================================================================================


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                              --------------------


                                    FORM 10-Q


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

                For the Quarterly Period Ended March 31, 2004

                                       OR

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

                For the transition period from _____ to ______

                          Commission File Number 1-3970


                              --------------------


                               HARSCO CORPORATION
- --------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


          Delaware                                        23-1483991
- --------------------------------------------------------------------------------
   (State of incorporation)                 (I.R.S. Employer Identification No.)


   Camp Hill, Pennsylvania                                17001-8888
- --------------------------------------------------------------------------------
(Address of principal executive offices)                   (Zip Code)


Registrant's Telephone Number                            (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 [_]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
YES [X]      NO [_]

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


               Class                               Outstanding at April 30, 2004
               -----                               -----------------------------
Common stock, par value $1.25 per share                      41,089,740

================================================================================

                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)


                                                                                            THREE MONTHS ENDED MARCH 31
                                                                                           ------------------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                                                       2004              2003
======================================================================================     ============      ============
                                                                                                       
REVENUES FROM CONTINUING OPERATIONS:
    Service sales                                                                          $    405,907      $    347,603
    Product sales                                                                               150,366           140,299
- --------------------------------------------------------------------------------------     ------------      ------------
      TOTAL REVENUES                                                                            556,273           487,902
- --------------------------------------------------------------------------------------     ------------      ------------

COSTS AND EXPENSES FROM CONTINUING OPERATIONS:
    Cost of services sold                                                                       304,792           261,737
    Cost of products sold                                                                       124,196           113,937
    Selling, general and administrative expenses                                                 88,004            80,512
    Research and development expenses                                                               705               872
    Other expenses                                                                                1,620               938
- --------------------------------------------------------------------------------------     ------------      ------------
      TOTAL COSTS AND EXPENSES                                                                  519,317           457,996
- --------------------------------------------------------------------------------------     ------------      ------------

      OPERATING INCOME FROM CONTINUING OPERATIONS                                                36,956            29,906

Equity in income of affiliates, net                                                                  97               162
Interest income                                                                                     714               697
Interest expense                                                                                (10,282)          (10,267)
- --------------------------------------------------------------------------------------     ------------      ------------

      INCOME FROM CONTINUING OPERATIONS BEFORE
        INCOME TAXES AND MINORITY INTEREST                                                       27,485            20,498

Income tax expense                                                                               (8,527)           (6,350)
- --------------------------------------------------------------------------------------     ------------      ------------

      INCOME FROM CONTINUING OPERATIONS BEFORE
        MINORITY INTEREST                                                                        18,958            14,148

Minority interest in net income                                                                  (2,101)           (1,678)
- --------------------------------------------------------------------------------------     ------------      ------------

INCOME FROM CONTINUING OPERATIONS                                                                16,857            12,470
- --------------------------------------------------------------------------------------     ------------      ------------

DISCONTINUED OPERATIONS:
    Income/(loss) from operations of discontinued business                                           10              (212)
    Gain/(loss) on disposal of discontinued business                                               (147)              295
    Income related to discontinued defense business                                                 224                --
    Income tax expense                                                                              (20)              (30)
- --------------------------------------------------------------------------------------     ------------      ------------
INCOME FROM DISCONTINUED OPERATIONS                                                                  67                53
- --------------------------------------------------------------------------------------     ------------      ------------
      NET INCOME                                                                           $     16,924      $     12,523
======================================================================================     ============      ============

Average shares of common stock outstanding                                                       40,937            40,543

Basic earnings per common share:
    Continuing operations                                                                  $        .41      $        .31
    Discontinued operations                                                                          --                --
- --------------------------------------------------------------------------------------     ------------      ------------
BASIC EARNINGS PER COMMON SHARE                                                            $        .41      $        .31
======================================================================================     ============      ============

Diluted average shares of common stock outstanding                                               41,461            40,654

Diluted earnings per common share:
    Continuing operations                                                                  $        .41      $        .31
    Discontinued operations                                                                          --                --
- --------------------------------------------------------------------------------------     ------------      ------------
DILUTED EARNINGS PER COMMON SHARE                                                          $        .41      $        .31
======================================================================================     ============      ============
CASH DIVIDENDS DECLARED PER COMMON SHARE                                                   $       .275      $      .2625
======================================================================================     ============      ============


See accompanying notes to consolidated financial statements.

                                       -2-

                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)



                                                                                             MARCH 31         DECEMBER 31
(IN THOUSANDS)                                                                                 2004             2003 (A)
======================================================================================     ============      ============
                                                                                                       
ASSETS
CURRENT ASSETS:
    Cash and cash equivalents                                                              $     78,845      $     80,210
    Accounts receivable, net                                                                    467,100           446,875
    Inventories                                                                                 205,925           190,221
    Other current assets                                                                         47,647            47,045
- --------------------------------------------------------------------------------------     ------------      ------------
      TOTAL CURRENT ASSETS                                                                      799,517           764,351
- --------------------------------------------------------------------------------------     ------------      ------------
Property, plant and equipment, net                                                              868,284           866,332
Goodwill, net                                                                                   410,249           407,846
Other assets                                                                                     97,393            97,483
Assets held for sale                                                                              1,518             2,023
- --------------------------------------------------------------------------------------     ------------      ------------
      TOTAL ASSETS                                                                         $  2,176,961      $  2,138,035
======================================================================================     ============      ============

LIABILITIES
CURRENT LIABILITIES:
    Short-term borrowings                                                                  $     17,041      $     14,854
    Current maturities of long-term debt                                                         13,827            14,252
    Accounts payable                                                                            187,388           188,430
    Accrued compensation                                                                         42,255            46,034
    Income taxes                                                                                 45,821            45,116
    Dividends payable                                                                            11,270            11,238
    Other current liabilities                                                                   186,066           175,151
- --------------------------------------------------------------------------------------     ------------      ------------
      TOTAL CURRENT LIABILITIES                                                                 503,668           495,075
- --------------------------------------------------------------------------------------     ------------      ------------
Long-term debt                                                                                  608,111           584,425
Deferred income taxes                                                                            67,004            66,855
Insurance liabilities                                                                            48,593            47,897
Retirement plan liabilities                                                                     116,146           115,190
Other liabilities                                                                                52,447            50,707
Liabilities associated with assets held for sale                                                    453               898
- --------------------------------------------------------------------------------------     ------------      ------------
      TOTAL LIABILITIES                                                                       1,396,422         1,361,047
- --------------------------------------------------------------------------------------     ------------      ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock                                                                                     84,342            84,197
Additional paid-in capital                                                                      124,004           120,070
Accumulated other comprehensive expense                                                        (175,600)         (169,427)
Retained earnings                                                                             1,351,432         1,345,787
Treasury stock                                                                                 (603,639)         (603,639)
- --------------------------------------------------------------------------------------     ------------      ------------
      TOTAL SHAREHOLDERS' EQUITY                                                                780,539           776,988
- --------------------------------------------------------------------------------------     ------------      ------------
      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                           $  2,176,961      $  2,138,035
======================================================================================     ============      ============


(a)  As permitted by the Financial Accounting Standards Board (FASB) Statement
     No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
     2003 information has been reclassified for comparative purposes.

See accompanying notes to consolidated financial statements.

                                       -3-

                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)



                                                                                             THREE MONTHS ENDED MARCH 31
                                                                                           ------------------------------
(IN THOUSANDS)                                                                                2004                  2003
======================================================================================     ============      ============
                                                                                        
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                              $     16,924      $     12,523
   Adjustments to reconcile net income to net cash provided (used)
     by operating activities:
       Depreciation                                                                              43,972            39,895
       Amortization                                                                                 552               373
       Equity in income of unconsolidated entities, net                                             (97)             (162)
       Dividends or distributions from unconsolidated entities                                      456                --
       Other, net                                                                                 3,122               507
       Changes in assets and liabilities, net of acquisitions and
         dispositions of businesses:
           Accounts receivable                                                                  (21,329)          (21,624)
           Inventories                                                                          (15,590)           (7,593)
           Accounts payable                                                                      (3,424)           (6,089)
           Net disbursements related to discontinued defense business                               (76)             (234)
           Other assets and liabilities                                                           7,865            13,580
- --------------------------------------------------------------------------------------     ------------      ------------

       NET CASH PROVIDED BY OPERATING ACTIVITIES                                                 32,375            31,176
- --------------------------------------------------------------------------------------     ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property, plant and equipment                                                   (46,539)          (30,181)
   Purchase of businesses, net of cash acquired                                                    (434)               --
   Proceeds from sale of assets                                                                   1,818            12,284
- --------------------------------------------------------------------------------------     ------------      ------------

       NET CASH USED BY INVESTING ACTIVITIES                                                    (45,155)          (17,897)
- --------------------------------------------------------------------------------------     ------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Short-term borrowings, net                                                                     2,172            (6,540)
   Current maturities and long-term debt:
           Additions                                                                             41,787            50,133
           Reductions                                                                           (24,471)          (27,219)
   Cash dividends paid on common stock                                                          (11,247)          (10,643)
   Common stock issued-options                                                                    3,493               190
   Other financing activities                                                                       (85)                3
- --------------------------------------------------------------------------------------     ------------      ------------

       NET CASH PROVIDED BY FINANCING ACTIVITIES                                                 11,649             5,924
- --------------------------------------------------------------------------------------     ------------      ------------

Effect of exchange rate changes on cash                                                            (234)              875
- --------------------------------------------------------------------------------------     ------------      ------------

Net increase (decrease) in cash and cash equivalents                                             (1,365)           20,078

Cash and cash equivalents at beginning of period                                                 80,210            70,132
- --------------------------------------------------------------------------------------     ------------      ------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                 $     78,845      $     90,210
======================================================================================     ============      ============


See accompanying notes to consolidated financial statements.

                                       -4-

                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                   (Unaudited)




                                                                                             THREE MONTHS ENDED MARCH 31
                                                                                           ------------------------------
(IN THOUSANDS)                                                                                 2004              2003
======================================================================================     ============      ============
                                                                                                       
Net income                                                                                 $     16,924      $     12,523
- --------------------------------------------------------------------------------------     ------------      ------------

Other comprehensive income (expense):
   Foreign currency translation adjustments                                                      (3,191)            4,656
   Net gains (losses) on cash flow hedging instruments, net of
     deferred income taxes                                                                          (25)                3
   Pension liability adjustments, net of deferred income taxes                                   (3,061)           22,690
   Reclassification adjustment for loss on cash flow hedging
     instruments, net of deferred income taxes included in net income                               104                --
   Reclassification adjustment for loss on marketable securities,
     net of deferred income taxes included in net income                                             --                 2
- --------------------------------------------------------------------------------------     ------------      ------------

Other comprehensive income (expense)                                                             (6,173)           27,351
- --------------------------------------------------------------------------------------     ------------      ------------

TOTAL COMPREHENSIVE INCOME                                                                 $     10,751      $     39,874
======================================================================================     ============      ============



See accompanying notes to consolidated financial statements.




























                                       -5-

                  HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART 1 - FINANCIAL INFORMATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------

A.   OPINION OF MANAGEMENT

Financial information furnished herein, which is unaudited, in the opinion of
management reflects all adjustments (all of which are of a normal recurring
nature) that are necessary to present a fair statement of the interim period.
This unaudited interim information should be read in conjunction with the
Company's annual Form 10-K filing for the year ended December 31, 2003.


B.   RECLASSIFICATIONS

Certain reclassifications have been made to prior years' amounts to conform with
current year classifications. These reclassifications relate principally to
segment information, which has been reclassified to conform to the current
presentation as described in Note D, "Review of Operations by Segment."
Additional reclassifications have been made between the property, plant and
equipment accounts and the assets held for sale account to reflect assets
currently classified as held for sale as permitted by SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets."

As a result of these reclassifications, certain 2003 amounts presented for
comparative purposes will not individually agree with previously filed Forms
10-K or 10-Q.


C.   OPTIONS FOR COMMON STOCK

The Company uses the intrinsic value method to account for options granted to
employees for the purchase of common stock. No compensation expense is
recognized on the grant date, since at that date, the option price equals the
market price of the underlying common stock.

The Company's net income and net income per common share would have been reduced
to the pro forma amounts indicated below if compensation cost for the Company's
stock option plan had been determined based on the fair value at the grant date
for awards in accordance with the provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation" (SFAS 123).


                                                            THREE MONTHS ENDED
                                                                  MARCH 31
    (IN THOUSANDS, EXCEPT PER SHARE)                      2004               2003
    --------------------------------------------------------------------------------
                                                                    
    Net income:
        As reported                                    $   16,924         $   12,523
        Compensation expense (a)                              (96)              (481)
                                                       ----------         ----------
        Pro forma                                      $   16,828         $   12,042
                                                       ==========         ==========
    Basic earnings per share:
        As reported                                    $      .41         $      .31
        Pro forma                                             .41                .30
    Diluted earnings per share:
        As reported                                           .41                .31
        Pro forma                                             .41                .30
    --------------------------------------------------------------------------------


     (a)  Total stock-based employee compensation expense determined under fair
          value based method for all awards, net of related tax effects.

