt to Total Capital (a)	43.3		%	39.5		%

(Dollars are in millions)
September 30
2009

December 31
2008 (a)

Notes Payable and Current Maturities $ 42.6 $ 121.1
Long-term Debt 919.2 891.8
Total Debt 961.8 1,012.9
Total Equity 1,534.1 1,450.0
Total Capital $ 2,495.9 $ 2,462.9
Total Debt to Total Capital 38.5 % 41.1 %

~~(a)~~

December 2008 Equity has been retroactively adjusted to include Noncontrolling Interest as a component of Equity in accordance with changes issued by the Financial Accounting Standards Board related to consolidation accounting and reporting.

(a)Calculated as Total debt/Total capital.

The Company’s debt as a percent of total capital ~~as of~~at September 30, ~~2009 decreased~~2010 increased from December 31, ~~2008.~~2009. The ~~decrease~~increase results ~~principally~~ from ~~increased equity and a decline~~the issuance of $250 million principal amount of 2.7% notes due in ~~overall debt, primarily due to lower capital expenditures.~~

2015.

Debt Covenants

The Company’s credit facilities and ~~certain~~the 7.25% British pound sterling-denominated notes ~~payable agreements~~ contain ~~covenants requiring~~ a ~~minimum net worth of $475 million and~~covenant stipulating a maximum debt to capital ratio of 60%. Certain notes payable agreements also contain a covenant requiring a minimum net worth of $475 million. In addition, one credit facility limits the proportion of subsidiary consolidated indebtedness to 10% of consolidated tangible assets. At September 30, ~~2009,~~2010, the Company was in compliance with these covenants with a debt to capital ratio of ~~38.5%~~43.3% and total net worth of $1.5 billion. Based on balances at September 30, ~~2009,~~2010, the Company could increase borrowings by approximately ~~$1.3~~$1.1 billion and still be within its debt covenants. Alternatively, keeping all other factors constant, the Company’s equity could decrease by approximately ~~$0.9 billion~~$754 million and the Company would still be within its debt covenants. Additionally, the Company’s ~~7.25% British pound sterling-denominated~~5.75% and 2.70% notes ~~due October 27, 2010, and its 5.75% notes, due May 2018, also~~ include covenants that permit the note holders to redeem their notes at ~~par and~~ 101% of par ~~respectively,~~ in the event of a change of control of the Company or disposition of a significant portion of the Company’s assets in combination with the Company’s credit rating downgraded to non-investment grade. The Company expects to continue to be compliant with these debt covenants one year from now.

Cash and Value-Based Management

The Company has various cash management systems throughout the world that centralize cash at 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 banks located in the various countries in which the Company operates rated “A” or better or if no such banks exist, to use the largest banks within those countries. The Company continuously monitors the creditworthiness of its banks and when appropriate will adjust its banking operations to reduce or eliminate exposure to less creditworthy banks.

The Company plans to continue with its strategy of targeted, prudent investing for strategic purposes for the foreseeable future, ~~although 2009 capital investments are significantly less than 2008 as~~continuing to make more efficient use of existing ~~investments are used more efficiently.~~investments. The long-term goal of this strategy is to ~~improve~~create stockholder value by improving the Company’s ~~EVA under the program adopted in 2002.~~EVA. Under this program, the Company evaluates strategic investments based upon the investment’s economic profit. EVA equals after-tax operating profits less a charge for the use of the capital employed to create those ~~profits (only the service cost portion of net periodic pension cost is included for EVA purposes).~~profits. Therefore, value is created when a project or initiative produces a return above the cost of capital. In the first nine months of ~~2009,~~2010, EVA was lower compared with the first nine months of ~~2008~~2009 due ~~principally~~ to lower operating ~~profits.~~

profits, principally in the Harsco Infrastructure Segment.

TheCompany currently expects tocontinue payingdividends tostockholders. ~~The Company has increased the dividend rate for fifteen consecutive years, and in~~In August ~~2009,~~ 2010,the Company paid its ~~237~~th 241stconsecutive quarterly cash dividend. In September ~~2009,~~2010, the Company declared its ~~238~~242thnd consecutive quarterly cash dividend.

