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

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

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

                                    FORM 10-K

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

                   For the fiscal year ended December 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 or other jurisdiction of          (I.R.S. employer identification number)
 incorporation or organization)

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

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

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

                                                            Name of each
       Title of each class                          exchange on which registered
       -------------------                          ----------------------------
Common stock, par value $1.25 per share              New York Stock Exchange and
Preferred stock purchase rights                         Pacific Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:   NONE

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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]

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

The aggregate market value of the Company's voting stock held by non-affiliates
of the Company as of June 30, 2004 was $1,933,614,169.

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

               Classes                          Outstanding at February 28, 2005
               -------                          --------------------------------
Common stock, par value $1.25 per share                     41,503,990


                       DOCUMENTS INCORPORATED BY REFERENCE

Selected portions of the 2005 Proxy Statement are incorporated by reference into
Part III of this Report.

The Exhibit Index (Item No. 15) located on pages 90 to 94 incorporates several
documents by reference as indicated therein.
================================================================================


                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES

                                     PART I

ITEM 1.     BUSINESS

(a)  General Development of Business

Harsco Corporation ("the Company") is a diversified, multinational provider of
market-leading industrial services and engineered products. The Company's
operations fall into three reportable segments: Mill Services, Access Services
and Gas Technologies, plus an "all other" category labeled Engineered Products
and Services. The Company has locations in 42 countries, including the United
States. The Company was incorporated in 1956.

The Company's executive offices are located at 350 Poplar Church Road, Camp
Hill, Pennsylvania 17011. The Company's main telephone number is (717) 763-7064.
The Company's Internet website address is www.harsco.com. Through this Internet
website (found in the "Investors" link) the Company makes available, free of
charge, its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K and all amendments to those reports, as soon as
reasonably practicable after these reports are electronically filed or furnished
to the Securities and Exchange Commission. Information contained on the
Company's website is not incorporated by reference into this Annual Report, and
you should not consider information contained on the Company's website as part
of this Annual Report.

The Company's principal lines of business and related principal business drivers
are as follows:


     Principal Lines of Business                                   Principal Business Drivers
     ---------------------------                                   --------------------------
                                                          
     o     Outsourced, on-site mill services                 o     Steel mill production and capacity utilization
                                                             o     Outsourcing of services by mills

     ------------------------------------------------------- -----------------------------------------------------------------------
     o     Scaffolding, forming, shoring and other           o     Non-residential construction
           access-related services                           o     Annual industrial and building maintenance cycles

     ------------------------------------------------------- -----------------------------------------------------------------------
     o     Gas control and containment products

           - Cryogenic containers and industrial cylinders   o     General industrial production and industrial gas production

           - Valves                                          o     Use of industrial, fuel and refrigerant gases
                                                             o     Respiratory care
                                                             o     Consumer barbeque grills

           - Propane Tanks                                   o     Use of propane as a primary and/or backup fuel

           - Filament-wound composite cylinders              o     Self-contained breathing apparatus (SCBA) market
                                                             o     Natural gas vehicle (NGV) market

     ------------------------------------------------------- -----------------------------------------------------------------------
     o     Railway track maintenance services and            o     Domestic and international railway track maintenance-of-way
           equipment                                               capital spending
                                                             o     Outsourcing of track maintenance and new track
                                                                   construction by railroads
     ------------------------------------------------------- -----------------------------------------------------------------------
     o     Industrial grating products                       o     Industrial production
                                                             o     Non-residential construction

     ------------------------------------------------------- -----------------------------------------------------------------------
     o     Industrial abrasives and roofing granules         o     Industrial and infrastructure surface preparation and
                                                                   restoration
                                                             o     Residential roof replacement

     ------------------------------------------------------- -----------------------------------------------------------------------
     o     Powder processing equipment and heat              o     Pharmaceutical, food and chemical production
           transfer products                                 o     Commercial and institutional boiler requirements
     ------------------------------------------------------- -----------------------------------------------------------------------

                                      -2-



     Principal Lines of Business                                   Principal Business Drivers
     ---------------------------                                   --------------------------
                                                          
     ------------------------------------------------------- -----------------------------------------------------------------------
     o     Air-cooled heat exchangers                        o     Natural gas drilling and transmission
     ------------------------------------------------------- -----------------------------------------------------------------------


The Company reports segment information using the "management approach" in
accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information." The management approach is based on the way management
organizes and reports the segments within the enterprise for making operating
decisions and assessing performance. The Company's reportable segments are
identified based upon differences in products, services and markets served. Due
to management changes, effective January 1, 2004, the air-cooled heat exchangers
business was reclassified from the Gas and Fluid Control Segment to the Other
Infrastructure Products and Services ("all other") Category. In June 2004, the
Company announced a new identity for its Gas and Fluid Control Segment and
renamed it Gas Technologies. Additionally, the Other Infrastructure Products and
Services ("all other") Category was renamed the Engineered Products and Services
("all other") Category. These segments and the types of products and services
offered are more fully described below. Historical information has been
reclassified for comparative purposes.

In 2004, 2003 and 2002, the United States contributed sales of $1.0 billion,
$0.9 billion and $0.9 billion, equal to 42%, 43% and 46% of total sales,
respectively. In 2004, 2003 and 2002, the United Kingdom contributed sales of
$0.5 billion, $0.5 billion and $0.4 billion, equal to 21% of total sales for
each year. No single customer represented 10% or more of the Company's sales
during 2004, 2003 and 2002. There were no significant inter-segment sales.

(b)  Financial Information about Segments

Financial information concerning industry segments is included in Note 14,
Information by Segment and Geographic Area, to the Consolidated Financial
Statements under Part II, Item 8, "Financial Statements and Supplementary Data."

(c)  Narrative Description of Business

     (1) A narrative description of the businesses by reportable segment is as
     follows:

     MILL SERVICES SEGMENT - 40% OF CONSOLIDATED SALES FOR 2004

     The Mill Services Segment, which consists of the MultiServ Division, is the
     Company's largest operating segment in terms of revenues and operating
     income. MultiServ is the world's largest provider of outsourced, on-site
     mill services to the global steel and metals industries. MultiServ provides
     its services on a long-term contract basis, supporting each stage of the
     metal-making process from initial raw material handling to post-production
     by-product processing and on-site recycling. Working as a specialized,
     high-value-added services provider, MultiServ rarely trades steel or scrap,
     or takes ownership of its customers' raw materials or finished products.
     Similar services are provided to the producers of non-ferrous metals, such
     as aluminum, copper and nickel. The Company's multi-year Mill Services
     contracts had estimated future revenues of $3.7 billion at December 31,
     2004. This provides the Company with a substantial base of long-term
     revenues. Approximately 59% of these revenues are expected to be recognized
     by December 31, 2007. The remaining revenues are expected to be recognized
     principally between January 1, 2008 and December 31, 2013.

     MultiServ's geographic reach to approximately 160 locations in over 30
     countries, and its increasing range of services, enhance the Company's
     financial and operating balance. In 2004, this Segment's revenues were
     generated in the following regions:

                        MILL SERVICES SEGMENT
            -----------------------------------------------
                                      2004 PERCENTAGE
            REGION                     OF REVENUES
            -----------------------------------------------

            Continental Europe               31%
            United States                    20%
            United Kingdom                   18%
            Latin America                    10%
            Other                            21%

     For 2004, 2003 and 2002, the Mill Services Segment's percentage of
     consolidated sales was 40%, 39% and 35%, respectively.

                                      -3-


     ACCESS SERVICES SEGMENT - 28% OF CONSOLIDATED SALES FOR 2004

     The Access Services Segment includes the Company's SGB Group and Patent
     Construction Systems Divisions. The Company's Access Services Segment leads
     the access industry as one of the world's most complete providers of
     scaffolding, shoring, forming and other access solutions. The U.K.-based
     SGB Group Division supports requirements throughout Europe, the Middle East
     and the Pacific, while the U.S.-based Patent Construction Systems Division
     serves North and South America. Major products and services include the
     rental and sale of scaffolding, powered access equipment, shoring and
     concrete forming products. The Company also provides access design
     engineering services, on-site installation and dismantling services, and a
     variety of other access equipment services. These businesses serve
     principally the non-residential construction and industrial plant
     maintenance markets.

     The Company's access services are provided in approximately 20 countries of
     operation. In 2004, this Segment's revenues were generated in the following
     regions:

                         ACCESS SERVICES SEGMENT
            -----------------------------------------------
                                        2004 PERCENTAGE
            REGION                       OF REVENUES
            -----------------------------------------------

            United Kingdom                   47%
            Continental Europe               22%
            United States                    20%
            Other                            11%

     For 2004, 2003 and 2002, the Access Services Segment's percentage of
     consolidated sales was 28%, 29% and 30%, respectively.

     GAS TECHNOLOGIES SEGMENT - 14% OF CONSOLIDATED SALES FOR 2004

     The Gas Technologies Segment includes the Company's Harsco GasServ
     Division. The Segment's manufacturing and service facilities in the United
     States, Europe, Australia, Malaysia and China comprise an integrated
     manufacturing network for gas containment and control products. This global
     operating presence and product breadth provide economies of scale and
     multiple code production capability, enabling Harsco GasServ to serve as a
     single source to the world's leading industrial gas producers and
     distributors, as well as regional and local customers. In 2004,
     approximately 87% of this Segment's revenues were generated in the United
     States.

     The Company's gas containment products include cryogenic gas storage tanks;
     high pressure and acetylene cylinders; propane tanks; and composite vessels
     for industrial and commercial gases, natural gas vehicle (NGV) products and
     other products. The Company's gas control products include valves and
     regulators serving a variety of markets, including the industrial gas,
     commercial refrigeration, life support and outdoor recreation industries.

     For 2004, 2003 and 2002, the Gas Technologies Segment's percentage of
     consolidated sales was 14%, 14% and 16%, respectively.

     ENGINEERED PRODUCTS AND SERVICES ("ALL OTHER") CATEGORY - 18% OF
     CONSOLIDATED SALES FOR 2004

     The Engineered Products and Services ("all other") Category includes the
     Harsco Track Technologies, Reed Minerals, IKG Industries, Patterson-Kelley
     and Air-X-Changers Divisions. Approximately 89% of this category's revenues
     originate in the United States.

     Export sales for this Category totaled $101.2 million, $71.1 million and
     $36.2 million in 2004, 2003 and 2002, respectively. In 2004, export sales
     for the Harsco Track Technologies Division were $76.3 million which
     included sales to China, the United Kingdom, Canada, Germany and India.

     Harsco Track Technologies is a global provider of equipment and services to
     maintain, repair and construct railway track. The Company's railway track
     maintenance services provide high-technology comprehensive track
     maintenance and new track construction support to railroad customers
     worldwide. The railway track maintenance equipment product class includes
     specialized track maintenance equipment used by private and
     government-owned railroads and urban transit systems worldwide.

                                      -4-


     Reed Minerals' roofing granules and industrial abrasives are produced from
     utility coal slag at a number of locations throughout the United States.
     The Company's Black Beauty(R) abrasives are used for industrial surface
     preparation, such as rust removal and cleaning of bridges, ship hulls and
     various structures. Roofing granules are sold to residential roofing
     shingle manufacturers, primarily for the replacement market. This Division
     is the United States' largest manufacturer of slag abrasives and third
     largest manufacturer of residential roofing granules.

     IKG Industries manufactures a varied line of industrial grating products at
     several plants in North America. These products include a full range of
     riveted, pressure-locked and welded grating configurations, which are used
     mainly in industrial flooring, safety and security applications in the
     power, paper, chemical, refining and processing industries.

     Patterson-Kelley is a leading manufacturer of powder processing equipment
     such as blenders, dryers and mixers for the chemical, pharmaceutical and
     food processing industries and heat transfer products such as water heaters
     and boilers for commercial and institutional applications.

     Air-X-Changers is a leading international supplier of custom-designed and
     manufactured air-cooled heat exchangers for the natural gas industry. The
     Company's heat exchangers are the primary apparatus used to condition
     natural gas during recovery, compression and transportation from
     underground reserves through the major pipeline distribution channels.

     For 2004, 2003 and 2002, the Engineered Products and Services ("all other")
     Category's percentage of consolidated sales was 18%, 18% and 19%,
     respectively.

     (1)(i)    The products and services of the Company include a number of
               product groups. These product groups are more fully discussed in
               Note 14, Information by Segment and Geographic Area, to the
               Consolidated Financial Statements under Part II, Item 8,
               "Financial Statements and Supplementary Data." The product groups
               that contributed 10% or more as a percentage of consolidated
               sales in any of the last three fiscal years are set forth in the
               following table:

                                              PERCENTAGE OF CONSOLIDATED SALES
                                             ----------------------------------
               PRODUCT GROUP                    2004         2003         2002
               ----------------------------------------------------------------
               Mill Services                     40%          39%          35%
               Access Services                   28%          29%          30%
               Industrial Gas Products           14%          14%          16%
               ================================================================

      (1)(ii)  New products and services are added from time to time; however,
               in 2004 none required the investment of a material amount of the
               Company's assets.

      (1)(iii) The manufacturing requirements of the Company's operations are
               such that no unusual sources of supply for raw materials are
               required. The raw materials used by the Company include
               principally steel and, to a lesser extent, aluminum, which are
               usually readily available. During 2004, the Company experienced
               significant increases in the cost of steel compared with prior
               years. Continued increases in steel prices and worldwide demand
               for steel could have an adverse effect on raw material costs, and
               the Company's ability to obtain the necessary raw materials. If
               this situation continues long-term and the Company is unable to
               recover increased costs through price increases, it could have a
               material impact on the Company's financial position, results of
               operations and cash flows. Also, the Company uses coal slag for
               its roofing granule and abrasives manufacturing. Although this
               raw material has limited availability, the Company has an
               adequate supply for the foreseeable future. Additionally, the
               Company uses carbon fiber to produce filament-wound composite
               cylinders, a product line of the Gas Technologies Segment. This
               material currently has limited availability. If this situation
               continues, it could result in increased costs to the Company. The
               Company believes that it will be able to recover increased costs
               through price increases which would mitigate the impact on the
               Company's financial position, results of operations and cash
               flows.

      (1)(iv)  While the Company has a number of trademarks, patents and patent
               applications, it does not consider that any material part of its
               business is dependent upon them.

                                      -5-


      (1)(v)   The Company furnishes products and materials and certain
               industrial services within the Access Services and Gas
               Technologies Segments and the Engineered Products and Services
               ("all other") Category that are seasonal in nature. As a result,
               the Company's sales and net income for the first quarter ending
               March 31 are normally lower than the second, third and fourth
               quarters. The Company's historical revenue patterns and cash
               provided by operating activities were as follows:


               HISTORICAL REVENUE PATTERNS

                (IN MILLIONS)                        2004       2003       2002       2001
               ------------------------------------------------------------------------------
                                                                         
               First Quarter Ended March 31         $556.3     $487.9     $458.6     $505.0

               Second Quarter Ended June 30          617.6      536.4      510.3      510.1

               Third Quarter Ended September 30      617.3      530.2      510.5      510.3

               Fourth Quarter Ended December 31      710.9      564.0      497.3      499.7


               HISTORICAL CASH PROVIDED BY OPERATIONS

                (IN MILLIONS)                        2004       2003       2002       2001
               ------------------------------------------------------------------------------

               First Quarter Ended March 31         $ 32.4     $ 31.2     $  9.0     $  2.6

               Second Quarter Ended June 30           64.6       59.2       71.4       65.1

               Third Quarter Ended September 30       68.9       64.1       83.3       66.1

               Fourth Quarter Ended December 31      104.6      108.4       90.1      106.9



      (1)(vi)  The practices of the Company relating to working capital are
               similar to those practices of other industrial service providers
               or manufacturers servicing both domestic and international
               industrial services and commercial markets. These practices
               include the following:
               o  Standard accounts receivable payment terms of 30 days to 60
                  days, with progress payments required for certain
                  long-lead-time or large orders.
               o  Standard accounts payable payment terms of 30 days to 90 days.
               o  Inventories are maintained in sufficient quantities to meet
                  forecasted demand. Due to the time required to manufacture
                  certain railway maintenance equipment to customer
                  specifications, inventory levels of this business tend to
                  increase during the production phase and then decline when the
                  equipment is sold.

      (1)(vii) The Company as a whole is not dependent upon any one customer for
               10% or more of its revenues. However, the Mill Services Segment
               is dependent largely on the global steel industry and has two
               European-based customers that each provided in excess of 10% of
               this Segment's revenues for the years 2002 to 2004 under multiple
               long-term contracts at several mill sites. The loss of any one of
               the contracts would not have a material adverse effect upon the
               Company's financial position or cash flows; however, it could
               have a material adverse effect on quarterly or annual results of
               operations of the Segment. Further consolidation is expected in
               the global steel industry. This could result in additional
               customers exceeding 10% of revenues for this Segment.

      (1)(viii)Backlog of orders was $243.0 million and $186.2 million as of
               December 31, 2004 and 2003, respectively. It is expected that
               approximately 22% of the total backlog at December 31, 2004 will
               not be filled during 2005. The Company's backlog is seasonal in
               nature and tends to follow in the same pattern as sales and net
               income which is discussed in section (1) (v) above. Backlog for
               scaffolding, shoring and forming services and for roofing
               granules and slag abrasives is not included in the total backlog
               because it is generally not quantifiable, due to the nature of
               the products and services provided. Contracts for the Mill
               Services Segment are also excluded from the total backlog. These
               contracts have estimated future revenues of $3.7 billion at
               December 31, 2004. For additional information regarding backlog,
               see the Backlog section included in Part II, Item 7,
               "Management's Discussion and Analysis of Financial Condition and
               Results of Operations."

                                      -6-


      (1)(ix)  At December 31, 2004, the Company had no material contracts that
               were subject to renegotiation of profits or termination at the
               election of the U.S. Government.

      (1)(x)   The Company encounters active competition in all of its
               activities from both larger and smaller companies who produce the
               same or similar products or services, or who produce different
               products appropriate for the same uses.

      (1)(xi)  The expense for product development activities was $2.6 million,
               $3.3 million and $2.8 million in 2004, 2003 and 2002,
               respectively. For additional information regarding product
               development activities, see the Research and Development section
               included in Part II, Item 7, "Management's Discussion and
               Analysis of Financial Condition and Results of Operations."

      (1)(xii) The Company has become subject, as have others, to stringent air
               and water quality control legislation. In general, the Company
               has not experienced substantial difficulty complying with these
               environmental regulations in the past, and does not anticipate
               making any material capital expenditures for environmental
               control facilities. While the Company expects that environmental
               regulations may expand, and that its expenditures for air and
               water quality control will continue, it cannot predict the effect
               on its business of such expanded regulations. For additional
               information regarding environmental matters see Note 10,
               Commitments and Contingencies, to the Consolidated Financial
               Statements included in Part II, Item 8, "Financial Statements and
               Supplementary Data."

      (1)(xiii)As of December 31, 2004, the Company had approximately 18,500
               employees.

(d)  Financial Information about Geographic Areas

Financial information concerning foreign and domestic operations is included in
Note 14, Information by Segment and Geographic Area, to the Consolidated
Financial Statements under Part II, Item 8, "Financial Statements and
Supplementary Data." Export sales totaled $139.3 million, $108.5 million and
$76.6 million in 2004, 2003 and 2002, respectively.

(e)  Available Information

Information is provided in Part I, Item 1 (a), "General Development of
Business."


ITEM 2.     PROPERTIES

Information as to the principal plants owned and operated by the Company is
summarized in the following table:

   LOCATION                                       PRINCIPAL PRODUCTS
   -----------------------------------------------------------------------------

   Access Services Segment
   -----------------------
         Marion, Ohio                             Access Equipment Maintenance
         Dosthill, United Kingdom                 Access Equipment Maintenance

   Gas Technologies Segment
   ------------------------
         Lockport, New York                       Valves
         Niagara Falls, New York                  Valves
         Washington, Pennsylvania                 Valves
         Bloomfield, Iowa                         Propane Tanks
         Fremont, Ohio                            Propane Tanks
         Jesup, Georgia                           Propane Tanks
         West Jordan, Utah                        Propane Tanks
         Harrisburg, Pennsylvania                 High Pressure Cylinders
         Huntsville, Alabama                      High Pressure Cylinders
         Beijing, China                           Cryogenic Storage Vessels
         Jesup, Georgia                           Cryogenic Storage Vessels
         Kosice, Slovakia                         Cryogenic Storage Vessels
         Shah Alam, Malaysia                      Cryogenic Storage Vessels
         Theodore, Alabama                        Cryogenic Storage Vessels

                                      -7-


   LOCATION                                       PRINCIPAL PRODUCTS
   -----------------------------------------------------------------------------

   Engineered Products and Services ("all other") Category
   -------------------------------------------------------
         Drakesboro, Kentucky                     Roofing Granules/Abrasives
         Gary, Indiana                            Roofing Granules/Abrasives
         Moundsville, West Virginia               Roofing Granules/Abrasives
         Tampa, Florida                           Roofing Granules/Abrasives
         Brendale, Australia                      Railroad Equipment
         Fairmont, Minnesota                      Railroad Equipment
         Ludington, Michigan                      Railroad Equipment
         West Columbia, South Carolina            Railroad Equipment
         Channelview, Texas                       Industrial Grating Products
         Leeds, Alabama                           Industrial Grating Products
         Nashville, Tennessee                     Industrial Grating Products
         Queretaro, Mexico                        Industrial Grating Products
         East Stroudsburg, Pennsylvania           Process Equipment
         Catoosa, Oklahoma                        Heat Exchangers
   =============================================================================

The Company also operates the following plants which are leased:

   LOCATION                                       PRINCIPAL PRODUCTS
   -----------------------------------------------------------------------------

   Access Services Segment
   -----------------------
         Maldon, United Kingdom                   Aluminum Access Products
         DeLimiet, Netherlands                    Access Equipment Maintenance

   Gas Technologies Segment
   ------------------------
         Cleveland, Ohio                          Brass Castings
         Pomona, California                       Composite Cylinders

   Engineered Products and Services ("all other") Category
   -------------------------------------------------------
         Eastwood, United Kingdom                 Railroad Equipment
         Tulsa, Oklahoma                          Industrial Grating Products
         Catoosa, Oklahoma                        Heat Exchangers
         Sapulpa, Oklahoma                        Heat Exchangers
   =============================================================================

The Company operates from a number of other plants, branches, warehouses and
offices in addition to the above. The Company has approximately 160 locations
related to mill services in over 30 countries; however since these facilities
are on the property of the steel mill being serviced they are not listed. The
Company considers all of its properties at which operations are currently
performed to be in satisfactory condition and suitable for operations.


ITEM 3.     LEGAL PROCEEDINGS

Information regarding legal proceedings is included in Note 10, Commitments and
Contingencies, to the Consolidated Financial Statements under Part II, Item 8,
"Financial Statements and Supplementary Data."


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

There were no matters that were submitted to a vote of security holders, through
the solicitation of proxies or otherwise, during the fourth quarter of the year
covered by this report.

                                      -8-


SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT (PURSUANT TO
INSTRUCTION 3 TO ITEM 401(B) OF REGULATION S-K)

Set forth below, as of March 10, 2005, are the executive officers (this excludes
two corporate officers who are not deemed "executive officers" within the
meaning of applicable Securities and Exchange Commission regulations) of the
Company and certain information with respect to each of them. The executive
officers were elected to their respective offices effective April 27, 2004. All
terms expire on April 26, 2005. There are no family relationships between any of
the executive officers.

NAME                    AGE    PRINCIPAL OCCUPATION OR EMPLOYMENT

EXECUTIVE OFFICERS:

D. C. Hathaway          60     Chairman, President and Chief Executive Officer
                               of the Corporation since July 31, 2000. Chairman
                               and Chief Executive Officer from January 1, 1998
                               to July 31, 2000. Served as Chairman, President
                               and Chief Executive Officer from April 1, 1994 to
                               December 31, 1997 and President and Chief
                               Executive Officer from January 1, 1994 to April
                               1, 1994. Director since 1991. From 1991 to 1993,
                               served as President and Chief Operating Officer.
                               From 1986 to 1991 served as Senior Vice
                               President-Operations of the Corporation. Served
                               as Group Vice President from 1984 to 1986 and as
                               President of the Dartmouth Division of the
                               Corporation from 1979 until 1984.

G. D. H. Butler         58     Senior Vice President - Operations of the
                               Corporation effective September 26, 2000 and
                               Director since January 2002. Concurrently serves
                               as President of the MultiServ and SGB Divisions.
                               From September 2000 through December 2003, he was
                               President of the Heckett MultiServ International
                               and SGB Divisions. Was President of the Heckett
                               MultiServ-East Division from July 1, 1994 to
                               September 26, 2000. Served as Managing Director -
                               Eastern Region of the Heckett MultiServ Division
                               from January 1, 1994 to June 30, 1994. Served in
                               various officer positions within MultiServ
                               International, N. V. prior to 1994 and prior to
                               the Company's acquisition of that corporation in
                               August 1993.

S. D. Fazzolari         52     Senior Vice President, Chief Financial Officer
                               and Treasurer of the Corporation effective August
                               24, 1999 and Director since January 2002. Served
                               as Senior Vice President and Chief Financial
                               Officer from January 1998 to August 1999. Served
                               as Vice President and Controller from January
                               1994 to December 1997 and as Controller from
                               January 1993 to January 1994. Previously served
                               as Director of Auditing from 1985 to 1993 and
                               served in various auditing positions from 1980 to
                               1985.

M. E. Kimmel            45     General Counsel and Corporate Secretary effective
                               January 1, 2004. Served as Corporate Secretary
                               and Assistant General Counsel from May 1, 2003 to
                               December 31, 2003. Held various legal positions
                               within the Corporation since he joined the
                               Company in August 2001. Prior to joining Harsco,
                               he was Vice President, Administration and General
                               Counsel, New World Pasta Company from January 1,
                               1999 to July 2001. Before joining New World
                               Pasta, Mr. Kimmel spent approximately 12 years in
                               various legal positions with Hershey Foods
                               Corporation.

S. J. Schnoor           51     Vice President and Controller of the Corporation
                               effective May 15, 1998. Served as Vice President
                               and Controller of the Patent Construction Systems
                               Division from February 1996 to May 1998 and as
                               Controller of the Patent Construction Systems
                               Division from January 1993 to February 1996.
                               Previously served in various auditing positions
                               for the Corporation from 1988 to 1993. Prior to
                               joining Harsco, he served in various auditing
                               positions for Coopers & Lybrand from September
                               1985 to April 1988.

                                      -9-


                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

Harsco common stock is listed on the New York and Pacific Stock Exchanges, and
also trades on the Boston and Philadelphia Exchanges under the symbol HSC. At
the end of 2004, there were 41,431,249 shares outstanding. In 2004, the
Company's common stock traded in a range of $40.10 to $56.24 and closed at
$55.74 at year-end. At December 31, 2004 there were approximately 16,500
stockholders. There are no significant limitations on the payment of dividends
included in the Company's loan agreements. For additional information regarding
Harsco common stock market price and dividends declared, see Dividend Action
under Part II, Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and the Common Stock Price and Dividend
Information under Part II, Item 8, "Financial Statements and Supplementary
Data." For additional information on the Company's equity compensation plans see
Part III, Item 11, "Executive Compensation."

(c). Issuer Purchases of Equity Securities


                                                                                 TOTAL NUMBER
                                                                                   OF SHARES
                                                                                   PURCHASED   MAXIMUM NUMBER
                                                                                   AS PART OF     OF SHARES
                                                   TOTAL                            PUBLICLY   THAT MAY YET BE
                                                 NUMBER OF          AVERAGE        ANNOUNCED   PURCHASED UNDER
                                                  SHARES           PRICE PAID       PLANS OR     THE PLANS OR
PERIOD                                           PURCHASED         PER SHARE        PROGRAMS       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
April 1, 2004 - April 30, 2004                       --               --               --          1,000,000
May 1, 2004 - May 31, 2004                           --               --               --          1,000,000
June 1, 2004 - June 30, 2004                         --               --               --          1,000,000
July 1, 2004 - July 31, 2004                         --               --               --          1,000,000
August 1, 2004 - August 31, 2004                     --               --               --          1,000,000
September 1, 2004 - September 30, 2004               --               --               --          1,000,000
October 1, 2004 - October 31, 2004                   --               --               --          1,000,000
November 1, 2004 - November 30, 2004                 --               --               --          1,000,000
December 1, 2004 - December 31, 2004                 --               --               --          1,000,000
- ----------------------------------------------------------------------------------------------
      Total                                          --               --               --
- ----------------------------------------------------------------------------------------------


The Company's share repurchase program was extended by Board of Directors in
November 2004. This was announced to the public on November 16, 2004 as part of
a Company-issued press release. The program authorizes the repurchase of up to
1,000,000 shares of the Company's common stock and expires January 31, 2006.


                                      -10-


ITEM 6.     SELECTED FINANCIAL DATA (A)

FIVE-YEAR STATISTICAL SUMMARY


(IN THOUSANDS, EXCEPT PER SHARE, EMPLOYEE INFORMATION AND
PERCENTAGES)                                                2004            2003            2002            2001            2000(b)
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                                                         
INCOME STATEMENT INFORMATION
Revenues from continuing operations                     $ 2,502,059     $ 2,118,516     $ 1,976,732     $ 2,025,163     $ 1,904,691
Income from continuing operations                           113,540          86,999          88,410          74,642          94,343
Income (loss) from discontinued operations                    7,671           5,218           1,696          (2,917)          2,460
Net income                                                  121,211          92,217          90,106          71,725          96,803
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION AND CASH FLOW INFORMATION
Working capital                                         $   346,527     $   269,276     $   228,552     $   231,156     $   181,489
Total assets                                              2,389,756       2,138,035       1,999,297       2,090,766       2,180,948
Long-term debt                                              594,747         584,425         605,613         720,133         774,448
Total debt                                                  625,809         613,531         639,670         762,115         837,473
Depreciation and amortization                               184,371         168,935         155,661         176,531         159,099
Capital expenditures                                        204,235         143,824         114,340         156,073         180,048
Cash provided by operating activities                       270,465         262,788         253,753         240,601         259,448
Cash used by investing activities                          (209,602)       (144,791)        (53,929)       (125,213)       (459,052)
Cash provided (used) by financing activities                (56,512)       (125,501)       (205,480)        (99,190)        210,746
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS
Return on sales(c)                                              4.5%            4.1%            4.5%            3.7%            5.0%
Return on average equity(d)                                    13.8%           12.2%           12.6%           11.1%           14.4%
Current ratio                                                 1.6:1           1.5:1           1.5:1           1.5:1           1.3:1
Total debt to total capital(e)                                 40.6%           44.1%           49.8%           52.6%           55.4%
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE INFORMATION
Basic - Income from continuing operations               $      2.76     $      2.14     $      2.19     $      1.87     $      2.36
      - Income (loss) from discontinued operations             0.19            0.13            0.04           (0.07)           0.06
                                                        ---------------------------------------------------------------------------
      - Net income                                      $      2.95     $      2.27     $      2.23     $      1.80     $      2.42
                                                        ===========================================================================

Diluted - Income from continuing operations             $      2.73     $      2.12     $      2.17     $      1.86     $      2.36
        - Income (loss) from discontinued operations           0.18            0.13            0.04           (0.07)           0.06
                                                        ---------------------------------------------------------------------------
        - Net income                                    $      2.91     $      2.25     $      2.21     $      1.79     $      2.42
                                                        ===========================================================================

Book value                                              $     22.07     $     19.01     $     15.90     $     17.16     $     16.94
Cash dividends declared                                       1.125          1.0625          1.0125            0.97           0.945
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER INFORMATION
Diluted average number of shares outstanding                 41,598          40,973          40,680          40,066          40,022
Number of employees                                          18,500          17,500          17,500          18,700          19,700
Backlog from continuing operations (f)                  $   243,006     $   186,222     $   157,777     $   214,124     $   256,745
===================================================================================================================================


(a)  As permitted by the Financial Accounting Standards Board (FASB) Statement
     No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
     2001 and 2000 information has been reclassified for comparative purposes.
(b)  Includes SGB Group Plc which was acquired June 16, 2000.
(c)  "Return on sales" is calculated by dividing income from continuing
     operations by revenues from continuing operations.
(d)  "Return on average equity" is calculated by dividing income from continuing
     operations by quarterly weighted-average equity.
(e)  "Total debt to total capital" is calculated by dividing the sum of debt
     (short-term borrowings and long-term debt including current maturities) by
     the sum of equity and debt.
(f)  Excludes the estimated amount of long-term mill service contracts, which
     had estimated future revenues of $3.7 billion at December 31, 2004. Also
     excludes backlog of the Access Services Segment and the roofing granules
     and slag abrasives business. These amounts are generally not quantifiable
     due to the nature and timing of the products and services provided.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion should be read in conjunction with the consolidated
financial statements provided under Part II, Item 8 of this Annual Report on
Form 10-K. Certain statements contained herein may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These statements involve a

                                      -11-


number of risks, uncertainties and other factors that could cause actual results
to differ materially, as discussed more fully herein.