                                      -6-


                  HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART 1 - FINANCIAL INFORMATION

D.   REVIEW OF OPERATIONS BY SEGMENT

                                                        THREE MONTHS ENDED               THREE MONTHS ENDED
                                                          MARCH 31, 2004                   MARCH 31, 2003

                                                                    OPERATING
                                                                      INCOME                          OPERATING
                                                     SALES(A)        (LOSS)(B)        SALES(A)        INCOME(B)
    -----------------------------------------------------------------------------------------------------------
                                                                                          
      Mill Services Segment                          $236,293        $ 25,250         $188,246        $ 16,729

      Access Services Segment                         157,807           3,400          147,404           4,628

      Gas and Fluid Control Segment (c)                77,562           3,088           68,193           3,327
    -----------------------------------------------------------------------------------------------------------

      Segment Totals                                  471,662          31,738          403,843          24,684

      Other Infrastructure Products and Services
         ("all other") Category (c)                    84,611           6,163           84,059           3,846

      General Corporate                                  --              (945)            --             1,376
    -----------------------------------------------------------------------------------------------------------

      Consolidated Totals                            $556,273        $ 36,956         $487,902        $ 29,906
    ===========================================================================================================


     (a) Sales from continuing operations to unaffiliated customers.

     (b) Operating income (loss) from continuing operations.

     (c) Segment information for prior periods has been reclassified to conform
         with the current presentation. Due to management changes, effective
         January 1, 2004, the Air-X-Changers Division is classified in the Other
         Infrastructure Products and Services ("all other") Category.

     RECONCILIATION OF SEGMENT OPERATING INCOME TO CONSOLIDATED INCOME
     BEFORE INCOME TAXES AND MINORITY INTEREST

                                                                            THREE MONTHS ENDED
                                                                                 MARCH 31
    (IN THOUSANDS)                                                        2004               2003
    ------------------------------------------------------------------------------------------------
                                                                                    
    Operating income from continuing operations                        $   36,956         $   29,906

    Equity in income of affiliates, net                                        97                162

    Interest Income                                                           714                697

    Interest Expense                                                      (10,282)           (10,267)

    ------------------------------------------------------------------------------------------------
    Income from continuing operations before income taxes and
      minority interest                                                $   27,485         $   20,498
    ================================================================================================


E.   ACCOUNTS RECEIVABLE AND INVENTORIES

Accounts receivable are net of an allowance for doubtful accounts of $23.2
million and $24.6 million at March 31, 2004 and December 31, 2003, respectively.
The provision for doubtful accounts was $1.7 million and $0.5 million for the
three months ended March 31, 2004 and 2003, respectively.

                                      -7-


                  HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART 1 - FINANCIAL INFORMATION

Inventories consists of the following:


                                                       MARCH 31         DECEMBER 31
     (IN THOUSANDS)                                      2004              2003
    ------------------------------------------------------------------------------
                                                                  
    Finished goods                                    $   55,665        $   59,739
    Work-in-process                                       41,363            32,121
    Raw materials and purchased parts                     84,657            74,231
    Stores and supplies                                   24,240            24,130
    ------------------------------------------------------------------------------

    Total Inventory                                   $  205,925        $  190,221
    ==============================================================================


F.   PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of:


                                                                                                MARCH 31          DECEMBER 31
    (IN THOUSANDS)                                                                                2004               2003(A)
    --------------------------------------------------------------------------------------------------------------------------
                                                                                                            
    Land and improvements                                                                    $     39,788         $     39,554
    Buildings and improvements                                                                    177,301              176,168
    Machinery and equipment                                                                     1,781,463            1,803,867
    Uncompleted construction                                                                       49,360               37,505
    --------------------------------------------------------------------------------------------------------------------------
    Gross property, plant and equipment                                                         2,047,912            2,057,094
    Less accumulated depreciation and facilities valuation allowance                           (1,179,628)          (1,190,762)
    --------------------------------------------------------------------------------------------------------------------------
    Net property, plant and equipment                                                        $    868,284         $    866,332
    ==========================================================================================================================


     (a) As permitted by the Financial Accounting Standards Board (FASB)
         Statement No. 144, "Accounting for the Impairment or Disposal of
         Long-Lived Assets," 2003 information has been reclassified for
         comparative purposes.

G.   GOODWILL AND OTHER INTANGIBLE ASSETS

The following table reflects the changes in carrying amounts of goodwill by
segment for the three months ended March 31,
2004:


                                                                                                     OTHER
                                                                                                 INFRASTRUCTURE
                                                                                      GAS AND     PRODUCTS AND
                                                          MILL           ACCESS        FLUID        SERVICES
                                                         SERVICES       SERVICES      CONTROL    ("ALL OTHER")  CONSOLIDATED
(IN THOUSANDS)                                           SEGMENT        SEGMENT       SEGMENT       CATEGORY        TOTALS
- ----------------------------------------------------------------------------------------------------------------------------
                                                                                                    
Balance as of December 31, 2003, net of
     accumulated amortization                           $ 208,718      $ 154,298     $  36,693     $   8,137       $ 407,846

Goodwill acquired during year                                --              207          --            --               207

Other (principally foreign currency translation)             (754)         2,950          --            --             2,196

- ----------------------------------------------------------------------------------------------------------------------------
BALANCE AS OF MARCH 31, 2004, NET OF
    ACCUMULATED AMORTIZATION                            $ 207,964      $ 157,455     $  36,693     $   8,137       $ 410,249
============================================================================================================================


Goodwill is net of accumulated amortization of $104.6 million and $105.2 million
at March 31, 2004 and December 31, 2003, respectively.

Intangible assets, which are included in Other assets on the Condensed
Consolidated Balance Sheet, totaled $10.3 million, net of accumulated
amortization of $8.8 million at March 31, 2004 and $10.4 million, net of
accumulated

                                      -8-


                  HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART 1 - FINANCIAL INFORMATION

amortization of $8.4 million at December 31, 2003. All intangible assets have
been classified as finite-lived and are subject to amortization. The following
chart reflects these intangible assets by major category.


                                                MARCH 31, 2004                    DECEMBER 31, 2003
                                        GROSS CARRYING    ACCUMULATED      GROSS CARRYING     ACCUMULATED
    (IN THOUSANDS)                         AMOUNT         AMORTIZATION         AMOUNT         AMORTIZATION
    ----------------------------------------------------------------------------------------------------
                                                                                     
    Customer Relationships                 $ 6,459           $   270           $ 6,373           $   196

    Non-compete agreements                   4,862             3,758             4,863             3,671

    Patents                                  4,314             3,441             4,304             3,351

    Other                                    3,451             1,334             3,313             1,197

    ----------------------------------------------------------------------------------------------------
    Total                                  $19,086           $ 8,803           $18,853           $ 8,415
    ====================================================================================================


Amortization expense for intangible assets was $0.4 million and $0.2 million for
the three months ended March 31, 2004 and 2003, respectively. The following
chart shows the estimated amortization expense for the next five fiscal years
based on current intangible assets.


    (IN THOUSANDS)                           2004       2005       2006      2007     2008
    --------------------------------------------------------------------------------------
                                                                      
    Estimated Amortization Expense          $ 1,507    $ 1,321    $ 1,090    $ 895   $ 711


H.   ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

In management's ongoing strategic efforts to increase the Company's focus on
core industrial services, certain manufacturing operations have been divested.
Effective March 21, 2002, the Board of Directors authorized the sale of the
Capitol Manufacturing business, a business unit of the Gas and Fluid Control
Segment. A significant portion of the Capitol Manufacturing business was sold on
June 28, 2002. The Company continues to recognize income from inventory
consigned to the buyer in accordance with the sale agreement and when all
revenue recognition criteria have been met. This business has been included in
discontinued operations and the assets and liabilities have been separately
identified on the Balance Sheet as "held for sale" for all periods presented.
There were no sales from discontinued operations for the three months ended
March 31, 2004 and 2003 as the business was sold during 2002. The income (loss)
from discontinued operations does not include any charges to reduce the book
value of the business held for sale to its fair market value less cost to sell,
since the estimated fair value of the business exceeded the book value.

Throughout 2003 and 2004, management approved the sale of certain long-lived
assets (primarily land and buildings) of the Access Services and Mill Services
Segments. Accordingly, these assets have been separately identified on the
Balance Sheet as "held for sale" for all periods presented.

The major classes of assets and liabilities "held for sale" included in the
Condensed Consolidated Balance Sheet are as follows:


                                                           MARCH 31         DECEMBER 31
(IN THOUSANDS)                                               2004               2003
- ---------------------------------------------------------------------------------------
                                                                       
ASSETS
Accounts receivable, net                                  $      (54)        $      411
Inventories                                                      194                222
Other current assets                                              20                 20
Property, plant and equipment, net                             1,358              1,370
- ---------------------------------------------------------------------------------------
TOTAL ASSETS "HELD FOR SALE"                              $    1,518         $    2,023
=======================================================================================

                                      -9-


                  HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART 1 - FINANCIAL INFORMATION


                                                           MARCH 31         DECEMBER 31
(IN THOUSANDS)                                               2004               2003
- ---------------------------------------------------------------------------------------
                                                                       
LIABILITIES
Accounts payable                                          $     --           $      512
Other current liabilities                                        453                386
- ---------------------------------------------------------------------------------------
TOTAL LIABILITIES ASSOCIATED WITH ASSETS
    "HELD FOR SALE"                                       $      453         $      898
=======================================================================================


I.   COMMITMENTS AND CONTINGENCIES

FEDERAL EXCISE TAX AND OTHER MATTERS RELATED TO THE FIVE-TON TRUCK CONTRACT
In 1995, the Company, the United States Army ("Army"), and the United States
Department of Justice concluded a settlement of Harsco's previously reported
claims against the Army relating to Federal Excise Tax ("FET") arising under a
completed 1986 contract for the sale of five-ton trucks to the Army. On
September 27, 1995, the Army paid the Company $49 million in accordance with the
settlement terms. The Company released the Army from any further liability for
those claims, and the Department of Justice released the Company from a
threatened action for damages and civil penalties based on an investigation
conducted by the Department's Commercial Litigation Branch that had been pending
for several years.

The settlement preserves the rights of the parties to assert claims and defenses
under the Internal Revenue Code, and rights of the Army and the Company to claim
certain amounts that may be owed by either party to reconcile possible
underpayments or overpayments on the truck contract as part of the formal
contract close-out process.

The settlement does not resolve the claim by the Internal Revenue Service
("IRS") that, contrary to the Company's position, certain cargo truck models
sold by the Company should be considered to have gross vehicle weights in excess
of the 33,000 pound threshold under FET law, are not entitled to an exemption
from FET under any other theory, and therefore are taxable. In 1999, the IRS
assessed an increase in FET of $30.4 million plus penalties and applicable
interest currently estimated to be $12.4 million and $71.9 million,
respectively, as of March 31, 2004. In October 1999, the Company posted an $80
million bond required as security by the IRS. This increase in FET takes into
account offsetting credits of $9.2 million, based on a partial allowance of the
Company's $31.9 million claim that certain truck components are exempt from FET.
The IRS disallowed in full the Company's additional claim that it is entitled to
the entire $52 million of FET (plus applicable interest estimated by the Company
to be $61.6 million as of March 31, 2004) the Company has paid on the five-ton
trucks, on the grounds that such trucks qualify for the FET exemption applicable
to certain vehicles specially designed for the primary function of off-highway
transportation. In the event that the Company ultimately receives from the IRS a
refund of tax (including applicable interest) with respect to which the Company
has already received reimbursement from the Army, the refund would be allocated
between the Company and the Army. In August 2000, the Company filed legal action
against the Government in the U.S. Court of Federal Claims challenging the
assessment and seeking a refund of all FET that the Company has paid on five-ton
trucks. Although there is risk of an adverse outcome, both the Company and the
Army believe that the cargo trucks are not taxable.

The settlement agreement with the Army preserved the Company's right to seek
reimbursement of after-imposed tax from the Army in the event that the cargo
trucks are determined to be taxable, but the agreement limited the reimbursement
to a maximum of $21 million. Additionally, in an earlier contract modification,
the Army accepted responsibility for $3.6 million of the potential tax, bringing
its total potential responsibility up to $24.6 million. As of September 30,
2000, the Army paid the Company this entire amount and the Company paid those
funds to the IRS, subject to its pending refund claim plus applicable interest.
Thus, the Company has satisfied a portion of the disputed tax assessment.