The Company’s financial position and debt capacity should enable it to meet current and future requirements. As additional resources are needed, the Company should be able to obtain funds readily and at competitive costs. The Company is well-positioned financially and intends toto: continue investing ~~prudently and strategically~~ in high-return, organic growth projects and ~~acquisitions,~~prudent, strategic alliances and joint ventures; to reduce ~~debt~~debt; and pay cash dividends as a means ~~to enhance~~of enhancing stockholder value.

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Recently Adopted and Recently Issued Accounting Standards

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

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~Information on~~

See Part II, Item 1A, “Risk Factors,” for quantitative and qualitative disclosures about market ~~risk is included under Part II, Item 1A, “Risk Factors.”~~

risk.

ITEM 4. CONTROLS AND PROCEDURES

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of disclosure controls and procedures as of September 30, ~~2009.~~2010. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective. There have been no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the third quarter of ~~2009.~~

~~- 41 - -~~

2010.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information on legal proceedings is included in Note G,H, “Commitments and Contingencies,” in Part I, Item 1, Financial Statements.

ITEM 1A. RISK FACTORS

In the normal course of business, the Company is routinely subjected to a variety of risks. In addition to the market risk associated with interest rate and currency movements on outstanding debt and non-U.S. dollar-denominated assets and liabilities, other examples of risk include ~~collectability~~adverse economic conditions and increased competition in the global non-residential construction markets; customer concentration in the Harsco Metals and Harsco Rail Segments and certain businesses of ~~receivables,~~the “All Other” Category; collectibility of receivables; volatility of the financial markets and their effect on pension plans and the availability of funding of non-residential construction projects; and global economic and political conditions.

The global recession has continued to diminish certain customers’ credit availability, restraining economic growth on a global basis. Governments have taken unprecedented actions intended to address these and other market conditions. While these conditions have not impaired the Company’s ability to access credit markets and finance operations, at this time, there can be no assurance that there will not be a further deterioration in financial markets and confidence in major economies which could lead to the inability to access credit markets.

For a full disclosure of risk factors that affect the Company, see the Company’s ~~2008~~2009 Annual Report on Form 10-K (Part I, Item 1A).

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

(a) There were no unregistered sales of equity securities during the period covered by the report.

(b) Not applicable.

Period		Total Number of Shares Purchased		Average Price Paid per Share	Total Number of Shares Purchased	~~Average Price Paid per Share~~	~~Total Number of Shares Purchased~~ as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs

July 1, ~~2009~~2010 – July 31, ~~2009~~2010	-	- —	-	~~1,536,647~~ —	—		2,000,000
August 1, ~~2009~~2010 – August 31, ~~2009~~2010	-	- —	-	~~1,536,647~~ —	—		2,000,000
September 1, ~~2009~~2010 – September 30, ~~2009~~2010	-	- —	-	—	—		2,000,000
~~Total~~	-	-	-
Total		—		—	—

The Company’s share repurchase program was extended by the Board of Directors in September 2009. At that time, the Board authorized an increase of 463,353 shares to the 1,536,647 remaining from the Board’s previous stock repurchase authorization. The repurchase program expires January 31, 2011. As of September 30, ~~2009,~~2010, there are 2,000,000 authorized shares remaining in the program. When and if appropriate, repurchases are made in open market transactions, depending on market conditions. Repurchases may not be made and may be discontinued at any time.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. ~~SUBMISSION OF MATTERS TO A VOTE BY SECURITY HOLDERS~~

~~None.~~

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(REMOVED AND RESERVED)

ITEM 5. OTHER INFORMATION

DIVIDEND INFORMATION

On September ~~22, 2009,~~21, 2010, the Company’s Board of Directors declared a quarterly cash dividend of ~~$0.20~~$0.205 per share, payable November ~~13, 2009,~~15, 2010, to stockholders of record as of October ~~14, 2009.~~15, 2010.