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 expenses;
(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 in 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. A further discussion of these, along with
other potential factors can be found in Part II, Item 7A, "Quantitative and
Qualitative Disclosures About Market Risk," of this Form 10-K. 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.


EXECUTIVE OVERVIEW
The Company's 2004 revenues were a record $2.5 billion. This is an increase of
$0.4 billion or 18% over 2003. Income from continuing operations was a record
$113.5 million for 2004 compared with $87.0 million in 2003, an increase of 31%.
Diluted earnings per share from continuing operations were a record $2.73 for
2004, a 29% increase.

The 2004 results were led by the Mill Services Segment. Revenues in 2004 for
this Segment were $997.4 million compared with $827.5 million in 2003, a 21%
increase. Operating income for 2004 increased by 23% to $105.5 million, from
$85.9 million in 2003. The Mill Services business accounted for 40% of the
Company's revenues and 50% of the operating income for 2004. Operating margins
for this Segment improved by 20 basis points to 10.6% from 10.4% last year. Mill
Services growth is expected to continue as worldwide steel mill production
volume is expected to remain strong in the near-term, and as the Company invests
substantial cash to grow the business.

The Access Services Segment revenues in 2004 were $706.5 million compared with
$619.1 million in 2003, a 14% increase. Operating income for 2004 increased by
19% to $44.4 million, from $37.4 million in 2003. The Access Services business
accounted for 28% of the Company's revenues and 21% of the operating income.
Operating margins for the Segment improved by 30 basis points to 6.3% from 6.0%
last year. The improved performance of the Access Services Segment was driven by
the international operations.

The Gas Technologies Segment revenues in 2004 were $339.1 million compared with
$294.0 million in 2003, a 15% increase. The increased revenues in 2004 were led
by the domestic propane business; the cryogenics operations, particularly Asia;
and the domestic cylinders business. Although revenue increased, operating
income and operating margins for 2004 declined in comparison with 2003 due to
significant increases in commodity costs, particularly steel. Operating income
was $14.4 million for 2004 compared with $14.5 million for 2003.

All business units of the Engineered Products and Services ("all other")
Category contributed higher revenues in 2004 compared with 2003. The industrial
grating business and the roofing granules and abrasives business also
contributed higher operating income compared with 2003. Operating income for the
boiler and process equipment business and the air-cooled heat exchangers
business was down slightly in 2004 compared with 2003. The railway track
maintenance services and equipment business delivered record revenues in 2004
through increased international sales, but operating income was below 2003 due
to significant increases in commodity costs.

                                      -12-


The Company's continued improvement in net income helped drive record net cash
provided by operating activities of $270.5 million in 2004. A significant
portion of this cash was reinvested in capital investments to grow and maintain
the business. Total 2004 capital investments of $204.2 million were also a
record.

During 2004, the Company received formal notice that the U.S. Government
accepted a proposed settlement of the Federal Excise Tax (FET) case relating to
the Company's former production of U.S. Army five-ton trucks. The Company
recorded pre-tax income of $12.5 million in Discontinued operations as a result
of this settlement in the third quarter of 2004 and received payment during the
fourth quarter of 2004. Additionally, the Company collected substantially all of
its $6.3 million outstanding receivable balance related to a customer's
previously reported Court-supervised restructuring. These are more fully
discussed in Note 10, Commitments and Contingencies, to the Consolidated
Financial Statements under Part II, Item 8, "Financial Statements and
Supplementary Data."

The positive effect of foreign currency translation increased 2004 consolidated
revenues by $108.9 million and pre-tax income by $5.4 million when compared with
2003.


     -------------------------------------------------------------------------------------------------
                                             REVENUES BY REGION
     -------------------------------------------------------------------------------------------------
                                          TOTAL REVENUES
                                        TWELVE MONTHS ENDED              PERCENTAGE GROWTH FROM
                                            DECEMBER 31                       2003 TO 2004
     (DOLLARS IN MILLIONS)              2004          2003         VOLUME        CURRENCY        TOTAL
     -------------------------------------------------------------------------------------------------
                                                                                   
     U.S.                            $  1,047.4   $    902.4         16.1%          0.0%          16.1%
     Europe                             1,018.1        872.3          6.4          10.3           16.7
     Latin America                        122.9        100.3         21.9           0.6           22.5
     Asia-Pacific                         119.7         88.1         28.2           7.7           35.9
     Middle East                           75.9         50.7         50.4          (0.7)          49.7
     Other                                118.1        104.7          1.4          11.4           12.8
     -------------------------------------------------------------------------------------------------
     Total                           $  2,502.1   $  2,118.5         13.0%          5.1%          18.1%
     =================================================================================================


2004 HIGHLIGHTS
The following significant items impacted the Company overall during 2004 in
comparison with 2003:

Company Wide:
- -------------

o    Strong worldwide economic activity, including increased steel production,
     benefited the Company's Mill Services Segment and resulted in strong demand
     for the Company's products. This included international demand for railway
     track maintenance equipment, concrete forming products and cryogenic
     equipment; and domestic demand for propane tanks, industrial cylinders,
     roofing granules and industrial grating products.
o    Due to strong worldwide demand, higher commodity and other material costs
     (particularly steel) increased the Company's operating costs during 2004.
     Included in that increase were higher fuel and energy-related costs. For
     the Company's manufacturing businesses, these increased costs were
     generally offset by increased revenues during the first six months of 2004;
     however, during the second half of 2004, operating income and margins were
     negatively impacted by the increased costs, particularly in the Gas
     Technologies Segment. To the extent that such costs cannot be passed to
     customers in the future, operating income may be adversely affected. The
     Company uses the last-in, first-out (LIFO) method of inventory valuation
     for most of its manufacturing businesses. LIFO matches the most recently
     incurred costs with current revenues by charging cost of goods sold with
     the costs of goods most recently acquired or produced. In periods of rising
     prices, reported costs under LIFO are generally greater than under the
     first-in, first-out (FIFO) method. Based on economic forecasts, cost
     inflation for certain commodities is expected to moderate in 2005. However,
     there can be no assurance that will occur.
o    Total pension expense for 2004 increased $6.4 million from 2003. Defined
     benefit pension expense for 2004 decreased approximately $5.4 million from
     2003. During 2004, there were offsetting increases of approximately $9.1
     million in defined contribution plan expenses related to the new plans that
     commenced January 1, 2004. Additionally, pension expense was increased by
     the impact of foreign currency translation. During 2003, the Company
     restructured its pension plans to make them more predictable and
     affordable. This is more fully discussed in Note 8, Employee Benefit Plans,
     to the Consolidated Financial Statements under Part II, Item 8, "Financial
     Statements and Supplementary Data."
o    A decrease in the effective income tax rate relating to continuing
     operations, from 30.7% in 2003 to 28.6% in 2004, resulted in approximately
     $3.5 million in lower income tax expense for 2004. This is more fully
     discussed in Note 9, Income Taxes, to the Consolidated Financial Statements
     under Part II, Item 8, "Financial Statements and Supplementary Data."

                                      -13-


o    During 2004, the Company was favorably affected by pre-tax benefits of $2.2
     million from the termination of certain postretirement benefit plans. This
     compares with pre-tax benefits of $4.9 million during 2003 for similar plan
     terminations.
o    Other than the impact on revenues, and included in the impact on pre-tax
     income effect as discussed previously, positive foreign currency
     translation in 2004 resulted in a pre-tax increase to interest expense of
     approximately $2.7 million compared with 2003.

MILL SERVICES SEGMENT:
- ----------------------
     (DOLLARS IN MILLIONS)                          2004          2003
     ---------------------------------------------------------------------------
     Revenues                                     $  997.4      $  827.5
     Operating income                                105.5          85.9
     Operating margin percent                         10.6%         10.4%
     ===========================================================================

     MILL SERVICES SEGMENT - SIGNIFICANT IMPACTS ON REVENUES:
     ---------------------------------------------------------------------------
     (IN MILLIONS)
     ---------------------------------------------------------------------------
     Revenues - 2003                                                    $  827.5
     Increased volume and new business                                      83.1
     The benefit of positive foreign currency translation                   59.3
     The acquisition of the industrial services unit of C. J.
     Langenfelder and Sons, Inc. in June 2003                               27.5
     ---------------------------------------------------------------------------
     Revenues - 2004                                                    $  997.4
     ===========================================================================

     MILL SERVICES SEGMENT - SIGNIFICANT IMPACTS ON OPERATING INCOME:
     o  Continued strong volume and new business, particularly in Europe and the
        U.S., increased operating income in 2004 by $17.1 million compared with
        2003.
     o  The benefit of positive foreign currency translation in 2004 resulted in
        increased operating income of $6.5 million compared with 2003.
     o  Compared with 2003, the Segment's operating income and margins in 2004
        were impacted by significantly increased fuel and energy-related costs.
     o  The Segment's operating income and margins for 2004 were also negatively
        impacted by increased maintenance and repair costs; higher start-up
        costs for new contracts; and increased selling, general and
        administrative costs (including Sarbanes-Oxley Section 404-related
        costs). Selling, general and administrative costs increased $11.9
        million or 24% (versus a 21% increase in revenues) for 2004 (including
        approximately $4 million related to foreign currency translation)
        compared with 2003.
     o  During 2003, the Segment was unfavorably impacted by $4.7 million in
        pre-tax Other expenses. During 2004 (principally the first half), only
        $1.5 million in similar expenses were incurred. The decrease of $3.2
        million related principally to reduced employee termination benefits
        costs and costs to exit activities in 2004. This positively impacted the
        operating margin on a comparative basis. Other expenses include impaired
        asset write-downs, employee termination benefit costs and costs to exit
        activities, offset by net gains on the disposal of non-core assets.
     o  During 2003, the Segment was favorably affected by pre-tax benefits of
        $1.9 million from the reversal of bad debt expense, and $1.4 million
        from the termination of certain postretirement benefit plans. The
        reversal of bad debt expense related to a change in estimate regarding
        collectibility of certain accounts receivable. No such benefits occurred
        in 2004, negatively impacting the operating margin on a comparative
        basis.

ACCESS SERVICES SEGMENT:
- ------------------------
     (DOLLARS IN MILLIONS)                                 2004          2003
     --------------------------------------------------------------------------
     Revenues                                            $  706.5      $  619.1
     Operating income                                        44.4          37.4
     Operating margin percent                                 6.3%          6.0%
     ==========================================================================

                                      -14-


     ACCESS SERVICES SEGMENT - SIGNIFICANT IMPACTS ON REVENUES:
     --------------------------------------------------------------------------
     (IN MILLIONS)
     --------------------------------------------------------------------------
     Revenues - 2003                                                   $  619.1
     The benefit of positive foreign currency translation                  45.4
     Net increased volume driven by the international operations           33.8
     Acquisitions (principally SGB Raffia in Australia)                     8.6
     Other                                                                 (0.4)
     --------------------------------------------------------------------------
     Revenues - 2004                                                   $  706.5
     ==========================================================================

     ACCESS SERVICES SEGMENT - SIGNIFICANT IMPACTS ON OPERATING INCOME:
     o  In 2004, the Segment was positively affected by the strength of the
        concrete forming business, particularly in the Middle East and United
        Kingdom. Also, margins on the international powered-access equipment
        rental revenues improved due to cost restructuring actions implemented
        during 2003.
     o  The international access services business continued to increase outside
        the U.K., predominantly in the Middle East, due to certain large
        projects during 2004. During 2004, the international operations outside
        of the U.K. had $231.5 million in revenues and $29.9 million in
        operating income. This compares with $178.2 million in revenues and
        $20.8 million in operating income for 2003.
     o  In the first six months of 2004, there was a continued slowdown in the
        U.S. non-residential construction markets. This slowdown had a negative
        effect on volume (particularly equipment rental revenues) which caused
        overall margins in the U.S. to decline. The third and fourth quarters of
        2004 showed initial signs of strengthening of the non-residential
        construction market. Equipment rental revenues, particularly in the
        construction sector, provide the highest margins for this Segment. The
        decline in margins in the U.S. was more than offset by improvements
        internationally.
     o  The U.S. was also negatively affected by decreased erection and
        dismantling labor revenue during 2004. This decrease was due primarily
        to delayed industrial maintenance activities, particularly fewer
        maintenance outages at power generation plants. The Company expects to
        see an increase in industrial maintenance activities during mid-to-late
        2005.
     o  The Segment's operating income and margins for 2004 were also negatively
        impacted by increased selling, general and administrative costs
        (including increased pension expense and Sarbanes-Oxley Section
        404-related costs).
     o  During 2003, the Segment was favorably affected by pre-tax income of
        $2.5 million from the sale of non-core assets. During 2004, only $1.1
        million of similar benefits occurred.
     o  The benefit of positive foreign currency translation in 2004 for this
        Segment resulted in increased operating income of $1.4 million when
        compared with 2003.

GAS TECHNOLOGIES SEGMENT:
- -------------------------
     (DOLLARS IN MILLIONS)                                 2004         2003(a)
     --------------------------------------------------------------------------
     Revenues                                            $  339.1      $  294.0
     Operating income                                        14.4          14.5
     Operating margin percent                                 4.2%          4.9%
     ==========================================================================

     (a) Segment information for 2003 has been reclassified to conform with the
         current presentation. Due to management changes, effective January 1,
         2004, the air-cooled heat exchangers business is classified in the
         Engineered Products and Services ("all other") Category.

                                      -15-


     GAS TECHNOLOGIES SEGMENT - SIGNIFICANT IMPACTS ON REVENUES:
     --------------------------------------------------------------------------
     (IN MILLIONS)
     --------------------------------------------------------------------------
     Revenues - 2003                                                   $  294.0
     Increased demand for cryogenics equipment and high-pressure
       cylinders                                                           28.6
     Increased sales of propane tanks                                      22.4
     The benefit of positive foreign currency translation                   1.6
     Decreased demand for certain valves and composite-wrapped
       cylinders                                                           (7.2)
     Other                                                                 (0.3)
     --------------------------------------------------------------------------
     Revenues - 2004                                                   $  339.1
     ==========================================================================

     GAS TECHNOLOGIES SEGMENT - SIGNIFICANT IMPACTS ON OPERATING INCOME:
     o  Operating income decreased slightly in 2004 compared with 2003 despite
        increased revenues, due mainly to increased commodity costs, principally
        steel.
     o  Increased revenues for propane tanks and high-pressure cylinders were
        due to increased demand and price increases, which partially offset
        increased commodity costs.
     o  The international cryogenics business, principally Asia, contributed
        significantly to the increased performance of the Segment during 2004
        when compared with 2003.
     o  Commodity costs, particularly steel, increased during 2004. During the
        first six months of 2004, the costs were generally offset by increased
        revenues. During the second half of 2004, increased costs resulted in
        decreased operating income and margins. To the extent that such costs
        cannot be passed to customers in the future, operating income may be
        adversely affected.
     o  Decreased demand for certain valves and composite-wrapped cylinders
        negatively impacted operating income for 2004 compared with 2003. A
        strategic action plan has been developed to improve the results of the
        valves business. This plan is further discussed in the Outlook, Trends
        and Strategies section.
     o  In 2004, foreign currency translation did not have a material impact on
        operating income for this Segment when compared with 2003.

ENGINEERED PRODUCTS AND SERVICES ("ALL OTHER") CATEGORY:
- --------------------------------------------------------
     (DOLLARS IN MILLIONS)                                 2004          2003(a)
     --------------------------------------------------------------------------
     Revenues                                            $  459.1      $  377.9
     Operating income                                        47.0          36.5
     Operating margin percent                                10.2%          9.7%
     ==========================================================================

     (a) Segment information for 2003 has been reclassified to conform with the
         current presentation. Due to management changes, effective January 1,
         2004, the air-cooled heat exchangers business is classified in the
         Engineered Products and Services ("all other") Category.

     ENGINEERED PRODUCTS AND SERVICES ("ALL OTHER") CATEGORY -
           SIGNIFICANT IMPACTS ON REVENUES:
     --------------------------------------------------------------------------
     (IN MILLIONS)
     --------------------------------------------------------------------------
     Revenues - 2003                                                   $  377.9
     Railway track services and equipment                                  33.6
     Industrial grating products                                           20.1
     Air-cooled heat exchangers                                            18.9
     Boiler and process equipment                                           4.1
     The benefit of positive foreign currency translation                   2.5
     Roofing granules and abrasives                                         2.0
     --------------------------------------------------------------------------
     Revenues - 2004                                                   $  459.1
     ==========================================================================

                                      -16-


     ENGINEERED PRODUCTS AND SERVICES ("ALL OTHER") CATEGORY - SIGNIFICANT
     IMPACTS ON OPERATING INCOME:
     o  Operating income for the industrial grating products business increased
        during 2004 due to increased demand and prices; increased focus on
        high-margin standard product orders; reduced low-margin fabrication
        orders; and internal restructuring and cost reductions. This is in
        comparison with an operating loss in 2003.
     o  Continued and consistent profitable results from the roofing granules
        and abrasives business were again attained in 2004.
     o  Despite increased revenues, operating income in the railway track
        maintenance services and equipment business decreased in 2004. This was
        due principally to increased commodity and manufacturing costs and
        increased sales commissions due to a change in product mix.
     o  The benefit of positive foreign currency translation in 2004 resulted in
        increased operating income of $0.9 million for this Category when
        compared with 2003.

OUTLOOK, TRENDS AND STRATEGIES
Looking to 2005 and beyond, the following significant items, trends and
strategies are expected to affect the Company in comparison with 2004:

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. Significant capital investments are
   expected to be made to grow the Mill Services business.
o  Continued focus on improving Economic Value Added (EVA(R)).
o  A target of $320 million in net cash provided by operating activities for
   2005.
o  Higher fuel, energy, transportation and material costs, particularly steel,
   encountered during 2004 are expected to moderate during 2005. However, should
   these costs continue to rise during 2005, this would increase the Company's
   operating costs and reduce profitability to the extent that such costs cannot
   be passed to customers.
o  The continued growth of the Chinese steel industry could impact the Company
   in several ways. Increased steel mill production in China may provide
   additional service opportunities for the Mill Services Segment. However,
   continued increased Chinese economic activity may result in increased
   commodity costs which may adversely affect the Company's manufacturing
   businesses. The impact of this risk is currently unknown.
o  Foreign currency translation has had a favorable effect on the Company's
   sales and income during 2004. However, should the U.S. dollar strengthen,
   particularly in relationship to the euro or British pound sterling, the
   impact on the Company would be negative.
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 related to external audit
   fees and internal costs for compliance with the Sarbanes-Oxley Act of 2002,
   particularly Section 404, have been incurred during 2004. The external audit
   fees are expected to be reduced during 2005 due to completion of the start-up
   phase of the project.
o  In 2005, pension expense is expected to approximate 2004 costs. The discount
   rate for the U.S. defined benefit pension plans declined from 6.25% in 2004
   to 5.75% in 2005; and the discount rate for the U.K. defined benefit pension
   plan will remain constant at 5.75%. Cost savings in the U.K. and U.S. plans,
   as a result of the structural plan changes made effective January 1, 2004,
   are expected to offset the increased U.S. defined benefit plan costs
   resulting from the lower discount rate.
o  On October 22, 2004, the American Jobs Creation Act (AJCA) was signed into
   law. The AJCA includes a deduction of 85% for certain international earnings
   that are repatriated, as defined in the AJCA, to the U.S. The Company may
   elect to apply this temporary provision to qualifying earnings repatriations
   during 2005. On January 13, 2005, the U.S. Treasury Department and the U.S.
   Internal Revenue Service (IRS) issued the first in a series of notices that
   will provide detailed guidance on the AJCA. The Company is assessing the
   effects of the repatriation provision and expects to complete its evaluation
   within a reasonable period of time following the publication of additional
   guidance by the U.S. Treasury Department and IRS. A specific range of income
   tax effects of these repatriations has not been determined; however, the
   Company does not expect a significant impact due to the structure of its
   international operations as well as the substantial amount of repatriations
   to the U.S. in prior years.

Mill Services Segment:
- ----------------------
o  Global steel demand and production is expected to remain strong in 2005, and
   bidding activity for new mill services contracts and add-on services is
   strong.
o  The significantly increased energy-related costs this Segment experienced
   during 2004 are expected to persist through 2005.

                                      -17-


o  The risk remains that certain Mill Services customers may file for bankruptcy
   protection, be acquired or consolidate in the future, which could have an
   adverse impact on the Company's income and cash flows. Conversely, such
   consolidation may provide additional service opportunities for the Company. A
   pending merger of two large customers is expected to create the world's
   largest steel company. Currently, the effect of this merger on the Company
   cannot be estimated.

Access Services Segment:
- ------------------------
o  The international access services business is expected to show continued
   improvement during 2005.
o  U.S. non-residential construction activity is expected to improve throughout
   2005. The benefits of this will likely affect the Company's mid-to-late 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 Technologies Segment:
- -------------------------
o  Although cost inflation for certain commodities is expected to moderate in
   2005, continued increases in steel prices and worldwide demand for steel
   could have an adverse effect on future raw material costs, and this Segment's
   ability to obtain the necessary raw materials.
o  Weak market conditions for liquid propane gas (LPG) valves; manufacturing
   inefficiencies; new product start-up costs; and increased raw material costs
   have impacted the valves business during 2004. Several strategic actions have
   been and are currently being executed to mitigate these conditions. They
   include the following: development and marketing of new products; focus on an
   expanded international customer base; outsourcing of certain manufacturing
   processes; process improvements within the manufacturing operations; and
   optimization of the organizational structure of the business. If the
   conditions encountered during 2004 persist despite execution of the strategic
   action plan, the valuation of this business could be negatively impacted.

Engineered Products and Services ("all other") Category:
- --------------------------------------------------------
o  International demand for the railway track services and equipment business'
   products and services is expected to grow. Additionally, Six Sigma process
   improvements, new technologies and improved manufacturing efficiencies are
   expected to assist in improving margins of this business.
o  The industrial grating business is expected to sustain continued
   profitability for 2005. However, the ability to pass increased commodity
   costs (e.g., steel) to customers may diminish.
o  Although cost inflation for certain commodities is expected to moderate in
   2005, continued increases in steel prices and worldwide demand for steel
   could have an adverse effect on raw material costs and the ability to obtain
   the necessary raw materials for most businesses in this Category.
o  Consistent, profitable results are expected from the roofing granules and
   abrasives business.


                                      -18-


RESULTS OF OPERATIONS FOR 2004, 2003 AND 2002


     (DOLLARS ARE IN MILLIONS, EXCEPT PER SHARE INFORMATION AND
     PERCENTAGES)                                                      2004            2003            2002
     ----------------------------------------------------------------------------------------------------------
                                                                                           
     Revenues from continuing operations                            $  2,502.1      $  2,118.5      $  1,976.7
     Cost of services and products sold                                1,916.4         1,604.4         1,481.8
     Selling, general and administrative expenses                        368.4           330.0           312.7
     Other expenses                                                        4.9             7.0             3.5
     Operating income from continuing operations                         209.8           173.9           176.0
     Interest expense                                                     41.1            40.5            43.3
     Provision for income taxes from continuing operations                49.0            41.7            42.2
     Income from continuing operations                                   113.5            87.0            88.4
     Income from discontinued operations                                   7.7             5.2             1.7
     Net income                                                          121.2            92.2            90.1
     Diluted earnings per common share                                    2.91            2.25            2.21
     Effective income tax rate for continuing operations                  28.6%           30.7%           30.9%
     Consolidated effective income tax rate                               29.1%           31.0%           31.0%
     ==========================================================================================================


COMPARATIVE ANALYSIS OF CONSOLIDATED RESULTS

REVENUES

2004 vs. 2003
- -------------
Revenues for 2004 increased $383.5 million or 18% from 2003, to a record level.
This increase was attributable to the following significant items:

     ---------------------------------------------------------------------------
         IN MILLIONS              CHANGE IN REVENUES 2004 VS. 2003
     ---------------------------------------------------------------------------
       $    108.9         Effect of foreign currency translation.
             83.1         Net increased volume, new contracts and price changes
                          in the Mill Services Segment.
             43.5         Net increased revenues in the Gas Technologies Segment
                          due principally to improved market conditions and
                          selling price increases partially offset by decreased
                          demand for liquid propane gas (LPG) valves in the
                          patio grill market and for composite-wrapped
                          cylinders.
             36.1         Effect of business acquisitions. Increased revenues of
                          $27.5 and $8.6 million in the Mill Services and Access
                          Services Segments, respectively.
             33.6         Net increased revenues in the railway track
                          maintenance services and equipment business due
                          principally to rail equipment sales and, to a lesser
                          extent, contract services.
             33.4         Net increased revenues in the Access Services Segment
                          due principally to the strength of the concrete
                          forming business, particularly in the Middle East and
                          U.K.
             20.1         Increased revenues of the industrial grating products
                          business due to increased demand and a focus on
                          higher-margin standard product orders.
             18.9         Increased revenues of the air-cooled heat exchangers
                          business due to improving natural gas prices.
              5.9         Other (minor changes across the various units not
                          already mentioned).
     ---------------------------------------------------------------------------
       $    383.5         Total Change in Revenues 2004 vs. 2003
     ===========================================================================

                                      -19-


2003 vs. 2002
- -------------
Revenues for 2003 increased $141.8 million or 7% from 2002. This increase was
attributable to the following significant items:

     ---------------------------------------------------------------------------
         IN MILLIONS           CHANGE IN REVENUES 2003 VS. 2002 (a)
     ---------------------------------------------------------------------------
       $    126.2         Effect of foreign currency translation.
             30.2         Net increased volume, new contracts and price changes
                          in the Mill Services Segment.
             20.4         Net effect of business acquisitions and dispositions.
                          Increased revenues of $23.1 and $6.4 million in the
                          Mill Services and Access Services Segments,
                          respectively, partially offset by decreased revenues
                          of $9.1 million in the Engineered Products and
                          Services ("all other") Category.
             19.6         Net increased revenues in the railway track
                          maintenance services and equipment business due
                          principally to rail equipment sales.
            (19.9)        Net decreased revenues in the Access Services Segment
                          due to continued slowdown in the non-residential
                          construction markets.
            (18.3)        Decreased revenues of the industrial grating products
                          business due to decreased demand and, to a lesser
                          extent, the sale of the bridge decking product line in
                          January 2002.
            (17.7)        Net decreased revenues in the Gas Technologies Segment
                          due to increased competition and decreased demand.
              1.3         Other (minor changes across the various units not
                          already mentioned).
     ---------------------------------------------------------------------------
       $    141.8         Total Change in Revenues 2003 vs. 2002
     ===========================================================================
       (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-cooled heat exchangers business,
            which was previously classified in the Gas Technologies Segment, is
            classified in the Engineered Products and Services ("all other")
            Category.

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

COST OF SERVICES AND PRODUCTS SOLD

2004 vs. 2003
- -------------
Cost of services and products sold for 2004 increased $312.0 million or 19% from
2003, slightly higher than the 18% increase in revenues. This increase was
attributable to the following significant items:

     ---------------------------------------------------------------------------
         IN MILLIONS          CHANGE IN COST OF SERVICES AND PRODUCTS SOLD
                                             2004 VS. 2003
     ---------------------------------------------------------------------------
       $    186.2         Increased costs due to increased revenues (exclusive
                          of effect of foreign currency translation and
                          including the impact of increased costs included in
                          increased selling prices).
             80.9         Effect of foreign currency translation.
             32.8         Effect of business acquisitions.
             12.1         Other (due to increased commodity costs, increased
                          fuel and energy-related costs, product mix and minor
                          changes across the various units not already
                          mentioned; partially offset by stringent cost
                          controls, process improvements, and reorganization
                          actions).
     ---------------------------------------------------------------------------
       $    312.0         Total Change in Cost of Services and Products Sold
                          2004 vs. 2003
     ===========================================================================

2003 vs. 2002
- -------------
Cost of services and products sold for 2003 increased $122.6 million or 8% from
2002, slightly higher than the 7% increase in revenues. This increase was
attributable to the following significant items:

     ---------------------------------------------------------------------------
         IN MILLIONS          CHANGE IN COST OF SERVICES AND PRODUCTS SOLD
                                         2003 VS. 2002
     ---------------------------------------------------------------------------
       $     95.6         Effect of foreign currency translation.
             17.5         Net effect of business acquisitions and dispositions.
             11.8         Increased costs due to increased revenues (exclusive
                          of effect of foreign currency translation).
              7.8         Increased defined benefit pension expense due to
                          financial market conditions and lower interest rates
                          in 2001 and 2002 which affected the SFAS No. 87
                          pension expense computation for 2003.
            (10.1)        Other (due to stringent cost controls, process
                          improvements, reorganization actions and minor changes
                          across the various units not already mentioned).
     ---------------------------------------------------------------------------
       $    122.6         Total Change in Cost of Services and Products Sold
                          2003 vs. 2002
     ===========================================================================

================================================================================
                                      -20-


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

2004 vs. 2003
- -------------
Selling, general and administrative expenses for 2004 increased $38.4 million or
12% from 2003, less than the 18% increase in revenues. This increase was
attributable to the following significant items:

     ---------------------------------------------------------------------------
         IN MILLIONS      CHANGE IN SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
                                              2004 VS. 2003
     ---------------------------------------------------------------------------
       $     17.9         Effect of foreign currency translation.
              5.4         Increased professional fees due to higher external
                          auditor fees (related to Sarbanes-Oxley Section 404)
                          and increased consulting and legal expense.
              4.4         Increased sales commission expense due to increased
                          revenues and a larger number of orders for the railway
                          track maintenance equipment business.
              4.2         Increased pension expense in the Access Services
                          Segment
              1.7         Effect of business acquisitions - principally SGB
                          Raffia in Australia
              4.8         Other (including energy-related costs partially offset
                          by process improvements and reorganization efforts).
     ---------------------------------------------------------------------------
       $     38.4         Total Change in Selling, General and Administrative
                          Expenses 2004 vs. 2003
     ===========================================================================

2003 vs. 2002
- -------------
Selling, general and administrative expenses for 2003 increased $17.3 million or
6% from 2002, less than the 7% increase in revenues. This increase was
attributable to the following significant items:

     ---------------------------------------------------------------------------
         IN MILLIONS      CHANGE IN SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
                                              2003 VS. 2002
     ---------------------------------------------------------------------------
       $     19.7         Effect of foreign currency translation.
              9.9         Increased defined benefit pension expense due to
                          financial market conditions and lower interest rates
                          in 2001 and 2002 which affected the SFAS No. 87
                          pension expense computation for 2003. This increased
                          pension expense was spread across all operations, with
                          $8.0 million of the increase in the Access Services
                          Segment.
             (3.5)        Reduction in provisions for uncollectible accounts
                          receivable due to significant charges in 2002 for Mill
                          Services customers that were experiencing financial
                          difficulties including bankruptcy.
             (8.8)        Other (due to continuing cost reduction, process
                          improvement and reorganization efforts).
     ---------------------------------------------------------------------------
       $     17.3         Total Change in Selling, General and Administrative
                          Expenses 2003 vs. 2002
     ===========================================================================

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

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 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 $4.9 million in 2004 compared with $7.0
million in 2003 and $3.5 million in 2002.