Even if the cargo trucks are ultimately held to be taxable, the Army's
contribution of $24.6 million toward payment of the tax (but not interest or
penalty, if any), would result in a net maximum liability for the Company of
$5.8 million plus penalties and applicable interest estimated as of March 31,
2004, to be $12.4 million and $71.9 million, respectively. The Company believes
it is unlikely that resolution of this matter will have a material adverse
effect on the Company's financial position; however, it could have a material
effect on quarterly or annual results of operations and cash flows.

During the third quarter of 2003, several significant developments occurred with
respect to this matter. On July 16, 2003, the Court denied entirely the
Government's motion for summary judgment. Shortly after the ruling and at the
urging of the

                                      -10-


                  HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART 1 - FINANCIAL INFORMATION

Court, the Government and the Company commenced settlement negotiations. These
settlement negotiations progressed significantly during the months of August and
September. At a status conference on September 30, 2003, the Court suspended
further proceedings in the litigation pending the outcome of the settlement
discussions. Since September, continued progress has been made toward finalizing
a settlement. The Company has been notified that the U.S. Internal Revenue
Service's Chief Counsel Office and the Court of Federal Claims Section of the
U.S. Department of Justice (Tax Division) have recommended for approval a
Company-sponsored settlement proposal in this matter. The settlement proposal,
which still requires approval by several levels within the U.S. Department of
Justice, would result in a refund to Harsco of an estimated $12 million to $13
million in taxes and interest. Final approval by the Department of Justice may
take several months.

As a result of these developments during the third and fourth quarters of 2003,
the Company has adjusted an accrual related to this matter. These adjustments
were included as Income related to discontinued defense business on the
Company's Consolidated Statements of Income for the three months ended September
30, 2003 and the three month period ending March 31, 2004. The Company's current
expectation is that its future obligations for finalizing this matter will
approximate $0.5 million. No recognition has been given in the accompanying
financial statements for the outcome of the ongoing settlement discussions with
respect to the Company's claim for a tax refund or the proposed settlement.

ENVIRONMENTAL
The Company is involved in a number of environmental remediation investigations
and clean-ups and, along with other companies, has been identified as a
"potentially responsible party" for certain waste disposal sites. While each of
these matters is subject to various uncertainties, it is probable that the
Company will agree to make payments toward funding certain of these activities
and it is possible that some of these matters will be decided unfavorably to the
Company. The Company has evaluated its potential liability, and its financial
exposure is dependent upon such factors as the continuing evolution of
environmental laws and regulatory requirements, the availability and application
of technology, the allocation of cost among potentially responsible parties, the
years of remedial activity required and the remediation methods selected. The
Consolidated Balance Sheets at March 31, 2004 and December 31, 2003 include
accruals of $3.2 million and $3.3 million, respectively, for environmental
matters. The amounts charged against pre-tax income related to environmental
matters totaled $0.4 million and $0.2 million for the first three months of 2004
and 2003, respectively.

The liability for future remediation costs is evaluated 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.

In January 2002, the New Jersey Department of Environmental Protection ("NJDEP")
issued Notices of Civil Administrative Penalty Assessment to the Company for
violations of the New Jersey Air Pollution Control Act. The Notices allege that
the Company operated a slag processing plant in violation of the emission permit
for control of slag dust. The Agency assessed civil administrative penalties
totaling approximately $311,000 and the Company filed an appeal with the Agency.
In March 2003, NJDEP amended its assessment and reduced the proposed penalty to
$146,000. This amended order has been appealed. The Company ceased operations at
the plant in the fourth quarter of 2001 for unrelated reasons.

CUSTOMER RESTRUCTURING
On January 29, 2004, a customer of the Company announced that it had obtained an
order to initiate a Court-supervised restructuring under Canada's Companies'
Creditors Arrangement Act (the Act). The Company is actively monitoring this
restructuring to determine the Company's potential loss exposure, if any. The
Company's pre-petition net receivable balance with the customer as of March 31,
2004 was approximately $5.3 million. The Company intends to vigorously pursue
collection of the entire receivable balance pursuant to our rights and
obligations under the Act. The Company has been successful in collecting
substantially all of the pre-petition receivable amounts in several similar
cases where the customer has filed for bankruptcy-court protection. Accordingly,
no reserve has been recognized as of March 31, 2004.

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 many manufacturers, distributors and installers of
numerous types of equipment or products that allegedly contained asbestos.

                                      -11-


                  HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART 1 - FINANCIAL INFORMATION

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 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 airborne asbestos exposure, and
moreover, the type of asbestos contained in any component that was used in those
products is protectively encapsulated in other materials and is not associated
with the types of injuries alleged. Finally, in most of the depositions taken of
plaintiffs to date in the litigation against the Company, plaintiffs have failed
to identify any Company products as the source of their asbestos exposure.

The majority of the asbestos complaints have been filed in either New York or
Mississippi. 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's alleged medical condition, and without
identifying any Company product as the source of plaintiff's asbestos exposure.
With respect to the Mississippi complaints, most contain a standard claim for an
unstated amount of damages against the numerous defendants (typically 240 to
270), without identifying any Company product as the source of plaintiff's
asbestos exposure.

The Company has not paid any amounts in settlement of these cases, with the
exception of two settlements totaling less than $10,000 paid in 1998 from
insurance proceeds. The Company's insurance carrier has paid all legal costs and
expenses to date. The Company has liability insurance coverage available 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.

During the first quarter of 2004, there was no significant increase in the
number of pending cases, either in total or in any particular jurisdiction. A
thorough review of all outstanding cases was conducted during the quarter. Based
on that review, there are currently approximately 36,600 pending asbestos
personal injury claims filed against the Company. Approximately 26,650 of these
cases were pending in the New York Supreme Court for various counties in New
York State and approximately 9,350 of the cases were pending in state courts of
various counties in Mississippi. The other claims totaling approximately 600 are
filed in various counties in a number of state courts, and in U.S. Federal
District Court for the Eastern District of Pennsylvania, and those complaints
assert lesser amounts of damages than the New York cases or do not state any
amount claimed.

As of March 31, 2004, the Company has obtained dismissal by stipulation, or
summary judgment prior to trial, in all cases that have proceeded to trial.
Further, the Company reached agreement with one plaintiff's counsel in
Mississippi to dismiss the Company from approximately 2,900 cases in that state.
The dismissal of these cases was finalized during the first quarter of 2004.

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 were developments
during the fourth quarter of 2002 that could have a favorable effect for the
Company regarding the pending claims and the number of future claims filed in
counties within New York City and in Mississippi state courts after 2002. On
December 19, 2002, the New York Supreme Court responsible for managing all
asbestos cases pending in the counties within New York City issued an Order
which 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 discernible physical impairment, and an Active Docket for
plaintiffs who are able to show such medical conditions. The Court is reviewing
cases for docketing based on their date of filing, with the older pending cases
reviewed first. Cases designated as Active are then assigned to a "FIFO" trial
group, which groups are scheduled for trial in the designated months of either
February or August. For cases in which there has been a recent death or a
diagnosis of cancer, the Court reviews such cases on an expedited basis and, if
medically supported, such cases are transferred to an "In Extremis" trial group,
which groups are scheduled for trial in the designated months of either May or
November. As of March 31, 2004, the Court has designated a total of 460 cases as
Active and assigned to trial groups scheduled for trial for the period of
February 2004 through February 2005, with the Company named in only 164 of those
cases. The Company was dismissed from all 14 cases in which it was named in the
February 2004 FIFO trial group and is in the process of obtaining dismissals as
to all 28 of the cases in which it was named in the May 2004 "In Extremis" trial
group.

Also, in the fourth quarter of 2002, Mississippi enacted tort reform legislation
that made various changes in the law favorable to the Company's defense and that
will apply to all cases filed on or after January 1, 2003. The majority of the
claims pending against the Company in Mississippi were filed in the fourth
quarter of 2002, in advance of the effective date of this more restrictive
legislation.

                                      -12-


                  HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART 1 - FINANCIAL INFORMATION

The Company intends to continue its practice of vigorously defending these cases
as they are listed for trial and expects the insurance carriers to continue to
pay the legal costs and expenses. Management believes that the outcome of these
cases will not have a material adverse effect on the Company's financial
condition, results of operations or cash flows.

The Company is subject to various other claims and legal proceedings covering a
wide range of matters that arose in the ordinary course of business. In the
opinion of management, all such matters are adequately covered by insurance or
by 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.

J.   COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES

As described in Note 15, "Other (Income) and Expenses," to the Company's Form
10-K for the year ended December 31, 2003, the Company adopted SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities," (SFAS 146)
on January 1, 2003. SFAS 146 addresses significant issues regarding the
recognition, measurement and reporting of costs that are associated with exit
and disposal activities. These activities include restructuring activities that
were previously accounted for pursuant to the guidance that the Emerging Issues
Task Force (EITF) had set forth in EITF Issue No. 94-3, "Liability Recognition
for Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)," (EITF 94-3). The scope
of SFAS 146 also includes (1) costs related to terminating a contract that is
not a capital lease and (2) termination benefits that employees who are
involuntarily terminated receive under the terms of a one-time benefit
arrangement that is not an ongoing benefit arrangement or an individual
deferred-compensation contract.

Costs associated with exit or disposal activities are included as a component of
Other expenses on the Company's Condensed Consolidated Statements of Income.
This income statement classification principally 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 and is more fully
described in Note 15, "Other (Income) and Expenses," to the Company's Form 10-K
for the year ended December 31, 2003.

During the first quarters of 2004 and 2003, the Company continued its strategy
to streamline operations. This strategy principally included continued staff
reductions in both administrative and operating positions. Under these
reorganization actions, the Company and its management have established and
approved specific plans of termination. During the three months ended March 31,
2004 and 2003, the Company initiated reorganization actions in several
operations, including, but not limited to, certain operations located in the
U.S., the U.K., Belgium (2003 only), Germany (2003 only), Canada, Hong Kong
(2004 only) and France (2004 only). There were no individually material
reorganization actions initiated during the three months ended March 31, 2004
and 2003; however, the following table summarizes these actions in aggregate for
the Company:

EMPLOYEE TERMINATION BENEFITS COSTS AND PAYMENTS


    (IN THOUSANDS)                                                  2004                         2003
    -------------------------------------------------------------------------------------------------------------
                                                                THREE MONTHS       THREE MONTHS         APRIL 1 -
    Original reorganization action period                      ENDED MARCH 31     ENDED MARCH 31         DEC 31
    -------------------------------------------------------------------------------------------------------------
                                                                                              
    Employee termination benefits expense                        $      630         $    1,590         $    4,474
    -------------------------------------------------------------------------------------------------------------
    Payments:
        In 2003                                                        --               (1,595)            (2,243)
        In 2004                                                        (235)               (26)            (1,083)
    -------------------------------------------------------------------------------------------------------------
    Total payments:                                                    (235)            (1,621)            (3,326)
    Other:                                                             --                  109                 (5)
    -------------------------------------------------------------------------------------------------------------
    Remaining payments as of March 31, 2004                      $      395         $       78         $    1,143
    =============================================================================================================


The total amount of costs expected to be incurred for the components of the
streamlining initiatives which have met the criteria described in SFAS 146 and
the costs incurred to date for the three months ended March 31, 2004 and 2003 by
reportable segment were as follows:

                                      -13-


                  HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART 1 - FINANCIAL INFORMATION

     EMPLOYEE TERMINATION BENEFITS COSTS BY SEGMENT


    --------------------------------------------------------------------------------------------------------------------
                                                           THREE MONTHS ENDED                  THREE MONTHS ENDED
                                                             MARCH 31, 2004                      MARCH 31, 2003
    --------------------------------------------------------------------------------------------------------------------
                                                       TOTAL COSTS                         TOTAL COSTS
                                                      EXPECTED TO BE      COSTS INCURRED  EXPECTED TO BE    COSTS INCURRED
    (IN THOUSANDS)                                       INCURRED             TO DATE        INCURRED           TO DATE
    --------------------------------------------------------------------------------------------------------------------
                                                                                                  
    Mill Services Segment                               $      208        $      208        $      995        $      995

    Access Services Segment                                    228               228               260               260

    Gas and Fluid Control Segment (a)                           57                57                18                18

    Other Infrastructure Products and Services
         ("all other") Category (a)                            137               137               250               250

    Corporate                                                 --                --                  67                67
    --------------------------------------------------------------------------------------------------------------------

    Total                                               $      630        $      630        $    1,590        $    1,590
    ====================================================================================================================


     (a) Segment information for prior periods has been reclassified to conform
         with the current presentation. Due to management changes, effective
         January 1, 2004, the Air-X-Changers Division is classified in the Other
         Infrastructure Products and Services ("all other") Category.