~~COMMON STOCK OPTION DISCLOSURE~~

In August 2009, in accordance with Securities and Exchange Commission Rule 10b5-1, Salvatore D. Fazzolari, the Company’s Chairman and Chief Executive Officer (“CEO”), adopted personal trading plans with regard to options to purchase 40,000 shares

Table of the Company’s common stock that will expire in January 2010. Under the personal trading plans, if the Company’s stock reaches a predetermined trading price prior to a predetermined date, the options will be exercised and the stock issued upon such exercise will be sold. If the Company’s stock does not reach the predetermined trading price prior to the predetermined date, the options will be exercised in full in a stock-for-stock exercise. Each plan provides for share withholding to cover withholding taxes relating to such exercise. The trading plans will expire in January 2010.

Rule 10b5-1 allows officers and directors, at a time when they are not in possession of material non-public information, to adopt written plans to sell shares on a regular basis under pre-arranged terms, regardless of any subsequent nonpublic information they may receive. Exercises of stock options by the CEO pursuant to the terms of his plans will be disclosed publicly through Form 144, as applicable, and Form 4 filings with the Securities and Exchange Commission.

Contents

ITEM 6. EXHIBITS

The following exhibits are filed as a part of this report:

Exhibit Number		Description

~~31(a)~~ 4(a)		Indenture, dated as of September 20, 2010, by and between Harsco Corporation and Wells Fargo Bank, National Association, as trustee

4(b)		First Supplemental Indenture, dated as of September 20, 2010, by and between Harsco Corporation and Wells Fargo Bank, National Association, as trustee

4(c)		Form of 2.700% Senior Notes due 2015

31(a)		Certification Pursuant to Rule 13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer)

31(b)		Certification Pursuant to Rule 13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)

32		Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief Financial Officer)

101		The following materials from Harsco Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 are furnished herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Income; (ii) the Condensed Consolidated Balance Sheets; (iii) the Condensed Consolidated Statements of Cash Flows; (iv) the Condensed Consolidated Statements of Equity; (v) the Condensed Consolidated Statements of Comprehensive Income; and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

~~- 43 - -~~

Table of 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)


DATE	November ~~5, 2009~~4, 2010	/S/ Stephen J. Schnoor
		Stephen J. Schnoor
		Senior Vice President, ~~and~~ Chief Financial Officer	and Treasurer


DATE	November ~~5, 2009~~4, 2010	/S/ Richard M. Wagner
		Richard M. Wagner
		Vice President and Controller

~~- 44 - -~~

	Three Months Ended September 30						Nine Months Ended September 30
(In thousands, except per share amounts)	2009			2008 (a)			2009			2008 (a)
Revenues from continuing operations:
Service revenues	$	612,432		$	876,633		$	1,791,081		$	2,673,751
Product revenues		131,789			168,264			427,005			458,524
Total revenues		744,221			1,044,897			2,218,086			3,132,275
Costs and expenses from continuing operations:
Cost of services sold		472,943			644,401			1,385,054			1,968,990
Cost of products sold		81,652			117,940			279,061			316,102
Selling, general and administrative expenses		125,443			153,518			381,354			470,482
Research and development expenses		861			1,177			2,236			3,738
Other (income) expense		6,898			(6,012	)		6,427			(6,129	)
Total costs and expenses		687,797			911,024			2,054,132			2,753,183

Operating income from continuing operations		56,424			133,873			163,954			379,092

Equity in income of unconsolidated entities, net		128			282			280			932
Interest income		888			1,066			1,944			2,866
Interest expense		(15,822	)		(19,650	)		(46,621	)		(55,844	)

Income from continuing operations before income taxes		41,618			115,571			119,557			327,046

Income tax expense		(6,525	)		(30,048	)		(20,508	)		(89,236	)

Income from continuing operations		35,093			85,523			99,049			237,810

Discontinued operations:
Loss from discontinued business		(17,183	)		(852	)		(21,094	)		(1,438	)
Income tax benefit (expense)		5,391			(2,834	)		6,609			(2,588	)
Loss from discontinued operations		(11,792	)		(3,686	)		(14,485	)		(4,026	)
Net Income		23,301			81,837			84,564			233,784
Less: Net income attributable to noncontrolling interests		(3,119	)		(1,553	)		(5,182	)		(6,578	)
Net Income attributable to Harsco Corporation	$	20,182		$	80,284		$	79,382		$	227,206