2004 vs. 2003
- -------------
Other Expenses for 2004 decreased $2.1 million or 30% from 2003. This decrease
was attributable to the following significant items:

     ---------------------------------------------------------------------------
         IN MILLIONS            CHANGE IN OTHER EXPENSES 2004 VS. 2003
     ---------------------------------------------------------------------------
       $     (2.2)        Decline in employee termination benefit costs.  This
                          decline relates principally to reduced costs in the
                          Mill Services and Access Services Segments compared
                          with 2003.
             (1.7)        Decrease in costs to exit activities.
              2.0         Decline in net gains on disposals of non-core assets.
                          This decline was attributable principally to $3.2
                          million in net gains that were realized in 2003 from
                          the sale of non-core assets within the Access Services
                          and Mill Services Segments compared with $1.5 million
                          in 2004.
             (0.2)        Increase in other expenses.
     ---------------------------------------------------------------------------
       $     (2.1)        Total Change in Other Expenses 2004 vs. 2003
     ===========================================================================

                                      -21-


2003 vs. 2002
- -------------
Other Expenses for 2003 increased $3.5 million or 100% from 2002. This increase
was attributable to the following significant items:

     ---------------------------------------------------------------------------
         IN MILLIONS            CHANGE IN OTHER EXPENSES 2003 VS. 2002
     ---------------------------------------------------------------------------
       $      3.5         Decline in net gains on disposals of non-core assets.
                          This decline was principally attributable to a $2.7
                          million net gain that was realized in 2002 from the
                          sale of an equity investment within the Mill Services
                          Segment and a $1.9 million gain on the sale of a
                          product line in the Engineered Products and Services
                          ("all other") Category that were not repeated in 2003.
              0.8         Increase in costs to exit activities.
              0.3         Increase in other expenses.
             (1.1)        Decline in employee termination benefit costs.

     ---------------------------------------------------------------------------
       $      3.5         Total Change in Other Expenses 2003 vs. 2002
     ===========================================================================

For additional information, see Note 15, Other (Income) and Expenses, to the
Consolidated Financial Statements under Part II, Item 8, "Financial Statements
and Supplementary Data."

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

INTEREST EXPENSE

2004 vs. 2003
- -------------
Interest expense in 2004 was $0.5 million or 1% higher than in 2003.
Approximately $2.7 million of the increase was due to the effect of foreign
currency translation. This was partially offset by a lower interest rate on the
Company's $150 million notes that were refinanced in the third quarter of 2003,
and lower variable interest rate borrowings.

2003 vs. 2002
- -------------
Interest expense in 2003 was $2.8 million or 6% lower than in 2002. This decline
was primarily due to approximately $58 million in reduced average annual
borrowings and lower average annual interest rates on certain borrowings (e.g.,
commercial paper). This was partially offset by an increase of $2.3 million due
to the effect of foreign currency translation.

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

PROVISION FOR INCOME TAXES FROM CONTINUING OPERATIONS

2004 vs. 2003
- -------------
The increase in 2004 of $7.3 million or 18% in the provision for income taxes
from continuing operations was primarily due to increased earnings from
continuing operations for the reasons mentioned above partially offset by a
decreased effective income tax rate. The effective income tax rate relating to
continuing operations for 2004 was 28.6% versus 30.7% for 2003. The decrease in
the effective income tax rate from 2003 to 2004 was primarily the result of the
benefit of foreign tax credits related to the American Jobs Creation Act of 2004
(AJCA) and the result of the settlement of certain tax contingencies. The
settlements of tax contingencies included the adjustment of certain U.S. federal
and state income tax contingencies due to favorable outcomes. Additionally,
during the fourth quarter of 2004, the Company recorded a favorable income tax
expense adjustment of $3.6 million related to prior periods, which was not
material, and which was mostly offset by increases in certain international tax
contingencies, state income taxes and the amount of international earnings
subject to U.S. income taxes.

2003 vs. 2002
- -------------
The decrease in 2003 of $0.5 million or 1% in the provision for income taxes
from continuing operations was primarily due to decreased earnings from
continuing operations for the reasons mentioned above and a decreased effective
income tax rate. The effective tax rate relating to continuing operations for
2003 was 30.7% versus 30.9% for 2002.

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

INCOME FROM CONTINUING OPERATIONS

2004 vs. 2003
- -------------
Income from continuing operations in 2004 of $113.5 million was $26.5 million or
31% higher than 2003. This increase primarily results from increased revenues, a
decreased effective income tax rate, stringent cost controls, process
improvements and reorganization actions that contained selling, general and
administrative expenses growth to a 12% increase while revenue increased 18%.

                                      -22-


2003 vs. 2002
- -------------
Income from continuing operations in 2003 was slightly below 2002 levels despite
increased revenues. This decrease of $1.4 million or 2% results primarily from
increased pension expense and reduced interest income of $1.5 million. This
reduced interest income related to lower average annual interest rates. These
items were partially offset by the positive impact of foreign currency
translation and the termination of certain postretirement benefit plans.

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

INCOME FROM DISCONTINUED OPERATIONS

2004 vs. 2003
- -------------
Income from discontinued operations for 2004 increased $2.5 million or 47% from
2003. This increase was attributable to the following significant items:

     ---------------------------------------------------------------------------
         IN MILLIONS         CHANGE IN INCOME FROM DISCONTINUED OPERATIONS
                                          2004 VS. 2003
     ---------------------------------------------------------------------------
       $      3.1         After-tax income due to the settlement of the
                          Company's Federal Excise Tax (FET) litigation in 2004
                          compared with after-tax income due to favorable
                          developments in the FET litigation in 2003. For
                          additional information on the FET litigation see Note
                          10, Commitments and Contingencies, to the Consolidated
                          Financial Statements under Part II, Item 8, "Financial
                          Statements and Supplementary Data."
             (0.6)        Decline in after-tax income related to the sale of the
                          Company's Capitol Manufacturing business during 2002.
     ---------------------------------------------------------------------------
       $      2.5         Total Change in Income from Discontinued Operations
                          2004 vs. 2003
     ===========================================================================

2003 vs. 2002
- -------------
Income from discontinued operations for 2003 increased $3.5 million or 208% from
2002. This increase was attributable to the following significant items:

     ---------------------------------------------------------------------------
         IN MILLIONS          CHANGE IN INCOME FROM DISCONTINUED OPERATIONS
                                           2003 VS. 2002
     ---------------------------------------------------------------------------
       $      5.2         After-tax income due to favorable developments in the
                          Company's Federal Excise Tax (FET) litigation. For
                          additional information on the FET litigation see Note
                          10, Commitments and Contingencies, to the Consolidated
                          Financial Statements under Part II, Item 8, "Financial
                          Statements and Supplementary Data."
             (1.7)        Decline in after-tax income related to the sale of the
                          Company's Capitol Manufacturing business during 2002.
     ---------------------------------------------------------------------------
       $      3.5         Total Change in Income from Discontinued Operations
                          2003 vs. 2002
     ===========================================================================

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

NET INCOME AND EARNINGS PER SHARE

2004 vs. 2003
- -------------
Net income of $121.2 million and diluted earnings per share of $2.91 in 2004
exceeded 2003 by $29.0 million and $0.66, respectively, primarily due to
increased income from both continuing and discontinued operations for the
reasons described above.

2003 vs. 2002
- -------------
Net income of $92.2 million and diluted earnings per share of $2.25 in 2003
exceeded 2002 by $2.1 million and $0.04, respectively, due principally to
increased income from discontinued operations partially offset by decreased
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. During 2004, the Company
achieved record net cash provided by operating activities of $270.5 million.
Additionally, in 2004, a record $204.2 million was expended for capital
investments including approximately $97 million for growth initiatives. Growth
initiatives are capital investments intended to increase future revenues. Over
50% of the amount expended on growth initiatives in 2004 was in the Mill
Services Segment. During 2004, net cash payments of $22.4 million were made to
reduce debt; the Company paid over

                                      -23-


$45 million in dividends to its stockholders; and the Company was able to
significantly decrease its debt to capital ratio to 40.6% from 44.1% as of
December 31, 2003.

In the fourth quarter of 2004, the Company received a $12.5 million settlement
related to the Federal Excise Tax (FET) litigation described in Note 10,
Commitments and Contingencies, to the Consolidated Financial Statements under
Part II, Item 8, "Financial Statements and Supplementary Data." In anticipation
of the settlement, the Company chose to improve the funded status of the
Company's defined benefit pension plans by making $10.6 million in discretionary
cash contributions, principally to the U.K. plan. The funded status of the plans
was further strengthened in the first quarter of 2005 with an additional
discretionary cash contribution of $9.4 million to the U.K. plan.

The Company's strategic objectives for 2005 include generating a record $320
million in net cash provided by operating activities, augmented by targeted
asset sales. The Company's strategy is to redeploy excess or discretionary cash
in new long-term, high renewal-rate services contracts for the Mill Services
business and for growth in the Access Services and railway track maintenance
services businesses. The Company will also pursue sensible bolt-on acquisitions
to further enhance its industrial services growth and increase Economic Value
Added (EVA(R)). The Company has targeted a minimum of $140 million of
discretionary cash flow for internal growth opportunities and acquisitions.
Additionally, the Company will use funds from targeted asset sales for
acquisitions.

As of December 31, 2004, the Company had approximately $65 million of debt that
may 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 to
pay dividends to stockholders.

CASH REQUIREMENTS
The following summarizes the Company's expected future payments related to
contractual obligations and commercial commitments at December 31, 2004.

     CONTRACTUAL OBLIGATIONS AS OF DECEMBER 31, 2004 (a)

                                                                       PAYMENTS DUE BY PERIOD
                                                                       ----------------------
                                                           LESS THAN       1-3          4-5        AFTER 5
     (IN MILLIONS)                              TOTAL       1 YEAR        YEARS        YEARS        YEARS
     -----------------------------------------------------------------------------------------------------
                                                                                   
     Short-term Debt                          $   16.1     $   16.1     $     --     $     --     $     --

     Long-term Debt
        (including current maturities and
        capital leases)                          609.7         14.9         49.4         10.4        535.0

     Projected interest payments on
        Long-term Debt(b)                        235.4         38.7         74.3         71.0         51.4

     Pension and Other Post-
        retirement Obligations (c)               154.1         31.4         54.9         51.8         16.0

     Operating Leases                            126.1         41.1         46.6         27.3         11.1

     Purchase Obligations                         94.1         92.3          1.4          0.1          0.3

     Foreign Currency Forward
        Exchange Contracts                        93.7         93.7           --           --           --
     -----------------------------------------------------------------------------------------------------

     Total Contractual Obligations            $1,329.2     $  328.2     $  226.6     $  160.6     $  613.8
     =====================================================================================================


      (a)   See Note 6, Debt and Credit Agreements; Note 7, Leases; Note 8,
            Employee Benefit Plans; and Note 13, Financial Instruments, to the
            Consolidated Financial Statements under Part II, Item 8, "Financial
            Statements and Supplementary Data," for additional disclosures on
            short-term and long-term debt; operating leases; pensions and other
            postretirement benefits; and foreign currency forward exchange
            contracts, respectively.

      (b)   The total projected interest payments on Long-term Debt are based
            upon borrowings, interest rates and foreign currency exchange rates
            as of December 31, 2004. The interest rates on variable rate debt
            and the foreign currency exchange rates are subject to changes
            beyond the Company's control and may result in actual interest
            expense and payments differing from the amounts projected above.

      (c)   The total obligation for Pension and Other Postretirement
            Obligations is based on actuarial calculations and represents the
            funded status of the Company's Plans as of December 31, 2004.
            Payments due by period are based on the expected undiscounted
            amounts to be paid in the years shown. The amount shown in the After
            5 years column is the remaining balance of the obligation as
            calculated at December 31, 2004. It is not practicable to estimate
            the actual amount to be paid after five years.

                                      -24-


      COMMERCIAL COMMITMENTS - The following table summarizes the Company's
contingent commercial commitments at December 31, 2004. These amounts are not
included in the Company's Consolidated Balance Sheet since there are no current
circumstances known to management indicating that the Company will be required
to make payments on these contingent obligations.

     COMMERCIAL COMMITMENTS AS OF DECEMBER 31, 2004


                                                                  AMOUNT OF COMMITMENT EXPIRATION PER PERIOD
                                                                  ------------------------------------------
                                             TOTAL        LESS
                                            AMOUNTS       THAN          1-3          4-5        OVER 5    INDEFINITE
      (IN MILLIONS)                        COMMITTED     1 YEAR        YEARS        YEARS        YEARS    EXPIRATION
     ---------------------------------------------------------------------------------------------------------------
                                                                                          
     Standby Letters of Credit             $  121.1     $  111.5     $    9.6     $     --     $     --     $     --

     Guarantees                                27.6          3.6          1.0           --          0.8         22.2

     Performance Bonds                         97.2         86.8          1.9           --           --          8.5

     Other Commercial Commitments              11.1           --           --           --           --         11.1
     ---------------------------------------------------------------------------------------------------------------

     Total Commercial Commitments          $  257.0     $  201.9     $   12.5     $     --     $    0.8     $   41.8
     ===============================================================================================================


Standby letters of credit as of December 31, 2004 increased $32.6 million from
December 31, 2003 due principally to additional letters of credit to guarantee
performance on new international orders for railway track maintenance equipment.

Performance bonds as of December 31, 2004 include an $80 million surety bond
related to the FET litigation discussed in Note 10, Commitments and
Contingencies, to the Consolidated Financial Statements under Part II, Item 8,
"Financial Statements and Supplemental Data." After formal dismissal of the FET
litigation, the $80 million surety bond was released in January 2005.

Certain guarantees and performance bonds are of a continuous nature and do not
have a definite expiration date.

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 based upon the requirements and seasonality of the business.

Major uses of operating cash flows and borrowed funds include payroll costs and
related benefits; pension funding payments; raw material purchases for the
manufacturing businesses; income tax payments; interest payments; insurance
premiums and payments of self-insured casualty losses; and machinery, equipment,
automobile and facility rental payments. Other primary uses of cash include
capital investments, principally in the industrial services businesses; debt
payments; and dividend payments. Cash will also be used for acquisitions as the
appropriate opportunities arise.

      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 under credit facilities
and commercial paper programs and available credit as of December 31, 2004.

                                      -25-


     SUMMARY OF CREDIT FACILITIES AND
     COMMERCIAL PAPER PROGRAMS             AS OF DECEMBER 31, 2004
     --------------------------------------------------------------------
                                       FACILITY   OUTSTANDING   AVAILABLE
     (IN MILLIONS)                      LIMIT       BALANCE       CREDIT
     --------------------------------------------------------------------

     U.S. commercial paper program     $  350.0     $   26.9     $  323.1

     Euro commercial paper program        135.7          6.8        128.9

     Revolving credit facility (a)        350.0           --        350.0

     Bilateral credit facility (b)         25.0           --         25.0
     --------------------------------------------------------------------

     TOTALS AT DECEMBER 31, 2004       $  860.7     $   33.7     $  827.0(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.

See Note 6, Debt and Credit Agreements, to the Consolidated Financial Statements
under Part II, Item 8, "Financial Statements and Supplementary Data," for more
information on the Company's credit facilities.

      CREDIT RATINGS AND OUTLOOK - The following table summarizes the Company's
debt ratings as of December 31, 2004:
                                          LONG-TERM     U.S.-BASED
                                            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 February 2005, Fitch reaffirmed its A- and F-2 ratings for the
Company's long-term notes and U.S. commercial paper, respectively, and its
stable outlook. S&P and Moody's reaffirmed their stable outlooks for the Company
in September 2004. 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.

                                      -26-


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

                                           DECEMBER 31  DECEMBER 31    INCREASE
     (DOLLARS ARE IN MILLIONS)                 2004         2003      (DECREASE)
     --------------------------------------------------------------------------
     CURRENT ASSETS
        Cash and cash equivalents            $   94.1     $   80.2     $   13.9
        Accounts receivable, net                555.2        446.9        108.3
        Inventories                             217.0        190.2         26.8
        Other current assets                     58.6         47.1         11.5
     --------------------------------------------------------------------------
              Total current assets              924.9        764.4        160.5
     --------------------------------------------------------------------------

     CURRENT LIABILITIES
        Notes payable and current maturities     31.1         29.1          2.0
        Accounts payable                        220.3        188.4         31.9
        Accrued compensation                     63.8         46.1         17.7
        Income taxes                             40.2         45.1         (4.9)
        Other current liabilities               223.0        186.4         36.6
     --------------------------------------------------------------------------
              Total current liabilities         578.4        495.1         83.3
     --------------------------------------------------------------------------

     WORKING CAPITAL                         $  346.5     $  269.3     $   77.2
     --------------------------------------------------------------------------

     CURRENT RATIO                              1.6:1        1.5:1
     ==========================================================================

Working capital increased 29% in 2004 due principally to the effect of increased
sales activity and, to a lesser extent, the effect of foreign currency
translation. Foreign currency translation changes were due principally to the
weakening of the U.S. dollar in relation to the British pound sterling and the
euro. Changes to specific working capital components in 2004 were due to the
following factors:

o  Cash increased by $13.9 million as of December 31, 2004 compared with
   December 31, 2003 due principally to receipts from the previously mentioned
   FET settlement and customer payments received too late in the year to apply
   towards the Company's debt.

o  Net receivables increased by $108.3 million as of December 31, 2004 compared
   with December 31, 2003. The largest increase occurred in the railway track
   maintenance services and equipment business followed by significant increases
   in the Access Services and Mill Services Segments. Increases were due
   principally to increased sales and, to a lesser extent, foreign exchange rate
   changes and the timing of collections. Fourth quarter 2004 revenues increased
   in all of the Company's operating units compared with the same period in
   2003. The euro and British pound sterling strengthened in relation to the
   U.S. dollar resulting in increased receivables in the Mill Services and
   Access Services Segments of approximately $20 million.

o  Inventories increased by $26.8 million as of December 31, 2004 compared with
   December 31, 2003. Increases occurred principally in the Gas Technologies
   Segment, the industrial grating business and the railway track maintenance
   services and equipment businesses. Inventories increased in the Gas
   Technologies Segment due to increased production requirements to meet
   increased demand and higher steel and brass costs. Inventory increases at the
   Company's industrial grating products business were due to increased sales
   activity, increased steel costs and accelerated raw material purchases to
   secure lower cost steel. Increases at the Company's railway track maintenance
   services and equipment business were due principally to long-lead-time orders
   scheduled for shipment in 2005.

o  Other current liabilities increased by $36.6 million as of December 31, 2004
   compared with December 31, 2003 due to the following factors:

   o  The current portion of the Company's retirement plan liability increased
      by $16.5 million due largely to planned cash contributions to the
      Company's defined benefit pension plans in 2005, particularly the U.K.
      plan.

   o  Contract advances increased $6.4 million due to customer advances for
      long-lead-time orders in the railway track maintenance services and
      equipment business.

                                      -27-


   o  Accrued value-added taxes (VAT) increased in the international mill
      services and access services businesses due to increased sales-related
      activity.

   o  Accrued sales commissions increased principally in the railway track
      maintenance services and equipment business due to increased sales in the
      fourth quarter of 2004, compared with the same period in 2003.

o  Accounts payable increased by $31.9 million as of December 31, 2004 compared
   with December 31, 2003 due to increased sales-related activity in the Mill
   Services and Access Services Segments as well as increased inventory levels
   in the railway track maintenance services and equipment business.

      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 December 31, 2004, the Company's mill services contracts had
estimated future revenues of $3.7 billion. Of that amount, approximately $900
million is projected for 2005 and approximately 59% is expected to be recognized
by December 31, 2007. In addition, as of December 31, 2004, the Company had an
order backlog of $243.0 million for its manufacturing businesses (excluding the
roofing granules and slag abrasives business) and railway track maintenance
services.

The types of products and services that the Company provides are not subject to
rapid technological change, which increases the stability of related cash flows.
Additionally, 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 Consolidated Statements of Cash Flows, are summarized in the
following table:


     SUMMARIZED CASH FLOW INFORMATION
     (IN MILLIONS)                                    2004          2003          2002
     -----------------------------------------------------------------------------------
                                                                       
     Cash provided by (used in):
        Operating activities                        $  270.5      $  262.8      $  253.7
        Investing activities                          (209.6)       (144.8)        (53.9)
        Financing activities                           (56.5)       (125.5)       (205.5)
        Effect of exchange rate changes on cash          9.5          17.6           8.4
     -----------------------------------------------------------------------------------
        Net change in cash and cash equivalents     $   13.9      $   10.1      $    2.7
     ===================================================================================


      CASH FROM OPERATING ACTIVITIES - Net cash provided by operating activities
in 2004 was a record $270.5 million, an increase of $7.7 million from 2003. The
increased cash from operations in 2004 resulted from the following factors:

   o  Increased net income in 2004 compared with 2003 that included the
      recognition and receipt of $12.5 million pre-tax related to the FET
      litigation settlement.

   o  The timing of accounts payable disbursements in the railway track
      maintenance services and equipment business, the Mill Services Segment and
      the international access services business.

   o  The timing of payments of other liabilities including income tax
      liabilities, advances from the Company's customers and commissions earned
      by the Company's sales force.

These increases were partially offset by the following factors:

   o  Recorded sales (accounts receivable) for which cash will not be received
      until 2005. As an example, the railway track maintenance services and
      equipment business recorded an increase in sales during the fourth quarter
      of 2004 compared with the same period in 2003. A significant portion of
      those sales will be collected in early 2005.

   o  Changes in inventory due principally to increased purchases in the Gas
      Technologies Segment to meet greater demand.

   o  Discretionary cash contributions of $10.6 million were made to the defined
      benefit pension plans, principally in the U.K.

                                      -28-


      CASH USED IN INVESTING ACTIVITIES - Capital investments in 2004 were
$204.2 million, an increase of $60.4 million from 2003. Investments were made
predominantly for the industrial services businesses with 59% in the Mill
Services Segment. The Company also invested $12.3 million for two access
services acquisitions. These acquisitions included the buy-out of a minority
shareholder in a joint venture and the acquisition of a business in Australia.
In 2003, the Company invested $23.5 million for two industrial service
acquisitions that included the domestic mill services unit of C.J. Langenfelder
& Son, Inc. and a small product line for the international access services
business. In 2005, the Company plans to continue to invest in high-return
projects and bolt-on acquisitions, principally in the industrial services
businesses.

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

     (DOLLARS ARE IN MILLIONS)                         DECEMBER 31   DECEMBER 31
                                                           2004          2003
     --------------------------------------------------------------------------
     Notes Payable and Current Maturities                $   31.1      $   29.1
     Long-term Debt                                         594.7         584.4
     --------------------------------------------------------------------------
     Total Debt                                             625.8         613.5
     Total Equity                                           914.2         777.0
     --------------------------------------------------------------------------
     Total Capital                                       $1,540.0      $1,390.5

     Total Debt to Total Capital                             40.6%         44.1%
     ==========================================================================

The Company's debt as a percent of total capital decreased in 2004 despite
increased debt. The favorable decrease in the ratio is due to increased net
income and foreign currency translation adjustments positively affecting total
equity. Due to the Company's significant net investments in Continental Europe
and the United Kingdom, the weakening of the U.S. dollar in relation to the euro
and the British pound sterling had a positive effect on total equity.

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 December 31, 2004, the Company could
increase borrowings by approximately $745.5 million and still be within its debt
covenants. Alternatively, keeping all other factors constant, the Company's
equity could decrease by approximately $439.2 million and the Company would
still be within its covenants. The Company expects to be compliant with these
debt covenants one year from now.

CASH AND VALUE-BASED MANAGEMENT
The Company plans to continue with its strategy of selective investing for
strategic purposes for the foreseeable future. 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 2004, six of the Company's nine divisions
improved their EVA from 2003.

Through the use of EVA, the Company targets its capital investments to those
that management expects will create the greatest value. In 2004, the Company
made approximately 59% and 25% of its capital investments in the Mill Services
and Access Services Segments, respectively. The investments in these Segments
continued to show positive results as the Mill Services and Access Services
Segments generated approximately 61% and 26% of the Company's 2004 net cash from
operating activities, respectively. The Company continues to target the
industrial services businesses for the majority of its capital investments.

The Company is committed to continue paying dividends to stockholders. The
Company has increased the dividend rate for eleven consecutive years, and in
February 2005, the Company paid its 219th consecutive quarterly cash dividend.
The Company also plans to continue paying down debt to the extent possible.
Additionally, the Company has authorization to repurchase up to 1,000,000 of its
shares through January 31, 2006.

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 and acquisitions, reducing debt and paying cash dividends as a means to
enhance stockholder value.

                                      -29-


APPLICATION OF CRITICAL ACCOUNTING POLICIES
The Company's discussion and analysis of its financial condition and results of
operations are based upon the consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires the
Company to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses and related disclosure of contingent
liabilities. On an on-going basis the Company evaluates its estimates, including
those related to pensions and other postretirement benefits, bad debts, goodwill
valuation, long-lived asset valuations, inventory valuations, insurance
accruals, contingencies and income taxes. The impact of changes in these
estimates, as necessary, is reflected in the respective segment's operating
income. The Company bases its estimates on historical experience and on various
other assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different
assumptions or conditions.

The Company believes the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of its consolidated
financial statements. Management has discussed the development and selection of
the critical accounting estimates described below with the Audit Committee of
the Board of Directors and the Audit Committee has reviewed the Company's
disclosure relating to these estimates in this Management's Discussion and
Analysis of Financial Condition and Results of Operations. These items should be
read in conjunction with Note 1, Summary of Significant Accounting Policies, to
the Consolidated Financial Statements under Part II, Item 8, "Financial
Statements and Supplementary Data."

PENSION BENEFITS
The Company has defined benefit pension plans in several countries. The largest
of these plans are in the United Kingdom and the United States. The Company's
funding policy for these plans is to contribute amounts sufficient to meet the
minimum funding pursuant to U.K. and U.S. statutory requirements, plus any
additional amounts that the Company may determine to be appropriate. The Company
made cash contributions to its defined benefit pension plans of $37.8 million
(including a $10.6 million discretionary payment) and $23.6 million during 2004
and 2003, respectively. Additionally, the Company expects to make $31.1 million
in cash contributions to its defined benefit pension plans during 2005,
including a $9.4 million discretionary payment. The Company accounts for its
defined benefit pension plans in accordance with SFAS No. 87, "Employer's
Accounting for Pensions" (SFAS 87), which requires that amounts recognized in
financial statements be determined on an actuarial basis. A minimum liability is
required to be established on the Consolidated Balance Sheet representing the
amount of unfunded accumulated benefit obligation. The unfunded accumulated
benefit obligation is the difference between the accumulated benefit obligation
and the fair value of the plan assets at the measurement date. When it is
necessary to establish an additional minimum pension liability, an equal amount
is recorded as an intangible pension asset limited to unrecognized prior service
cost. Any excess amount is recorded as a reduction to Stockholders' Equity in
Accumulated other comprehensive expense, net of deferred income taxes, in the
Consolidated Balance Sheet. At December 31, 2004 and 2003, the Company has a
gross minimum pension liability of $239.3 million and $233.9 million,
respectively. These adjustments impacted Accumulated other comprehensive expense
in the Stockholders' Equity section of the Consolidated Balance Sheet by $4.5
million of comprehensive expense, net of deferred income taxes, and $1.5 million
of comprehensive income, net of deferred income taxes, at December 31, 2004 and
2003, respectively. When and if the fair market value of the pension plans'
assets exceed the accumulated benefit obligation, the reduction to Stockholders'
Equity would be fully restored to the Consolidated Balance Sheet.

Management has implemented a three-part strategy to deal with the adverse market
forces that have increased the unfunded benefit obligations over the last
several years. These strategies included pension plan design changes, a review
of funding policy alternatives and a review of the asset allocation policy and
investment manager structure. With regards to plan design, the Company amended a
majority of the U.S. defined benefit pension plans and certain international
defined benefit pension plans so that accrued service is no longer granted for
periods after December 31, 2003, although compensation increases will continue
to be recognized on actual service to-date (for the U.S. plans this is limited
to 10 years - through December 2013). In place of these plans, the Company
established, effective January 1, 2004, defined contribution pension plans
providing for the Company to contribute a specified matching amount for
participating employees' contributions to the plan. Domestically, this match is
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
these new retirement benefit plans will provide a more predictable and less
volatile pension expense than existed under the defined benefit plans.

                                      -30-


      CRITICAL ESTIMATE - PENSION BENEFITS

Accounting for defined benefit pensions and other postretirement benefits
requires the use of actuarial assumptions. The principal assumptions used
include the discount rate and the expected long-term rate of return on plan
assets. Each assumption is reviewed annually and represents management's best
estimate at that time. The assumptions are selected to represent the average
expected experience over time and may differ in any one year from actual
experience due to changes in capital markets and the overall economy. These
differences will impact the amount of unfunded benefit obligation and the
expense recognized.

The discount rates as of the September 30, 2004 measurement date for the U.K.
defined benefit pension plan and the October 31, 2004 measurement date for the
U.S. defined benefit pension plans were 5.75% for both countries. These rates
were used in calculating the Company's projected benefit obligations as of
December 31, 2004. The discount rates selected represent the average yield on
high-quality corporate bonds as of the measurement dates. The weighted average
of these assumed discount rates for the year ending December 31, 2004 was 5.7%.
The weighted average assumed discount rate at year-end 2004 compares with the
weighted average assumed discount rates of 5.9% and 6.0% for the years ending
December 31, 2003 and 2002, respectively. Annual pension expense is determined
using the discount rate as of the beginning of the year, which for 2005 is the
5.7% assumed weighted average discount rate. Pension expense and the projected
benefit obligation generally increase as the discount rate selected decreases.

The expected long-term rate of return on plan assets is determined by evaluating
the portfolios' asset class return expectations with the Company's advisors as
well as actual, long-term, historical results of asset returns for the pension
plans. The pension expense increases as the expected long-term rate of return on
assets decreases. For 2004, the weighted average expected long-term rate of
return on asset assumption was 7.9%. For 2005, the expected long-term rate of
return on assets will remain at 7.9%. This rate was determined based on a model
of expected asset returns for an actively managed portfolio.

Based on the updated actuarial assumptions and the structural changes in the
pension plans mentioned previously, the Company's 2005 pension expense is
expected to stabilize. Total pension expense increased from 2003 to 2004 by $6.4
million due to lower interest rates, the effect of foreign currency translation,
increased expenses for multi-employer pension plans due to the change in the
Company's revenue mix and higher defined contribution pension expense. These
increases were partially offset by a decrease of approximately $5.6 million in
defined benefit pension expense due to design changes made to those plans. A
$19.2 million increase in pension expense from 2002 to 2003 resulted from lower
interest rates and unfavorable investment performance during 2000, 2001, and
2002. Changes in the related pension benefit costs may occur in the future due
to changes in the assumptions and due to changes in returns on plan assets
resulting from financial market conditions. Holding all other assumptions
constant, a one-half percent increase or decrease in the discount rate and the
expected long-term rate of return on plan assets would increase or decrease
annual 2005 pre-tax defined benefit pension expense as follows:


                                                           APPROXIMATE CHANGES IN PRE-TAX DEFINED BENEFIT
                                                           ----------------------------------------------
                                                                          PENSION EXPENSE
                                                                          ---------------
                                                              U.S. PLANS                   U.K. PLAN
                                                              ----------                   ---------
     Discount rate
     -------------
                                                                               
     One-half percent increase                         Decrease of $1.6 million      Decrease of $5.8 million
     One-half percent decrease                         Increase of $1.6 million      Increase of $5.8 million

     Expected long-term rate of return on plan assets
     ------------------------------------------------

     One-half percent increase                         Decrease of $1.1 million      Decrease of $2.8 million
     One-half percent decrease                         Increase of $1.1 million      Increase of $2.8 million


Should circumstances change that affect these estimates, changes (either
increases or decreases) to the unfunded obligations may be required and would be
recorded in accordance with the provisions of SFAS 87. Additionally, certain
events could result in the pension obligation changing at a time other than the
annual measurement date. This would occur when the benefit plan is amended or
when plan curtailments occur.