The following table summarizes employee termination benefit costs and payments
(associated with continuing operations) related to reorganization actions
initiated prior to January 1, 2003 and accounted for under EITF 94-3:


    (IN THOUSANDS)

    Original reorganization action period                             2002               2001
    ============================================================================================
    --------------------------------------------------------------------------------------------
                                                                                
    Employee termination benefits expense                          $    7,140         $   10,135
    --------------------------------------------------------------------------------------------
    Payments:
        In 2001                                                          --               (6,142)
        In 2002                                                        (4,438)            (1,997)
        In 2003                                                        (2,627)            (2,215)
        In 2004                                                           (20)              --
    --------------------------------------------------------------------------------------------
    Total payments:                                                    (7,085)           (10,354)
    Other:                                                                 42                253
    --------------------------------------------------------------------------------------------
    Remaining payments as of March 31, 2004                        $       97         $       34
    ============================================================================================

                                      -14-


                  HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART 1 - FINANCIAL INFORMATION

K.   RECONCILIATION OF BASIC AND DILUTED SHARES


                                                                                              THREE MONTHS ENDED
                                                                                                    MARCH 31
    (IN THOUSANDS, EXCEPT AMOUNTS PER SHARE)                                                 2004              2003
    ------------------------------------------------------------------------------------------------------------------
                                                                                                      
    Income from continuing operations                                                     $   16,857        $   12,470
    ==================================================================================================================

    Average shares of common stock outstanding used to compute
       basic earnings per common share from continuing operations                             40,937            40,543

    Additional common shares to be issued assuming exercise of stock
       options, net of shares assumed reacquired                                                 524               111
    ------------------------------------------------------------------------------------------------------------------

    Shares used to compute dilutive effect of stock options                                   41,461            40,654
    ==================================================================================================================


    Basic earnings per common share from continuing operations                            $      .41        $      .31
    ==================================================================================================================


    Diluted earnings per common share from continuing operations                          $      .41        $      .31
    ==================================================================================================================


Options to purchase 12,000 shares and 937,047 shares were outstanding at March
31, 2004 and 2003, respectively, but were not included in the computation of
diluted earnings per share because the effect was antidilutive.


L.   EMPLOYEE BENEFIT PLANS

PENSION EXPENSE FOR DEFINED BENEFIT PLANS


                                                              THREE MONTHS ENDED                    THREE MONTHS ENDED
                                                                   MARCH 31                              MARCH 31
                                                                  U. S. PLANS                       INTERNATIONAL PLANS
    ------------------------------------------------------------------------------------------------------------------------
    (IN THOUSANDS)                                          2004               2003               2004               2003
    ------------------------------------------------------------------------------------------------------------------------
                                                                                                      
    PENSION EXPENSE (INCOME)
    Defined benefit plans:
      Service cost                                       $      652         $    1,835         $    2,458         $    2,704
      Interest cost                                           3,398              3,300              9,522              7,962
      Expected return on plan assets                         (4,490)            (3,939)            (9,982)            (7,986)
      Recognized prior service costs                            189                182                313                263
      Recognized losses                                         746              1,102              3,360              3,254
      Amortization of transition asset                         (367)              (367)              (137)              (151)
      Settlement/Curtailment loss                              --                 --                 --                    1
    ------------------------------------------------------------------------------------------------------------------------
    Defined benefit plans pension expense                $      128         $    2,113         $    5,534         $    6,047
    ========================================================================================================================


Defined benefit pension expense for the three months ended March 31, 2004
decreased approximately $2.5 million from the three months ended March 31, 2003.
There was an offsetting increase in defined contribution plan expense for the
same period. This is principally due to pension plan changes where accrued
service is no longer being granted for periods after December 31, 2003 for a
majority of the U.S. defined benefit pension plans and certain international
defined benefit pension plans. In place of these plans, the Company has
established, effective January 1, 2004, defined contribution plans providing for
the Company to contribute a specified matching amount for participating
employees' contributions to the plan. Domestically, this match will be made on
employee contributions up to four percent of their eligible compensation.
Additionally, the Company may provide a discretionary contribution of up to two
percent of compensation for eligible employees. Internationally, this match is
up to six percent of eligible compensation with an additional two percent going
towards insurance and administrative costs. The Company believes this new
defined contribution plan will provide a more predictable and less volatile
expense than existed under the defined benefit plans.

In the quarter ended March 31, 2004, the Company contributed $0.2 million and
$4.1 million for the U.S. and international defined benefit pension plans,
respectively. The Company currently anticipates contributing an additional $1.2
million and $14.3 million for the U.S. and international plans, respectively,
during the remainder of 2004. These are reductions from

                                      -15-


the estimates included in the Company's Form 10-K for the year-ended December
31, 2003 due to updated international estimates and the passage of the Pension
Funding Equity Act of 2004 which impacted domestic plans.

POSTRETIREMENT BENEFITS


                                                                                                THREE MONTHS ENDED
                                                                                                     MARCH 31
    (IN THOUSANDS)                                                                           2004               2003
    -------------------------------------------------------------------------------------------------------------------
                                                                                                       
    POSTRETIREMENT BENEFITS EXPENSE (INCOME)
      Service cost                                                                        $        3         $       12
      Interest cost                                                                              107                186
      Recognized prior service costs                                                               8                  8
      Recognized losses                                                                           14                 15
      Settlement/Curtailment gain                                                               (736)            (4,080)
    -------------------------------------------------------------------------------------------------------------------
    Postretirement benefits income                                                        $     (604)        $   (3,859)
    ===================================================================================================================


The income of $0.6 million for 2004 was due principally to the termination of
certain postretirement health care plans.

The income of $3.9 million for 2003 was due principally to the termination of
certain postretirement life insurance plans.

In accordance with the provisions of Financial Accounting Standards Board Staff
Position No. 106-1, "Accounting and Disclosure Requirements Related to the
Medicare Prescription Drug, Improvement and Modernization Act of 2003" (FSP FAS
106-1), the Company has deferred any re-measurement of its benefit obligation
until authoritative guidance on the accounting for this federal subsidy is
issued. For a detailed disclosure of the Company's pension and postretirement
benefit plans, see Note 8, "Employee Benefit Plans," to the Company's Form 10-K
for the year ended December 31, 2003.


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

The following management's discussion and analysis describes the principal
factors affecting the Company's results of operations and liquidity. This
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, 2003 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 2004
and beyond.

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,
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 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(R)).
These statements can be identified by the use of such terms as "may," "could,"
"expect," "anticipate," "intend," "believe," or other comparable terms.

Factors which 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 and capital costs; (3) changes in the performance of stock and
bond markets that could affect the valuation of the assets in the Company's
pension plans and the accounting for pension assets, liabilities and expense;
(4) changes in governmental laws and regulations, including taxes and import
tariffs; (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 which the
Company operates due to political instability, civil disobedience, armed
hostilities or other calamities; and (7) other risk factors listed from time to
time in the Company's SEC reports. 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.

                                      -16-


                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

EXECUTIVE OVERVIEW
The Company's first quarter 2004 revenues were a record $556.3 million. This is
an increase of $68.4 million or 14% over the first quarter of 2003. Income from
continuing operations was $16.9 million compared with $12.5 million in the first
quarter of 2003, an increase of 35%. Diluted earnings per share from continuing
operations were $0.41 in the first quarter of 2004 compared with $0.31 for the
first quarter of 2003, a 32% increase.

The results were led by the Mill Services Segment which achieved
quarter-over-quarter revenues growth of $48.0 million or 26% and accounted for
42% of the Company's revenues and 68% of the operating income for the first
quarter of 2004. The Access Services and Gas and Fluid Control Segments also
contributed revenues increases of $10.4 million or 7% and $9.4 million or 14%,
respectively. The increase in the Access Services Segment was driven by the SGB
international operations as the domestic operations continue to face difficult
operating conditions, particularly a continued slow-down in non-residential
construction. The increase in the Gas and Fluid Control Segment is evidence that
the manufacturing recession experienced by this Segment over the last several
years may have bottomed out. Also contributing to the positive performance in
the first quarter of 2004 was a turnaround to profitability of the IKG
Industries industrial grating business. The Reed Minerals, Patterson-Kelley and
Air-X-Changers businesses all contributed higher income and margins compared
with the first quarter of 2003. The Harsco Track Technologies railway track
services and equipment business performed below last year's results, reflecting
the significant lead time involved in the manufacture and delivery of its
fast-growing international order backlog.

The positive effect of foreign currency translation increased first quarter 2004
consolidated revenues by $38.6 million and pre-tax income by $1.6 million when
compared with the first quarter of 2003.

    ---------------------- -----------------------------------------------------
                                             REVENUES BY REGION
    ---------------------- -----------------------------------------------------
                                TOTAL REVENUES
                              THREE MONTHS ENDED      PERCENTAGE GROWTH FROM
                                   MARCH 31                2003 TO 2004

    (DOLLARS IN MILLIONS)      2004        2003     VOLUME    CURRENCY   TOTAL
    ---------------------- ----------- ----------- --------- ---------- --------
    U.S.                     $  227.3    $  203.8     11.5%      0.0%     11.5%
    Europe                      232.6       206.6     (1.5)     14.1      12.6
    Latin America                27.1        21.8     15.5       8.8      24.3
    Asia - Pacific               27.3        20.1     21.1      14.7      35.8
    Other                        42.0        35.6      5.3      12.7      18.0
    ---------------------- ----------- ----------- --------- ---------- --------
    Total                    $  556.3    $  487.9      6.1%      7.9%     14.0%
    ====================== =========== =========== ========= ========== ========

FIRST QUARTER 2004 HIGHLIGHTS
On a macro basis, the following significant items impacted the Company during
the first quarter of 2004 in comparison with the first quarter 2003:

Company Wide:
- -------------
o    During the first quarter of 2003, the Company was favorably affected by a
     pre-tax benefit of $4.1 million from the termination of certain
     postretirement benefit plans. This compares with only a $0.7 million
     pre-tax benefit during the first quarter of 2004 for similar plan
     terminations.
o    Defined benefit pension expense for the first quarter of 2004 decreased
     approximately $2.5 million from the first quarter of 2003. There was an
     offsetting increase of approximately $2.6 million in defined contribution
     plan expense for the same period. The overall containment of pension
     expense in 2004 is due to the restructuring of the Company's pension plans
     as more fully discussed under Part I, Item 1, Footnote L labeled "Employee
     Benefit Plans."
o    Higher fuel, commodity and other material costs, particularly steel,
     increased the Company's operating costs during the first quarter of 2004.
     These increased costs were generally offset by increased revenues in the
     first quarter. To the extent that such costs cannot be passed to customers
     in the future, operating income may be adversely affected.
o    Other than the impact on revenues and included in the impact on pre-tax
     income discussed above, the effect of foreign currency translation in the
     first quarter of 2004 resulted in a pre-tax increase to interest expense of
     $0.9 million when compared with the first quarter of 2003.

                                      -17-


                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

Mill Services Segment:
- ----------------------
                                                   THREE MONTHS
                                                  ENDED MARCH 31
    --------------------------------- ---------------------------------------
    (IN MILLIONS)                            2004                2003
    --------------------------------- ------------------- -------------------
    --------------------------------- ------------------- -------------------
    Revenues                              $  236.3            $  188.2
    Operating income                          25.3                16.7
    ================================= =================== ===================

o    Continued strong volume and new business increased the first quarter of
     2004 revenues and operating income $12.8 million and $4.9 million,
     respectively, when compared with the first quarter of 2003.
o    The benefit of foreign currency translation in the first quarter of 2004
     resulted in increased revenues and operating income of $22.5 million and
     $2.6 million, respectively, when compared with the first quarter of 2003.
o    The acquisition of the industrial services unit of C. J. Langenfelder and
     Sons, Inc. increased the first quarter of 2004 Segment revenues by $12.6
     million, when compared with the first quarter of 2003.
o    During the first quarter of 2003, the Segment was favorably affected by a
     pre-tax benefit of $0.5 million from the termination of certain
     postretirement benefit plans. During the first quarter of 2004 no such
     benefit occurred.

Access Services Segment:
- ------------------------
                                                   THREE MONTHS
                                                  ENDED MARCH 31
    --------------------------------- ---------------------------------------
    (IN MILLIONS)                            2004                2003
    --------------------------------- ------------------- -------------------
    --------------------------------- ------------------- -------------------
    Revenues                              $  157.8            $  147.4
    Operating income                           3.4                 4.6
    ================================= =================== ===================

o    During the first quarter of 2003, the Segment was favorably affected by
     pre-tax income of $1.4 million from the sale of non-core assets and a
     pre-tax benefit of $0.5 million from the termination of certain
     postretirement benefit plans. During the first quarter of 2004 no such
     benefits occurred.
o    In the first quarter of 2004, there was a continued slowdown in the
     non-residential construction markets served by the Company, especially in
     the U.S. This slowdown had a negative effect on equipment rental rates in
     the U.S. Additionally, although scaffolding erection and dismantling volume
     in the industrial market sector held up relatively well, margins declined
     as a result of lower volume and pricing caused by the reduced
     non-residential construction in the U.S. The construction sector,
     particularly equipment rentals, provides the highest margins for this
     Segment.
o    In the first quarter of 2004, margins on the SGB powered access equipment
     rentals improved due to cost restructuring actions implemented during 2003.
     The Segment was also positively impacted by the strength of SGB's formwork
     business, particularly in the Middle East.
o    The benefit of foreign currency translation in the first quarter of 2004
     resulted in increased revenues and operating income of $14.6 million and
     $0.4 million, respectively, when compared with the first quarter of 2003.