Amounts attributable to Harsco Corporation common stockholders:
Income from continuing operations, net of tax	$	31,974		$	83,970		$	93,867		$	231,232
Loss from discontinued operations, net of tax		(11,792	)		(3,686	)		(14,485	)		(4,026	)
Net income attributable to Harsco Corporation common stockholders	$	20,182		$	80,284		$	79,382		$	227,206

Weighted average shares of common stock outstanding		80,315			84,089			80,285			84,244
Basic earnings per common share attributable to Harsco Corporation common stockholders:
Continuing operations	$	0.40		$	1.00		$	1.17		$	2.74
Discontinued operations		(0.15	)		(0.04	)		(0.18	)		(0.05	)
Basic earnings per share attributable to Harsco Corporation common stockholders	$	0.25		$	0.95	(b)	$	0.99		$	2.70	(b)

Diluted weighted average shares of common stock outstanding		80,631			84,537			80,557			84,712
Diluted earnings per common share attributable to Harsco Corporation common stockholders:
Continuing operations	$	0.40		$	0.99		$	1.17		$	2.73
Discontinued operations		(0.15	)		(0.04	)		(0.18	)		(0.05	)
Diluted earnings per share attributable to Harsco Corporation common stockholders	$	0.25		$	0.95		$	0.99		$	2.68
Cash dividends declared per common share	$	0.200		$	0.195		$	0.600		$	0.585

(In thousands)	September 30 2009			December 31 2008 (a)
ASSETS
Current assets:
Cash and cash equivalents	$	97,707		$	91,336
Trade accounts receivable, net		640,870			648,880
Other receivables		27,497			46,032
Inventories		300,874			309,530
Other current assets		106,783			104,430
Assets held-for-sale		657			5,280
Total current assets		1,174,388			1,205,488
Property, plant and equipment, net		1,493,119			1,482,833
Goodwill		668,017			631,490
Intangible assets, net		133,792			141,493
Other assets		68,011			101,666
Total assets	$	3,537,327		$	3,562,970
LIABILITIES
Current liabilities:
Short-term borrowings	$	38,586		$	117,854
Current maturities of long-term debt		4,050			3,212
Accounts payable		218,680			262,783
Accrued compensation		70,333			85,237
Income taxes payable		8,563			13,395
Dividends payable		16,063			15,637
Insurance liabilities		24,206			36,553
Advances on contracts		130,538			144,237
Other current liabilities		230,790			209,518
Total current liabilities		741,809			888,426
Long-term debt		919,187			891,817
Deferred income taxes		34,049			35,442
Insurance liabilities		62,345			60,663
Retirement plan liabilities		190,758			190,153
Other liabilities		55,042			46,497
Total liabilities		2,003,190			2,112,998
COMMITMENTS AND CONTINGENCIES
EQUITY
Harsco Corporation stockholders’ equity:
Preferred stock, Series A junior participating cumulative preferred stock		—			—
Common stock		139,186			138,925
Additional paid-in capital		136,160			137,083
Accumulated other comprehensive loss		(152,067	)		(208,299	)
Retained earnings		2,110,374			2,079,170
Treasury stock		(735,016	)		(733,203	)
Total Harsco Corporation stockholders’ equity		1,498,637			1,413,676
Noncontrolling interests		35,500			36,296
Total equity		1,534,137			1,449,972
Total liabilities and equity	$	3,537,327		$	3,562,970

	Harsco Corporation Stockholders’ Equity
(In thousands, except share and per share amounts)	Common Stock					Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest (a)			Total Equity
(In thousands, except share and per share amounts)	Issued		Treasury			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest (a)			Total Equity
Beginning Balances, January 1, 2008	$	138,665	$	(603,169	)	$	128,622		$	1,903,049		$	(129	)	$	38,023		$	1,605,061
Net income										227,206						6,578			233,784
Cash dividends declared:
Common @ $0.585 per share										(49,187	)								(49,187	)
Noncontrolling interests																(4,906	)		(4,906	)
Translation adjustments, net of deferred income taxes of $26,818													(34,906	)		199			(34,707	)
Cash flow hedging instrument adjustments, net of deferred income taxes of $(3,035)													7,420						7,420
Pension liability adjustments, net of deferred income taxes of $(9,153)													21,853						21,853
Marketable securities unrealized loss, net of deferred income taxes of $21													(38	)					(38	)
Stock options exercised, 102,076 shares		128					2,681												2,809
Net issuance of stock – vesting of restricted stock units, 56,847 shares		108		(1,457	)		(8	)											(1,357	)
Treasury shares repurchased, 1,053,633 shares				(52,962	)														(52,962	)
Amortization of unearned compensation on restricted stock units, net of forfeitures							4,099												4,099
Balances, September 30, 2008	$	138,901	$	(657,588	)	$	135,394		$	2,081,068		$	(5,800	)	$	39,894		$	1,731,869