See Note 8, Employee Benefit Plans, to the Consolidated Financial Statements
under Part II, Item 8, "Financial Statements and Supplementary Data," for
additional disclosures related to these items.

                                      -31-


NOTES AND ACCOUNTS RECEIVABLE
Notes and accounts receivable are stated at their net realizable value through
the use of allowances for doubtful accounts. These allowances are maintained for
estimated losses resulting from the inability or unwillingness of customers to
make required payments. The Company has policies and procedures in place
requiring customers to be evaluated for creditworthiness prior to the execution
of new service contracts or shipments of products. These reviews are structured
to minimize the Company's risk related to realizability of its receivables.
Despite these policies and procedures, the Company may still experience
collection problems and potential bad debts due to economic conditions within
certain industries (e.g., construction and steel industries) and countries and
regions (e.g., U.S., U.K., Middle East, etc.) in which the Company operates. As
of December 31, 2004 and 2003, receivables of $555.2 million and $446.9 million,
respectively, were net of reserves of $19.1 million and $24.6 million,
respectively. The decrease in reserves from December 31, 2003 relates to the
write-off of previously reserved accounts receivable.

      CRITICAL ESTIMATE - NOTES AND ACCOUNTS RECEIVABLE

A considerable amount of judgment is required to assess the realizability of
receivables, including the current creditworthiness of each customer, related
aging of the past due balances and the facts and circumstances surrounding any
non-payment. The Company's provisions for bad debts during 2004, 2003 and 2002
were $5.0 million, $3.4 million and $6.9 million, respectively. Included in
these provisions for bad debts were net provisions and (reversals) for steel
mill customers of $0.5 million, $(1.5) million and $1.9 million in 2004, 2003
and 2002, respectively. The 2003 amount includes approximately $1.9 million in
net reserve reductions related to changes in estimates during the year due
principally to the recovery of receivables related to a customer that had
previously filed for bankruptcy protection.

In the three years prior to 2004, approximately 40 U.S. steelmakers and several
international steel producers filed for bankruptcy-court protection, some of
which were the Company's customers. The Company evaluates its reserve
requirements for bankrupt customers based upon contractual rights and
obligations, the rights and obligations under the respective country's
bankruptcy laws, details of the proposed reorganization plan, and the history in
collecting pre-petition receivable amounts from bankrupt customers. The Company
has been successful in collecting substantially all of the pre-petition
receivable amounts in several cases where the customer has filed for
bankruptcy-court protection.

On a monthly basis, customer accounts are analyzed for collectibility. Reserves
are established based upon a specific-identification method as well as
historical collection experience, as appropriate. The Company also evaluates
specific accounts when it becomes aware of a situation in which a customer may
not be able to meet its financial obligations due to a deterioration in its
financial condition, credit ratings or bankruptcy. The reserve requirements are
based on the facts available to the Company and are re-evaluated and adjusted as
additional information is received. Reserves are also determined by using
percentages (based upon experience) applied to certain aged receivable
categories. Specific issues are discussed with Corporate Management and any
significant changes in reserve amounts or the write-off of balances must be
approved by a specifically designated Corporate Officer. All approved items are
monitored to ensure they are recorded in the proper period. Additionally, any
significant changes in reserve balances are reviewed to ensure the proper
Corporate approval has occurred.

If the financial condition of the Company's customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances may be required. Conversely, an improvement in a customer's ability
to make payments could result in a decrease of the allowance for doubtful
accounts. Changes in the allowance related to both of these situations would be
recorded through income in the period the change was determined.

The Company has not materially changed its methodology for calculating
allowances for doubtful accounts for the years presented.

See Note 3, Accounts Receivable and Inventories, to the Consolidated Financial
Statements under Part II, Item 8, "Financial Statements and Supplementary Data"
for additional disclosures related to these items.

GOODWILL
The Company's net goodwill balances were $433.1 million and $407.8 million, as
of December 31, 2004 and 2003, respectively. Goodwill is not amortized but
tested for impairment at the reporting unit level on an annual basis, and
between annual tests whenever events or circumstances indicate that the carrying
value of a reporting unit's goodwill may exceed its fair value.

      CRITICAL ESTIMATE - GOODWILL

A discounted cash flow model is used to estimate the fair value of a reporting
unit. This model requires the use of long-term planning estimates and
assumptions regarding industry-specific economic conditions that are outside the
control of

                                      -32-


the Company. The annual test for impairment includes the selection of an
appropriate discount rate to value cash flow information. The basis of this
discount rate calculation is derived from several internal and external factors.
These factors include, but are not limited to, the average market price of the
Company's stock, the number of shares of stock outstanding, the book value of
the Company's debt, a long-term risk free interest rate, and both market and
size specific risk premiums. The Company's annual goodwill impairment testing,
performed as of October 1, 2004 and 2003, indicated that the fair value of all
reporting units tested exceeded their respective book values and therefore no
additional goodwill impairment testing was required. Due to uncertain market
conditions, it is possible that estimates used for goodwill impairment testing
may change in the future. Therefore, there can be no assurance that future
goodwill impairment tests will not result in a charge to earnings.

The Company has not materially changed its methodology for goodwill impairment
testing for the years presented. There are currently no known trends, demands,
commitments, events or uncertainties that are reasonably likely to occur that
would materially affect the methodology or assumptions described above.

See Note 5, Goodwill and Other Intangible Assets, to the Consolidated Financial
Statements under Part II, Item 8, "Financial Statements and Supplementary Data"
for additional information on goodwill and other intangible assets.

ASSET IMPAIRMENT
Long-lived assets are reviewed for impairment when events and circumstances
indicate that the book value of an asset may be impaired. At both December 31,
2004 and 2003, the cumulative long-lived asset impairment valuation reserve was
$4.3 million.

      CRITICAL ESTIMATE - ASSET IMPAIRMENT

The determination of a long-lived asset impairment loss involves significant
judgments based upon short and long-term projections of future asset
performance. Impairment loss estimates are based upon the difference between the
book value and the fair value of the asset. The fair value is generally based
upon the Company's estimate of the amount that the assets could be bought or
sold for in a current transaction between willing parties. If quoted market
prices for the asset or similar assets are unavailable, the fair value estimate
is generally calculated using a discounted cash flow model. Should circumstances
change that affect these estimates, additional impairment charges may be
required and would be recorded through income in the period the change was
determined.

The Company has not materially changed its methodology for calculating asset
impairments for the years presented. There are currently no known trends,
demands, commitments, events or uncertainties that are reasonably likely to
occur that would materially affect the methodology or assumptions described
above.

INVENTORIES
Inventories are stated at the lower of cost or market. Inventory balances are
adjusted for estimated obsolete or unmarketable inventory equal to the
difference between the cost of inventory and its estimated market value. At
December 31, 2004 and 2003, inventories of $217.0 million and $190.2 million,
respectively, are net of lower of cost or market reserves of $0.9 million and
$2.9 million, respectively.

      CRITICAL ESTIMATE - INVENTORIES

In assessing the ultimate realization of inventory balance amounts, the Company
is required to make judgments as to future demand requirements and compare these
with the current or committed inventory levels. If actual market conditions are
determined to be less favorable than those projected by management, additional
inventory write-downs may be required and would be recorded through income in
the period the determination is made. Additionally, the Company records reserves
to adjust a substantial portion of its U.S. inventory balances to the last-in,
first-out (LIFO) method of inventory valuation. In adjusting these reserves
throughout the year, the Company estimates its year-end inventory costs and
quantities. At December 31 of each year, the reserves are adjusted to reflect
actual year-end inventory costs and quantities. During periods of inflation, the
LIFO expense usually increases and during periods of deflation it decreases.
These adjustments resulted in pre-tax income/(expense) of $(4.3) million, $1.5
million and $1.4 million in 2004, 2003 and 2002, respectively.

The Company has not materially changed its methodology for calculating inventory
reserves for the years presented. There are currently no known trends, demands,
commitments, events or uncertainties that are reasonably likely to occur that
would materially affect the methodology or assumptions described above.

See Note 3, Accounts Receivable and Inventories, to the Consolidated Financial
Statements under Part II, Item 8, "Financial Statements and Supplementary Data"
for additional disclosures related to these items.

                                      -33-


INSURANCE RESERVES
The Company retains a significant portion of the risk for property, workers'
compensation, automobile, general and product liability losses. At December 31,
2004 and 2003 the Company has recorded liabilities of $77.4 million and $69.3
million, respectively, related to both asserted as well as unasserted insurance
claims.

      CRITICAL ESTIMATE - INSURANCE RESERVES

Reserves have been recorded based upon actuarial calculations which reflect the
undiscounted estimated liabilities for ultimate losses including claims incurred
but not reported. Inherent in these estimates are assumptions which are based on
the Company's history of claims and losses, a detailed analysis of existing
claims with respect to potential value, and current legal and legislative
trends. If actual claims differ from those projected by management, changes
(either increases or decreases) to insurance reserves may be required and would
be recorded through income in the period the change was determined. During 2004,
2003 and 2002, the Company recorded retrospective insurance reserve adjustments
that decreased pre-tax insurance expense for self-insured programs by $2.7
million, $5.7 million and $5.9 million, respectively. The adjustments resulted
from improved claims experience, aggressive claim and insured litigation
management programs and an improved focus on workplace safety.

The Company has not materially changed its methodology for calculating insurance
reserves for the years presented. There are currently no known trends, demands,
commitments, events or uncertainties that are reasonably likely to occur that
would materially affect the methodology or assumptions described above.

LEGAL AND OTHER CONTINGENCIES
Reserves for contingent liabilities are recorded when it is probable that an
asset has been impaired or a liability has been incurred and the loss can be
reasonably estimated. Adjustments to estimated amounts are recorded as necessary
based on new information or the occurrence of new events or the resolution of an
uncertainty. Such adjustments are recorded in the period that the required
change is identified.

      CRITICAL ESTIMATE - LEGAL AND OTHER CONTINGENCIES

On a quarterly basis, recorded contingent liabilities are analyzed to determine
if any adjustments are required. Additionally, functional department heads
within each business unit are consulted monthly to ensure all issues with a
potential financial accounting impact, including possible reserves for
contingent liabilities have been properly identified, addressed or disposed of.
Specific issues are discussed with Corporate Management and any significant
changes in reserve amounts or the adjustment or write-off of previously recorded
balances must be approved by a specifically designated Corporate Officer. If
necessary, outside legal counsel, other third parties or internal experts are
consulted to assess the likelihood and range of outcomes for a particular issue.
All approved items are monitored to ensure they are recorded in the proper
period. Additionally, any significant changes in reported business unit reserve
balances are reviewed to ensure the proper Corporate approval has occurred. On a
quarterly basis, the Company's business units submit a reserve listing to the
Corporate headquarters which is reviewed in detail. All significant reserve
balances are discussed with a designated Corporate Officer to assess their
validity, accuracy and completeness. Anticipated changes in reserves are
identified for follow-up prior to the end of a reporting period. Any new issues
that may require a reserve are also identified and discussed to ensure proper
disposition. Additionally, on a quarterly basis, all significant environmental
reserve balances or issues are evaluated to assess their validity, accuracy and
completeness.

The Company has not materially changed its methodology for calculating legal and
other contingencies for the years presented. There are currently no known
trends, demands, commitments, events or uncertainties that are reasonably likely
to occur that would materially affect the methodology or assumptions described
above.

See Note 10, Commitments and Contingencies, to the Consolidated Financial
Statements under Part II, Item 8, "Financial Statements and Supplementary Data"
for additional disclosure on this uncertainty and other contingencies.

INCOME TAXES
The Company is subject to various federal, state and local income taxes in the
taxing jurisdictions where the Company operates. At the end of each quarterly
period, the Company makes its best estimate of the annual effective income tax
rate and applies that rate to year-to-date pretax income to arrive at the
year-to-date income tax provision. Income tax loss contingencies are recorded in
the period when it is determined that it is probable that a liability has been
incurred and the loss can be reasonably estimated. Adjustments to estimated
amounts are recorded as necessary based upon new information, the occurrence of
new events or the resolution of an uncertainty. As of December 31, 2004, 2003
and 2002, the Company's net effective income tax rate was 29.1%, 31.0% and
31.0%, respectively.

                                      -34-


A valuation allowance to reduce deferred tax assets is evaluated on a quarterly
basis. The valuation allowance is principally for tax loss carryforwards which
are uncertain as to realizability. The valuation allowance was $17.5 million and
$13.1 million as of December 31, 2004 and 2003, respectively.

      CRITICAL ESTIMATE - INCOME TAXES

The annual effective income tax rates are developed giving recognition to tax
rates, tax holidays, tax credits and capital losses, as well as certain exempt
income and non-deductible expenses in all of the jurisdictions where the Company
does business. The Company has various tax holidays in Europe, the Middle East
and Asia that expire between 2004 and 2010. These tax holidays resulted in
approximately $4.2 million in reduced income tax expense in 2004. The income tax
provision for the quarterly period is the change in the year-to-date provision
from the previous quarterly period.

The Company considers future taxable income and ongoing prudent and feasible tax
planning strategies in assessing the need for the valuation allowance. In the
event the Company were to determine that it would more likely than not be able
to realize its deferred tax assets in the future in excess of its net recorded
amount, an adjustment to the deferred tax asset would increase income in the
period such determination was made. Likewise, should the Company determine that
it would not be able to realize all or part of its net deferred tax assets in
the future, an adjustment to the deferred tax assets would decrease income in
the period in which such determination was made.

The Company has not materially changed its methodology for calculating income
tax expense for the years presented. There are currently no known trends,
demands, commitments, events or uncertainties that are reasonably likely to
occur that would materially affect the methodology or assumptions described
above.

See Note 9, Income Taxes, to the Consolidated Financial Statements under Part
II, Item 8, "Financial Statements and Supplementary Data" for additional
disclosures related to these items.

NEW FINANCIAL ACCOUNTING STANDARDS ISSUED
See Note 1, Summary of Significant Accounting Policies, to the Consolidated
Financial Statements under Part II, Item 8, "Financial Statements and
Supplementary Data," for disclosures on new financial accounting standards
issued and their effect on the Company.

RESEARCH AND DEVELOPMENT
The Company invested $2.6 million, $3.3 million and $2.8 million in internal
research and development programs in 2004, 2003 and 2002, respectively. Internal
funding for research and development was as follows:


                                                                   RESEARCH AND DEVELOPMENT EXPENSE
     -----------------------------------------------------------------------------------------------
     (IN MILLIONS)                                                  2004         2003         2002
     -----------------------------------------------------------------------------------------------
                                                                                   
     Mill Services Segment                                        $    1.3     $    1.3     $    1.2
     Access Services Segment                                           0.4          0.5          0.4
     Gas Technologies Segment                                          0.3          0.6          0.2
     -----------------------------------------------------------------------------------------------
        Segment Totals                                                 2.0          2.4          1.8
     Engineered Products and Services ("all other") Category           0.6          0.9          1.0
     -----------------------------------------------------------------------------------------------
        Consolidated Totals                                       $    2.6     $    3.3     $    2.8
     ===============================================================================================


BACKLOG
As of December 31, 2004, the Company's order backlog, exclusive of long-term
mill services contracts, access services and roofing granules and slag
abrasives, was $243.0 million compared with $186.2 million as of December 31,
2003, a 30% increase.


                                                                        ORDER BACKLOG
     ------------------------------------------------------------------------------------
     (IN MILLIONS)                                                    2004        2003(a)
     ------------------------------------------------------------------------------------
                                                                           
     Gas Technologies Segment                                       $   48.7     $   29.3
     Engineered Products and Services ("all other") Category           194.3        156.9
     ------------------------------------------------------------------------------------
           Consolidated Backlog                                     $  243.0     $  186.2
     ====================================================================================


      (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-cooled heat exchangers business,
            which was previously classified in the Gas Technologies Segment, is
            classified in the Engineered Products and Services ("all other")
            Category.

                                      -35-


The Gas Technologies Segment order backlog at December 31, 2004 was 66% above
the December 31, 2003 order backlog. The change reflects increased order backlog
for all Segment business units, particularly for high-pressure gas cylinders and
cryogenics equipment.

Order backlog for the Engineered Products and Services ("all other") Category at
December 31, 2004 was 24% above the December 31, 2003 order backlog. The change
is principally due to increased order backlog of railway track maintenance
equipment, partially offset by decreased order backlog of railway track
maintenance services. Order backlog for roofing granules and slag abrasives is
excluded from the above amounts. Order backlog amounts for that product group
are generally not quantifiable due to the nature and timing of the products
provided.

Mill services contracts have an estimated future value of $3.7 billion at
December 31, 2004 compared with $3.4 billion at December 31, 2003. Approximately
59% of these revenues are expected to be recognized by December 31, 2007. The
remaining revenues are expected to be recognized principally between January 1,
2008 and December 31, 2013.

Order backlog for scaffolding, shoring and forming services of the Access
Services Segment is excluded from the above amounts. These amounts are generally
not quantifiable due to the nature and timing of the products and services
provided.

DIVIDEND ACTION
The Company paid four quarterly cash dividends of $0.275 per share in 2004, for
an annual rate of $1.10. This is an increase of 4.8% from 2003. At the November
2004 meeting, the Board of Directors increased the dividend by 9.1% to an annual
rate of $1.20 per share. The Board normally reviews the dividend rate
periodically during the year and annually at its November meeting. There are no
material restrictions on the payment of dividends.

The February 2005 payment marked the 219th consecutive quarterly dividend paid
at the same or at an increased rate. In 2004, 37% of net earnings were paid out
in dividends. The Company is philosophically committed to maintaining or
increasing the dividend at a sustainable level. The Company has paid dividends
each year since 1939.


ITEM 7A.  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.

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

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 technologies business may be adversely affected by reduced
   industrial production, and lower demand for industrial gases, slowdowns in
   demand for medical cylinders, valves and consumer barbecue grills, 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

                                      -36-


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, or by slowdowns in the industrial and
   infrastructure refurbishment industries.

      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. AN UPWARD TREND BY THE
      EQUITY AND BOND MARKETS COULD POSITIVELY AFFECT THE COMPANY'S FUTURE
      EARNINGS.

In addition to the economic issues that directly affect the Company's
businesses, 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 $20.8 million for calendar year 2002
compared with 2001 and $17.7 million for calendar year 2003 compared with 2002.
The upturn in certain financial markets during 2003 and certain plan design
changes (discussed below) contributed to a decrease in pre-tax defined benefit
pension expense from continuing operations of approximately $5.4 million for
2004 compared with 2003. An upward trend in capital markets would likely result
in a decrease in future unfunded obligations and pension expense. This could
also result in an increase to Stockholders' Equity and a decrease in the
Company's statutory funding requirements. If the financial markets deteriorate,
it would most likely have a negative impact on the Company's pension expense and
the accounting for pension assets and liabilities. This could result in a
decrease to Stockholders' Equity and an increase in the Company's statutory
funding requirements.

In response to 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.

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

The Company operates 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;

   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 international 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;

                                      -37-


   o  laws in various international jurisdictions that limit the right and
      ability of 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 2004, 2003 and 2002, these countries contributed
approximately $25.5 million, $16.4 million and $14.6 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., 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 58% and 57% of the
Company's sales and approximately 69% and 63% of the Company's operating income
from continuing operations for the years ended December 31, 2004 and 2003,
respectively, were derived from operations outside the United States. More
specifically, during both 2004 and 2003, approximately 21% of the Company's
revenues were derived from operations in the U.K. Additionally, approximately
17% and 18% of the Company's revenues were derived from operations with the euro
as their functional currency during 2004 and 2003, respectively. 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 10%
      o  Euro                       Strengthened by 8%
      o  South African rand         Strengthened by 14%
      o  Brazilian real             Strengthened by 5%
      o  Australian dollar          Strengthened by 11%

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 2004, revenues would have been approximately 4%
or $108.9 million less and income from continuing operations would have been
approximately 3% or $3.8 million less if the average exchange rates for 2003
were utilized. A similar comparison for 2003 would have decreased revenues
approximately 6% or $126.2 million while income from continuing operations would
have been approximately 9% or $8.2 million less if the average exchange rates
for 2003 would have remained the same as 2002. 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 income from continuing operations 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 increased net assets of
$46.4 million and $72.0 million, at December 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 December 31,
2004, the notional amount of these contracts was $93.7 million, and all will
mature within the first four months of 2005. 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.

                                      -38-


Although the Company engages in foreign currency 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 prices in the face of
adverse currency movements. Sales of 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 gains or 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 or losses 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 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 recorded amounts, 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 condition could be adversely
affected. For more information concerning this litigation, see Note 10,
Commitments and Contingencies, to the Consolidated Financial Statements under
Part II, Item 8, "Financial Statements and Supplementary Data."

      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
practices 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 international competitors.
If the Company is unable to match the prices charged by international
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. In 2004 and 2003, energy costs have approximated 3.5% of
the Company's revenue. To the extent that such costs cannot be passed to
customers in the future, operating income and results of operations may be
adversely affected.

                                      -39-


      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 2004,
the price paid for steel and certain other commodities increased significantly
compared with prior years. 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
remediation 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 remediation 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 December 31, 2004 and 2003 includes an accrual of $2.7 million and $3.3
million, respectively, for environmental matters. The amounts charged against
pre-tax earnings related to environmental matters totaled $2.1 million, $1.4
million and $1.2 million for the years ended December 31, 2004, 2003 and 2002,
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 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 a
covenant requiring a maximum debt to capital ratio of 60%. In addition, certain
notes payable agreements also contain a covenant requiring a minimum net worth
of $475 million. 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
December 31, 2004, the Company was in compliance with these covenants and $386.3
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

                                      -40-


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
December 31, 2004 and 2003, the Company had recorded liabilities of $77.4
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 normally 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. Fourth quarter 2004 sales and income
were higher than historical amounts. This resulted principally from the timing
of certain rail equipment sales and expanded mill services activities. 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
historical revenue patterns and net cash provided by operating activities are
included in Part I, Item 1, "Business."


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

The Company's total debt as of December 31, 2004 was $625.8 million. Of this
amount, approximately 12% had variable rates of interest and 88% had fixed rates
of interest. The weighted average interest rate of total debt was approximately
6.3%. At current debt levels, a one-percentage increase/decrease in variable
interest rates would increase/decrease interest expense by approximately $0.7
million per year.

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



                                      -41-


ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

               Index to Consolidated Financial Statements and
               Supplementary Data

                                                                            Page
                                                                            ----
               Consolidated Financial Statements of Harsco Corporation:

                        Management's Report on Internal Control Over
                              Financial Reporting                            43

                        Report of Independent Registered Public
                              Accounting Firm                                43

                        Consolidated Balance Sheets
                              December 31, 2004 and 2003                     45

                        Consolidated Statements of Income
                              for the years 2004, 2003 and 2002              46

                        Consolidated Statements of Cash Flows
                              for the years 2004, 2003 and 2002              47

                        Consolidated Statements of Stockholders' Equity
                              for the years 2004, 2003 and 2002              48

                        Consolidated Statements of Comprehensive Income
                              for the years 2004, 2003 and 2002              49

                        Notes to Consolidated Financial Statements           50

               Supplementary Data (Unaudited):

                        Two-Year Summary of Quarterly Results                84

                        Common Stock Price and Dividend Information          84



                                      -42-


                  MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER
                               FINANCIAL REPORTING

Management of Harsco Corporation, together with its consolidated subsidiaries
(the Company), is responsible for establishing and maintaining adequate internal
control over financial reporting. The Company's internal control over financial
reporting is a process designed under the supervision of the Company's principal
executive and principal financial officers to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of the
Company's financial statements for external reporting purposes in accordance
with U.S. generally accepted accounting principles.

The Company's internal control over financial reporting includes policies and
procedures that:

o  Pertain to the maintenance of records that, in reasonable detail, accurately
   and fairly reflect transactions and dispositions of assets of the Company;

o  Provide reasonable assurance that transactions are recorded as necessary to
   permit preparation of financial statements in accordance with U.S. generally
   accepted accounting principles, and that receipts and expenditures of the
   Company are being made only in accordance with authorizations of management
   and the directors of the Company; and

o  Provide reasonable assurance regarding prevention or timely detection of
   unauthorized acquisition, use or disposition of the Company's assets that
   could have a material effect on the Company's financial statements.

Management has assessed the effectiveness of its internal control over financial
reporting as of December 31, 2004 based on the framework established in INTERNAL
CONTROL -- INTEGRATED FRAMEWORK issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on this assessment,
management has determined that the Company's internal control over financial
reporting is effective as of December 31, 2004.

Management's assessment of the effectiveness of the Company's internal control
over financial reporting as of December 31, 2004 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as
stated in their report appearing below, which expresses unqualified opinions on
management's assessment and on the effectiveness of the Company's internal
control over financial reporting as of December 31, 2004.

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


PRICEWATERHOUSECOOPERS

To the Stockholders of Harsco Corporation:

We have completed an integrated audit of Harsco Corporation's 2004 consolidated
financial statements and of its internal control over financial reporting as of
December 31, 2004 and audits of its 2003 and 2002 consolidated financial
statements in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Our opinions, based on our audits, are
presented below.

Consolidated financial statements and financial statement schedules
- -------------------------------------------------------------------

In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of Harsco
Corporation and its subsidiaries at December 31, 2004 and 2003, and the results

                                      -43-

of their operations and their cash flows for each of the three years in the
period ended December 31, 2004 in conformity with accounting principles
generally accepted in the United States of America. In addition, in our opinion,
the financial statement schedule listed in the accompanying index presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial
statements and the financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit of
financial statements includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

Internal control over financial reporting
- -----------------------------------------

Also, in our opinion, management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting, that the
Company maintained effective internal control over financial reporting as of
December 31, 2004 based on criteria established in INTERNAL CONTROL - INTEGRATED
FRAMEWORK issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), is fairly stated, in all material respects, based on those
criteria. Furthermore, in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31,
2004, based on criteria established in INTERNAL CONTROL - INTEGRATED FRAMEWORK
issued by the COSO. The Company's management is responsible for maintaining
effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting. Our
responsibility is to express opinions on management's assessment and on the
effectiveness of the Company's internal control over financial reporting based
on our audit. We conducted our audit of internal control over financial
reporting in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. An audit of internal control over financial reporting includes
obtaining an understanding of internal control over financial reporting,
evaluating management's assessment, testing and evaluating the design and
operating effectiveness of internal control, and performing such other
procedures as we consider necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (i) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (ii)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the
company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
March 10, 2005

                                      -44-

HARSCO CORPORATION
CONSOLIDATED BALANCE SHEETS

                                                                              DECEMBER 31       DECEMBER 31
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)                                2004              2003 (A)
============================================================================================================
                                                                                          
ASSETS
CURRENT ASSETS:
     Cash and cash equivalents                                                $     94,093      $     80,210
     Accounts receivable, net                                                      555,191           446,875
     Inventories                                                                   217,026           190,221
     Other current assets                                                           58,614            47,045
- ------------------------------------------------------------------------------------------------------------
         TOTAL CURRENT ASSETS                                                      924,924           764,351
- ------------------------------------------------------------------------------------------------------------
Property, plant and equipment, net                                                 932,298           865,443
Goodwill, net                                                                      433,125           407,846
Other assets                                                                        98,477            97,483
Assets held for sale                                                                   932             2,912
- ------------------------------------------------------------------------------------------------------------
         TOTAL ASSETS                                                         $  2,389,756      $  2,138,035
============================================================================================================

LIABILITIES
CURRENT LIABILITIES:
     Short-term borrowings                                                    $     16,145      $     14,854
     Current maturities of long-term debt                                           14,917            14,252
     Accounts payable                                                              220,322           188,430
     Accrued compensation                                                           63,776            46,034
     Income taxes                                                                   40,227            45,116
     Dividends payable                                                              12,429            11,238
     Other current liabilities                                                     210,581           175,151
- ------------------------------------------------------------------------------------------------------------
         TOTAL CURRENT LIABILITIES                                                 578,397           495,075
- ------------------------------------------------------------------------------------------------------------
Long-term debt                                                                     594,747           584,425
Deferred income taxes                                                               95,702            66,855
Insurance liabilities                                                               53,960            47,897
Retirement plan liabilities                                                         97,586           115,190
Other liabilities                                                                   54,483            50,707
Liabilities associated with assets held for sale                                       691               898
- ------------------------------------------------------------------------------------------------------------
         TOTAL LIABILITIES                                                       1,475,566         1,361,047
- ------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, Series A junior participating cumulative preferred stock               --                --
Common stock, par value $1.25, issued 67,911,031 and 67,357,447 shares as
   of December 31, 2004 and 2003, respectively                                      84,889            84,197
Additional paid-in capital                                                         139,532           120,070
Accumulated other comprehensive expense                                           (127,491)         (169,427)
Retained earnings                                                                1,420,637         1,345,787
Treasury stock, at cost (26,479,782 and 26,490,977 shares, respectively)          (603,377)         (603,639)
- ------------------------------------------------------------------------------------------------------------
         TOTAL STOCKHOLDERS' EQUITY                                                914,190           776,988
- ------------------------------------------------------------------------------------------------------------
         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $  2,389,756      $  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.

                                      -45-

HARSCO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31                                                           2004              2003              2002
==============================================================================================================================
                                                                                                         
REVENUES FROM CONTINUING OPERATIONS:
     Service sales                                                            $  1,764,159      $  1,493,942      $  1,341,867
     Product sales                                                                 737,900           624,574           634,865
- ------------------------------------------------------------------------------------------------------------------------------
         TOTAL REVENUES                                                          2,502,059         2,118,516         1,976,732
- ------------------------------------------------------------------------------------------------------------------------------

COSTS AND EXPENSES FROM CONTINUING OPERATIONS:
     Cost of services sold                                                       1,313,075         1,104,873           981,754
     Cost of products sold                                                         603,309           499,500           500,010
     Selling, general and administrative expenses                                  368,385           329,983           312,704
     Research and development expenses                                               2,579             3,313             2,820
     Other expenses                                                                  4,862             6,955             3,473
- ------------------------------------------------------------------------------------------------------------------------------
         TOTAL COSTS AND EXPENSES                                                2,292,210         1,944,624         1,800,761
- ------------------------------------------------------------------------------------------------------------------------------

         OPERATING INCOME FROM CONTINUING OPERATIONS                               209,849           173,892           175,971

Equity in income of unconsolidated entities, net                                       128               321               363
Interest income                                                                      2,319             2,202             3,688
Interest expense                                                                   (41,057)          (40,513)          (43,323)
- ------------------------------------------------------------------------------------------------------------------------------

         INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
         AND MINORITY INTEREST                                                     171,239           135,902           136,699

Income tax expense                                                                 (49,034)          (41,708)          (42,240)
- ------------------------------------------------------------------------------------------------------------------------------

         INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST                122,205            94,194            94,459

Minority interest in net income                                                     (8,665)           (7,195)           (6,049)
- ------------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS                                                  113,540            86,999            88,410
- ------------------------------------------------------------------------------------------------------------------------------

DISCONTINUED OPERATIONS:
     Loss from operations of discontinued business                                    (801)             (668)           (2,952)
     Gain/(loss) on disposal of discontinued business                                 (102)              765             5,606
     Income related to discontinued defense business                                12,849             8,030                --
     Income tax expense                                                             (4,275)           (2,909)             (958)
- ------------------------------------------------------------------------------------------------------------------------------
INCOME FROM DISCONTINUED OPERATIONS                                                  7,671             5,218             1,696
- ------------------------------------------------------------------------------------------------------------------------------
        NET INCOME                                                            $    121,211      $     92,217      $     90,106
==============================================================================================================================

Average shares of common stock outstanding                                          41,129            40,690            40,360

Basic earnings per common share:
     Continuing operations                                                    $       2.76      $       2.14      $       2.19
     Discontinued operations                                                          0.19              0.13              0.04
- ------------------------------------------------------------------------------------------------------------------------------
BASIC EARNINGS PER COMMON SHARE                                               $       2.95      $       2.27      $       2.23
==============================================================================================================================

Diluted average shares of common stock outstanding                                  41,598            40,973            40,680

Diluted earnings per common share:
     Continuing operations                                                    $       2.73      $       2.12      $       2.17
     Discontinued operations                                                          0.18              0.13              0.04
- ------------------------------------------------------------------------------------------------------------------------------
DILUTED EARNINGS PER COMMON SHARE                                             $       2.91      $       2.25      $       2.21
==============================================================================================================================


See accompanying notes to consolidated financial statements.