Gas and Fluid Control Segment:
- ------------------------------
                                                   THREE MONTHS
                                                  ENDED MARCH 31
    --------------------------------- ---------------------------------------
    (IN MILLIONS)                            2004               2003(A)
    --------------------------------- ------------------- -------------------
    --------------------------------- ------------------- -------------------
    Revenues                              $   77.6            $   68.2
    Operating income                           3.1                 3.3
    ================================= =================== ===================

     (a) Segment information for prior periods has been reclassified to conform
         with the current presentation. Due to management changes, effective
         January 1, 2004, the Air-X-Changers Division is classified in the Other
         Infrastructure Products and Services ("all other") Category.

o    This Segment's performance was led by increased demand for propane tanks in
     the first quarter of 2004. This resulted in increased revenues of $10.6
     million when compared with the first quarter of 2003.
o    Increased demand for cylinders in the first quarter of 2004 increased
     revenues by $2.6 million when compared with the first quarter of 2003.

                                      -18-


                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

o    The increased demand for propane tanks and cylinders was partially driven
     by customers accelerating purchases in anticipation of future price
     increases. The impact of this accelerated customer purchasing may result in
     decreased sales in future quarters of 2004.
o    Although steel costs increased during the first quarter of 2004, the costs
     were generally offset by increased revenues. To the extent that such costs
     cannot be passed to customers in the future, operating income may be
     adversely affected.
o    Increased competition and decreased demand for certain valves and
     composite-wrapped cylinders reduced first quarter 2004 revenues by $5.0
     million when compared with the first quarter of 2003.
o    During the first quarter of 2003, the Segment was favorably affected by a
     pre-tax benefit of $0.6 million from the termination of certain
     postretirement benefit plans. During the first quarter of 2004, no such
     benefit occurred.
o    The benefit of foreign currency translation in the first quarter of 2004
     resulted in increased revenues and decreased operating income of $0.6 and
     $0.3 million, respectively, when compared with the first quarter of 2003.

Other Infrastructure Products and Services ("all other") Category:
- ------------------------------------------------------------------
                                                   THREE MONTHS
                                                  ENDED MARCH 31
    --------------------------------- ---------------------------------------
    (IN MILLIONS)                            2004               2003(A)
    --------------------------------- ------------------- -------------------
    --------------------------------- ------------------- -------------------
    Revenues                              $   84.6            $   84.1
    Operating income                           6.2                 3.8
    ================================= =================== ===================

     (a) Segment information for prior periods has been reclassified to conform
         with the current presentation. Due to management changes, effective
         January 1, 2004, the Air-X-Changers Division is classified in the Other
         Infrastructure Products and Services ("all other") Category.

o    Revenues and operating income for the IKG industrial grating products
     business increased during the first quarter of 2004 due to increased demand
     and customers accelerating purchases in anticipation of future price
     increases. This is in comparison with an operating loss in the first
     quarter of 2003.
o    Continued and consistent profitable results from the Reed Minerals roofing
     granules business and Patterson-Kelley boiler and process equipment
     business were attained.
o    Net decreased first quarter 2004 revenues and operating income in the
     Harsco Track Technologies (HTT) railway track services and equipment
     business, were due principally to the timing of international sales during
     2004. Sales are expected to increase as the year progresses, especially in
     the second half.
o    During the first quarter of 2003, this Category was favorably affected by a
     pre-tax benefit of $1.1 million from the termination of certain
     postretirement benefit plans. This compares with only a $0.7 million
     pre-tax benefit during the first quarter of 2004 for similar plan
     terminations.


OUTLOOK, TRENDS AND STRATEGIES
Looking to the remainder of 2004 and beyond, the following significant items,
trends and strategies are expected to affect the Company:

Company Wide:
- -------------
o    A continued focus on expanding the higher-margin industrial services
     businesses, with a particular emphasis on growing the Mill Services Segment
     through the provision of additional services to existing customers, new
     contracts and strategic acquisitions.
o    Continued focus on Economic Value Added (EVA(R))-positive investments and a
     reduction in capital employed to improve EVA.
o    A target of $280 million in cash provided by operating activities for 2004,
     which would be a record.
o    Cost reductions and Six-Sigma continuous process improvement initiatives
     across the Company should further enhance margins. This includes improved
     supply chain management and additional outsourcing in the manufacturing
     businesses.
o    An increase in general and administrative expenses is expected related to
     external audit fees and internal costs for compliance with the
     Sarbanes-Oxley Act of 2002, particularly Section 404.
o    Higher fuel, transportation and material costs, particularly steel, could
     increase the Company's operating costs and reduce profitability. To the
     extent that such costs cannot be passed to customers, operating income may
     be adversely affected.

                                      -19-


                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

Mill Services Segment:
- ----------------------
o    Global steel production is forecasted to rise in 2004, and bidding activity
     for new mill services contracts and add-on services is strong.
o    Increases in steel prices and worldwide demand could provide increased
     production volumes and additional opportunities for mill services
     contracts.
o    The risk remains that certain Mill Services customers may file for
     bankruptcy protection in the future which could have an adverse affect on
     the Company's income and cash flows.

Access Services Segment:
- ------------------------
o    The outlook for non-residential construction spending is expected to
     modestly improve as the year progresses. The benefits of this will likely
     affect late 2004 and 2005 results.
o    There is continued concern over the competitive environment in the United
     States. International competitors have invested heavily in the U.S. access
     services market, substantially increasing the supply of certain types of
     rental equipment.

Gas and Fluid Control Segment:
- ------------------------------
o    An overall net improvement in this Segment is expected to be led by the
     propane tank product line along with modest improvements from the
     cryogenics and cylinders product lines.
o    Increases in steel prices and worldwide demand for steel could have an
     adverse effect on raw material costs, and this Segment's ability to obtain
     the necessary raw materials.

Other Infrastructure Products and Services ("all other") Category:
- ------------------------------------------------------------------
o    A continued positive outlook is anticipated for railway track services and
     equipment sales as international orders continue to grow. However, due to
     long lead times, the benefits of the increased orders will gradually affect
     the second half of 2004 and later years.
o    The IKG Industries industrial grating division is expected to have
     continued profitability for 2004.
o    Increases in steel prices and worldwide demand for steel could have an
     adverse effect on raw material costs, and Harsco Track Technologies', IKG's
     and Air-X-Changers' ability to obtain the necessary raw materials.
o    Consistent results are expected from the Reed Minerals, Patterson-Kelley
     and Air-X-Changers Divisions.


RESULTS OF OPERATIONS
FIRST QUARTER OF 2004 COMPARED WITH FIRST QUARTER 2003

- ---------------------------------------------- ---------------------------------- ----------------- ----------------
                                                         THREE MONTHS                  AMOUNT           PERCENT
                                                        ENDED MARCH 31                INCREASE         INCREASE
(DOLLARS ARE IN MILLIONS, EXCEPT PER SHARE)          2004             2003
- ---------------------------------------------- ----------------- ---------------- ----------------- ----------------
                                                                                               
Revenues from continuing operations               $  556.3          $  487.9         $   68.4              14%
Cost of services and products sold                   429.0             375.7             53.3              14
Selling, general and administrative expenses          88.0              80.5              7.5               9
Other expenses                                         1.6               0.9              0.7              73
Operating income from continuing operations           37.0              29.9              7.1              24
Income tax expense                                     8.5               6.4              2.1              34
Income from continuing operations                     16.9              12.5              4.4              35
Income from discontinued operations                    0.1               0.1              -                 -
Net income                                            16.9              12.5              4.4              35
Diluted earnings per common share                      0.41              0.31             0.10             32
- ---------------------------------------------- ----------------- ---------------- ----------------- ----------------


                                      -20-


                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

COMPARATIVE ANALYSIS OF CONSOLIDATED RESULTS

REVENUES

First Quarter 2004 vs. First Quarter 2003
- -----------------------------------------
Record revenues were recorded for the first quarter of 2004, up $68.4 million or
14% from the first quarter of 2003. This increase was attributable to the
following significant items:

    --------------- ------------------------------------------------------------
     IN MILLIONS                        CHANGE IN REVENUES
                            FIRST QUARTER 2004 VS. FIRST QUARTER 2003
    --------------- ------------------------------------------------------------
      $   38.6      Effect of foreign currency translation.
          12.9      Net effect of business acquisitions resulted in increased
                         revenues of $12.6 and $0.3 million in the Mill Services
                         and Access Services Segments, respectively.
          12.8      Net increased volume, new contracts and price changes in the
                         Mill Services Segment.
           8.7      Net increased revenues in the Gas and Fluid Control Segment
                         due principally to improving market conditions; price
                         increases; and customers accelerating purchases in
                         anticipation of future price increases for both the
                         propane and cylinders businesses partially offset by
                         decreased demand for liquid propane gas (LPG) valves in
                         the patio grill market.
           2.6      Increased revenues of the Air-X-Changers Division due to
                         increased volume in relation to a poor first quarter of
                         2003.
           2.4      Increased revenues of the IKG Industries Division due to
                         increased demand and customers accelerating purchases
                         in anticipation of future price increases.
          (6.7)     Net decreased revenues in the Harsco Track Technologies
                         (HTT) Division due principally to decreased rail
                         equipment sales.
          (4.5)     Net decreased revenues in the Access Services Segment due to
                         continued slowdown in the non-residential construction
                         markets, particularly in the U.S.
           1.6      Other (minor changes across the various units not already
                         mentioned).
    --------------- ------------------------------------------------------------
      $   68.4      Total Change in Revenues -
                         First Quarter 2004 vs. First Quarter 2003
    =============== ============================================================

- --------------------------------------------------------------------------------

COST OF SERVICES AND PRODUCTS SOLD

First Quarter 2004 vs. First Quarter 2003
- -----------------------------------------
Cost of services and products sold for the first quarter of 2004 increased $53.3
million or 14% from the first quarter of 2003, consistent with the 14% increase
in revenues. This increase was attributable to the following significant items:

    --------------- ------------------------------------------------------------
     IN MILLIONS           CHANGE IN COST OF SERVICES AND PRODUCTS SOLD
                             FIRST QUARTER 2004 VS. FIRST QUARTER 2003
    --------------- ------------------------------------------------------------
      $   29.1      Effect of foreign currency translation.
          14.2      Increased costs due to increased revenues (exclusive of the
                         effect of foreign currency translation and business
                         acquisitions). This includes increased steel and
                         commodity costs since the Company was generally able to
                         recover these costs with increased revenues.
          12.2      Effect of business acquisitions.
           2.8      Increased costs on a comparative basis due to income
                         generated by the termination of a postretirement
                         benefit plan in the first quarter of 2003 that did not
                         recur in the first quarter of 2004.
          (5.0)     Other (due to stringent cost controls, process improvements,
                         reorganization actions, product mix and minor changes
                         across the various units not already mentioned).
    --------------- ------------------------------------------------------------
      $   53.3      Total Change in Cost of Services and Products Sold -
                         First Quarter 2004 vs. First Quarter 2003
    =============== ============================================================

- --------------------------------------------------------------------------------

                                      -21-


                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

First Quarter 2004 vs. First Quarter 2003
Selling, general and administrative (SG&A) expenses for the first quarter of
2004 increased $7.5 million or 9% from the first quarter of 2003, less than the
14% increase in revenues. The lower relative increase in SG&A expenses (9%) as
compared with revenues (14%) was due to stringent cost controls, process
improvements, and reorganization actions. The increase in SG&A expenses was
attributable to the following significant items:

    --------------- ------------------------------------------------------------
     IN MILLIONS       CHANGE IN SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
                              FIRST QUARTER 2004 VS. FIRST QUARTER 2003
    --------------- ------------------------------------------------------------
      $    6.4      Effect of foreign currency translation.
           1.2      Increased provisions for uncollectible accounts receivable.
           0.6      Increased costs on a comparative basis due to $1.3 million
                         in income generated by the termination of a
                         postretirement benefit plan in the first quarter of
                         2003 compared with $0.7 million in the first quarter of
                         2004.
          (0.8)     Decreased insurance expense.
           0.1      Other.
    --------------- ------------------------------------------------------------
      $    7.5      Total Change in Selling, General and Administrative
                         Expenses - First Quarter 2004 vs. First Quarter 2003
    =============== ============================================================

- --------------------------------------------------------------------------------

OTHER EXPENSES

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. During the first quarter of 2004, the
Company continued its strategy to streamline operations. This strategy included
the consolidation, closure and sale of certain operating locations and continued
headcount reductions in both administrative and operating positions. These
actions resulted in net Other Expenses of $1.6 million in the first quarter of
2004 compared with $0.9 million in the first quarter of 2003.