Beginning Balances, January 1, 2009	$	138,925	$	(733,203	)	$	137,083		$	2,079,170		$	(208,299	)	$	36,296		$	1,449,972
Net income										79,382						5,182			84,564
Cash dividends declared:
Common @ $0.600 per share										(48,178	)								(48,178	)
Noncontrolling interests																(2,466	)		(2,466	)
Translation adjustments, net of deferred income taxes of $(15,654)													94,278			297			94,575
Cash flow hedging instrument adjustments, net of deferred income taxes of $10,121													(27,486	)					(27,486	)
Purchase of subsidiary shares from noncontrolling interests							(3,905	)								(9,141	)		(13,046	)
Contributions of equity from noncontrolling interest																5,332			5,332
Pension liability adjustments, net of deferred income taxes of $4,775													(10,569	)					(10,569	)
Marketable securities unrealized loss, net of deferred income taxes of $(5)													9						9
Stock options exercised, 54,000 shares		67		(423	)		863												507
Net issuance of stock – vesting of restricted stock units, 101,918 shares		194		(1,390	)		(616	)											(1,812	)
Amortization of unearned compensation on restricted stock units, net of forfeitures							2,735												2,735
Balances, September 30, 2009	$	139,186	$	(735,016	)	$	136,160		$	2,110,374		$	(152,067	)	$	35,500		$	1,534,137

	Three Months Ended September 30, 2009					Three Months Ended September 30, 2008

(In thousands)	Revenues		Operating Income (Loss)			Revenues		Operating Income (Loss)

Harsco Infrastructure Segment	$	279,450	$	22,503		$	393,292	$	59,998

Harsco Metals Segment		275,093		(4,420	)		423,831		33,287

Segment Totals		554,543		18,083			817,123		93,285

All Other Category – Harsco Minerals & Rail		189,618		39,624			227,714		41,975

General Corporate		60		(1,283	)		60		(1,387	)

Totals	$	744,221	$	56,424		$	1,044,897	$	133,873

	Nine Months Ended September 30, 2009					Nine Months Ended September 30, 2008

(In thousands)	Revenues		Operating Income (Loss)			Revenues		Operating Income (Loss)

Harsco Infrastructure Segment	$	871,962	$	66,267		$	1,201,292	$	155,970

Harsco Metals Segment		772,958		(3,014	)		1,286,037		99,608

Segment Totals		1,644,920		63,253			2,487,329		255,578

All Other Category – Harsco Minerals & Rail		572,986		105,725			644,766		127,953

General Corporate		180		(5,024	)		180		(4,439	)

Totals	$	2,218,086	$	163,954		$	3,132,275	$	379,092

(In thousands)	September 30 2009			December 31 2008
Land and improvements	$	45,574		$	41,913
Buildings and improvements		199,263			167,606
Machinery and equipment		3,108,658			2,905,398
Uncompleted construction		68,012			75,210
Gross property, plant and equipment		3,421,507			3,190,127
Less accumulated depreciation		(1,928,388	)		(1,707,294	)
Net property, plant and equipment	$	1,493,119		$	1,482,833

Goodwill by Segment
(In thousands)	Harsco Infrastructure Segment			Harsco Metals Segment		All Other Category – Harsco Minerals & Rail		Consolidated Totals

Balance as of December 31, 2008	$	220,547		$	299,613	$	111,330	$	631,490

Changes to goodwill		(68	)		480		1,746		2,158

Foreign currency translation		15,566			15,447		3,356		34,369
Balance as of September 30, 2009	$	236,045		$	315,540	$	116,432	$	668,017