                                      -46-

HARSCO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)
YEARS ENDED DECEMBER 31                                                           2004              2003              2002
==============================================================================================================================
                                                                                                         
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                 $    121,211      $     92,217      $     90,106
   Adjustments to reconcile net income to net cash provided (used)
   by operating activities:
        Depreciation                                                               181,914           167,161           153,979
        Amortization                                                                 2,457             1,774             1,682
        Equity in income of unconsolidated entities, net                              (128)             (321)             (363)
        Dividends or distributions from unconsolidated entities                        589             1,383               144
        Other, net                                                                  (2,781)           (2,678)            8,503
        Changes in assets and liabilities, net of acquisitions
        and dispositions of businesses:
              Accounts receivable                                                  (81,403)          (21,211)           30,038
              Inventories                                                          (22,278)           (2,078)          (13,280)
              Accounts payable                                                      22,310             5,834           (13,055)
              Net receipts (disbursements) related to discontinued
                defense business                                                    12,280            (1,328)           (1,435)
              Other assets and liabilities                                          36,294            22,035            (2,566)
- ------------------------------------------------------------------------------------------------------------------------------
        NET CASH PROVIDED BY OPERATING ACTIVITIES                                  270,465           262,788           253,753
- ------------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property, plant and equipment                                     (204,235)         (143,824)         (114,340)
   Purchase of businesses, net of cash acquired*                                   (12,264)          (23,718)           (3,332)
   Proceeds from sales of assets                                                     6,897            22,794            63,731
   Other investing activities                                                           --               (43)               12
- ------------------------------------------------------------------------------------------------------------------------------
        NET CASH USED BY INVESTING ACTIVITIES                                     (209,602)         (144,791)          (53,929)
- ------------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Short-term borrowings, net                                                       (5,863)          (20,013)          (16,272)
   Current maturities and long-term debt:
              Additions                                                            198,032           323,366           136,970
              Reductions                                                          (214,551)         (389,599)         (294,799)
   Cash dividends paid on common stock                                             (45,170)          (42,688)          (40,286)
   Common stock issued-options                                                      16,656             8,758            14,011
   Other financing activities                                                       (5,616)           (5,325)           (5,104)
- ------------------------------------------------------------------------------------------------------------------------------
        NET CASH USED BY FINANCING ACTIVITIES                                      (56,512)         (125,501)         (205,480)
- ------------------------------------------------------------------------------------------------------------------------------

Effect of exchange rate changes on cash                                              9,532            17,582             8,380
Net decrease in cash of discontinued operations                                         --                --                 1
- ------------------------------------------------------------------------------------------------------------------------------

Net increase in cash and cash equivalents                                           13,883            10,078             2,725

Cash and cash equivalents at beginning of period                                    80,210            70,132            67,407
- ------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                    $     94,093      $     80,210      $     70,132
==============================================================================================================================

*PURCHASE OF BUSINESSES, NET OF CASH ACQUIRED
   Working capital, other than cash                                           $        (60)     $       (225)     $        250
   Property, plant and equipment                                                    (3,024)          (16,694)           (2,705)
   Other noncurrent assets and liabilities, net                                     (9,180)           (6,799)             (877)
- ------------------------------------------------------------------------------------------------------------------------------
        NET CASH USED TO ACQUIRE BUSINESSES                                   $    (12,264)     $    (23,718)     $     (3,332)
==============================================================================================================================


See accompanying notes to consolidated financial statements.

                                      -47-

HARSCO CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                                                                  ACCUMULATED OTHER
                             COMMON STOCK                                  COMPREHENSIVE INCOME (EXPENSE)
                         --------------------              ----------------------------------------------------------
                                                                                                UNREALIZED
(IN THOUSANDS,                                 ADDITIONAL                CASH FLOW               GAIN ON
EXCEPT SHARE AND                                 PAID-IN                  HEDGING     PENSION   MARKETABLE               RETAINED
PER SHARE AMOUNTS)         ISSUED    TREASURY    CAPITAL   TRANSLATION  INSTRUMENTS  LIABILITY  SECURITIES    TOTAL      EARNINGS
==================================================================================================================================
                                                                                            
BALANCES,
JANUARY 1, 2002          $  83,106  $(603,947) $   94,597  $  (129,338) $       (84) $  (6,178) $      337  $(135,263) $ 1,247,680
- ----------------------------------------------------------------------------------------------------------------------------------

Net income                                                                                                                  90,106

Cash dividends declared,
  $1.0125 per share                                                                                                        (40,931)

Translation adjustments                                         39,311                                         39,311

Cash flow hedging
  instrument adjustments,
  net of $(11) deferred
  income taxes                                                                   22                                22

Pension liability
  adjustments, net of
  $63,613 deferred income
  taxes                                                                               (146,709)              (146,709)

Marketable securities
  adjustments, net of
  $183 deferred income
  taxes                                                                                               (339)      (339)

Stock options exercised,
  552,101 shares               687         83      16,048

Other, 2,450 shares                        95          (6)
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCES,
DECEMBER 31, 2002        $  83,793  $(603,769) $  110,639  $   (90,027) $       (62) $(152,887) $       (2) $(242,978) $ 1,296,855
- ----------------------------------------------------------------------------------------------------------------------------------

Net income                                                                                                                  92,217

Cash dividends declared,
  $1.0625 per share                                                                                                        (43,285)

Translation adjustments                                         72,032                                         72,032

Cash flow hedging
  instrument adjustments,
  net of $4 deferred
  income taxes                                                                   (8)                               (8)

Pension liability
  adjustments, net of
  $(482) deferred income
  taxes                                                                                  1,523                  1,523

Marketable securities
  adjustments, net of $(2)
  deferred income taxes                                                                                  4          4

Stock options exercised,
  325,480 shares               404         69       9,436

Other, 1,590 shares                        61          (5)
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCES,
DECEMBER 31, 2003        $  84,197  $(603,639) $  120,070  $   (17,995) $       (70) $(151,364) $        2  $(169,427) $ 1,345,787
- ----------------------------------------------------------------------------------------------------------------------------------

Net income                                                                                                                 121,211

Cash dividends declared,
  $1.125 per share                                                                                                         (46,361)

Translation adjustments                                         46,230                                         46,230

Cash flow hedging
  instrument adjustments,
  net of $(86) deferred
  income taxes                                                                  159                               159

Pension liability
  adjustments, net of
  $2,062 deferred income
  taxes                                                                                 (4,453)                (4,453)

Stock options exercised,
  564,529 shares               692        253      19,308

Other, 250 shares, and
  3,500 restricted stock
  units                                     9         154
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCES,
DECEMBER 31, 2004        $  84,889  $(603,377) $  139,532  $    28,235  $        89  $(155,817) $        2  $(127,491) $ 1,420,637
==================================================================================================================================


See accompanying notes to consolidated financial statements.

                                      -48-

HARSCO CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


(IN THOUSANDS)
YEARS ENDED DECEMBER 31                                                2004              2003 (A)          2002 (A)
===================================================================================================================
                                                                                              
Net Income                                                         $    121,211      $     92,217      $     90,106
- -------------------------------------------------------------------------------------------------------------------
Other comprehensive income (expense):
    Foreign currency translation adjustments                             46,230            72,032            39,311
    Net gains (losses) on cash flow hedging instruments,
        net of deferred income taxes of $(30),
        $6 and $(8) in 2004, 2003 and 2002,
        respectively                                                         55               (11)               16
    Reclassification adjustment for loss on cash flow
        hedging instruments, net of deferred income taxes
        of $(56), $(2), and $(3) in 2004, 2003 and 2002,
        respectively                                                        104                 3                 6
    Pension liability adjustments, net of deferred income
        taxes of $2,062, $(482) and $63,613 in 2004, 2003
        and 2002, respectively                                           (4,453)            1,523          (146,709)
    Unrealized gain (loss) on marketable securities, net
        of deferred income taxes of $(1) and $1 in 2003
        and 2002, respectively                                               --                 2                (2)
    Reclassification adjustment for (gain) loss on
        marketable securities included in net income, net
        of deferred income taxes of $(1) and $182 in 2003
        and 2002, respectively                                               --                 2              (337)
- -------------------------------------------------------------------------------------------------------------------
Other comprehensive income (expense)                                     41,936            73,551          (107,715)
- -------------------------------------------------------------------------------------------------------------------
Total comprehensive income (expense)                               $    163,147      $    165,768      $    (17,609)
===================================================================================================================


(a)  2003 and 2002 have been reclassified to conform with the current
     presentation.



See accompanying notes to consolidated financial statements.

                                      -49-

HARSCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION
The consolidated financial statements include the accounts of Harsco Corporation
and its majority-owned subsidiaries (the "Company"). Additionally, the Company
consolidates three entities in which it has an equity interest of 49% to 50% and
exercises management control. These three entities had combined revenues of
approximately $66.7 million or 2.7% of the Company's total revenues in 2004.
Investments in unconsolidated entities (all of which are 40-50% owned) are
accounted for under the equity method. The Company does not have any
consolidated variable interest entities or off-balance sheet arrangements with
unconsolidated special-purpose entities.

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 14, "Segment Information." 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 and 2002 amounts presented
for comparative purposes will not individually agree with previously filed Forms
10-K or 10-Q.

CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, demand deposits and short-term
investments which are highly liquid in nature and have an original maturity of
three months or less.

INVENTORIES
Inventories, which are principally located in the U.S., are stated at the lower
of cost or market. Inventories in the United States are accounted for using
principally the last-in, first-out (LIFO) method. Other inventories are
accounted for using the first-in, first-out (FIFO) or average cost methods.

DEPRECIATION
Property, plant and equipment is recorded at cost and depreciated over the
estimated useful lives of the assets using principally the straight-line method.
When property is retired from service, the cost of the retirement is generally
charged to the allowance for depreciation to the extent of the accumulated
depreciation and the balance is charged to income. Long-lived assets to be
disposed of by sale are not depreciated while they are held for sale.

GOODWILL AND INTANGIBLE ASSETS
Intangible assets consist principally of goodwill. Goodwill is not amortized but
tested for impairment, at the reporting unit level, on an annual basis as of
October 1 and between annual tests whenever events or circumstances indicate
that the carrying value of a reporting unit's goodwill may exceed its fair
value. A discounted cash flow model is used to estimate the fair value of a
reporting unit. This model requires the use of long-term planning forecasts and
assumptions regarding industry-specific economic conditions that are outside the
control of the Company. See Note 5, "Goodwill and Other Intangible Assets," for
additional information on intangible assets and goodwill impairment testing.
Finite-lived intangible assets are amortized on a straight-line basis over their
estimated useful lives.

IMPAIRMENT OF LONG-LIVED ASSETS (OTHER THAN GOODWILL)
Long-lived assets are reviewed for impairment when events and circumstances
indicate that the carrying amount of an asset may not be recoverable. The
Company's policy is to record an impairment loss when it is determined that the
carrying amount of the asset exceeds the sum of the expected undiscounted future
cash flows resulting from use of the asset and its eventual disposition.
Impairment losses are measured as the amount by which the carrying amount of the
asset exceeds its fair value. Long-lived assets to be disposed of are reported
at the lower of the carrying amount or fair value less cost to sell.

REVENUE RECOGNITION
Product sales and service sales are recognized when they are realized or
realizable and when earned. Revenue is realized or realizable and earned when
all of the following criteria are met: persuasive evidence of an arrangement
exists, delivery has occurred or services have been rendered, the Company's
price to the buyer is fixed or determinable and collectibility is reasonably
assured.

                                      -50-

      Mill Services Segment - This Segment provides services predominantly on a
long-term, volume-of-production contract basis. Contracts may include both fixed
monthly fees as well as variable fees based upon specific services provided to
the customer. The fixed-fee portion is recognized periodically as earned
(normally monthly) over the contractual period. The variable-fee portion is
recognized as services are performed and differs from period-to-period based
upon the actual provision of services.

      Access Services Segment - This Segment rents equipment under
month-to-month rental contracts and provides services under both fixed-fee and
time-and-materials short-term contracts. Equipment rentals are recognized as
earned over the contractual rental period. Services provided on a fixed-fee
basis are recognized over the contractual period based upon the completion of
specific units of accounting (i.e., erection and dismantling of scaffolding).
Services provided on a time-and-materials basis are recognized when earned as
services are performed.

      Gas Technologies Segment - This Segment sells products under
customer-specific sales contracts. Product sales revenue is recognized when
title and risk of loss transfer, and when all of the revenue recognition
criteria detailed in Staff Accounting Bulletin 104 (SAB 104) have been met.
Title and risk of loss for domestic shipments transfers to the customer at the
point of shipment. For export sales, title and risk of loss transfer in
accordance with the international commercial terms included in the specific
customer contract.

      Engineered Products and Services ("all other") Category - This category
includes the Harsco Track Technologies, Reed Minerals, IKG Industries,
Patterson-Kelley and Air-X-Changers operating segments. These operating segments
principally sell products. The Harsco Track Technologies Division sells products
and provides services. Product sales revenue for each of these operating
segments is recognized generally when title and risk of loss transfer, and when
all of the revenue recognition criteria detailed in SAB 104 have been met. Title
and risk of loss for domestic shipments transfers to the customer at the point
of shipment. For export sales, title and risk of loss transfer in accordance
with the international commercial terms included in the specific customer
contract. Revenue may be recognized subsequent to the transfer of title and risk
of loss for certain product sales of the Harsco Track Technologies Division if
the specific sales contract includes a customer acceptance clause which provides
for different timing. In those situations revenue is recognized after transfer
of title and risk of loss and after customer acceptance. The Harsco Track
Technologies Division provides services predominantly on a long-term,
time-and-materials contract basis. Revenue is recognized when earned as services
are performed.

INCOME TAXES
United States federal and state income taxes and non-U.S. taxes are provided
currently on the undistributed earnings of international subsidiaries and
unconsolidated affiliated entities, giving recognition to current tax rates and
applicable foreign tax credits, except when management has specific plans for
reinvestment of undistributed earnings which will result in the indefinite
postponement of their remittance. Deferred taxes are provided using the asset
and liability method for temporary differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. A valuation allowance to reduce deferred tax assets is evaluated on a
quarterly basis. The valuation allowance is principally for tax loss
carryforwards which are uncertain as to realizability. Income tax loss
contingencies are recorded in the period when it is determined that it is
probable that a liability has been incurred and the loss can be reasonably
estimated. Adjustments to estimated amounts are recorded as necessary based upon
new information, the occurrence of new events or the resolution of an
uncertainty.

ACCRUED INSURANCE AND LOSS RESERVES
The Company retains a significant portion of the risk for workers' compensation,
automobile, general and product liability losses. During 2004, 2003 and 2002,
the Company recorded insurance expense related to these lines of coverage of
approximately $37 million, $36 million and $31 million, respectively. Reserves
have been recorded which reflect the undiscounted estimated liabilities
including claims incurred but not reported. Changes in the estimates of the
reserves are included in net income in the period determined. During 2004, 2003
and 2002, the Company recorded retrospective insurance reserve adjustments that
decreased pre-tax insurance expense for self-insured programs by $2.7 million,
$5.7 million and $5.9 million, respectively. At December 31, 2004 and 2003 the
Company has recorded liabilities of $77.4 million and $69.3 million,
respectively, related to both asserted as well as unasserted insurance claims.
Amounts estimated to be paid within one year have been classified as Other
current liabilities, with the remainder included in Insurance liabilities.

                                      -51-

WARRANTIES
The Company has recorded product warranty reserves of $4.2 million, $2.8 million
and $2.2 million as of December 31, 2004, 2003 and 2002, respectively. The
Company provides for warranties of certain products as they are sold in
accordance with SFAS No. 5, "Accounting for Contingencies." The following table
summarizes the warranty activity for the years ended December 31, 2004, 2003 and
2002:

WARRANTY ACTIVITY
===========================================================================================
(IN THOUSANDS)                                        2004           2003           2002
===========================================================================================
                                                                        
Balance at the beginning of the period             $    2,788     $    2,248     $    2,753

Accruals for warranties issued during the period        4,135 (A)      2,125          1,673

Reductions related to pre-existing warranties            (414)          (233)          (418)

Warranties paid                                        (2,361)        (1,344)        (1,831)

Other (principally foreign currency translation)           13             (8)            71
- -------------------------------------------------------------------------------------------
Balance at end of the period                       $    4,161     $    2,788     $    2,248
===========================================================================================


(a)  The increase from 2003 reflects changes in product mix and increased sales.

FOREIGN CURRENCY TRANSLATION
The financial statements of the Company's subsidiaries outside the United
States, except for those subsidiaries located in highly inflationary economies
and those entities for which the U.S. dollar is the currency of the primary
economic environment in which the entity operates, are measured using the local
currency as the functional currency. Assets and liabilities of these
subsidiaries are translated at the exchange rates as of the balance sheet date.
Resulting translation adjustments are recorded in the cumulative translation
adjustment account, a separate component of Other comprehensive income
(expense). Income and expense items are translated at average monthly exchange
rates. Gains and losses from foreign currency transactions are included in net
income. For subsidiaries operating in highly inflationary economies, and those
entities for which the U.S. dollar is the currency of the primary economic
environment in which the entity operates, gains and losses on foreign currency
transactions and balance sheet translation adjustments are included in net
income.

FINANCIAL INSTRUMENTS AND HEDGING
The Company has subsidiaries operating throughout the world. These operations
are exposed to fluctuations in related foreign currencies in the normal course
of business. The Company seeks to reduce exposure to foreign currency
fluctuations through the use of forward exchange contracts. 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.
The Company has a Foreign Currency Risk Management Committee that meets
periodically to monitor foreign currency risks.

The Company executes foreign currency forward exchange contracts to hedge
transactions of its non-U.S. subsidiaries for firm purchase commitments, to
hedge variable cash flows of forecasted transactions and for export sales
denominated in foreign currencies. These contracts are generally for 90 to 180
days or less. For those contracts that are designated as qualified cash flow
hedges under SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS 133), gains or losses are recorded in Other comprehensive
income (expense).

Amounts recorded in Other comprehensive income (expense) are reclassified into
income in the same period or periods during which the hedged forecasted
transaction affects income. The cash flows from these contracts are classified
consistent with the cash flows from the transaction being hedged (e.g., the cash
flows related to contracts to hedge the purchase of fixed assets are included in
cash flows from investing activities, etc.). The Company also enters into
certain forward exchange contracts not designated as hedges under SFAS 133.
Gains and losses on these contracts are recognized in income based on fair
market value. For fair value hedges of a firm commitment, the gain or loss on
the derivative and the offsetting gain or loss on the hedged firm commitment are
recognized currently in income.

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. Effective in 2003, the Company
ceased granting stock options to employees.

                                      -52-

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).


PRO FORMA IMPACT OF SFAS 123 ON EARNINGS
- -------------------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE)                      2004           2003           2002
- -------------------------------------------------------------------------------------------
                                                                        
Net income:
     As reported                                   $  121,211     $   92,217     $   90,106
     Compensation expense (a)                             (96)        (1,673)        (2,300)
                                                   ----------------------------------------
     Pro forma                                     $  121,115     $   90,544     $   87,806
                                                   ========================================
Basic earnings per share:
     As reported                                   $     2.95     $     2.27     $     2.23
     Pro forma                                           2.94           2.23           2.18
Diluted earnings per share:
     As reported                                         2.91           2.25           2.21
     Pro forma                                           2.91           2.21           2.16
- -------------------------------------------------------------------------------------------


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

Effective in 2005, stock option grants to employees have been replaced by
performance-based restricted stock unit grants to certain officers. See Note 12,
"Stock-Based Compensation," for additional information on the Company's equity
compensation plans.

EARNINGS PER SHARE
Basic earnings per share are calculated using the average shares of common stock
outstanding, while diluted earnings per share reflect the dilutive effects of
restricted stock units and the potential dilution that could occur if stock
options were exercised. See Note 11, "Capital Stock," for additional information
on earnings per share.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses. Actual results could differ from
those estimates.

NEW FINANCIAL ACCOUNTING STANDARDS ISSUED

SFAS No. 123 (revised 2004), "Share-Based Payment" (SFAS 123R)
- --------------------------------------------------------------

In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS
123R which replaces SFAS No. 123, "Accounting for Stock-Based Compensation" and
supersedes Accounting Principles Board (APB) Opinion No. 25, "Accounting for
Stock Issued to Employees" (APB 25). SFAS 123R requires the cost of employee
services received in exchange for an award of equity instruments to be based
upon the grant-date fair value of the award (with limited exceptions).
Additionally, this cost is to be recognized as expense over the period during
which an employee is required to provide services in exchange for the award
(usually the vesting period). This is a change from APB 25's intrinsic value
method which the Company has historically used to value stock option grants.
SFAS 123R is effective as of the beginning of the first interim or annual
reporting period that begins after June 15, 2005 (as of July 1, 2005 for the
Company). The Company has not yet determined the full impact of implementing
SFAS 123R, but it is not expected to have a material impact on the Company's
financial position, results of operations or cash flows since the Company ceased
granting stock options in 2003. The Company expects to implement SFAS 123R
effective July 1, 2005.

SFAS No. 151, "Inventory Costs, an amendment of ARB No. 43, Chapter 4"
- ----------------------------------------------------------------------
(SFAS 151)
- ----------

In November 2004, the FASB issued SFAS 151, which amends Accounting Research
Bulletin No. 43, Chapter 4 "Inventory Pricing" (ARB 43). SFAS 151 clarifies that
abnormal amounts of idle facility expense, freight, handling costs and wasted
material (spoilage) should be expensed rather than capitalized as inventory.
Additionally, SFAS 151 requires that allocation of fixed production overheads to
inventory costs be based upon the normal capacity of the production facility.
The provisions of SFAS 151 are applicable to inventory costs incurred during
fiscal years beginning after June 15, 2005 (as of January 1, 2006 for the
Company) with earlier application permitted. The Company has not yet determined

                                      -53-

the timing of adoption or the full impact of SFAS 151; however, it is not
expected to materially impact the Company's financial position, results of
operations or cash flows.

SFAS No. 153, "Exchanges of Nonmonetary Assets an amendment of APB Opinion No.
- ------------------------------------------------------------------------------
29" (SFAS 153)
- --------------

In December 2004, the FASB issued SFAS 153 which eliminates the exception from
fair value measurement for nonmonetary exchanges of similar productive assets in
paragraph 21(b) of APB Opinion No. 29, "Accounting for Nonmonetary
Transactions," and replaces it with an exception for exchanges that do not have
commercial substance. SFAS 153 specifies that a nonmonetary exchange has
commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. The provisions of SFAS 153 are
applicable for nonmonetary asset exchanges occurring in fiscal periods beginning
after June 15, 2005 (as of July 1, 2005 for the Company) with earlier
application permitted. The Company has not yet determined the timing of adoption
or the full impact of SFAS 153; however, it is not expected to materially impact
the Company's financial position, results of operations or cash flow as the
Company has historically had a very limited number of nonmonetary exchange
transactions.


2.    ACQUISITIONS AND DISPOSITIONS

ACQUISITIONS
In October 2004, the Company's Access Services Segment acquired full ownership
of its existing Mastclimbers Ltd joint venture partnership which is located in
the United Kingdom. Previously, the Company owned 51% of the partnership.
Mastclimbers Ltd ranks as the United Kingdom's leading supplier of mast climbing
work platforms and related services.

In April 2004, the Company's Access Services Segment acquired the Australian
distributor, Raffia Contracting Pty, and Raffia's sister company, Tower
International Pty. Both businesses are based in Sydney, New South Wales. Raffia
Contracting Pty is involved in the supply and erection of scaffolding, working
with many of the major contractors in and around the state capital, while Tower
International Pty provides light access sales and rentals throughout the area.
The combined businesses have been renamed SGB Raffia.

In June 2003, the Company completed the acquisition of the domestic mill
services unit of C.J. Langenfelder & Son, Inc., an industrial services company.
This acquisition gives the Company an expanded presence with two major North
American steel producers. In June 2003, the Company also acquired a small
product line for the Company's international access services business.

The pro forma impact of the above acquisitions was not material.

DISPOSITIONS - 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 Technologies 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 years ended December 31, 2004 and December
31, 2003. 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 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 Assets held for sale for all periods presented.

                                      -54-

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

(IN THOUSANDS)
AS OF DECEMBER 31                                     2004          2003 (A)
- ----------------------------------------------------------------------------
ASSETS
Accounts receivable, net                           $       15     $      411
Inventories                                               133            222
Other current assets                                       23             20
Property, plant and equipment, net                        761          2,259
- ----------------------------------------------------------------------------
TOTAL ASSETS "HELD FOR SALE"                       $      932     $    2,912
============================================================================

LIABILITIES
Accounts payable                                   $       24     $      512
Other current liabilities                                 542            386
Other liabilities                                         125             --
- ----------------------------------------------------------------------------
TOTAL LIABILITIES ASSOCIATED WITH ASSETS
"HELD FOR SALE"                                    $      691     $      898
============================================================================

(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.


DISCONTINUED DEFENSE BUSINESS
In January 1994, FMC Corporation and the Company combined certain assets and
liabilities of FMC's Defense Systems Group and the Company's BMY-Combat Systems
Division to form United Defense, L.P. On August 25, 1997, the Company and FMC
Corporation signed an agreement to sell United Defense, L.P. for $850 million,
and the sale was completed on October 6, 1997. Prior to the sale, FMC had been
the managing general partner and 60% owner of United Defense, L.P., while the
Company owned the balance of 40% as the limited partner. United Defense supplies
ground combat and naval weapons systems for the U.S. and military customers
worldwide. These transactions did not include any of the assets or liabilities
of the Company's BMY-Wheeled Vehicles Division, which were retained by the
Company. This division, which was exited by the Company in 1995, sold five-ton
trucks to the United States Army under a completed 1986 contract that was the
subject of a Federal Excise Tax dispute as more fully discussed in Note 10,
"Commitments and Contingencies."

Income and cash flows related to the discontinued defense business are shown
separately on the Consolidated Statements of Income and Cash Flows,
respectively.


3.    ACCOUNTS RECEIVABLE AND INVENTORIES

Accounts receivable are net of an allowance for doubtful accounts of $19.1
million and $24.6 million at December 31, 2004 and 2003, respectively. The
decrease from December 31, 2003 relates principally to write-offs of previously
reserved accounts receivable. The provision for doubtful accounts was $5.0
million, $3.4 million and $6.9 million for 2004, 2003 and 2002, respectively.


                                      -55-

Inventories consist of the following:

(IN THOUSANDS)                                        2004           2003
- ----------------------------------------------------------------------------
Finished goods                                     $   60,554     $   59,739
Work-in-process                                        37,882         32,121
Raw materials and purchased parts                      91,965         74,231
Stores and supplies                                    26,625         24,130
- ----------------------------------------------------------------------------
Total Inventories                                  $  217,026     $  190,221
============================================================================

Valued at lower of cost or market:
Last-in, first out (LIFO) basis                    $  129,064     $  109,821
First-in, first out (FIFO) basis                       17,399          8,430
Average cost basis                                     70,563         71,970
- ----------------------------------------------------------------------------
Total Inventories                                  $  217,026     $  190,221
============================================================================

Inventories valued on the LIFO basis at December 31, 2004 and 2003 were
approximately $35.8 million and $17.9 million, respectively, less than the
amounts of such inventories valued at current costs.

As a result of reducing certain inventory quantities valued on the LIFO basis,
net income increased from that which would have been recorded under the FIFO
basis of valuation by $0.02 million, $1.1 million and $2.3 million in 2004, 2003
and 2002, respectively.


4.    PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

(IN THOUSANDS)                                        2004          2003 (A)
- ----------------------------------------------------------------------------
Land and improvements                              $   39,838     $   39,311
Buildings and improvements                            185,807        175,482
Machinery and equipment                             2,027,765      1,803,867
Uncompleted construction                               45,083         37,505
- ----------------------------------------------------------------------------
Gross property, plant and equipment                 2,298,493      2,056,165
Less accumulated depreciation and facilities
  valuation allowance                              (1,366,195)    (1,190,722)
- ----------------------------------------------------------------------------
Net property, plant and equipment                  $  932,298     $  865,443
============================================================================

(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.


The estimated useful lives of different types of assets are generally:

      Land improvements                                 5 to 20 years

      Buildings and improvements                       10 to 50 years

      Certain plant, buildings and installations
      (Principally Mill Services Segment)               3 to 10 years

      Machinery and equipment                           3 to 20 years

      Leasehold improvements                       Estimated useful life of the
                                                   improvement or, if shorter,
                                                   the life of the lease

                                      -56-

5.    GOODWILL AND OTHER INTANGIBLE ASSETS

The Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets," (SFAS
142) on January 1, 2002. Under this standard, goodwill and intangible assets
with indefinite useful lives are no longer amortized. Goodwill is tested for
impairment at the reporting unit level on an annual basis, and between annual
tests, whenever events or circumstances indicate that the carrying value of a
reporting unit's goodwill may exceed its fair value. This impairment testing is
a two-step process as outlined in SFAS 142. Step one is a comparison of each
reporting unit's fair value to its book value. If the fair value of the
reporting unit exceeds the book value, step two of the test is not required.
Step two requires the allocation of fair values to assets and liabilities as if
the reporting unit had just been purchased resulting in the implied fair value
of goodwill. If the carrying value of the goodwill exceeds the implied fair
value, a write down to the implied fair value would be required.

The Company uses a discounted cash flow model to estimate the fair value of a
reporting unit in performing step one of the testing. This model requires the
use of long-term planning estimates and assumptions regarding industry-specific
economic conditions that are outside the control of the Company. The Company
performed required annual testing for goodwill impairment as of October 1, 2004
and 2003 and all reporting units of the Company passed the step 1 testing
thereby indicating that no goodwill impairment exists. However, there can be no
assurance that future goodwill impairment tests will not result in a charge to
earnings.

The following table reflects the changes in carrying amounts of goodwill by
segment for the years ended December 31, 2003 and 2004:


                                                                                          ENGINEERED
                                                                                           PRODUCTS
                                                      MILL      ACCESS        GAS        AND SERVICES
                                                    SERVICES   SERVICES   TECHNOLOGIES   ("ALL OTHER")  CONSOLIDATED
(IN THOUSANDS)                                       SEGMENT    SEGMENT     SEGMENT        CATEGORY        TOTALS
- --------------------------------------------------------------------------------------------------------------------
                                                                                         
Balance as of December 31, 2002, net of
   accumulated amortization                         $195,721   $136,624   $     36,693   $      8,182   $    377,220

Goodwill acquired during year                             --        441             --             --            441

Other (principally foreign currency translation)      15,597     14,633             --            (45)        30,185
- --------------------------------------------------------------------------------------------------------------------
Balance as of December 31, 2003, net of
   accumulated amortization                         $211,318   $151,698   $     36,693   $      8,137   $    407,846
- --------------------------------------------------------------------------------------------------------------------

Goodwill acquired during year                             --      5,046             --             --          5,046

Other (principally foreign currency translation)       9,175     11,058             --             --         20,233
- --------------------------------------------------------------------------------------------------------------------
BALANCE AS OF DECEMBER 31, 2004, NET OF
   ACCUMULATED AMORTIZATION                         $220,493   $167,802   $     36,693   $      8,137   $    433,125
====================================================================================================================


Goodwill is net of accumulated amortization of $108.4 million and $105.2 million
at December 31, 2004 and 2003, respectively.