First Quarter 2004 vs. First Quarter 2003
Other expenses for the first quarter of 2004 increased $0.7 million or 73% from
the first quarter of 2003. This increase was attributable to the following
significant items:

    --------------- ------------------------------------------------------------
     IN MILLIONS                    CHANGE IN OTHER EXPENSES
                            FIRST QUARTER 2004 VS. FIRST QUARTER 2003
    --------------- ------------------------------------------------------------
      $    1.4      Decrease in net gains on disposals of non-core assets. This
                         decline was attributable to $1.4 million in net gains
                         that were realized in the first quarter of 2003 from
                         the sale of non-core assets within the Access Services
                         Segment that were not repeated in the first quarter of
                         2004.
           0.6      Increase in other expenses.
          (1.0)     Decrease in employee termination benefit costs.
          (0.3)     Decrease in costs to exit activities.
    --------------- ------------------------------------------------------------
                    Total Change in Other Expenses -
      $    0.7           First Quarter 2004 vs. First Quarter 2003
    =============== ============================================================

For additional information on employee termination benefits, see Note J, "Costs
Associated with Exit or Disposal Activities," in Part I, Item 1, Financial
Statements.

- --------------------------------------------------------------------------------

INCOME TAX EXPENSE FROM CONTINUING OPERATIONS

First Quarter 2004 vs. First Quarter 2003
- -----------------------------------------
The increase in the first quarter of 2004 of $2.1 million or 34% in income tax
expense from continuing operations was due to increased earnings from continuing
operations for the reasons mentioned above. The effective tax rate relating to
continuing operations for both the first quarter of 2004 and 2003 was 31%.

- --------------------------------------------------------------------------------

                                      -22-


                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

INCOME FROM CONTINUING OPERATIONS

First Quarter 2004 vs. First Quarter 2003
- -----------------------------------------
Income from continuing operations in the first quarter of 2004 was $4.4 million
or 35% above the first quarter of 2003. This increase results from increased
revenues, stringent cost controls, process improvements and reorganization
actions that contained general and administrative expenses growth to a 9%
increase while revenue increased 14%.

- --------------------------------------------------------------------------------

INCOME FROM DISCONTINUED OPERATIONS

First Quarter 2004 vs. First Quarter 2003
- -----------------------------------------
Income from discontinued operations for the first quarter of 2004 approximated
the first quarter of 2003.
- --------------------------------------------------------------------------------

NET INCOME AND EARNINGS PER SHARE

First Quarter 2004 vs. First Quarter 2003
- -----------------------------------------
Net income of $16.9 million and diluted earnings per share of $0.41 in the first
quarter of 2004 exceeded the first quarter of 2003 by $4.4 million and $0.10,
respectively, due to increased income from continuing operations for the reasons
described above.

- --------------------------------------------------------------------------------

LIQUIDITY AND CAPITAL RESOURCES

OVERVIEW
The Company's principal sources of liquidity are cash from operations and
short-term borrowings under its various credit agreements, augmented
periodically by cash proceeds from asset sales. Principal borrowings for working
capital requirements are commercial paper. During 2003, record net cash provided
by operating activities of $262.8 million enabled the Company to make
substantial payments on its outstanding debt. During the first three months of
2004, cash flows from operations of $32.4 million were 4% higher than in the
first three months of 2003. Due to the seasonal aspect of the Company's cash
flows, and record first quarter capital investments of $46.5 million, the
Company's net cash borrowings increased $19.5 million in the first quarter of
2004.

The Company's management reaffirms its previously stated strategic objectives
for 2004 that include generating a record $280 million in cash from operations,
augmented by $30 million in targeted asset sales. The Company's strategy is to
redeploy excess or discretionary cash to grow primarily the mill services
business and to further reduce debt. In 2004, the Company has targeted $125
million for growth capital investments and acquisitions and $40 million for debt
reduction.

As of March 31, 2004 the Company had approximately $88 million of debt that can
be paid prior to maturity. The balance of the debt, principally the (pound)200
million notes and the $150 million notes, cannot be paid until maturity in 2010
and 2013, respectively. The Company also plans to continue paying dividends to
shareholders.

SOURCES AND USES OF CASH
The primary drivers of the Company's cash flow from operations are the Company's
sales and income, particularly in the services businesses. The Company's
long-term mill services contracts provide predictable cash flows for several
years into the future. Additionally, returns on capital investments made in
prior years, for which no cash is currently required, are a significant source
of operating cash. Depreciation related to these investments is a non-cash
charge. The Company also continues to maintain working capital at a manageable
level.

Major uses of cash include payroll costs and related benefits; raw material
purchases for the manufacturing businesses; income tax payments; interest
payments; insurance premiums and payments of self-insured casualty losses; and
facility rental payments. Other primary uses of cash include capital
investments, principally in the industrial services businesses; debt payments;
and dividend payments.

     RESOURCES AVAILABLE FOR CASH REQUIREMENTS - The Company has various credit
facilities and commercial paper programs available for use throughout the world.
The following chart illustrates the amounts outstanding on credit facilities and
commercial paper programs and available credit at March 31, 2004.

                                      -23-


                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

    SUMMARY OF CREDIT FACILITIES                AS OF MARCH 31, 2004
    ------------------------------ ---------------------------------------------
    (IN MILLIONS)                   FACILITY LIMIT   OUTSTANDING    AVAILABLE
                                                       BALANCE       CREDIT
    ------------------------------ ---------------- ------------- --------------

    U.S. commercial paper program      $   350.0      $    36.7    $   313.3

    Euro commercial paper program          121.7           18.2        103.5

    Revolving credit facility (a)          350.0            -          350.0

    Bilateral credit facility (b)           25.0            2.2         22.8
    ------------------------------ ---------------- ------------- --------------
    TOTALS AT MARCH 31, 2004           $   846.7      $    57.1    $   789.6 (C)
    ============================================================================

     (a) U.S.-based Program
     (b) International-based Program
     (c) Although the Company has significant available credit, it is the
         Company's policy to limit aggregate commercial paper and credit
         facility borrowings at any one time to a maximum of $375 million.

     CREDIT RATINGS AND OUTLOOK - The following table summarizes the Company's
debt ratings at March 31, 2004:

                                                     U.S.-BASED
                                LONG-TERM NOTES   COMMERCIAL PAPER   OUTLOOK
    -------------------------- ----------------- ------------------ ---------
    Standard & Poor's (S&P)            A-                A-2          Stable
    Moody's                            A3                P-2          Stable
    Fitch (a)                          A-                F-2          Stable
    -------------------------- ----------------- ------------------ ---------

     (a) The Company's (pound)200 million notes are not rated by Fitch.

The euro commercial paper market does not require commercial paper to be rated;
accordingly, the Company's euro-based commercial paper program has not been
rated. In the third quarter of 2003, S&P, Fitch and Moody's all reaffirmed their
stable outlooks for the Company. A downgrade to the Company's credit rating
would probably increase the costs to the Company to borrow funds. An improvement
in the Company's credit rating would probably decrease the costs to the Company
to borrow funds.

     WORKING CAPITAL POSITION - Changes in the Company's working capital are
reflected in the following table:

    (DOLLARS ARE IN MILLIONS)     MARCH 31    DECEMBER 31
                                    2004         2003        INCREASE
    --------------------------- ------------ ------------- ------------
    Current Assets               $    799.5   $    764.4    $     35.1
    Less: Current Liabilities         503.7        495.1           8.6
    --------------------------- ------------ ------------- ------------
    Working Capital              $    295.8   $    269.3    $     26.5

    Current Ratio                     1.6:1        1.5:1
    =========================== ============ ============= ============

Working capital increased 10% in the first three months of 2004 due principally
to several factors.

     o   Receivables increased $20.2 million due principally to increased sales
         in the Mill Services Segment and IKG Industries in the first quarter of
         2004 compared with the fourth quarter of 2003. The continued weakening
         of the U.S. dollar in relation to certain foreign currencies
         (particularly the U.K. pound sterling) also had the effect of
         increasing certain foreign currency-denominated receivables translated
         into U.S. dollars.

     o   Inventories increased due to the following factors: long-lead-time
         orders currently in process at Harsco Track Technologies (HTT) will be
         delivered in the second half of 2004 or later; increases at SGB for new
         projects; and a general increase due to higher raw materials costs,
         especially steel.

     o   Other current liabilities increased due to accrued interest on the 200
         million British pound sterling notes (which is paid annually in
         October), insurance accruals and increased advances on long-term
         contracts at HTT.

                                      -24-


                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

     CERTAINTY OF CASH FLOWS - The certainty of the Company's future cash flows
is strengthened by the long-term nature of the Company's mill services
contracts. At March 31, 2004, the Company's mill services contracts had
estimated future revenues of $3.2 billion. Of that amount, over $600 million is
projected for the remainder of 2004 and approximately 70% is expected to be
recognized by December 31, 2007. In addition, the Company had an order backlog
of $213.9 million for its manufacturing businesses and railway track services at
March 31, 2004. This compares with $172.7 million at March 31, 2003 and $186.2
million at December 31, 2003. The increase from December 31, 2003 is due to new
orders for track maintenance equipment and increased orders in the Gas and Fluid
Control Segment. HTT's backlog includes a portion that is long-term which will
not be realized until 2005 or later due to the long lead time necessary to build
certain pieces of equipment and the long-term nature of certain service
contracts.

The types of products and services that the Company provides are not subject to
rapid technological change. This increases the stability of related cash flows.
Additionally, each of the Company's businesses is among the top three companies
(relative to sales) in the industries 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
                                                     THREE MONTHS ENDED
                                                          MARCH 31
    --------------------------------------------- ------------ -----------
    (IN MILLIONS)                                     2004        2003
    --------------------------------------------- ------------ -----------
    Cash provided by (used in):

       Operating activities                        $    32.4    $    31.2

       Investing activities                            (45.2)       (17.9)

       Financing activities                             11.6          5.9

       Effect of exchange rate changes on cash          (0.2)         0.9
    --------------------------------------------- ------------ -----------
       Net change in cash and cash equivalents     $    (1.4)   $    20.1
    ============================================= ============ ===========

     CASH FROM OPERATING ACTIVITIES - Cash provided by operating activities in
the first quarter of 2004 was $32.4 million, an increase of $1.2 million from
the first quarter of 2003. Increased net income was the primary reason for the
increase in cash from operations. This was partially offset by the use of cash
for increased work-in-process inventories for HTT to meet current long-lead-time
orders; new projects at SGB; and the effects of higher steel prices on the
manufacturing businesses. These were partially offset by reduced inventories in
the Gas and Fluid Control Segment.

     CASH USED IN INVESTING ACTIVITIES - Capital investments for the first three
months of 2004 were a first quarter record of $46.5 million, an increase of
$16.4 million from the first three months of 2003. Over 50% of the investments
were for revenue growth projects. Investments were made predominantly for the
industrial services businesses with 56% in the Mill Services Segment, and 25% in
the Access Services Segment. A decrease in proceeds from sales of assets in the
2004 first quarter was due principally to the sale of three U.K. properties in
the first quarter of 2003. Throughout the remainder of 2004, the Company plans
to continue to invest in high-return projects, principally in the industrial
services businesses, and make targeted asset sales.

                                      -25-


                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

     CASH USED IN FINANCING ACTIVITIES - The following table summarizes the
Company's debt and capital positions at March 31, 2004 and December 31, 2003.

    (DOLLARS ARE IN MILLIONS)                 MARCH 31     DECEMBER 31
                                                2004          2003
    --------------------------------------- ------------- -------------
    Notes Payable and Current Maturities     $     30.9    $     29.1
    Long-term Debt                                608.1         584.4
    --------------------------------------- ------------- -------------
    Total Debt                                    639.0         613.5
    Total Equity                                  780.5         777.0
    --------------------------------------- ------------- -------------
    Total Capital                            $  1,419.5    $  1,390.5

    Total Debt to Total Capital                    45.0%         44.1%
    ======================================= ============= =============

The Company's debt as a percent of total capital increased in the first three
months of 2004 due principally to the effect of foreign currency translation on
the Company's U.K. pound sterling-denominated debt, the increase in growth
capital investments and the seasonal effect of the Company's cash flows. The
first quarter of the year has historically been the quarter with the lowest
income and operating cash flows for the Company.