Intangible Assets
	September 30, 2009				December 31, 2008
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer relationships	$	148,052	$	56,180	$	138,752	$	40,821

Non-compete agreements		1,426		1,310		1,414		1,196

Patents		7,022		4,496		6,316		4,116

Other		65,497		26,019		60,495		19,309
Total	$	221,997	$	88,005	$	206,977	$	65,442

Acquired Intangible Assets
(In thousands)	Gross Carrying Amount		Residual Value	Weighted-average Amortization Period

Customer relationships	$	931	None	6 years

Patents		425	None	15 years

Other	$	640	None	2 years
Total	$	1,996

(In thousands)	2009	2010	2011	2012	2013

Estimated amortization expense (a)	$25,500	$24,500	$23,400	$11,100	$9,700

	Three Months Ended				Nine Months Ended
	September 30				September 30
(Amounts in thousands, except per share data)	2009		2008		2009		2008

Income from continuing operations attributable to Harsco Corporation common stockholders	$	31,974	$	83,970	$	93,867	$	231,232

Weighted average shares outstanding - basic		80,315		84,089		80,285		84,244

Dilutive effect of stock-based compensation		316		448		272		468

Weighted average shares outstanding - diluted		80,631		84,537		80,557		84,712

Earnings from continuing operations per common share, attributable to Harsco Corporation common stockholders:

Basic	$	0.40	$	1.00	$	1.17	$	2.74

Diluted	$	0.40	$	0.99	$	1.17	$	2.73

	Three Months Ended September 30
Defined Benefit Net Periodic Pension Cost (Income)	U. S. Plans						International Plans
(In thousands)	2009			2008			2009			2008

Defined benefit plans:
Service cost	$	447		$	373		$	1,062		$	2,281
Interest cost		3,523			3,727			11,296			13,202
Expected return on plan assets		(3,647	)		(5,862	)		(10,939	)		(15,337	)
Recognized prior service costs		88			83			92			244
Recognized losses		857			292			2,477			2,742
Amortization of transition liability		—			—			9			9
Curtailment gain		—			—			(79	)		—
Defined benefit plans net periodic pension cost (income) – continuing operations	$	1,268		$	(1,387	)	$	3,918		$	3,141

	Nine Months Ended September 30
Defined Benefit Net Periodic Pension Cost (Income)	U. S. Plans						International Plans
(In thousands)	2009			2008			2009			2008

Defined benefit plans:
Service cost	$	1,311		$	1,367		$	2,998		$	7,082
Interest cost		10,331			11,470			32,245			41,141
Expected return on plan assets		(10,693	)		(17,951	)		(31,212	)		(47,823	)
Recognized prior service costs		257			250			264			753
Recognized losses		2,512			876			6,756			8,561
Amortization of transition liability		—			—			23			28
Curtailment/settlement gain		—			(866	)		(79	)		—
Defined benefit plans net periodic pension cost (income)		3,718			(4,854	)		10,995			9,742
Less Discontinued Operations included in above		—			(694	)		—			—
Defined benefit plans net periodic pension cost (income) – continuing operations	$	3,718		$	(4,160	)	$	10,995		$	9,742

	Fair Values of Derivative Contracts
	At September 30, 2009
(In thousands)	Other current assets		Other assets		Other current liabilities
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts	$	—	$	—	$	36
Commodity contracts		212		—		1,449
Cross-currency interest rate swap		—		7,779		—
Total derivatives designated as hedging instruments	$	212	$	7,779	$	1,485
Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts	$	1,233	$	—	$	1,035

Derivatives Designated as Hedging Instruments
(In thousands)	Amount of Loss Recognized in Other Comprehensive Income (“OCI”) on Derivative - Effective Portion			Location of Loss Reclassified from Accumulated OCI into Income - Effective Portion	Amount of Loss Reclassified from Accumulated OCI into Income - Effective Portion			Location of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing	Amount of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing
For the three months ended September 30, 2009:
Foreign currency forward exchange contracts	$	(57	)	Cost of services and products sold	$	(8	)		$	—
Commodity contracts		(1,130	)	Service Revenues		(923	)	Service Revenues		259
Cross-currency interest rate swap		(1,494	)			—		Cost of services and products sold		(7,920	) (a)
	$	(2,681	)		$	(931	)		$	(7,661	)