                                      -57-

Intangible assets, which are included principally in Other assets on the
Consolidated Balance Sheets, totaled $10.9 million, net of accumulated
amortization of $10.5 million at December 31, 2004 and $10.4 million, net of
accumulated amortization of $8.4 million at December 31, 2003. The following
table reflects these intangible assets by major category:


                                  DECEMBER 31, 2004                 DECEMBER 31, 2003
                           -----------------------------     -----------------------------
                           GROSS CARRYING   ACCUMULATED      GROSS CARRYING   ACCUMULATED
(IN THOUSANDS)                 AMOUNT       AMORTIZATION         AMOUNT       AMORTIZATION
- ------------------------------------------------------------------------------------------
                                                                  
Customer relationships     $        7,662   $        609     $        6,373   $        196

Non-compete agreements              4,898          4,032              4,863          3,671

Patents                             4,416          3,757              4,304          3,351

Other                               4,411          2,087              3,313          1,197
- ------------------------------------------------------------------------------------------
Total                      $       21,387   $     10,485     $       18,853   $      8,415
==========================================================================================


The increase in intangible assets for 2004 is due principally to the
acquisitions discussed in Note 2, "Acquisitions and Dispositions." As part of
these transactions, the Company acquired the following intangible assets (by
major class) which are subject to amortization:

ACQUIRED INTANGIBLE ASSETS
- ------------------------------------------------------------------------------
                           GROSS CARRYING     RESIDUAL      WEIGHTED-AVERAGE
(IN THOUSANDS)                 AMOUNT           VALUE     AMORTIZATION PERIOD
- ------------------------------------------------------------------------------
Customer relationships     $        1,144       None              6 years

Non-compete agreements                 29       None              3 years

Other                                 549       None              5 years
                           --------------
Total                      $        1,722
                           ==============

There were no research and development assets acquired and written off in 2004
or 2003.

Amortization expense for intangible assets was $1.8 million, $1.2 million and
$0.9 million for the years ended December 31, 2004, 2003 and 2002, respectively.
The following chart shows the estimated amortization expense for the next five
fiscal years based on current intangible assets.

(IN THOUSANDS)                     2005      2006      2007     2008    2009
- ----------------------------------------------------------------------------
Estimated Amortization Expense    $1,859    $1,561    $1,205    $917    $586


6.    DEBT AND CREDIT AGREEMENTS

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 December 31, 2004. The Company limits the aggregate
commercial paper, syndicated credit facility and bilateral credit facility
borrowings at any one time to a maximum of $375 million. These credit facilities
and programs are described in more detail below the chart.

                                      -58-

SUMMARY OF CREDIT FACILITIES
AND COMMERCIAL PAPER PROGRAMS              AS OF DECEMBER 31, 2004
- ----------------------------------------------------------------------------
                                                  OUTSTANDING     AVAILABLE
(IN THOUSANDS)                  FACILITY LIMIT      BALANCE         CREDIT
- ----------------------------------------------------------------------------
U.S. commercial paper program    $    350,000     $   26,895      $  323,105

Euro commercial paper program         135,670          6,770         128,900

Revolving credit facility (a)         350,000             --         350,000

Bilateral credit facility (b)          25,000             --          25,000
- ----------------------------------------------------------------------------
TOTALS AT DECEMBER 31, 2004      $    860,670     $   33,665      $  827,005(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.

The Company has a U.S. commercial paper borrowing program under which it can
issue up to $350 million of short-term notes in the U.S. commercial paper
market. In addition, the Company has a 100 million euro commercial paper
program, equivalent to approximately $135.7 million at December 31, 2004, which
is used to fund the Company's international operations. Commercial paper
interest rates, which are based on market conditions, have been lower than
comparable rates available under the credit facilities. At December 31, 2004 and
2003, the Company had $26.9 million and $9.3 million of U.S. commercial paper
outstanding, respectively, and $6.8 million and $26.0 million outstanding,
respectively, under its European-based commercial paper program. Commercial
paper is classified as long-term debt at December 31, 2004 and 2003, because the
Company has the ability and intent to refinance it on a long-term basis through
existing long-term credit facilities.

On August 12, 2004, the Company executed a new revolving credit facility in the
amount of $350 million through a syndicate of 15 banks which matures in August
2007. This facility serves as back-up to the Company's investment-grade
commercial paper programs. This new facility replaced the existing $350 million
revolving credit facility that was divided into two parts, a $131.3 million
portion that matured on August 12, 2004 and a $218.8 million portion that would
have matured on September 29, 2005. Interest rates on the new facility are
either negotiated, based upon the U.S. federal funds interbank market, prime
rate, or based upon the London Interbank Offered Rate (LIBOR), plus a margin.
The Company pays a facility fee (.09% per annum as of December 31, 2004) that
varies based upon its credit ratings. At December 31, 2004 and 2003, there were
no borrowings outstanding under either of the facilities.

The $25 million bilateral credit facility was renewed in January 2005 for an
additional one year. The facility serves as back-up to the Company's commercial
paper programs and also helps finance the Company's European operations.
Borrowings under this facility, which expires in December 2005, are available in
most major currencies with active markets at interest rates based upon LIBOR
plus a margin. Borrowings outstanding at expiration may be repaid over the
succeeding 12 months. As of December 31, 2004 and 2003, there was $0 million and
$3.4 million outstanding on this credit facility, respectively.

Short-term debt amounted to $16.1 million and $14.9 million at December 31, 2004
and 2003, respectively. The weighted average interest rate for short-term
borrowings at December 31, 2004 and 2003 was 3.4% and 2.9%, respectively.

                                      -59-

Long-term debt consists of the following:


(IN THOUSANDS)                                                              2004            2003
- ---------------------------------------------------------------------------------------------------
                                                                                   
7.25% British pound sterling-denominated notes due October 27, 2010      $  379,751      $  353,018
5.125% notes due September 15, 2013                                         148,738         148,627
Commercial paper borrowings, with a weighted average interest rate
   of 2.3% and 1.9% as of December 31, 2004 and 2003, respectively           33,665          35,347
Faber Prest loan notes due October 31, 2008 with interest based on
   sterling LIBOR minus .75% (4.2% and 3.4% at December 31, 2004
   and 2003, respectively)                                                    9,361           9,991
Industrial development bonds, payable in varying amounts from 2010
   to 2011 with a weighted average interest rate of 2.1% as of
   December 31, 2004 and 2003                                                 6,500          10,000
Other financing payable in varying amounts to 2009 with a weighted
   average interest rate of 6.0% and 5.4% as of December 31, 2004
   and 2003, respectively                                                    31,649          41,694
- ---------------------------------------------------------------------------------------------------
                                                                            609,664         598,677
Less: current maturities                                                    (14,917)        (14,252)
- ---------------------------------------------------------------------------------------------------
                                                                         $  594,747      $  584,425
===================================================================================================


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%. Additionally, the Company's 7.25% British pound
sterling-denominated notes due October 27, 2010 include a covenant that permits
the note holders to redeem their notes, at par, in the event of a change of
control of the Company. At December 31, 2004, the Company was in compliance with
these covenants.

The maturities of long-term debt for the four years following December 31, 2005
are as follows:

(IN THOUSANDS)
- ------------------------------------------
2006                       $         5,038
2007                                44,341
2008                                10,116
2009                                   263


Cash payments for interest on all debt from continuing operations were $40.2
million, $40.1 million and $42.3 million in 2004, 2003 and 2002, respectively.


7.    LEASES

The Company leases certain property and equipment under noncancelable operating
leases. Rental expense (for both continuing and discontinued operations) under
such operating leases was $49.4 million, $48.5 million and $46.6 million in
2004, 2003 and 2002, respectively.

Future minimum payments under operating leases with noncancelable terms are as
follows:

(IN THOUSANDS)
- ------------------------------------------
2005                       $        41,145
2006                                27,455
2007                                19,159
2008                                11,246
2009                                16,014
After 2009                          11,086

Total minimum rentals to be received in the future under non-cancelable
subleases as of December 31, 2004 are $9.0 million.


                                      -60-

8.    EMPLOYEE BENEFIT PLANS

PENSION BENEFITS
The Company has pension and profit sharing retirement plans covering a
substantial number of its employees. The defined benefits for salaried employees
generally are based on years of service and the employee's level of compensation
during specified periods of employment. Plans covering hourly employees
generally provide benefits of stated amounts for each year of service. The
multi-employer plans in which the Company participates provide benefits to
certain unionized employees. The Company's funding policy for qualified plans is
consistent with statutory regulations and customarily equals the amount deducted
for income tax purposes. The Company's policy is to amortize prior service costs
of defined benefit pension plans over the average future service period of
active plan participants. The Company uses an October 31 measurement date for
its United States defined benefit pension plans and a September 30 measurement
date for international defined benefit pension plans.

For a majority of the U.S. defined benefit pension plans and certain
international defined benefit pension plans, accrued service will no longer be
granted for periods after December 31, 2003. In place of these plans, the
Company has established, effective January 1, 2004, defined contribution pension
plans providing for the Company to contribute a specified matching amount for
participating employees' contributions to the plan. Domestically, this match is
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
these new defined contribution plans will provide a more predictable and less
volatile pension expense than exists under the defined benefit plans.


- --------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS)                                       U. S. PLANS                       INTERNATIONAL PLANS
- --------------------------------------------------------------------------------------------------------------------
                                           2004         2003         2002          2004         2003         2002
                                        ----------   ----------   ----------    ----------   ----------   ----------
                                                                                        
PENSION EXPENSE (INCOME)
Defined benefit plans:
   Service cost                         $    2,610   $    7,339   $    8,375    $    9,561   $   10,439   $    9,980
   Interest cost                            13,592       13,201       13,034        37,876       32,627       28,393
   Expected return on plan assets          (17,960)     (15,758)     (19,845)      (39,765)     (34,083)     (35,542)
   Recognized prior service costs              754          726        1,442         1,245        1,117          991
   Recognized losses                         2,982        4,409          822        13,431        9,813        4,090
   Amortization of transition asset         (1,466)      (1,466)      (1,684)         (567)        (626)        (572)
   Settlement/Curtailment loss                 131           36          918            --            8           --
- --------------------------------------------------------------------------------------------------------------------
Defined benefit plans pension expense          643        8,487        3,062        21,781       19,295        7,340
Multi-employer plans                         7,674        6,020        4,705         5,395        4,389        4,162
Defined contribution plans                   6,197          527          753         5,722        2,329        1,790
- --------------------------------------------------------------------------------------------------------------------
   Pension expense                      $   14,514   $   15,034   $    8,520    $   32,898   $   26,013   $   13,292
====================================================================================================================




                                      -61-

The change in the financial status of the pension plans and amounts recognized
in the Consolidated Balance Sheets at December 31, 2004 and 2003 are as follows:


                                                           U. S. PLANS            INTERNATIONAL PLANS
DEFINED BENEFIT PENSION BENEFITS                     -----------------------    -----------------------
(IN THOUSANDS)                                          2004         2003          2004         2003
- -------------------------------------------------------------------------------------------------------
                                                                                 
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year              $  221,695   $  199,959    $  660,441   $  561,509
Service cost                                              2,610        7,339         9,561       10,439
Interest cost                                            13,592       13,201        37,876       32,627
Plan participants' contributions                             --           --         2,691        4,044
Amendments                                                   --          226            --          188
Actuarial loss                                           18,094       19,066        15,074        9,661
Settlements/curtailments                                    (22)      (5,148)          (54)        (401)
Benefits paid                                           (12,401)     (12,948)      (30,113)     (30,301)
Obligations of added plans                                   --           --            --        3,823
Effect of foreign currency                                   --           --        51,097       68,852
- -------------------------------------------------------------------------------------------------------
   Benefit obligation at end of year                 $  243,568   $  221,695    $  746,573   $  660,441
=======================================================================================================

CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year       $  209,130   $  180,277    $  522,185   $  418,002
Actual return on plan assets                             23,096       37,917        52,900       60,088
Employer contributions                                    3,283        3,884        34,528       19,749
Plan participants' contributions                             --           --         2,692        4,044
Benefits paid                                           (12,401)     (12,948)      (29,774)     (29,993)
Plan assets of added plans                                   --           --            --        1,724
Effect of foreign currency                                   --           --        34,566       48,571
- -------------------------------------------------------------------------------------------------------
   Fair value of plan assets at end of year          $  223,108   $  209,130    $  617,097   $  522,185
=======================================================================================================

FUNDED STATUS:
Funded status at end of year                         $  (20,460)  $  (12,565)   $ (129,476)  $ (138,256)
Unrecognized net loss                                    60,173       50,365       240,797      234,273
Unrecognized transition (asset) obligation               (1,817)      (3,283)          478          (80)
Unrecognized prior service cost                           3,858        4,743        12,085       13,055
- -------------------------------------------------------------------------------------------------------
   Net amount recognized                             $   41,754   $   39,260    $  123,884   $  108,992
=======================================================================================================

AMOUNTS RECOGNIZED IN THE CONSOLIDATED
BALANCE SHEETS CONSIST OF THE FOLLOWING:
Prepaid benefit cost                                 $   54,613   $   46,359    $       --   $       --
Accrued benefit liability                               (37,187)     (29,566)      (91,115)    (102,432)
Intangible asset                                          3,209        3,935        11,733       12,088
Accumulated other comprehensive expense                  21,119       18,532       203,266      199,336
- -------------------------------------------------------------------------------------------------------
   Net amount recognized                             $   41,754   $   39,260    $  123,884   $  108,992
=======================================================================================================


The Company's best estimate of expected contributions to be paid in year 2005
for the U.S. defined benefit plans is $0.9 million and for the international
defined benefit plans is $30.2 million.

                                      -62-

FUTURE BENEFIT PAYMENTS
The Company's expected benefit payments for defined benefit plans over the next
ten years are as follows:


                                                     INTERNATIONAL
(IN MILLIONS)                           U.S. PLANS       PLANS
- ------------------------------------------------------------------
                                               
2005                                    $      9.7   $        28.5
2006                                          10.2            29.4
2007                                          10.7            30.7
2008                                          11.4            31.2
2009                                          12.1            32.0
2010 - 2014                                   72.4           177.1

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


NET PERIODIC PENSION EXPENSE ASSUMPTIONS
The weighted-average actuarial assumptions used to determine the net periodic
pension expense for the years ended December 31 were as follows:

                                                            GLOBAL WEIGHTED AVERAGE
                                                                  DECEMBER 31
                                                     -------------------------------------
                                                        2004         2003          2002
- ------------------------------------------------------------------------------------------
                                                                                                     
Discount rates                                          5.9%         6.0%          6.5%
Expected long-term rates of return on plan assets       7.9%         8.0%          8.5%
Rates of compensation increase                          3.5%         3.4%          3.9%


                                                                  U. S. PLANS                         INTERNATIONAL PLANS
                                                                  DECEMBER 31                             DECEMBER 31
                                                     ----------------------------------------------------------------------------
                                                        2004         2003          2002         2004         2003         2002
- ---------------------------------------------------------------------------------------------------------------------------------
Discount rates                                          6.25%        6.75%         7.25%        5.7%         5.8%         6.2%
Expected long-term rates of return on plan assets       8.75%        8.9%          9.5%         7.5%         7.6%         8.0%
Rates of compensation increase                          4.0%         3.8%          3.7%         3.4%         3.3%         4.0%
=================================================================================================================================


DEFINED BENEFIT PENSION OBLIGATION ASSUMPTIONS
The weighted-average actuarial assumptions used to determine the defined benefit
pension plan obligations at December 31 were as follows:

                                                            GLOBAL WEIGHTED AVERAGE
                                                                  DECEMBER 31
                                                     -------------------------------------
                                                        2004         2003          2002
- ------------------------------------------------------------------------------------------
                                                                                                     
Discount rates                                          5.7%         5.9%          6.0%
Rates of compensation increase                          3.7%         3.5%          3.4%


                                                                  U. S. PLANS                         INTERNATIONAL PLANS
                                                                  DECEMBER 31                             DECEMBER 31
                                                     ----------------------------------------------------------------------------
                                                        2004         2003          2002         2004         2003         2002
- ---------------------------------------------------------------------------------------------------------------------------------
Discount rates                                          5.75%        6.25%         6.75%        5.7%         5.7%         5.8%
Rates of compensation increase                          4.0%         4.0%          3.8%         3.6%         3.4%         3.3%
=================================================================================================================================



                                      -63-

ACCUMULATED BENEFIT OBLIGATIONS
The accumulated benefit obligation for all defined benefit pension plans at
December 31 was as follows:

                                                     INTERNATIONAL
(IN MILLIONS)                           U.S. PLANS       PLANS
- -------------------------------------------------------------------
2004                                      $231.6         $705.3
2003                                       211.3          622.0


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

PLANS WITH ACCUMULATED BENEFIT OBLIGATION IN EXCESS OF PLAN ASSETS
The projected benefit obligation, accumulated benefit obligation and fair value
of plan assets for pension plans with accumulated benefit obligations in excess
of plan assets at December 31 were as follows:


                                              U. S. PLANS           INTERNATIONAL PLANS
                                        -----------------------   ------------------------
(IN MILLIONS)                              2004         2003         2004          2003
- ------------------------------------------------------------------------------------------
                                                                    
Projected benefit obligation              $75.6        $68.6        $737.3        $652.7
Accumulated benefit obligation             73.8         67.3         697.8         616.5
Fair value of plan assets                  40.7         38.3         605.4         511.5



The increase in the minimum liability included in other comprehensive income
(expense) was ($4.5) million in 2004. The decrease in the minimum liability
included in other comprehensive income (expense) was $1.5 million in 2003.

The asset allocations attributable to the Company's U.S. pension plans at
October 31, 2004 and 2003 and the target allocation of plan assets for 2005, by
asset category, are as follows:


- --------------------------------------------------------------------------------------------
                                                     PERCENTAGE OF PLAN ASSETS AT OCTOBER 31
U.S. PLANS                              TARGET 2005  ---------------------------------------
ASSET CATEGORY                          ALLOCATION      2004                        2003
- --------------------------------------------------------------------------------------------
                                                                       
Domestic Equity Securities               49% - 59%      52.6%                       60.0%
Fixed Income Securities                  27% - 37%      32.5%                       28.5%
International Equity Securities         5.5% - 14.5%    10.5%                        9.8%
Cash & Cash Equivalents                   0% - 5%        1.8%                        1.7%
Other                                     0% - 7%        2.6%                        0.0%


Plan assets are allocated among various categories of equities, fixed income,
cash and cash equivalents with professional investment managers whose
performance is actively monitored. The primary investment objective is long-term
growth of assets in order to meet present and future benefit obligations. The
Company periodically conducts an asset/liability modeling study to ensure the
investment strategy is aligned with the profile of benefit obligations.

The Company reviews the long-term expected return on asset assumption on a
periodic basis taking into account a variety of factors including the historical
investment returns achieved over a long-term period, the targeted allocation of
plan assets and future expectations based on a model of asset returns for an
actively managed portfolio. For 2005, the expected return on asset assumption is
8.75%, the same as 2004. The Company had lowered its expected return on asset
assumption from 8.9% in 2003 to 8.75% in 2004 due to changes in capital market
expectations.

The U.S. defined benefit pension plans owned shares of the Company's stock
valued at $18.2 million and $27.6 million on October 31, 2004 and 2003,
respectively, representing 8.2% and 13.2%, respectively, of total plan assets.
As part of a rebalancing of the pension fund to further diversify the plan
assets, approximately one-half of the pension fund's holdings in the Company's
stock were sold in the second quarter of 2004. Dividends paid to the pension
plans on the Company stock amounted to $0.6 million in 2004 and $0.7 million in
2003.

                                      -64-


The asset allocations attributable to the Company's International plans at
September 30, 2004 and 2003 and the target allocation of plan assets for 2005,
by asset category, are as follows:


- ----------------------------------------------------------------------------------------------
                                                     PERCENTAGE OF PLAN ASSETS AT SEPTEMBER 30
INTERNATIONAL PLANS                     TARGET 2005  -----------------------------------------
ASSET CATEGORY                          ALLOCATION      2004                        2003
- ----------------------------------------------------------------------------------------------
                                                                           
Equity Securities                      55.5% - 64.5%    57.5%                        60.9%
Fixed Income Securities                37.5% - 42.5%    42.0%                        38.6%
Cash & Cash Equivalents                      0%          0.4%                         0.5%
Other                                     0% - 2%        0.1%                         0.0%


Plan assets as of September 30, 2004, under the United Kingdom (U.K.) Pension
Plan amounted to over 90% of the international pension assets. These assets were
divided into seven portfolios representing various categories of equities, fixed
income, cash and cash equivalents managed by four professional investment
managers.

The primary investment objective is long-term growth of assets in order to meet
present and future benefit obligations. The Company periodically conducts an
asset/liability modeling study to ensure the investment strategy is aligned with
the profile of benefit obligations. The expected return on asset assumption was
7.75% for the U.K. plan in 2004. The Company reviews the long-term return on
asset assumption on a periodic basis and has retained 7.75% for 2005. The
remaining international pension plans with assets representing less than 10% of
the international pension assets are under the guidance of professional
investment managers and have similar investment objectives.

POSTRETIREMENT BENEFITS
The Company has postretirement health care benefits for a limited number of
employees mainly under plans related to acquired companies and postretirement
life insurance benefits for certain hourly employees. The costs of health care
and life insurance benefits are accrued for current and future retirees and are
recognized as determined under the projected unit credit actuarial method. Under
this method, the Company's obligation for postretirement benefits is to be fully
accrued by the date employees attain full eligibility for such benefits. The
Company's postretirement health care and life insurance plans are unfunded. The
Company uses an October 31 measurement date for its postretirement benefit
plans.


(IN THOUSANDS)                                   2004         2003         2002
- ----------------------------------------------------------------------------------
                                                               
POSTRETIREMENT BENEFITS EXPENSE (INCOME)
   Service cost                               $       11   $       21   $       66
   Interest cost                                     342          553          743
   Recognized prior service costs                     32           32          (16)
   Recognized (gains) or losses                       39           66          (18)
   Curtailment gains                              (2,236)      (4,898)        (467)
- ----------------------------------------------------------------------------------
Postretirement benefit expense (income)       $   (1,812)  $   (4,226)  $      308
==================================================================================


The curtailment gains of $2.2 million for 2004 were due to the termination of
certain retiree health care plans. The curtailment gains of $4.9 million for
2003 were due to the termination of certain retiree life insurance and health
care plans.

Effective October 31, 2004, the Company adopted the provisions of Financial
Accounting Standards Board Staff Position No. 106-2, "Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003" (FSP FAS 106-2). Adoption of FSP FAS 106-2 reduced
the Company's accumulated postretirement benefit obligation by $0.3 million.
This amount is treated as an unrecognized actuarial gain. The Company deferred
re-measurement of its postretirement health care benefit obligation until its
measurement date, so there is no effect on 2004 reported expense.

                                      -65-

The changes in the postretirement benefit liability recorded in the Consolidated
Balance Sheets are as follows:


 POSTRETIREMENT BENEFITS
(IN THOUSANDS)                                                2004         2003
- ----------------------------------------------------------------------------------
                                                                  
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year                    $    7,405   $   11,639
Service cost                                                       11           21
Interest cost                                                     342          553
Actuarial (gain) loss                                            (654)          74
Plan participants' contributions                                   48           36
Benefits paid                                                    (369)        (424)
Plan amendments                                                     4           --
Curtailment                                                    (2,600)      (4,494)
- ----------------------------------------------------------------------------------
Benefit obligation at end of year                          $    4,187   $    7,405
==================================================================================

FUNDED STATUS:
Funded status at end of year                               $   (4,187)  $   (7,405)
Unrecognized prior service cost                                   296          330
Unrecognized net actuarial (gain) loss                            (95)         943
- ----------------------------------------------------------------------------------
Net amount recognized as accrued benefit liability         $   (3,986)  $   (6,132)
==================================================================================


The actuarial assumptions used to determine the postretirement benefit
obligation are as follows:


(DOLLARS IN THOUSANDS)                              2004        2003        2002
- ----------------------------------------------------------------------------------
                                                                 
Assumed discount rate                                 5.75%       6.25%       6.75%
Health care cost trend rate                          10.00%      12.00%      12.00%
Decreasing to ultimate rate                           5.00%       5.00%       5.00%

Effect of one percent increase in health care
cost trend rate:
   On total service and interest cost components  $     15    $     24    $     28
   On postretirement benefit obligation           $    239    $    373    $    422
Effect of one percent decrease in health care
cost trend rate:
   On total service and interest cost components  $    (13)   $    (21)   $    (29)
   On postretirement benefit obligation           $   (212)   $   (336)   $   (382)
- ----------------------------------------------------------------------------------


It is anticipated that the health care cost trend rate will decrease from 10.0%
in 2005 to 5.0% in the year 2010.

The assumed discount rates to determine the postretirement benefit expense for
the years 2004, 2003 and 2002 were 6.25%, 6.75% and 7.25%, respectively.

The Company's estimate of expected contributions to be paid in year 2005 is $260
thousand.

The Company's expected benefit payments over the next ten years are as follows:

YEAR                                          (IN THOUSANDS)
- -----------------------------------------------------------------
2005                                           $      260
2006                                                  276
2007                                                  281
2008                                                  293
2009                                                  292
2010 - 2014                                         1,465


                                      -66-

SAVINGS PLAN
Prior to January 1, 2004, the Company had a 401(k) Savings Plan (the Savings
Plan) which covered substantially all U.S. employees with the exception of
employees represented by a collective bargaining agreement, unless the agreement
expressly provides otherwise. Effective January 1, 2004, certain U.S. employees
previously covered by the Savings Plan have been transferred into the Harsco
Retirement Savings & Investment Plan (HRSIP) which is a defined contribution
pension plan. The transferred employees were those whose credited years of
service under the qualified Defined Benefit Pension Plan were frozen as of
December 31, 2003 (as discussed in the Pension Benefits section of this
footnote). Employees whose credited service was not frozen as of December 31,
2003 remained in the Savings Plan. The expenses related to the HRSIP are
included in the defined contribution pension plans disclosure in the Pension
Benefits section of this footnote.

Employee contributions to the Savings Plan are generally determined as a
percentage of covered employees' compensation. The expense for contributions to
the Savings Plan by the Company was $0.4 million, $3.5 million and $3.8 million
for 2004, 2003 and 2002, respectively.

Employee directed investments in the Savings Plan and HRSIP include the
following amounts of Company stock:

                                               COMPANY SHARES IN PLANS
- ----------------------------------------------------------------------------------------------------------------
                              DECEMBER 31, 2004             DECEMBER 31, 2003              DECEMBER 31, 2002
                          ------------------------       ------------------------       ------------------------
                           NUMBER      FAIR MARKET        NUMBER      FAIR MARKET        NUMBER      FAIR MARKET
(DOLLARS IN MILLIONS)     OF SHARES       VALUE          OF SHARES       VALUE          OF SHARES       VALUE
- ----------------------------------------------------------------------------------------------------------------
                                                                                   
Savings Plan              1,017,241    $      56.7       2,143,820    $      93.9       2,352,286    $      75.0

HRSIP                       954,442           53.2              --             --              --             --


EXECUTIVE INCENTIVE COMPENSATION PLAN
The amended 1995 Executive Incentive Compensation Plan, as approved by the
Management Development and Compensation Committee of the Board of Directors,
provides the basis for determination of annual incentive compensation awards.
Actual awards are usually paid in January or February of the following year. The
Company accrues amounts reflecting the estimated value of incentive compensation
anticipated to be earned for the year. Compensation expense relating to these
awards was $4.5 million, $4.0 million and $3.6 million in 2004, 2003 and 2002,
respectively.








                                      -67-

9.    INCOME TAXES

Income before income taxes and minority interest for both continuing and
discontinued operations in the Consolidated Statements of Income consists of the
following:

(IN THOUSANDS)                                2004         2003         2002
- -------------------------------------------------------------------------------
United States                              $   57,566   $   53,549   $   35,214
International                                 125,619       90,480      104,139
- -------------------------------------------------------------------------------
      Total income before income taxes and
      minority interest                    $  183,185   $  144,029   $  139,353
===============================================================================

Income tax expense/(benefit):
      Currently payable:
            Federal                        $   (2,788)  $    5,275   $    1,053
            State                                (281)        (961)      (1,718)
            International                      31,471       24,233       24,897
- -------------------------------------------------------------------------------
      Total income taxes currently payable     28,402       28,547       24,232

      Deferred federal and state               17,110       12,255       13,048
      Deferred international                    7,797        3,815        5,918
- -------------------------------------------------------------------------------
      Total income tax expense             $   53,309   $   44,617   $   43,198
===============================================================================

Continuing Operations                      $   49,034   $   41,708   $   42,240
Discontinued Operations                         4,275        2,909          958
- -------------------------------------------------------------------------------
      Total income tax expense             $   53,309   $   44,617   $   43,198
===============================================================================

Cash payments for income taxes were $26.2 million, $23.5 million and $18.7
million, for 2004, 2003 and 2002, respectively.

The following is a reconciliation of the normal expected statutory U.S. federal
income tax rate to the effective rate as a percentage of Income before income
taxes and minority interest for both continuing and discontinued operations as
reported in the Consolidated Statements of Income:

                                              2004         2003         2002
- -------------------------------------------------------------------------------
U.S. federal income tax rate                  35.0%        35.0%        35.0%
State income taxes, net of federal income
  tax benefit                                  1.0          0.3          0.3
Export sales corporation benefit              (0.6)        (0.7)        (0.9)
Deductible 401(k) dividends                   (0.4)        (0.6)        (0.9)
Losses for which no tax benefit was
  recorded                                     0.0          0.1          0.4
Difference in effective tax rates on
  international earnings and remittances      (1.7)        (2.2)        (2.2)
Settlement of tax contingencies               (3.3)        (1.1)        (0.9)
Other, net                                    (0.9)         0.2          0.2
- -------------------------------------------------------------------------------
Effective income tax rate                     29.1%        31.0%        31.0%
===============================================================================

The decrease in the effective income tax rate from 2003 to 2004 was primarily
the result of the benefit of foreign tax credits related to the American Jobs
Creation Act of 2004 (AJCA) and the result of the settlement of certain tax
contingencies. The settlements of tax contingencies included the adjustment of
certain U.S. federal and state income tax contingencies due to favorable
outcomes. Additionally, during the fourth quarter of 2004, the Company recorded
a favorable income tax expense adjustment of $3.6 million related to prior
periods, which was not material, and which was mostly offset by increases in
certain international tax contingencies, state income taxes and the amount of
international earnings subject to U.S. income taxes.

                                      -68-

The tax effects of the primary temporary differences giving rise to the
Company's deferred tax assets and liabilities for the years ended December 31,
2004 and 2003 are as follows:

(IN THOUSANDS)                          2004                      2003
- -------------------------------------------------------------------------------
DEFERRED INCOME TAXES            ASSET      LIABILITY      ASSET      LIABILITY
- -------------------------------------------------------------------------------
Depreciation                   $      --    $ 111,967    $      --    $  79,254
Expense accruals                  22,437           --       14,820           --
Inventories                        3,268           --        2,772           --
Provision for receivables          3,225           --        3,854           --
Postretirement benefits            1,475           --        2,175           --
Deferred revenue                      --        3,770           --        3,167
Operating loss carryforwards      19,667           --       15,510           --
Pensions                          25,649        9,493       24,566        7,935
Other                              5,292        4,071        3,719        2,177
- -------------------------------------------------------------------------------
      Subtotal                    81,013      129,301       67,416       92,533
Valuation allowance              (17,492)          --      (13,098)          --
- -------------------------------------------------------------------------------
Total deferred income taxes    $  63,521    $ 129,301    $  54,318    $  92,533
===============================================================================

At December 31, 2004 and 2003, Other current assets included deferred income tax
benefits of $28.9 million and $22.9 million, respectively.