DEBT COVENANTS
The Company's credit facilities and certain notes payable agreements contain
covenants requiring a minimum net worth of $475 million and a maximum debt to
capital ratio of 60%. Based on balances at March 31, 2004, the Company could
increase borrowings by approximately $531 million and still be within its debt
covenants. Alternatively, keeping all other factors constant, the Company's
equity could decrease by approximately $306 million and the Company would still
be within its covenants.

CASH AND VALUE-BASED MANAGEMENT
In 2004, the Company plans to continue with its strategy of selective investing
for strategic purposes. The goal of this strategy is to improve the Company's
Economic Value Added (EVA(R)) under the program that commenced January 1, 2002.
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 pension expense is included for EVA purposes).
Therefore, value is created when a project or initiative produces a return above
the cost of capital. In the first three months of 2004, seven of the Company's
nine operating units improved their EVA from the comparable 2003 period.

Through the use of EVA, the Company targets its capital investments where
management expects they will create the greatest value. In the first three
months of 2004, the Company made approximately 56% of its capital expenditures
in the Mill Services Segment. The investments in this Segment continued to show
positive results as the Mill Services Segment generated most of the Company's
cash from operations in the first three months of 2004. In 2004, the Company is
again targeting the industrial services businesses for the majority of its
capital investments.

The Company is committed to continue paying dividends to shareholders. The
Company has increased the dividend rate for ten consecutive years, and in
February 2004, the Company paid its 215th consecutive quarterly cash dividend.
The Company also plans to continue paying down debt to the extent possible. The
Company has authorization to repurchase up to 1,000,000 of its shares through
January 31, 2005.

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 and intends to continue investing strategically in high-return
projects, reducing debt and paying cash dividends as a means to enhance
shareholder value.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ------------------------------------------------------------------

     MARKET RISK.

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 collectibility of
receivables, volatility of the financial markets and their effect on pension
plans, and global economic and political conditions.

                                      -26-


                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

     CYCLICAL INDUSTRY AND ECONOMIC CONDITIONS MAY ADVERSELY AFFECT THE
COMPANY'S BUSINESS.

     The Company's businesses are vulnerable to general economic slowdowns and
cyclical conditions in the industries served. In particular,

o    The Company's mill services business may be adversely affected by slowdowns
     in steel mill production, excess capacity, consolidation or bankruptcy of
     steel producers or a reversal or slowing of current outsourcing trends in
     the steel industry;

o    The Company's access services business may be adversely affected by
     slowdowns in non-residential construction and annual industrial and
     building maintenance cycles;

o    The Company's gas and fluid control business may be adversely affected by
     slowdowns in demand for consumer barbecue grills, reduced industrial
     production or lower demand for natural gas vehicles;

o    The industrial grating business may be adversely affected by slowdowns in
     non-residential construction and industrial production;

o    The railway track maintenance business may be adversely affected by
     developments in the railroad industry that lead to lower capital spending
     or reduced maintenance spending; and

o    The industrial abrasives and roofing granules business may be adversely
     affected by slower home resales or economic conditions that slow the rate
     of residential roof replacement.

     THE COMPANY'S DEFINED BENEFIT PENSION EXPENSE IS DIRECTLY AFFECTED BY THE
     EQUITY AND BOND MARKETS AND A DOWNWARD TREND IN THOSE MARKETS COULD
     ADVERSELY AFFECT THE COMPANY'S FUTURE EARNINGS.

In addition to the economic issues that directly affect the Company's business,
changes in the performance of equity and bond markets, particularly in the
United Kingdom and the United States, impact actuarial assumptions used in
determining annual pension expense, pension liabilities and the valuation of the
assets in the Company's defined benefit pension plans. The downturn in financial
markets during 2000, 2001 and 2002 negatively impacted the Company's pension
expense and the accounting for pension assets and liabilities. This resulted in
an increase in pre-tax defined benefit pension expense from continuing
operations of approximately $20 million for calendar year 2002 compared with
2001 and $17.7 million for calendar year 2003 compared with 2002. Should another
downward trend in capital markets begin, future unfunded obligations and pension
expense would likely increase. This could result in an additional reduction to
shareholders' equity and increase the Company's statutory funding requirements.
If the financial markets improve, it would most likely have a positive impact on
the Company's pension expense and the accounting for pension assets and
liabilities. This could result in an increase to shareholders' equity and a
decrease in the Company's statutory funding requirements.

In response to dealing with the adverse market conditions, during 2002 and 2003
the Company conducted a comprehensive global review of its pension plans in
order to formulate a plan to make its long-term pension costs more predictable
and affordable. The Company implemented design changes for most of these plans
during 2003. The principal change involved converting future pension benefits
for many of the Company's non-union employees in both the U.K. and U.S. from
defined benefit plans to defined contribution plans as of January 1, 2004. This
conversion is expected to make the Company's pension expense more predictable
and affordable and less sensitive to changes in the financial markets. Total
defined benefit and defined contribution expense for 2004 is expected to
approximate defined benefit pension expense for 2003.

     THE COMPANY'S GLOBAL PRESENCE SUBJECTS IT TO A VARIETY OF RISKS ARISING
FROM DOING BUSINESS INTERNATIONALLY.

The Company operates in over 400 locations in over 40 countries, including the
United States. The Company's global footprint exposes it to a variety of risks
that may adversely affect results of operations, cash flows or financial
position. These include the following:

     o    periodic economic downturns in the countries in which the Company does
          business;

     o    fluctuations in currency exchange rates;

                                      -27-


                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

     o    customs matters and changes in trade policy or tariff regulations;

     o    imposition of or increases in currency exchange controls and hard
          currency shortages;

     o    changes in regulatory requirements in the countries in which the
          Company does business;

     o    higher tax rates and potentially adverse tax consequences including
          restrictions on repatriating earnings, adverse tax withholding
          requirements and "double taxation ";

     o    longer payment cycles and difficulty in collecting accounts
          receivable;

     o    complications in complying with a variety of foreign laws and
          regulations;

     o    political, economic and social instability, civil unrest and armed
          hostilities in the countries in which the Company does business;

     o    inflation rates in the countries in which the Company does business;

     o    laws in various foreign jurisdictions that limit the right and ability
          of foreign subsidiaries to pay dividends and remit earnings to
          affiliated companies unless specified conditions are met; and,

     o    uncertainties arising from local business practices, cultural
          considerations and international political and trade tensions.

If the Company is unable to successfully manage the risks associated with its
global business, the Company's financial condition, cash flows and results of
operations may suffer.

The Company has operations in several countries in the Middle East, including
Bahrain, Egypt, Saudi Arabia, United Arab Emirates and Qatar, which are
geographically close to Iraq and other countries with a continued high risk of
armed hostilities. During the first quarter of 2004 and 2003, these countries
contributed approximately $4.7 million and $4.0 million, respectively, to the
Company's operating income. Additionally, the Company has operations in and
sales to countries that have encountered outbreaks of communicable diseases
(e.g., Severe Acute Respiratory Syndrome (SARS) and Acquired Immune Deficiency
Syndrome (AIDS). Should these outbreaks worsen or spread to other countries, the
Company may be negatively impacted through reduced sales to and within these
countries and other countries affected by such diseases.

     EXCHANGE RATE FLUCTUATIONS MAY ADVERSELY AFFECT THE COMPANY'S BUSINESS.

Fluctuations in foreign exchange rates between the U.S. dollar and the
approximately 35 other currencies in which the Company conducts business may
adversely affect the Company's operating income and income from continuing
operations in any given fiscal period. Approximately 59% and 58% of the
Company's sales and approximately 76% and 66% of the Company's operating income
from continuing operations for the three months ended March 31, 2004 and 2003,
respectively, were derived from operations outside the United States. Given the
structure of the Company's revenues and expenses, an increase in the value of
the U.S. dollar relative to the foreign currencies in which the Company earns
its revenues generally has a negative impact on operating income, whereas a
decrease in the value of the U.S. dollar tends to have the opposite effect. The
Company's principal foreign currency exposures are to the British pound sterling
and the euro.

Compared with the corresponding period in 2003, the average values of major
currencies changed as follows in relation to the U.S. dollar during 2004,
impacting the Company's sales and income:

     o   British pound sterling         Strengthened by 13%
     o   euro                           Strengthened by 13%
     o   South African rand             Strengthened by 18%
     o   Brazilian real                 Strengthened by 16%
     o   Australian dollar              Strengthened by 21%


                                      -28-


                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

The Company's foreign currency exposures increase the risk of income statement,
balance sheet and cash flow volatility. If the above currencies change
materially in relation to the U.S. dollar, the Company's financial position,
results of operations, or cash flows may be materially affected.

To illustrate the effect of foreign currency exchange rate changes in certain
key markets of the Company, in the first quarter of 2004, revenues would have
been approximately 7% or $38.6 million less and income from continuing
operations would have been approximately 7% or $1.1 million less if the average
exchange rates for the first quarter of 2003 were utilized. A similar comparison
for the first quarter of 2003 would have decreased sales approximately 6% or
$30.0 million while income from continuing operations would have been
approximately 9% or $1.1 million less if the average exchange rates for the
first quarter of 2003 would have remained the same as the first quarter of 2002.
In the first quarter of 2004, the U.S. dollar weakened against the British pound
sterling while strengthening slightly against the euro. If the U.S. dollar
weakens in relation to the euro and British pound sterling, the Company would
expect to see a positive impact on future sales and net income as a result of
foreign currency translation.

Currency changes result in assets and liabilities denominated in local
currencies being translated into U.S. dollars at different amounts than at the
prior period end. These currency changes resulted in decreased net assets of
$3.1 million and increased net assets of $4.7 million, at March 31, 2004 and
2003, respectively, when compared with December 31, 2003 and 2002, respectively.

The Company seeks to reduce exposures to foreign currency transaction
fluctuations through the use of forward exchange contracts. At March 31, 2004,
the notional amount of these contracts was $79.1 million, and all will mature
within the second quarter of 2004. The Company does not hold or issue financial
instruments for trading purposes, and it is the Company's policy to prohibit the
use of derivatives for speculative purposes.

Although the Company engages in forward exchange contracts and other hedging
strategies to mitigate foreign exchange risk, hedging strategies may not be
successful or may fail to offset the risk.

In addition, competitive conditions in the Company's manufacturing businesses
may limit the Company's ability to increase product price in the face of adverse
currency movements. Products manufactured in the United States for the domestic
and export markets may be affected by the value of the U.S. dollar relative to
other currencies. Any long-term strengthening of the U.S. dollar could depress
demand for these products and reduce sales and may cause translation losses due
to the revaluation of accounts payable, accounts receivable and other asset and
liability accounts. Conversely, any long-term weakening of the U.S. dollar could
improve demand for these products and increase sales and may cause translation
gains due to the revaluation of accounts payable, accounts receivable and other
asset and liability accounts.

     NEGATIVE ECONOMIC CONDITIONS MAY ADVERSELY AFFECT THE ABILITY OF THE
     COMPANY'S CUSTOMERS TO MEET THEIR OBLIGATIONS TO THE COMPANY ON A TIMELY
     BASIS AND AFFECT THE VALUATION OF THE COMPANY'S ASSETS.

If a downturn in the economy occurs, it may adversely affect the ability of the
Company's customers to meet their obligations to the Company on a timely basis
and could result in additional bankruptcy filings by them. If customers are
unable to meet their obligations on a timely basis, it could adversely impact
the realizability of receivables, the valuation of inventories and the valuation
of long-lived assets across the Company's businesses, as well as negatively
affect the forecasts used in performing the Company's goodwill impairment
testing under SFAS No. 142, "Goodwill and Other Intangible Assets." If
management determines that goodwill or assets are impaired or that inventories
or receivables cannot be realized at projected rates, the Company will be
required to record a write-down in the period of determination, which will
reduce net income for that period.

     A NEGATIVE OUTCOME ON PERSONAL INJURY CLAIMS AGAINST THE COMPANY MAY
     ADVERSELY AFFECT RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

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. In their suits, the plaintiffs have named as defendants many
manufacturers, distributors and repairers of numerous types of equipment or
products that may involve asbestos. Most of these complaints contain a standard
claim for damages of $20 million or more against the named defendants. The
Company has not paid any amounts in settlement of these cases, with the
exception of two settlements totaling less than $10,000 paid by the insurance
carrier prior to 1998. However, if the Company was found to be liable in any of
these actions and the liability was to exceed the Company's insurance coverage,
results of operations, cash flows and financial

                                      -29-


                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

condition could be adversely affected. For more information concerning these
litigations, see Note I, "Commitments and Contingencies," in Part 1, Item 1,
Financial Statements.

     THE COMPANY MAY LOSE CUSTOMERS OR BE REQUIRED TO REDUCE PRICES AS A RESULT
     OF COMPETITION.