Derivatives Not Designated as Hedging Instruments
		Amount of Loss Recognized in Income on Derivative
(In thousands)	Location of Loss Recognized in Income on Derivative	For the Three Months Ended September 30, 2009			For the Nine Months Ended September 30, 2009
Foreign currency forward exchange contracts	Cost of services and products sold	$	(1,946	)	$	(8,704	)

Foreign Currency Forward Exchange Contracts
(In thousands)	As of September 30, 2009
	Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)
British pounds sterling	Sell	$	32,429	October 2009	$	419
British pounds sterling	Buy		49,538	October 2009 through March 2010		(581	)
Euros	Sell		46,272	October 2009		341
Euros	Buy		73,463	October 2009 through November 2009		44
Other currencies	Sell		3,179	October 2009 through December 2009		(66	)
Other currencies	Buy		2,217	October 2009 through December 2009		5
Total		$	207,098		$	162

(In thousands)	Accrual December 31 2008		Adjustments to Previously Recorded Restructuring Charges*			Cash Expenditures			Remaining Accrual September 30 2009

Harsco Infrastructure Segment
Employee termination benefit costs	$	1,806	$	215		$	(1,641	)	$	380
Cost to exit activities		1,963		(999	)		(863	)		101
Total Harsco Infrastructure Segment		3,769		(784	)		(2,504	)		481

Harsco Metals Segment
Employee termination benefit costs		9,888		—			(6,807	)		3,081
Cost to exit activities		656		(150	)		(198	)		308
Total Harsco Metals Segment		10,544		(150	)		(7,005	)		3,389

All Other Category - Harsco Minerals & Rail
Employee termination benefit costs		531		215			(746	)		—
Total All Other Category - Harsco Minerals & Rail		531		215			(746	)		—

Corporate
Employee termination benefit costs		113		—			(113	)		—
Cost to exit activities		2,448		—			(933	)		1,515
Total Corporate		2,561		—			(1,046	)		1,515

Total	$	17,405	$	(719	)	$	(11,301	)	$	5,385

	Revenues by Region
	Total Revenues Three Months Ended September 30				Percentage Change From 2008 to 2009
(Dollars in millions)	2009		2008		Volume/Price			Currency			Total
Western Europe	$	310.0	$	450.8		(23.4	)%		(7.8	)%		(31.2	)%
North America		256.6		363.2		(29.0	)		(0.4	)		(29.4	)
Middle East and Africa		59.7		69.4		(14.3	)		0.3			(14.0	)
Latin America (a)		53.0		72.5		(17.5	)		(9.4	)		(26.9	)
Eastern Europe		33.7		54.5		(21.8	)		(16.4	)		(38.2	)
Asia Pacific		31.2		34.5		(7.5	)		(2.1	)		(9.6	)
Total	$	744.2	$	1,044.9		(23.7	)%		(5.1	)%		(28.8	)%

	Revenues by Region
	Total Revenues Nine Months Ended September 30				Percentage Change From 2008 to 2009
(Dollars in millions)	2009		2008		Volume/Price			Currency			Total
Western Europe	$	923.4	$	1,416.9		(19.9	)%		(14.9	)%		(34.8	)%
North America		823.0		1,057.1		(21.1	)		(1.0	)		(22.1	)
Middle East and Africa		172.0		197.5		(11.0	)		(1.9	)		(12.9	)
Latin America (a)		134.9		202.5		(16.7	)		(16.7	)		(33.4	)
Eastern Europe		86.2		152.1		(20.6	)		(22.7	)		(43.3	)
Asia Pacific		78.6		106.2		(12.3	)		(13.7	)		(26.0	)
Total	$	2,218.1	$	3,132.3		(19.3	)%		(9.9	)%		(29.2	)%