At December 31, 2004, after-tax net operating loss carryforwards (NOLs) totaled
$19.7 million. Of that amount, $4.1 million is attributable to international
operations and may be carried forward indefinitely. After-tax U.S. state NOLs
are $15.6 million. Of that amount, $2.2 million expire in 2005-2011, $5.3
million expire in 2012-2019, and $8.1 million expire in 2024. Included in the
above-mentioned total are $0.3 million of preacquisition NOLs.

During both 2004 and 2003, $0.5 million of preacquisition NOLs were utilized by
the Company, resulting in tax benefits of $0.2 million.

The valuation allowance of $17.5 million and $13.1 million at December 31, 2004
and 2003, respectively, relates principally to NOLs which are uncertain as to
realizability. To the extent that the preacquisition NOLs are utilized in the
future and the associated valuation allowance reduced, the tax benefit will be
allocated to reduce goodwill.

The change in the valuation allowances for 2004 and 2003 results primarily from
the utilization of NOLs, the release of valuation allowances in certain
jurisdictions based on the Company's revaluation of the realizability of future
benefits, and the increase in valuation allowances in certain jurisdictions
based on the Company's revaluation of the realizability of future benefits.

The Company has not provided U.S. income taxes on certain of its non-U.S.
subsidiaries' undistributed earnings as such amounts are permanently reinvested
outside the U.S. At December 31, 2004, such earnings were approximately $86
million. The Company has various tax holidays in Europe, the Middle East and
Asia that expire between 2004 and 2010. These tax holidays resulted in
approximately $4.2 million in reduced income tax expense in 2004.

On October 22, 2004, the American Jobs Creation Act (AJCA) was signed into law.
The AJCA includes a deduction of 85% for certain international earnings that are
repatriated, as defined in the AJCA, to the U.S. The Company may elect to apply
this temporary provision to qualifying earnings repatriations during 2005. On
January 13, 2005, the U.S. Treasury Department and the U.S. Internal Revenue
Service (IRS) issued the first in a series of notices that will provide detailed
guidance on the AJCA. The Company is assessing the effects of the repatriation
provision and expects to complete its evaluation within a reasonable period of
time following the publication of additional guidance by the U.S. Treasury
Department and IRS. A specific range of income tax effects of these
repatriations has not been determined; however, the Company does not expect a
significant impact due to the structure of its international operations as well
as the substantial amount of repatriations to the U.S. in prior years.

                                      -69-

10.   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 preserved 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 did 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. 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. At that time, the IRS disallowed in full the
Company's additional claim that it is entitled to the entire $52 million of FET
the Company 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 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 had
paid on five-ton trucks.

The Company, by letter dated August 2, 2004, received formal notice that the
Government had accepted a settlement proposal submitted by the Company. Income
of $12.5 million from the settlement was recognized by the Company in the third
quarter of 2004. This income was recorded as Income related to discontinued
defense business on the Company's Consolidated Statement of Income. The Company
received the Government's refund of $12.5 million in December 2004.

As a result of developments during the third and fourth quarters of 2003 and
during 2004, the Company 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 years ended December 31,
2004 and 2003.

The Company has estimated administrative costs to close-out this matter of
approximately $0.2 million. Formal dismissal of the case occurred on January 31,
2005.

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 December 31, 2004 and 2003 include accruals of
$2.7 million and $3.3 million, respectively, for environmental matters. The
amounts charged against pre-tax income related to environmental matters totaled
$2.1 million, $1.4 million and $1.2 million in 2004, 2003 and 2002,
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. In August 2004, NJDEP amended its reassessment of $146,000 and revised
the proposed penalty to

                                      -70-

$325,400. The amended order has been appealed. Discussions continue between the
parties to resolve this matter. 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's net pre-petition receivable
balance with the customer as of September 30, 2004 was approximately $5.5
million. In the fourth quarter of 2004, the Company collected substantially all
of the outstanding receivable balance via a non-recourse sale to a third party.

ROYALTY EXPENSE DISPUTE
The Company is involved in a royalty expense dispute with Canada Revenue Agency
(CRA). The CRA is proposing to disallow certain royalty expense deductions
claimed by the Company's Canadian subsidiary on its 1994-1998 tax returns. As of
December 31, 2004, the maximum assessment from the CRA for the period 1994-1998
is approximately $9 million including tax and interest. The Company has filed an
administrative appeal and will vigorously contest the disallowance.

The Company currently anticipates that some portion of the assessment may be
paid in this royalty expense dispute. However, the Company intends to utilize
competent authority proceedings in the U.S. to recover a portion of any required
tax payment amount. The Company believes that any amount not recovered through
these proceedings has been fully reserved as of December 31, 2004 and, therefore
will not have a material adverse affect on the Company's future results of
operations.

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.

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.

As of December 31, 2004, there are approximately 33,862 pending asbestos
personal injury claims filed against the Company. Approximately 26,510 of these
cases were pending in the New York Supreme Court for New York County in New York
State and approximately 7,069 of the cases were pending in state courts of
various counties in Mississippi. The other claims totaling approximately 283 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 December 31, 2004, the Company has obtained dismissal by stipulation, or
summary judgment prior to trial, in all cases that have proceeded to trial. To
date, the Company has been dismissed from 7,950 cases.

                                      -71-

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
the New York Supreme Court for New York County and in Mississippi state courts
after 2002. On December 19, 2002, the New York Supreme Court responsible for
managing all asbestos cases pending within New York County 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 September 30, 2004, the Company was listed as a defendant in
approximately 245 pending cases in the New York Supreme Court for New York
County that have been designated as Active or "In Extremis" and assigned to
trial groups. To date, the Company has been dismissed as a defendant prior to
trial in all New York cases that have proceeded to trial. The number of these
dismissals is currently approximately 1,150.

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.

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.


11.   CAPITAL STOCK

The authorized capital stock consists of 150,000,000 shares of common stock and
4,000,000 shares of preferred stock, both having a par value of $1.25 per share.
The preferred stock is issuable in series with terms as fixed by the Board of
Directors. None of the preferred stock has been issued. On June 24, 1997, the
Company adopted a revised Shareholder Rights Plan. Under the new Plan, the Board
declared a dividend to stockholders of record on September 28, 1997, of one
right for each share of common stock. The rights may only be exercised if, among
other things, a person or group has acquired 15% or more, or intends to commence
a tender offer for 20% or more, of the Company's common stock. Each right
entitles the holder to purchase 1/100th share of a new Harsco Junior
Participating Cumulative Preferred Stock at an exercise price of $150. Once the
rights become exercisable, if any person acquires 20% or more of the Company's
common stock, the holder of a right will be entitled to receive common stock
calculated to have a value of two times the exercise price of the right. The
rights, which expire on September 28, 2007, do not have voting power, and may be
redeemed by the Company at a price of $.05 per right at any time until the 10th
business day following public announcement that a person or group has
accumulated 15% or more of the Company's common stock. At December 31, 2004,
750,000 shares of $1.25 par value preferred stock were reserved for issuance
upon exercise of the rights.

The Board of Directors has authorized the repurchase of shares of common stock
as follows:

           NO. OF SHARES                      ADDITIONAL        REMAINING NO. OF
           AUTHORIZED TO   NO. OF SHARES   SHARES AUTHORIZED   SHARES AUTHORIZED
           BE PURCHASED      PURCHASED        FOR PURCHASE       FOR PURCHASE
- -------------------------------------------------------------------------------
2002           499,154           --                --                499,154
2003           499,154           --             500,846            1,000,000
2004         1,000,000           --                --              1,000,000
===============================================================================

On June 24, 2003, the Board of Directors increased the share repurchase
authorization to 1,000,000 shares. In November 2004, the Board of Directors
extended the share purchase authorization through January 31, 2006 for the
1,000,000 shares still remaining from the June 2003 authorization.

                                      -72-

In 2004, 2003 and 2002, additional issuances of 11,195 shares, 3,633 shares and
5,174 shares, respectively, were made for SGB stock option exercises and
employee service awards.

The following chart summarizes the Company's common stock:

BALANCES OUTSTANDING    SHARES ISSUED     TREASURY SHARES    OUTSTANDING SHARES
- -------------------------------------------------------------------------------
December 31, 2002         67,034,010         26,494,610          40,539,400
December 31, 2003         67,357,447         26,490,977          40,866,470
DECEMBER 31, 2004         67,911,031         26,479,782          41,431,249
===============================================================================

The following is a reconciliation of the average shares of common stock used to
compute basic earnings per common share to the shares used to compute diluted
earnings per common share as shown on the Consolidated Statements of Income:


(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)       2004       2003       2002
- --------------------------------------------------------------------------------

Income from continuing operations                 $113,540   $ 86,999   $ 88,410
================================================================================
Average shares of common stock outstanding
used to compute basic earnings per common share     41,129     40,690     40,360

Dilutive effect of stock options and restricted
stock units                                            469        283        320
- --------------------------------------------------------------------------------
Shares used to compute dilutive effect of
stock options                                       41,598     40,973     40,680
================================================================================
Basic earnings per common share from
continuing operations                             $   2.76   $   2.14   $   2.19
================================================================================
Diluted earnings per common share from
continuing operations                             $   2.73   $   2.12   $   2.17
================================================================================

All outstanding stock options were included in the computation of diluted
earnings per share at December 31, 2004. Options to purchase 32,000 shares and
1,369,954 shares were outstanding at December 31, 2003 and 2002, respectively,
but were not included in the computation of diluted earnings per share because
the effect was antidilutive.


12.   STOCK-BASED COMPENSATION

In 2004, the Company's stockholders approved an amendment to the 1995
Non-Employee Directors' Stock Plan whereby non-employee directors are granted
restricted stock or restricted stock units instead of stock options. In 2004,
3,500 restricted stock units with a fair value of $43.42 per unit were granted
to the non-employee directors. Each non-employee director was granted 500
restricted stock units vesting after one year. The restricted stock units
require no payment from the recipient and compensation cost is measured based on
the market price on the grant date and is recorded over the vesting period.
Restricted stock units issued to non-employee directors will be exchanged for a
like number of shares of Company stock following termination of the
participant's service as a director. As issued, restricted stock units do not
have an option for cash payout. Compensation expense related to the restricted
stock unit awards totaled $0.1 million in 2004.

In 2004, the Company's stockholders approved a proposal to amend the 1995
Executive Incentive Compensation Plan in order to meet new requirements of the
New York Stock Exchange and to comply with tax law changes. During 2004, no
stock options or restricted stock units were granted to officers or employees.
In 2004, the Management Development and Compensation Committee of the Board of
Directors approved the granting of restricted stock units as the long-term
equity component of officer compensation. In the first quarter of 2005, the
Company issued 32,700 performance-based restricted stock units with a fair value
of $50.41 per unit to certain officers of the Company. Restricted stock units
granted to officers vest after three years of continuous employment. After the
restricted stock units vest, they will be exchanged for a like number of shares
of Company stock. These restricted stock units are not redeemable for cash.

                                      -73-


No stock options were granted during 2004. During 2003, stock options were only
granted to non-employee directors. The fair value of stock options granted
during 2003 and 2002 was estimated on the date of grant using the binomial
option pricing model. The Company discloses the pro forma effect of accounting
for stock options under the fair value method in Note 1, "Summary of Significant
Accounting Policies." The weighted-average assumptions used and the estimated
fair value are as follows:

                                                           STOCK OPTIONS
                                                           -------------
                                                         2003         2002
     -------------------------------------------------------------------------
     Expected term                                    7.5 years      5 years
     Expected stock volatility                            32.7%        35.2%
     Risk-free interest rate                              3.46%        4.24%
     Dividend                                         $    1.05     $   1.00
     Rate of dividend increase                            4.63%        3.25%
     Fair value                                       $    9.70     $   9.48
     -------------------------------------------------------------------------

Prior to 2003, the Company had granted stock options to officers, certain key
employees and directors for the purchase of its common stock under two
stockholder-approved plans. The 1995 Executive Incentive Compensation Plan
authorizes the issuance of up to 4,000,000 shares of the Company's common stock
for use in paying incentive compensation awards in the form of stock options or
other equity awards such as restricted stock, restricted stock units, or stock
appreciation rights. The 1995 Non-Employee Directors' Stock Plan authorizes the
issuance of up to 300,000 shares of the Company's common stock for equity
awards.

Options were granted at fair market value on the date of grant. Options issued
in 2002 under the 1995 Executive Incentive Compensation Plan generally vest and
become exercisable commencing two years following the date of grant. Options
issued under the 1995 Non-Employee Directors' Stock Plan become exercisable
commencing one year following the date of grant but vest immediately. The
options under both Plans expire ten years from the date of grant. Upon
stockholder approval of these two plans in 1995, the Company terminated the use
of the 1986 Stock Option Plan for granting of stock option awards. At December
31, 2004, there were 1,312,281 and 162,500 shares available for granting equity
awards under the 1995 Executive Incentive Compensation Plan and the 1995
Non-Employee Directors' Stock Plan, respectively.

                                      -74-


Changes during 2004, 2003 and 2002 in stock options outstanding were as follows:

                                                 SHARES        WEIGHTED AVERAGE
                                              UNDER OPTION      EXERCISE PRICE
     ---------------------------------------------------------------------------

     Outstanding, January 1, 2002                 2,135,815          $28.31
     Granted                                        614,237           32.93
     Exercised                                     (552,101)          25.38
     Terminated and expired                         (74,838)          33.09
     ---------------------------------------------------------------------------

     Outstanding, December 31, 2002               2,123,113           30.30
     Granted                                         16,000(a)        33.92
     Exercised                                     (325,480)          27.15
     Terminated and expired                        (118,553)          33.76
     ---------------------------------------------------------------------------

     Outstanding, December 31, 2003               1,695,080           30.72
     Granted                                              -            -
     Exercised                                     (564,529)          30.02
     Terminated and expired                          (9,450)          40.25
     ---------------------------------------------------------------------------

     OUTSTANDING, DECEMBER 31, 2004               1,121,101(b)       $31.01
     ===========================================================================

     (a)   During 2003, options were only granted to non-employee directors.

     (b)   Included in options outstanding at December 31, 2004 were 5,107
           options granted to SGB key employees as part of the Company's
           acquisition of SGB in 2000. These options are not a part of the 1995
           Executive Compensation Plan, or the 1995 Non-Employee Directors'
           Stock Plan.

Options to purchase 1,098,831 shares, 1,187,938 shares and 1,536,411 shares were
exercisable at December 31, 2004, 2003 and 2002, respectively. The following
table summarizes information concerning outstanding and exercisable options at
December 31, 2004.


                             OPTIONS OUTSTANDING                      OPTIONS EXERCISABLE
                 ---------------------------------------------    ---------------------------
    RANGE OF                      REMAINING        WEIGHTED                       WEIGHTED
  EXERCISABLE       NUMBER    CONTRACTUAL LIFE     AVERAGE           NUMBER       AVERAGE
    PRICES       OUTSTANDING      IN YEARS      EXERCISE PRICE    EXERCISABLE  EXERCISE PRICE
- ---------------------------------------------------------------------------------------------
                                                                   
$23.81 - $29.00    470,487           5.5            $26.88           457,777       $26.89
 29.31 -  32.65    395,320           6.4             32.25           394,120        32.25
 32.81 -  46.16    255,294           3.5             36.69           246,934        36.73
- ---------------------------------------------------------------------------------------------
                 1,121,101                                         1,098,831
=============================================================================================


13. FINANCIAL INSTRUMENTS

OFF-BALANCE SHEET RISK
As collateral for the Company's performance and to insurers, the Company is
contingently liable under standby letters of credit, bonds and bank guarantees
in the amount of $239.1 million and $216.3 million at December 31, 2004 and
2003, respectively. These standby letters of credit, bonds and bank guarantees
are generally in force for up to four years. Certain issues have no scheduled
expiration date. The Company pays fees to various banks and insurance companies
that range from 0.08 to 1.85 percent per annum of their face value. If the
Company were required to obtain replacement standby letters of credit, bonds and
bank guarantees as of December 31, 2004 for those currently outstanding, it is
the Company's opinion that the replacement costs would not vary significantly
from the present fee structure.

The Company has currency exposures in over 40 countries. The Company's primary
foreign currency exposures during 2004 were in the United Kingdom, European
Economic and Monetary Union countries, South Africa and Australia.

                                      -75-


OFF-BALANCE SHEET RISK - THIRD PARTY GUARANTEES
In connection with the licensing of one of the Company's trade names and
providing certain management services (the furnishing of selected employees),
the Company guarantees the debt of certain third parties related to its
international operations. These guarantees are provided to enable the third
parties to obtain financing of their operations. The Company receives fees from
these operations, which are included as Services sales in the Company's
Consolidated Statements of Income. The revenue the Company recorded from these
entities was $1.0 million, $1.5 million and $1.9 million for the twelve months
ended December 31, 2004, 2003 and 2002, respectively. The guarantees are renewed
on an annual basis and the Company would only be required to perform under the
guarantee if the third parties default on their debt. The maximum potential
amount of future payments (undiscounted) related to these guarantees was $2.9
million at December 31, 2004 and 2003. There is no recognition of this potential
future payment in the accompanying financial statements as the Company believes
the potential for making these payments is remote. These guarantees were renewed
in June 2004, September 2004 and November 2004.

The Company provided an environmental indemnification for property that was sold
to a third party in 2004. The term of this guarantee is seven years and the
Company would only be required to perform under the guarantee if an
environmental matter is discovered on the property relating to the time the
Company owned the property and was not known by the buyer at the date of sale.
The Company is not aware of any environmental issues related to this property.
The maximum potential amount of future payments (undiscounted) related to this
guarantee is $0.8 million at December 31, 2004. There is no recognition of this
potential future payment in the accompanying financial statements as the Company
believes the potential for making this payment is remote.

Every three years, the Company requires a third party to review procedures and
record keeping related to the production of certain products. Commencing in
2004, the Company provided an indemnification for any costs incurred by the
third party resulting from an injury while these services are being provided to
the Company. In addition, the Company provided an indemnification for certain
costs resulting from an outside claim against the third party. The
indemnification is provided for as long as the Company is producing products
which meet the third party's specifications. At December 31, 2004, the maximum
potential amount of future payments (undiscounted) related to this guarantee is
$3.0 million per claim. This amount represents the Company's self-insured
maximum limitation. There is no specific recognition of this potential future
payment in the accompanying financial statements as the Company believes the
potential for any claims is remote.

Liabilities for the fair value of each of the guarantee instruments noted above
were recognized in accordance with FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" (FIN 45) which the Company adopted January
1, 2003. These liabilities are included in Other current liabilities or Other
liabilities (as appropriate) on the Consolidated Balance Sheets. The recognition
of these liabilities did not have a material impact on the Company's financial
condition or results of operations for the twelve months ended December 31, 2004
or 2003.

In the normal course of business, the Company provides legal indemnifications
related primarily to the performance of its products and services and patent and
trademark infringement of its goods and services sold. These indemnifications
generally relate to the performance (regarding function, not price) of the
respective goods or services and therefore no liability is recognized related to
the fair value of such guarantees.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company has several hedges of net investment recorded in accordance with
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"
(SFAS 133). The Company recorded a debit of $8.5 million and $17.1 million
during 2004 and 2003, respectively, in the foreign currency translation
adjustments line of Other comprehensive income (expense) related to hedges of
net investments.

At December 31, 2004 and 2003, the Company had $93.7 million and $78.4 million
contracted amounts, respectively, of foreign currency forward exchange contracts
outstanding. These contracts are part of a worldwide program to minimize foreign
currency exchange operating income and balance sheet exposure. The unsecured
contracts mature within six months and are with major financial institutions.
The Company may be exposed to credit loss in the event of non-performance by the
other parties to the contracts. The Company evaluates the credit worthiness of
the counterparties' financial condition and does not expect default by the
counterparties. Foreign currency forward exchange contracts are used to hedge
commitments, such as foreign currency debt, firm purchase commitments and
foreign currency cash flows for certain export sales transactions.

The following tables summarize by major currency the contractual amounts of the
Company's forward exchange contracts in U.S. dollars as of December 31, 2004 and
2003. The "Buy" amounts represent the U.S. dollar equivalent of commitments to
purchase foreign currencies, and the "Sell" amounts represent the U.S. dollar
equivalent of commitments to sell foreign currencies.

                                      -76-


   FORWARD EXCHANGE CONTRACTS
   -----------------------------------------------------------------------------
   (IN THOUSANDS)                       AS OF DECEMBER 31, 2004
   -----------------------------------------------------------------------------
                                  U.S. DOLLAR                        RECOGNIZED
                            TYPE   EQUIVALENT        MATURITY        GAIN (LOSS)
   -----------------------------------------------------------------------------
   Euros                    Buy    $  33,210   Through February 2005   $  368
   Euros                    Sell      40,779       January 2005          (968)
   British pounds sterling  Buy        7,287       January 2005          (195)
   Canadian Dollars         Buy        7,210       January 2005           178
   Canadian Dollars         Sell       3,149       January 2005           (73)
   Australian Dollars       Buy          433       January 2005            14
   Australian Dollars       Sell       1,629    Through April 2005        (29)
   -----------------------------------------------------------------------------
            Total                  $  93,697                           $ (705)
   =============================================================================

At December 31, 2004, the Company held forward exchange contracts in British
pounds sterling, euros, Canadian dollars and Australian dollars which were used
to offset certain future payments between the Company and its various
subsidiaries or vendors. These contracts all mature by April 2005. The Company
had an outstanding forward contract designated as a SFAS 133 cash flow hedge in
the amount of $587 thousand at December 31, 2004. This forward contract had an
unrealized gain of $67 thousand that was included in Other comprehensive income
(expense) net of deferred taxes at December 31, 2004. The Company did not elect
to treat the remaining contracts as hedges under SFAS 133 and so mark-to-market
gains and losses were recognized in net income.

   FORWARD EXCHANGE CONTRACTS
   -----------------------------------------------------------------------------
   (IN THOUSANDS)                       AS OF DECEMBER 31, 2003
   -----------------------------------------------------------------------------
                                  U.S. DOLLAR                        RECOGNIZED
                            TYPE   EQUIVALENT        MATURITY        GAIN (LOSS)
   -----------------------------------------------------------------------------
   Euros                    Sell   $  44,186     By February 2004      $ (270)
   Euros                    Buy       27,008     By February 2004         227
   British pounds sterling  Buy        6,139     By February 2004         119
   British pounds sterling  Sell       1,082     By February 2004         (48)
   -----------------------------------------------------------------------------
            Total                  $  78,415                           $   28
   =============================================================================

At December 31, 2003, the Company held forward exchange contracts in British
pounds sterling and euros which were used to offset certain future payments
between the Company and its various subsidiaries or vendors. These contracts all
matured by February 2004. The Company had outstanding forward contracts
designated as SFAS 133 cash flow hedges in the amount of $1.6 million at
December 31, 2003. These forward contracts had a net unrealized loss of $47
thousand that was included in Other comprehensive income (expense) net of
deferred taxes at December 31, 2003. The Company did not elect to treat the
remaining contracts as hedges under SFAS 133 and so mark-to-market gains and
losses were recognized in net income.

CONCENTRATIONS OF CREDIT RISK
Financial instruments, which potentially subject the Company to concentrations
of credit risk, consist principally of cash and cash equivalents, investments
and accounts receivable. The Company places its cash and cash equivalents with
high quality financial institutions and, by policy, limits the amount of credit
exposure to any one institution. Concentrations of credit risk with respect to
accounts receivable are generally limited due to the Company's large number of
customers and their dispersion across different industries and geographies.
However, the Company's Mill Services Segment has several large customers
throughout the world with significant accounts receivable balances. If a
receivable from one or more of those customers became uncollectible, it could
have a material effect on the Company's results of operations. The Company
generally does not require collateral or other security to support customer
receivables.

FAIR VALUE OF FINANCIAL INSTRUMENTS
The major methods and assumptions used in estimating the fair values of
financial instruments are as follows:

     CASH AND CASH EQUIVALENTS
     The carrying amount approximates fair value due to the relatively short
     period to maturity of these instruments.

     FOREIGN CURRENCY FORWARD EXCHANGE CONTRACTS
     The fair value of foreign currency forward exchange contracts is estimated
     by obtaining quotes from brokers.

                                      -77-


     LONG-TERM DEBT
     The fair value of the Company's long-term debt is estimated based on the
     quoted market prices for the same or similar issues or on the current rates
     offered to the Company for debt of the same remaining maturities.


The carrying amounts and estimated fair values of the Company's financial
instruments as of December 31, 2004 and 2003 are as follows:

   (IN THOUSANDS)                          2004                    2003
   -----------------------------------------------------------------------------
                                  CARRYING      FAIR       CARRYING     FAIR
                                   AMOUNT       VALUE       AMOUNT      VALUE
   -----------------------------------------------------------------------------
   Assets:
      Cash and cash equivalents  $  94,093    $  94,093   $  80,210   $  80,210
      Foreign currency forward
        exchange contracts             --           --           28          28
   Liabilities:
      Long-term debt including
        current maturities       $ 609,664    $ 651,456   $ 598,677   $ 633,190
      Foreign currency forward
        exchange contracts             705          705         --          --
   -----------------------------------------------------------------------------

14. INFORMATION BY SEGMENT AND GEOGRAPHIC AREA

The Company reports information about its operating segments using the
"management approach" in accordance with SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information" (SFAS 131). This approach is
based on the way management organizes and reports the segments within the
enterprise for making operating decisions and assessing performance. The
Company's reportable segments are identified based upon differences in products,
services and markets served. There were no significant inter-segment sales.

The Company's Divisions are aggregated into three reportable segments and an
"all other" category labeled Engineered Products and Services. Due to management
changes, effective January 1, 2004, the air-cooled heat exchangers business was
reclassified from the Gas and Fluid Control Segment to the Other Infrastructure
Products and Services ("all other") Category. In June 2004, the Company
announced a new identity for its Gas and Fluid Control Segment and renamed it
Gas Technologies. Additionally, the Other Infrastructure Products and Services
("all other") Category was renamed the Engineered Products and Services ("all
other") Category. These segments and the types of products and services offered
include the following:

MILL SERVICES SEGMENT
This segment provides mill services, principally for the global steel industry.
Mill services include slag processing, marketing and disposal; metal
reclamation; slab management systems; materials handling; scrap management
programs; in-plant transportation; and a variety of other services. Similar
services are provided to non-ferrous metallurgical industries, such as aluminum,
nickel and copper.

ACCESS SERVICES SEGMENT
Major products and services include the rental and sales of scaffolding, powered
access equipment, shoring and concrete forming products as well as erection and
dismantling services and a variety of other access equipment services.

Products and services are provided to the oil, chemical and petrochemical
industries; commercial and industrial construction firms; public utilities;
industrial plants; and infrastructure repair and maintenance markets.

GAS TECHNOLOGIES
Major products and services are gas containment cylinders and tanks; cryogenic
equipment; and valves, regulators and gauges for high pressure and liquid
propane gas equipment, refrigeration, specialty, scuba and life support
equipment.

Major customers include various industrial markets; petrochemical sectors;
propane, compressed gas, life support, scuba and refrigerant gas industries; gas
equipment companies; automotive industry; welding distributors; medical
laboratories; beverage carbonation users; and the animal husbandry industry.

                                      -78-


ENGINEERED PRODUCTS AND SERVICES ("ALL OTHER") CATEGORY
Major products and services include granules for asphalt roofing shingles and
slag abrasives for industrial surface preparation derived from coal slag;
railway track maintenance equipment and services; industrial grating; boilers
and water heaters; air-cooled heat exchangers; and process equipment, including
industrial blenders, dryers and mixers.

Major customers include asphalt roofing manufacturers; private and
government-owned railroads worldwide; urban mass transit operators; and
industrial plants. Other customers include the chemical, food processing and
pharmaceutical industries; natural gas and process industries; and the
institutional building and retrofit markets.

OTHER INFORMATION
The measurement basis of segment profit or loss is operating income. Sales of
the Company in the United States and the United Kingdom exceeded 10% of
consolidated sales with 42% and 21%, respectively, in 2004; 43% and 21%,
respectively, in 2003; and 46% and 21%, respectively, in 2002. No single
customer represented 10% or more of the Company's sales during 2004, 2003 or
2002. However, the Mill Services Segment is dependent largely on the global
steel industry and has two European based customers that each provided in excess
of 10% of this segment's revenues for the years 2002 to 2004 under multiple
long-term contracts at several mill sites. The loss of any one of the contracts
would not have a material adverse effect upon the Company's financial position
or cash flows; however, it could have a material effect on quarterly or annual
results of operations. There are no significant inter-segment sales.

Corporate assets include principally cash, prepaid pension costs and United
States deferred taxes. Assets in the United Kingdom represent 25% of total
assets excluding corporate assets as of December 31, 2004 and 2003, and are
disclosed separately in the geographic area information.


                               SEGMENT INFORMATION

                                                                 TWELVE MONTHS ENDED
                                        ---------------------------------------------------------------------
                                          DECEMBER 31, 2004      DECEMBER 31, 2003(a)    DECEMBER 31, 2002(a)

                                                    OPERATING               OPERATING               OPERATING
   (IN MILLIONS)                         SALES(b)   INCOME(c)    SALES(b)   INCOME(c)    SALES(b)   INCOME(c)
   ----------------------------------------------------------------------------------------------------------
                                                                                   
   Mill Services Segment                $   997.4    $ 105.5    $   827.5    $  85.9    $   696.8    $  73.5

   Access Services Segment                  706.5       44.4        619.1       37.4        587.9       41.7

   Gas Technologies Segment                 339.1       14.4        294.0       14.5        307.9       22.0
   ----------------------------------------------------------------------------------------------------------

   Segment Totals                         2,043.0      164.3      1,740.6      137.8      1,592.6      137.2

   Engineered Products and Services
     ("all other") Category                 459.1       47.0        377.9       36.5        384.1       38.6

   General Corporate                          -         (1.5)         -         (0.4)         -          0.2
   ----------------------------------------------------------------------------------------------------------

   Consolidated Totals                  $ 2,502.1    $ 209.8    $ 2,118.5    $ 173.9    $ 1,976.7    $ 176.0
   ==========================================================================================================


(a)  Segment information for 2003 and 2002 has been reclassified to conform with
     the current presentation.
(b)  Sales from continuing operations to unaffiliated customers.
(c)  Operating income (loss) from continuing operations.

                                      -79-


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

                                                    TWELVE MONTHS ENDED
                                           -------------------------------------
                                           DECEMBER 31  DECEMBER 31  DECEMBER 31
(IN MILLIONS)                                  2004       2003(a)      2002(a)
- --------------------------------------------------------------------------------

Segment operating income                    $  164.3     $  137.8     $  137.2

Engineered Products and Services
   ("all other") Category                       47.0         36.5         38.6

General Corporate Income (Expense)              (1.5)        (0.4)         0.2
- --------------------------------------------------------------------------------

Operating income from continuing
  operations                                   209.8        173.9        176.0

Equity in income of unconsolidated
  entities, net                                  0.1          0.3          0.3

Interest Income                                  2.3          2.2          3.7

Interest Expense                               (41.0)       (40.5)       (43.3)

- --------------------------------------------------------------------------------
Income from continuing operations before
  income taxes and minority interest        $  171.2     $  135.9     $  136.7
================================================================================

(a)  Segment information for 2003 and 2002 has been reclassified to conform with
     the current presentation.