The industries in which the Company operates are highly competitive. The
Company's manufacturing businesses compete with companies that manufacture
similar products both internationally and domestically. Certain international
competitors export their products into the United States and sell them at lower
prices due to lower labor costs and government subsidies for exports. Such
prices may limit the prices the Company can charge for its products and
services. Additionally, unfavorable foreign exchange rates can adversely impact
the Company's ability to match the prices charged by foreign competitors. If the
Company is unable to match the prices charged by foreign competitors, it may
lose customers. The Company's strategy to overcome this competition includes Six
Sigma continuous process improvement and cost reduction programs, international
customer focus and the diversification, streamlining and consolidation of
operations.

     INCREASES IN ENERGY PRICES COULD INCREASE THE COMPANY'S OPERATING COSTS AND
     REDUCE ITS PROFITABILITY.

Worldwide political and economic conditions, among other factors, may result in
an increase in the volatility of energy costs, both on a macro basis and for the
Company specifically. Historically, direct energy costs have approximated
between 2.5% to 3.5% of the Company's revenue. To the extent that such costs
cannot be passed to customers, operating income and results of operations may be
adversely affected.

     INCREASES OR DECREASES IN PURCHASE PRICES OR AVAILABILITY OF STEEL OR OTHER
     MATERIALS AND COMMODITIES MAY AFFECT THE COMPANY'S PROFITABILITY.

The profitability of the Company's manufactured products are affected by
changing purchase prices of steel and other materials and commodities. In the
first quarter of 2004, the price paid for steel and certain other commodities
has increased. If steel or other material costs associated with the Company's
manufactured products continue to increase and the costs cannot be passed on to
the Company's customers, then operating income will be adversely affected.
Additionally, decreased availability of steel or other materials could affect
the Company's ability to produce manufactured products in a timely manner. If
the Company encounters difficulty in obtaining the necessary raw materials for
its manufactured products, then revenues, operating income and cash flows will
be adversely affected.

     THE COMPANY IS SUBJECT TO VARIOUS ENVIRONMENTAL LAWS AND THE SUCCESS OF
     EXISTING OR FUTURE ENVIRONMENTAL CLAIMS AGAINST IT COULD ADVERSELY AFFECT
     THE COMPANY'S RESULTS OF OPERATIONS AND CASH FLOWS.

The Company's operations are subject to various federal, state, local and
foreign laws, regulations and ordinances relating to the protection of health,
safety and the environment, including those governing discharges to air and
water, handling and disposal practices for solid and hazardous wastes, the
cleaning up of contaminated sites and the maintenance of a safe work place.
These laws impose penalties, fines and other sanctions for non-compliance and
liability for response costs, property damages and personal injury resulting
from past and current spills, disposals or other releases of, or exposure to,
hazardous materials. The Company could incur substantial costs as a result of
non-compliance with or liability for cleanup or other costs or damages under
these laws. The Company may be subject to more stringent environmental laws in
the future, and compliance with more stringent environmental requirements may
require the Company to make material expenditures or subject it to liabilities
that the Company currently does not anticipate.

The Company is currently involved in a number of environmental remediation
investigations and clean-ups and, along with other companies, has been
identified as a "potentially responsible party" for certain waste disposal sites
under the federal "Superfund" law. At several sites, the Company is currently
conducting environmental remediation, and it is probable that the Company will
agree to make payments toward funding certain other of these remediation
activities. It also is possible that some of these matters will be decided
unfavorably to the Company and that other sites requiring remediation will be
identified. Each of these matters is subject to various uncertainties and
financial exposure is dependent upon such factors as the continuing evolution of
environmental laws and regulatory requirements, the availability and application
of technology, the allocation of cost among potentially responsible parties, the
years of remedial activity required and the remediation methods selected. The
Company has evaluated its potential liability and the consolidated balance sheet
at March 31, 2004 and December 31, 2003 includes an accrual of $3.2 million and
$3.3 million, respectively, for environmental matters. The amounts charged
against pre-tax earnings related to environmental matters totaled $0.4 million
and $0.2 million for the three months ended March 31, 2004 and 2003,
respectively. The liability for future

                                      -30-


                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                         PART I - FINANCIAL INFORMATION

remediation costs is evaluated on a quarterly basis. Actual costs to be incurred
at identified sites in future periods may be greater than the estimates, given
inherent uncertainties in evaluating environmental exposures.

     RESTRICTIONS IMPOSED BY THE COMPANY'S CREDIT FACILITIES AND OUTSTANDING
     NOTES MAY LIMIT THE COMPANY'S ABILITY TO OBTAIN ADDITIONAL FINANCING OR TO
     PURSUE BUSINESS OPPORTUNITIES.

The Company's credit facilities and certain notes payable agreements contain
covenants requiring a minimum net worth of $475 million and a maximum debt to
capital ratio of 60%. These covenants limit the amount of debt the Company may
incur, which could limit its ability to obtain additional financing or to pursue
business opportunities. In addition, the Company's ability to comply with these
ratios may be affected by events beyond its control. A breach of any of these
covenants or the inability to comply with the required financial ratios could
result in a default under these credit facilities. In the event of any default
under these credit facilities, the lenders under those facilities could elect to
declare all borrowings outstanding, together with accrued and unpaid interest
and other fees, to be due and payable, which would cause an event of default
under the notes. This could in turn trigger an event of default under the
cross-default provisions of the Company's other outstanding indebtedness. At
March 31, 2004, the Company was in compliance with these covenants and $369.8
million in indebtedness containing these covenants was outstanding.

     HIGHER THAN EXPECTED CLAIMS UNDER INSURANCE POLICIES, UNDER WHICH THE
     COMPANY RETAINS A PORTION OF RISK, COULD ADVERSELY AFFECT RESULTS OF
     OPERATIONS AND CASH FLOWS.

The Company retains a significant portion of the risk for property, workers'
compensation, automobile, general and product liability losses. Reserves have
been recorded which reflect the undiscounted estimated liabilities for ultimate
losses including claims incurred but not reported. Inherent in these estimates
are assumptions that are based on the Company's history of claims and losses, a
detailed analysis of existing claims with respect to potential value, and
current legal and legislative trends. At March 31, 2004 and December 31, 2003,
the Company had recorded liabilities of $70.8 million and $69.3 million,
respectively, related to both asserted and unasserted insurance claims. If
actual claims are higher than those projected by management, an increase to the
Company's insurance reserves may be required and would be recorded as a charge
to income in the period the need for the change was determined. Conversely, if
actual claims are lower than those projected by management, a decrease to the
Company's insurance reserves may be required and would be recorded as a
reduction to expense in the period the need for the change was determined.

     THE SEASONALITY OF THE COMPANY'S BUSINESS MAY CAUSE ITS QUARTERLY RESULTS
     TO FLUCTUATE.

The Company has historically generated the majority of its cash flows in the
third and fourth quarters (periods ending September 30 and December 31). This is
a direct result of traditionally higher sales and income during the second and
third quarters (periods ending June 30 and September 30) of the year, as the
Company's business tends to follow seasonal patterns. If the Company is unable
to successfully manage the cash flow and other effects of seasonality on the
business, its results of operations may suffer.

     THE COMPANY'S CASH FLOWS AND EARNINGS ARE SUBJECT TO CHANGES IN INTEREST
     RATES.

The Company's total debt as of March 31, 2004 was $639.0 million. Of this
amount, approximately 15% had variable rates of interest and 85% had fixed rates
of interest. The weighted average interest rate of total debt was approximately
6.0%. At current debt levels, a one-percentage increase/decrease in variable
interest rates would increase/decrease interest expense by approximately $0.9
million per year.

The future financial impact on the Company associated with the above risks
cannot be estimated.


ITEM 4. CONTROLS AND PROCEDURES
- -------------------------------

The Company's management, including the Chief Executive Officer and Chief
Financial Officer, has conducted an evaluation of the effectiveness of
disclosure controls and procedures as of March 31, 2004. 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
significant changes in internal controls, or in factors that could significantly
affect internal controls, subsequent to the date of their evaluation.

                                      -31-


                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES
                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
- -------------------------

Information on legal proceedings is included under Part I, Item 1, Footnote I
labeled "Commitments and Contingencies."


ITEM 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
- -----------------------------------------------------------------------------
        Securities
        ----------
(e). Issuer Purchases of Equity Securities

                                          (A) TOTAL                       (C) TOTAL NUMBER OF     (D) MAXIMUM NUMBER OF
                                           NUMBER OF      (B) AVERAGE    SHARES PURCHASED AS PART  SHARES THAT MAY YET BE
                                             SHARES          PRICE        OF PUBLICLY ANNOUNCED     PURCHASED UNDER THE
PERIOD                                     PURCHASED     PAID PER SHARE      PLANS OR PROGRAMS        PLANS OR PROGRAMS
- ---------------------------------------- ------------- ----------------- ------------------------ -----------------------
                                                                                             
January 1, 2004 - January 31, 2004             -               -                     -                    1,000,000
February 1, 2004 - February 29, 2004           -               -                     -                    1,000,000
March 1, 2004 - March 31, 2004                 -               -                     -                    1,000,000
     Total                                     -               -                     -
- ---------------------------------------- ------------- ----------------- ------------------------ -----------------------


The Company's share repurchase program was extended by Board of Directors in
January 2004. This was announced to the public on March 11, 2004 as part of the
Company's Annual Report on Form 10-K. The program authorizes the repurchase of
up to 1,000,000 shares of the Company's common stock and expires January 31,
2005.


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

At the annual meeting of stockholders held on April 27, 2004 in Camp Hill,
Pennsylvania, three members of the Board of Directors were reelected to terms
expiring in 2007 under the classified Board structure enacted at the 1986 Annual
Meeting. They include G.D.H. Butler, Senior Vice President - Operations of the
Company; J. I. Scheiner, President and Chief Operating Officer of Benatec
Associates, Inc.; and R. C. Wilburn, President of the Gettysburg National
Battlefield Museum Foundation.

The Board of Directors voting tabulation was as follows:

                                                                     Broker
                                 For             Withheld           No-Votes
    Name                    No. of Shares      No. of Shares      No. of Shares
    ----                    -------------      -------------      -------------
    G. D. H. Butler           36,073,625          905,302               -
    J. I. Scheiner            36,275,394          703,533               -
    R. C. Wilburn             36,094,282          884,645               -

Shareholders approved the amendment and restatement of the 1995 Non-Employee
Directors' Stock Plan by the following vote:

                                                               Broker
           For             Against         Abstentions        No-Votes
      No. of Shares     No. of Shares     No. of Shares    No. of Shares
      -------------     -------------     -------------    -------------
       29,433,425         3,129,563          354,676         4,061,263

                                      -32-


Shareholders approved the amendment and restatement of the 1995 Executive
Incentive Compensation Plan by the following vote:

                                                               Broker
           For             Against         Abstentions        No-Votes
      No. of Shares     No. of Shares     No. of Shares    No. of Shares
      -------------     -------------     -------------    -------------
       29,447,842         3,104,910          366,611         4,059,564

Shareholders approved the appointment of PricewaterhouseCoopers LLP, as
independent accountants to audit the financial statements of the Company for the
fiscal year ending December 31, 2004 by the following vote:

                                                               Broker
           For             Against         Abstentions        No-Votes
      No. of Shares     No. of Shares     No. of Shares    No. of Shares
      -------------     -------------     -------------    -------------
       36,069,074          687,742           222,111             -


ITEM 5. OTHER INFORMATION
- -------------------------

DIVIDEND INFORMATION
- --------------------

On March 11, 2004, the Board of Directors declared a quarterly cash dividend of
27.50 cents per share, payable May 17, 2004, to shareholders of record on April
15, 2004.

ITEM 6(a). EXHIBITS
- -------------------

Listing of Exhibits filed with Form 10-Q:

    Exhibit
    Number     Data Required                                        Location
    ------     -------------                                        --------

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

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

    32(a)      Certification Pursuant to 18 U.S.C. Section          Exhibit
               1350, as Adopted Pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002

    32(b)      Certification Pursuant to 18 U.S.C. Section          Exhibit
               1350, as Adopted Pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002

ITEM 6(b). REPORTS ON FORM 8-K
- ------------------------------

During the first quarter 2004 (and thereafter to the date hereof), the Company
furnished to the Commission the following reports on Form 8-K under Item 12:

(1)  A Form 8-K dated January 29, 2004, furnishing a copy of the press release
     announcing the Company's fourth quarter and full year of 2003 earnings.

(2)  A Form 8-K dated April 22, 2004, furnishing a copy of the press release
     announcing the Company's first quarter of 2004 earnings.

                                      -33-


                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES

                                   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      May 7, 2004                   /S/ Salvatore D. Fazzolari
     ----------------------             -----------------------------------
                                        Salvatore D. Fazzolari
                                        Senior Vice President, Chief
                                        Financial Officer and Treasurer



DATE      May 7, 2004                   /S/ Stephen J. Schnoor
     ----------------------             -----------------------------------
                                        Stephen J. Schnoor
                                        Vice President and Controller



                                      -34-