	Three Months Ended September 30						Nine Months Ended September 30
(Dollars in millions)	2009			2008			2009			2008
Revenues	$	279.5		$	393.3		$	872.0		$	1,201.3
Operating income		22.5			60.0			66.3			156.0
Operating margin percent		8.1	%		15.3	%		7.6	%		13.0	%

	Three Months Ended September 30						Nine Months Ended September 30
(In millions, except per share and percentages)	2009			2008 (a)			2009			2008 (a)
Revenues from continuing operations	$	744.2		$	1,044.9		$	2,218.1		$	3,132.3
Cost of services and products sold		554.6			762.3			1,664.1			2,285.1
Selling, general and administrative expenses		125.4			153.5			381.4			470.5
Other (income) expense		6.9			(6.0	)		6.4			(6.1	)
Operating income from continuing operations		56.4			133.9			164.0			379.1
Interest expense		15.8			19.7			46.6			55.8
Income tax expense from continuing operations		6.5			30.0			20.5			89.2
Income from continuing operations		35.1			85.5			99.1			237.8
Loss from discontinued operations		(11.8	)		(3.7	)		(14.5	)		(4.0	)
Net income attributable to Harsco Corporation		20.2			80.3			79.4			227.2
Diluted earnings per common share from continuing operations attributable to Harsco Corporation common stockholders		0.40			0.99			1.17			2.73
Effective income tax rate for continuing operations		15.7	%		26.0	%		17.2	%		27.3	%

Changes in Revenues – 2009 vs. 2008	Three Months Ended September 30			Nine Months Ended September 30
(In millions)
Net decreased volume in the Harsco Metals Segment principally due to the deterioration of the global steel markets and decline in steel production.	$	(106.1	)	$	(345.8	)
Effect of foreign currency translation.		(53.2	)		(309.0	)
Net decreased volume (excluding acquisitions) in the Harsco Infrastructure Segment principally due to weaker demand in Europe, particularly in the United Kingdom.		(90.5	)		(197.3	)
Decreased revenues in the industrial grating products business due to weaker demand and lower commodity pricing.		(15.5	)		(35.2	)
Decreased revenues of the minerals business due to weaker demand and lower commodity pricing.		(1.3	)		(31.6	)
Decreased revenues of air-cooled heat exchangers business due to a weaker natural gas market.		(24.8	)		(24.9	)
Increased revenues in the Harsco Rail business principally due to shipments of equipment to China.		8.9			41.5
Effect of business acquisitions in the Harsco Infrastructure Segment.		0.8			2.5
Out-of-period adjustment in the Harsco Metals Segment and other changes across the various units not already mentioned.		(19.0	)		(14.4	)
Total Change in Revenues – 2009 vs. 2008	$	(300.7	)	$	(914.2	)

Summary of Credit Facilities and Commercial Paper Programs
(In millions)	Facility Limit		Outstanding Balance		Available Credit

U.S. commercial paper program	$	550.0	$	10.9	$	539.1

Euro commercial paper program		291.4		7.3		284.1

Multi-year revolving credit facility (a)		450.0		—		450.0

364-day revolving credit facility (a) (b)		220.0		—		220.0

Bilateral credit facility (c)		30.0		—		30.0

Totals at September 30, 2009	$	1,541.4	$	18.2	$	1,523.2	(d)

(Dollars are in millions)	September 30 2009		December 31 2008		Increase (Decrease)
Current Assets
Cash and cash equivalents	$	97.7	$	91.3	$	6.4
Trade accounts receivable, net		640.9		648.9		(8.0	)
Other receivables		27.5		46.0		(18.5	)
Inventories		300.9		309.5		(8.6	)
Other current assets		106.8		104.5		2.3
Assets held-for-sale		0.6		5.3		(4.7	)
Total current assets		1,174.4		1,205.5		(31.1	)
Current Liabilities
Notes payable and current maturities		42.6		121.1		(78.5	)
Accounts payable		218.7		262.8		(44.1	)
Accrued compensation		70.3		85.2		(14.9	)
Income taxes payable		8.6		13.4		(4.8	)
Other current liabilities		401.6		405.9		(4.3	)
Total current liabilities		741.8		888.4		(146.6	)
Working Capital	$	432.6	$	317.1	$	115.5
Current Ratio	1.6:1		1.4:1