                          SEGMENT INFORMATION

                                                                                   DEPRECIATION AND
                                                 ASSETS(a)                          AMORTIZATION(b)
                                  --------------------------------------------------------------------------
(IN MILLIONS)                        2004         2003(c)       2002(c)       2004       2003(c)     2002(c)
- ------------------------------------------------------------------------------------------------------------
                                                                                  
Mill Services Segment             $   985.6     $   898.0     $   766.8     $ 107.7     $  96.9     $  86.2

Access Services Segment               763.9         696.2         685.4        48.0        41.7        37.4

Gas Technologies Segment              257.2         239.5         238.4        12.7        13.0        13.9
- ------------------------------------------------------------------------------------------------------------
Segment Totals                      2,006.7       1,833.7       1,690.6       168.4       151.6       137.5

Engineered Products and Services
  ("all other") Category              274.6         215.7         226.2        14.7        15.9        16.9

Corporate                             108.5          88.6          82.5         1.3         1.4         1.3
- ------------------------------------------------------------------------------------------------------------
     Total                        $ 2,389.8     $ 2,138.0     $ 1,999.3     $ 184.4     $ 168.9     $ 155.7
============================================================================================================


(a)  Assets from discontinued operations of $0.5 million, $1.0 million and $1.3
     million in 2004, 2003 and 2002, respectively, are included in the Gas
     Technologies Segment.
(b)  Depreciation and amortization from discontinued operations of $0.5 million
     in 2002 are included in the Gas Technologies Segment.
(c)  Segment information for 2003 and 2002 has been reclassified to conform with
     the current presentation.

                                      -80-



                                           CAPITAL EXPENDITURES(a)
- -----------------------------------------------------------------------

(IN MILLIONS)                         2004        2003(b)      2002(b)
- -----------------------------------------------------------------------
                                    $ 120.9      $  88.1      $  62.5
Mill Services Segment

Access Services Segment                50.4         41.2         34.3

Gas Technologies Segment                8.9          7.8          8.3
- -----------------------------------------------------------------------
Segment Totals                        180.2        137.1        105.1

Engineered Products and Services
  ("all other") Category               22.6          6.3          8.8

Corporate                               1.4          0.4          0.4
- -----------------------------------------------------------------------
      Total                         $ 204.2      $ 143.8      $ 114.3
=======================================================================

(a)  Capital Expenditures from discontinued operations of $0.6 million in 2002
     are included in the Gas Technologies Segment.
(b)  Segment information for 2003 and 2002 has been reclassified to conform with
     the current presentation.


                        INFORMATION BY GEOGRAPHIC AREA(a)

GEOGRAPHIC AREA      SALES TO UNAFFILIATED CUSTOMERS                  ASSETS
                    ---------------------------------   ---------------------------------
(IN MILLIONS)          2004        2003        2002        2004        2003        2002
- -----------------------------------------------------------------------------------------
                                                              
United States       $ 1,047.4   $   902.4   $   903.2   $   721.8   $   650.0   $   648.4
United Kingdom          534.1       453.4       405.7       578.9       506.6       477.7
All Other               920.6       762.7       667.8       980.6       892.8       790.7
- -----------------------------------------------------------------------------------------

Totals excluding
 Corporate          $ 2,502.1   $ 2,118.5   $ 1,976.7   $ 2,281.3   $ 2,049.4   $ 1,916.8
=========================================================================================


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


                     INFORMATION ABOUT PRODUCTS AND SERVICES

                                           ----------------------------------
PRODUCT GROUP                                SALES TO UNAFFILIATED CUSTOMERS
                                           ----------------------------------
(IN MILLIONS)                                 2004        2003        2002
- -----------------------------------------------------------------------------

Mill services                              $   997.4   $   827.5   $   696.8
Access services                                706.5       619.1       587.9
Industrial gas products                        339.1       293.9       307.8
Railway track maintenance services and
  equipment                                    209.8       173.1       157.2
Industrial grating products                     85.6        66.2        86.0
Industrial abrasives and roofing granules       70.9        68.9        68.7
Heat exchangers                                 60.1        41.2        42.8
Powder processing equipment and heat
  transfer products                             32.7        28.6        28.5
Medical waste disposal (divested in 2002)        --          --          1.0
- -----------------------------------------------------------------------------
Consolidated Sales                         $ 2,502.1   $ 2,118.5   $ 1,976.7
=============================================================================

                                      -81-


15. OTHER (INCOME) AND EXPENSES

In the years 2004, 2003 and 2002, the Company recorded pre-tax Other (income)
and expenses from continuing operations of $4.9 million, $7.0 million and $3.5
million, respectively. The major components of this income statement category
are as follows:

                                         OTHER (INCOME) AND EXPENSES
                                      ----------------------------------
 (IN THOUSANDS)                          2004       2003       2002
- ------------------------------------------------------------------------

Net gains                              $(1,524)   $(3,543)   $(7,091)

Impaired asset write-downs                 484        168        204

Employee termination benefit costs       3,892      6,064      7,140

Costs to exit activities                   975      2,725      1,934

Other expense                            1,035      1,541      1,286
- ------------------------------------------------------------------------

Total                                  $ 4,862    $ 6,955    $ 3,473
========================================================================

NET GAINS
Net gains are recorded from the sales of redundant properties (primarily land,
buildings and related equipment) and non-core assets. In 2004, this included
$1.1 million in the Access Services Segment and $0.4 million in the Mill
Services Segment.

In 2003, this included $2.5 million in the Access Services Segment and $0.7
million in the Mill Services Segment.

In 2002, net gains included $2.2 million in the Access Services Segment as well
as $1.9 million for assets of a product line in the Engineered Products and
Services ("all other") Category. A $2.7 million net gain was also realized from
the sale of an equity investment which was part of the Mill Services Segment.

Cash proceeds associated with these gains are included in Proceeds from the sale
of assets in the investing activities section of the Consolidated Statements of
Cash Flows.

IMPAIRED ASSET WRITE-DOWNS
Impairment losses are measured as the amount by which the carrying amount of
assets exceeded their estimated fair value. Fair value is estimated based upon
the expected future realizable cash flows including anticipated selling prices.

Non-cash impaired asset write-downs are included in Other, net in the
Consolidated Statements of Cash Flows as adjustments to reconcile net income to
net cash provided by operating activities.

EMPLOYEE TERMINATION BENEFIT COSTS
The Company adopted SFAS No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities," (SFAS 146) on January 1, 2003. This standard addresses
involuntary termination costs associated with one-time benefit arrangements
provided as part of an exit or disposal activity. These costs and the related
liabilities are recognized by the Company when a formal plan for reorganization
is approved at the appropriate level of management and communicated to the
affected employees. Additionally, costs associated with on-going benefit
arrangements, or in certain countries where statutory requirements dictate a
minimum required benefit, are recognized when they are probable and estimable,
in accordance with existing guidance in SFAS No. 112, "Employers' Accounting for
Postemployment Benefits," (SFAS 112).

                                      -82-


The total amount of employee termination benefit costs incurred for the years
2004, 2003 and 2002 was as follows. None of the actions are expected to incur
any additional costs.

- -----------------------------------------------------------------------
                                     EMPLOYEE TERMINATION BENEFIT COSTS
                                     ----------------------------------
(IN THOUSANDS)                          2004        2003        2002
- -----------------------------------------------------------------------

Mill Services Segment                 $ 1,338     $ 3,101     $ 3,591

Access Services Segment                 1,504       1,778       1,722

Gas Technologies Segment(a)               229         174         247

Engineered Products and Services
  ("all other") Category(a)               685         749       1,475

Corporate                                 136         262         105
- -----------------------------------------------------------------------

Total                                 $ 3,892     $ 6,064     $ 7,140
=======================================================================

(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-cooled heat exchangers business, which was previously
     classified in the Gas Technologies Segment, is classified in the Engineered
     Products and Services ("all other") category.

The terminations for the years 2002 to 2004 occurred principally in Europe and
the United States.

The following table summarizes employee termination benefit costs and payments
(associated with continuing operations) related to reorganization actions
initiated prior to January 1, 2005:

                                      ORIGINAL REORGANIZATION ACTION PERIOD

(IN THOUSANDS)                        2004       2003       2002      2001
- -----------------------------------------------------------------------------
Employee termination benefits
  expense                           $ 3,892    $ 6,064    $ 7,140   $ 10,135
- -----------------------------------------------------------------------------
Payments:
     In 2001                            --         --         --      (6,142)
     In 2002                            --         --      (4,438)    (1,997)
     In 2003                            --      (3,838)    (2,627)    (2,215)
     In 2004                         (2,178)    (1,859)       (52)       (33)
- -----------------------------------------------------------------------------
Total payments:                      (2,178)    (5,697)    (7,117)   (10,387)
Other:                                   33         87         42        252
- -----------------------------------------------------------------------------
Remaining payments as of
  December 31, 2004                 $ 1,747    $   454    $    65   $    --
=============================================================================

The payments for employee termination benefit costs are reflected as uses of
operating cash in the Consolidated Statements of Cash Flows.

COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES
Costs associated with exit or disposal activities are recognized in accordance
with SFAS 146 and are included as a component of Other expenses in the Company's
Consolidated Statements of Income. SFAS 146 addresses involuntary termination
costs (as discussed above) and other costs associated with exit or disposal
activities (exit costs). Costs to terminate a contract that is not a capital
lease are recognized when an entity terminates the contract or when an entity
ceases using the right conveyed by the contract. This includes the costs to
terminate the contract before the end of its term or the costs that will
continue to be incurred under the contract for its remaining term without
economic benefit to the entity (lease run-out costs). Other costs associated
with exit or disposal activities (e.g., costs to consolidate or close facilities
and relocate equipment or employees) are recognized and measured at their fair
value in the period in which the liability is incurred. In 2004, $1.0 million of
exit costs were incurred. These were principally relocation costs and lease
run-out costs for mainly the Mill Services and Access Services Segments.

In 2003 and 2002, exit costs incurred were $2.7 million and $1.9 million,
respectively. These were principally lease run-out costs, lease termination
costs and relocation costs for mainly the Mill Services and Access Services
Segments.

                                      -83-


TWO-YEAR SUMMARY OF QUARTERLY RESULTS
(UNAUDITED)

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)                    2004
                                          --------------------------------------
QUARTERLY                                   FIRST    SECOND    THIRD     FOURTH
- --------------------------------------------------------------------------------
     Sales                                $ 556.3   $ 617.6   $ 617.3   $ 710.9
     Gross profit (a)                       127.3     149.7     146.5     162.1
     Net income                              16.9      30.7      38.6      35.0
     Basic earnings per share                0.41      0.75      0.94      0.85
     Diluted earnings per share              0.41      0.74      0.93      0.84
================================================================================


(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)                    2003
                                          --------------------------------------
QUARTERLY                                   FIRST    SECOND    THIRD     FOURTH
- --------------------------------------------------------------------------------
     Sales                                $ 487.9   $ 536.4   $ 530.2   $ 564.0
     Gross profit (a)                       112.2     132.6     130.2     139.1
     Net income                              12.5      25.6      28.5      25.6
     Basic earnings per share                0.31      0.63      0.70      0.63
     Diluted earnings per share              0.31      0.63      0.69      0.62
================================================================================

(a)  Gross profit is defined as Sales less costs and expenses associated
     directly with or allocated to products sold or services rendered.


COMMON STOCK PRICE AND DIVIDEND INFORMATION
(UNAUDITED)
                                         MARKET PRICE PER SHARE       DIVIDENDS
                                         ----------------------       DECLARED
                                            HIGH         LOW          PER SHARE
- --------------------------------------------------------------------------------
2004
First Quarter                             $  48.78    $  43.00        $  0.2750
Second Quarter                               47.00       40.10           0.2750
Third Quarter                                47.35       41.87           0.2750
Fourth Quarter                               56.24       44.55           0.3000

2003
First Quarter                             $  32.60    $  27.50        $  0.2625
Second Quarter                               36.88       30.30           0.2625
Third Quarter                                39.49       35.14           0.2625
Fourth Quarter                               44.39       37.06           0.2750
================================================================================

                                      -84-


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURES

     None.


ITEM 9A. 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 December 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.

Management's Report on Internal Controls Over Financial Reporting is included in
Part II, Item 8, "Financial Statements and Supplementary Data." Management's
assessment of the effectiveness of the Company's internal control over financial
reporting as of December 31, 2004 has been audited by PricewaterhouseCoopers
LLP, an independent registered public accounting firm, as stated in their report
appearing in Part II, Item 8, "Financial Statements and Supplementary Data,"
which expresses unqualified opinions on management's assessment and on the
effectiveness of the Company's internal control over financial reporting as of
December 31, 2004.



ITEM 9B. OTHER INFORMATION

10b5-1 Plan
- -----------

The Chief Executive Officer (CEO) of the Company adopted in the Fourth Quarter
of 2004, a personal trading plan, as part of a long-term strategy for asset
diversification and liquidity, in accordance with the Securities and Exchange
Commission's Rule 10b5-1. Under the plan, the CEO will exercise, under
pre-arranged terms, up to 167,500 options in open market transactions. The
167,500 options represent approximately 38% of his total option holdings at the
time the trading plan was initiated. The trading plan will expire in December
2005. As of March 10, 2005, 75,500 shares have been sold under the trading plan.

The Chief Financial Officer (CFO) of the Company adopted in the Third Quarter of
2004, a personal trading plan, as part of a long-term strategy for asset
diversification and liquidity, in accordance with the Securities and Exchange
Commission's Rule 10b5-1. Under the plan, the CFO will exercise, under
pre-arranged terms, up to 40,000 options in open market transactions, some of
which are set to expire within the next year. The 40,000 options represented
approximately 30% of his total option holdings at the time the trading plan was
initiated. The trading plan expired in February 2005. As of the expiration of
the trading plan, all 40,000 shares had been sold.

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

                                      -85-


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding executive officers required by this Item is set forth as a
Supplementary Item at the end of Part I hereof (pursuant to Instruction 3 to
Item 401(b) of Regulation S-K). Other information required by this Item is
incorporated by reference to the sections entitled "Director Information,"
"Report of the Audit Committee" and "Section 16(a) Beneficial Ownership
Reporting Compliance" of the 2005 Proxy Statement.

The Company's Code of Ethics for the Chief Executive Officer and Senior
Financial Officers (the "Code") may be found on the Company's internet website,
www.harsco.com. The Company intends to disclose on the website any amendments to
the Code or any waiver from a provision of the Code. The Code is available in
print to any stockholder who requests it.


ITEM 11. EXECUTIVE COMPENSATION

Information regarding compensation of executive officers and directors is
incorporated by reference to the sections entitled "Management Development and
Compensation Committee Report on Executive Compensation"; "Executive
Compensation and Other Information"; "Stock Options"; "Options Exercises and
Holdings"; "Stock Performance Graph"; "Retirement Plans"; "Employment Agreements
with Officers of the Company"; and "Directors' Compensation" of the 2005 Proxy
Statement.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information regarding security ownership of certain beneficial owners and
management is incorporated by reference to the sections entitled "Share
Ownership of Certain Beneficial Owners" and "Share Ownership of Management" of
the 2005 Proxy Statement.

EQUITY COMPENSATION PLAN INFORMATION
The Company maintains the 1995 Executive Incentive Compensation Plan and the
1995 Non-Employee Directors' Stock Plan, which allow the Company to grant equity
awards to eligible persons. Upon stockholder approval of these two plans in
1995, the Company terminated the use of the 1986 Stock Option Plan for granting
stock option awards.

The Company also assumed options under the SGB Group Plc Discretionary Share
Option Plan 1997 (the "SGB Plan") upon the Company's acquisition of SGB Group
Plc ("SGB") in 2000. At the time of the acquisition, various employees of the
U.K.-based SGB held previously granted stock options under the SGB Plan. Harsco
authorized the issuance of Harsco common stock to fulfill these SGB Plan stock
options upon exercise from time to time. Harsco has not made any additional
stock option grants under the SGB Plan since the acquisition and will not make
any further grants in the future.

                                      -86-


The following table gives information about equity awards under these plans as
of December 31, 2004. All securities referred to are shares of Harsco common
stock.


                                     EQUITY COMPENSATION PLAN INFORMATION
- --------------------------------------------------------------------------------------------------------------
                                     Column(a)                   Column(b)                   Column(c)
                                                                                       Number of securities
                                                                                      remaining available for
                            Number of securities to be   Weighted-average exercise     future issuance under
                              issued upon exercise of      price of outstanding      equity compensation plans
                                outstanding options,       options, warrants and       (excluding securities
Plan category                   warrants and rights               rights               reflected in column(a))
- --------------------------------------------------------------------------------------------------------------
                                                                                    
Equity compensation plans
 approved by security holders(1)      1,115,994                   $30.97                      1,474,781

Equity compensation plans not
 approved by security holders             5,107(2)                $40.14(3)                         --
- --------------------------------------------------------------------------------------------------------------
Total                                 1,121,101                   $31.01                      1,474,781
==============================================================================================================


(1)  Plans include the 1995 Executive Incentive Compensation Plan, as amended,
     and the 1995 Non-Employee Directors' Stock Plan, as amended.
(2)  Represents the shares of Harsco common stock issuable as replacement option
     shares in satisfaction of the exercise of stock options granted by SGB
     under the SGB Plan as described below. This plan is not a material equity
     compensation plan of the Company.
(3)  These stock options denominate the exercise price in British pounds
     sterling. The price shown is translated into U. S. dollars at an exchange
     rate of $1.9185 effective December 31, 2004.

Description of the Equity Compensation Plan Not Approved by Security Holders
- ----------------------------------------------------------------------------

The SGB Group Plc Discretionary Share Option Plan 1997

Upon the acquisition of SGB in June 2000, the Company authorized the assumption
of outstanding options granted under the SGB Plan and the issuance of options
("Harsco Replacement Options") exercisable for shares of Harsco common stock in
exchange for options granted by SGB pursuant to the SGB Plan and exercisable for
shares of SGB common stock ("SGB Options"). On June 30, 2000, the Company
commenced an offer ("Option Exchange Offer") to the holders of SGB Options for
an equivalent Harsco Replacement Option. Upon completion of the Option Exchange
Offer, each SGB Option exercisable for one SGB share was exchanged for a Harsco
Replacement Option exercisable for a fraction, equal to 0.1362, of one share of
Harsco common stock. The Company has authorized the issuance of Harsco common
stock from treasury or from authorized but unissued shares as necessary to
fulfill the terms of the Harsco Replacement Options. The maximum number of
shares of Harsco common stock that were issuable upon exercise of the Harsco
Replacement Options was 61,097. Only those SGB participants who accepted the
Option Exchange Offer and received Harsco Replacement Options were eligible to
continue participation in the SGB Plan. SGB Options were granted under the Plan
on five different dates prior to the acquisition. The exercise prices of the
Harsco Replacement Options varied depending on the original SGB Option date of
grant and ranged from 11.45 British pounds sterling to 20.92 British pounds
sterling. All Harsco Replacement Options currently outstanding have an exercise
price of 20.92 British pounds sterling. The options are exercisable during the
period commencing on the third anniversary of the date the original SGB Options
were granted and ending on the day before the tenth anniversary of the date the
SGB Options were granted. If a participant ceases to be an Eligible Employee (as
defined under the Plan), the participant's Harsco Replacement Options will
lapse, except in the event that the participant ceases to be an Eligible
Employee due to death or injury, disability, redundancy or retirement.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information regarding certain relationships and related transactions is
incorporated by reference to the section entitled "Employment Agreements with
Officers of the Company" of the 2005 Proxy Statement.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information regarding principal accounting fees and services is incorporated by
reference to the section entitled "Fees Billed by the Accountants for Audit and
Non-Audit Services" of the 2005 Proxy Statement.

                                      -87-


                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

     (a)  1.   The Consolidated Financial Statements are listed in the index to
               Item 8, "Financial Statements and Supplementary Data," on page
               42.

     (a)  2.   The following financial statement schedule should be read in
               conjunction with the Consolidated Financial Statements (see Item
               8, "Financial Statements and Supplementary Data"):

                                                                       Page
                                                                       ----
                  Report of Independent Registered Public
                      Accounting Firm                                   43

                  Schedule II - Valuation and Qualifying
                    Accounts for the years 2004, 2003 and 2002          89

          Schedules other than the schedule listed above are omitted for the
          reason that they are either not applicable or not required or because
          the information required is contained in the financial statements or
          notes thereto.

          Condensed financial information of the registrant is omitted since
          there are no substantial amounts of "restricted net assets" applicable
          to the Company's consolidated subsidiaries.

          Financial statements of 50% or less owned unconsolidated companies are
          not submitted inasmuch as (1) the registrant's investment in and
          advances to such companies do not exceed 20% of the total consolidated
          assets, (2) the registrant's proportionate share of the total assets
          of such companies does not exceed 20% of the total consolidated
          assets, and (3) the registrant's equity in the income from continuing
          operations before income taxes of such companies does not exceed 20%
          of the total consolidated income from continuing operations before
          income taxes.

                                      -88-


                 SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
                              CONTINUING OPERATIONS
                             (DOLLARS IN THOUSANDS)

                                                                COLUMN C
                 COLUMN A                        COLUMN B      Additions      COLUMN D (Deductions) Additions        COLUMN E
                 --------                        --------      ---------      -------------------------------        --------
                                                Balance at     Charged to    Due to Currency
                                               Beginning of     Cost and       Translation                          Balance at
Description                                       Period        Expenses       Adjustments           Other(a)      End of Period
- -----------                                       ------        --------       -----------           --------      -------------
                                                                                                     
FOR THE YEAR 2004:

  Deducted from receivables:
    Uncollectible accounts                       $ 24,612       $  5,048         $   863           $ (11,428)(b)     $ 19,095
                                                   ======         ======            ====             ========          ======

  Deducted from inventories:
    Inventory valuations                         $  5,950       $  2,849         $   343           $  (4,084)        $  5,058
                                                   ======         ======            ====             ========          ======

  Other reorganization and valuation reserves    $  6,692       $  4,811         $   283           $  (6,547)        $  5,239
                                                   ======         ======            ====             ========          ======

FOR THE YEAR 2003:

  Deducted from receivables:
    Uncollectible accounts                       $ 36,483       $  3,389         $ 1,609           $ (16,869)(c)     $ 24,612
                                                   ======         ======           =====             ========          ======

  Deducted from inventories:
    Inventory valuations                         $  4,541       $  2,775         $   535           $  (1,901)        $  5,950
                                                   ======         ======            ====             ========          ======

  Other reorganization and valuation reserves    $  8,373       $  7,409         $   643           $  (9,733)        $  6,692
                                                   ======         ======            ====             ========          ======

FOR THE YEAR 2002:

  Deducted from receivables:
    Uncollectible accounts                       $ 32,495       $  6,913         $ 1,655           $  (4,580)        $ 36,483
                                                   ======         ======           =====             ========          ======

  Deducted from inventories:
    Inventory valuations                         $  5,487       $  2,514         $   467           $  (3,927)        $  4,541
                                                   ======         ======            ====             ========          ======

  Other reorganization and valuation reserves    $ 19,559       $  7,709         $   764           $ (19,659)(d)     $  8,373
                                                   ======         ======            ====             ========          ======


(a)  Includes principally the use of previously reserved amounts.
(b)  Includes $5,322 for the write-off of six accounts receivable in the Mill
     Services Segment as well as the write-off of other accounts receivable for
     all segments.
(c)  Includes $6,276 for the write-off of two accounts receivable in the Mill
     Services Segment as well as the write-off of other accounts receivable for
     all segments.
(d)  Includes the use of previously reserved Bio-Oxidation balance of $10,377.

                                      -89-


(a) 3. Listing of Exhibits Filed with Form 10-K


EXHIBIT
NUMBER                            DATA REQUIRED                                                    LOCATION IN 10-K
- ------                            -------------                                                    ----------------
                                                                                  
3(a)           Articles of Incorporation as amended April 24, 1990                      Exhibit volume, 1990 10-K

3(b)           Certificate of Amendment of Articles of Incorporation filed              Exhibit volume, 1999 10-K
               June 3, 1997

3(c)           Certificate of Designation filed September 25, 1997                      Exhibit volume, 1997 10-K

3(d)           By-laws as amended April 25, 1990                                        Exhibit volume, 1990 10-K

4(a)           Harsco Corporation Rights Agreement dated as of September                Incorporated by reference to Form 8-A,
               28, 1997, with Chase Mellon Shareholder Services L.L.C.                  filed September 26, 1997

4(b)           Registration of Preferred Stock Purchase Rights                          Incorporated by reference to Form 8-A dated
                                                                                        October 2, 1987

4(c)           Current Report on dividend distribution of Preferred Stock               Incorporated by reference to Form 8-K dated
               Purchase Rights                                                          October 13, 1987

4(f)           Debt and Equity Securities Registered                                    Incorporated by reference to Form S-3,
                                                                                        Registration No. 33-56885 dated December 15,
                                                                                        1994, effective date January 12, 1995

4(g)           Harsco Finance B. V. (pound)200 million, 7.25% Guaranteed                Exhibit to 10-Q for the period ended
               Notes due 2010                                                           September 30, 2000

4(h)(i)        Indenture, dated as of May 1, 1985, by and between Harsco                Exhibit to Form 8-K dated September 8, 2003
               Corporation and The Chase Manhattan Bank (National Association),
               as trustee (incorporated herein by reference to Exhibit 4(d)
               to the Registration Statement on Form S-3, filed by Harsco
               Corporation on August 23, 1991 (Reg. No. 33-42389))

4(h)(ii)       First Supplemental Indenture, dated as of April 12, 1995, by             Exhibit to Form 8-K dated September 8, 2003
               and among Harsco Corporation, The Chase Manhattan Bank (National
               Association), as resigning trustee, and Chemical Bank, as
               successor trustee

4(h)(iii)      Form of Second Supplemental Indenture, by and between Harsco             Exhibit to Form 8-K dated September 8, 2003
               Corporation and JPMorgan Chase Bank, as Trustee

4(h)(iv)       Second Supplemental Indenture, dated as of September 12, 2003,           Exhibit to 10-Q for the period ended
               by and between Harsco Corporation and J.P. Morgan Chase Bank,            September 30, 2003
               as Trustee

                                      -90-



EXHIBIT
NUMBER                            DATA REQUIRED                                                    LOCATION IN 10-K
- ------                            -------------                                                    ----------------
                                                                                  
4(i)(i)        Form of 5.125% Global Senior Note due September 15, 2013                 Exhibit to Form 8-K dated September 8, 2003

4(i)(ii)       5.125% 2003 Notes due September 15, 2013 described in                    Incorporated by reference to the Prospectus
               Prospectus Supplement dated September 8, 2003 to Form S-3                Supplement dated September 8, 2003 to Form
               Registration under Rule 415 dated December 15, 1994                      S-3, Registration No. 33-56885 dated
                                                                                        December 15, 1994

             MATERIAL CONTRACTS - CREDIT AND UNDERWRITING AGREEMENTS

10(a) (i)      $50,000,000 Facility agreement dated December 15, 2000                   Exhibit volume, 2000 10-K

10(a) (ii)     Agreement extending term of $50,000,000 Facility agreement               Exhibit volume, 2001 10-K
               dated December 15, 2000

10(a) (iii)    Agreement amending term and amount of $50,000,000 Facility               Exhibit volume, 2002 10-K
               agreement dated December 15, 2000

10(a) (iv)     Agreement extending term of $50,000,000 Facility agreement               Exhibit volume, 2003 10-K
               dated December 15, 2000

10(a) (v)      Agreement extending term of $50,000,000 Facility agreement               Exhibit to Form 8-K dated January 25, 2005
               dated December 15, 2000

10(b)          Commercial Paper Dealer Agreement dated September 24, 2003,              Exhibit volume, 2003 10-K
               between ING Belgium SA/NV and Harsco Finance B.V.

10(c)          Commercial Paper Payment Agency Agreement Dated October 1, 2000,         Exhibit volume, 2000 10-K
               Between Salomon Smith Barney Inc. and Harsco Corporation

10(e)          Issuing and Paying Agency Agreement, Dated October 12, 1994,             Exhibit volume, 1994 10-K
               Between Morgan Guaranty  Trust Company of New York and Harsco
               Corporation

10(g)          Three Year Credit Agreement                                              Exhibit to Form 8-K dated August 12, 2004

10(i)          Commercial Paper Dealer Agreement dated June 7, 2001, between            Exhibit to 10-Q for the period ended
               Citibank International plc, National Westminster Bank plc, The           June 30, 2001
               Royal Bank of Scotland plc and Harsco Finance B.V.

10(j)          Commercial Paper Placement Agency Agreement dated November 6,            Exhibit volume, 1998 10-K
               1998, between Chase Securities, Inc. and Harsco Corporation

                                      -91-



EXHIBIT
NUMBER                            DATA REQUIRED                                                    LOCATION IN 10-K
- ------                            -------------                                                    ----------------
                                                                                  
10(w)          Commercial Paper Placement Agency Agreement dated April 12,              Exhibit volume, 2002 10-K
               2002, between Credit Suisse First Boston Corp. and Harsco
               Corporation


        MATERIAL CONTRACTS - MANAGEMENT CONTRACTS AND COMPENSATORY PLANS

10(k)          Harsco Corporation Supplemental Retirement Benefit Plan as               Exhibit volume, 2002 10-K
               amended October 4, 2002

10(l)          Trust Agreement between Harsco Corporation and Dauphin Deposit           Exhibit volume, 1987 10-K
               Bank and Trust Company dated July 1, 1987 relating to the
               Supplemental Retirement Benefit Plan

10(m)          Harsco Corporation Supplemental Executive Retirement Plan as             Exhibit volume, 1991 10-K
               amended

10(n)          Trust Agreement between Harsco Corporation and Dauphin Deposit           Exhibit volume, 1988 10-K
               Bank and Trust Company dated November 22, 1988 relating to the
               Supplemental Executive Retirement Plan

10(o)          Harsco Corporation 1995 Executive Incentive Compensation Plan As         Proxy Statement dated March 23, 2004 on
               Amended and Restated                                                     Exhibit B pages B-1 through B-15

10(p)          Authorization, Terms and Conditions of the Annual Incentive              Exhibit volume, 2001 10-K
               Awards, as amended and Restated November 15, 2001, under the
               1995 Executive Incentive Compensation Plan

10(u)          Harsco Corporation Deferred Compensation Plan for Non-Employee           Exhibit volume, 2002 10-K
               Directors, as amended and restated November 19, 2002

10(v)          Harsco Corporation 1995 Non-Employee Directors' Stock Plan As            Proxy Statement dated March 23, 2004 on
                Amended and Restated at January 27, 2004                                Exhibit A pages A-1 through A-9

10(x)          Settlement and Consulting Agreement                                      Exhibit to 10-Q for the period ended March
                                                                                        31, 2003

10(y)          Restricted Stock Units Agreement                                         Exhibit to Form 8-K dated January 24, 2005

                                      -92-



EXHIBIT
NUMBER                            DATA REQUIRED                                                    LOCATION IN 10-K
- ------                            -------------                                                    ----------------
                                                                                  
            EMPLOYMENT AGREEMENTS -

10(q)          D. C. Hathaway                                                           Exhibit volume, 1989 10-K Uniform agreement,
                                                                                        the same as shown for J. J. Burdge

   "           G. D. H. Butler                                                                  "                   "

   "           S. D. Fazzolari                                                                  "                   "

10(r)          Special Supplemental Retirement Benefit Agreement for D. C.              Exhibit Volume, 1988 10-K
               Hathaway



            DIRECTOR INDEMNITY AGREEMENTS -

10(t)          A. J. Sordoni, III                                                       Exhibit volume, 1989 10-K Uniform agreement,
                                                                                        same as shown for J. J. Burdge

   "           R. C. Wilburn                                                                    "                   "

   "           J. I. Scheiner                                                                   "                   "

   "           C. F. Scanlan                                                                    "                   "

   "           J. J. Jasinowski                                                                 "                   "

   "           J. P. Viviano                                                                    "                   "

   "           D. H. Pierce                                                                     "                   "

   "           K. G. Eddy                                                               Exhibit to Form 8-K dated August 27, 2004










                                      -93-


EXHIBIT
NUMBER                            DATA REQUIRED                                                    LOCATION IN 10-K
- ------                            -------------                                                    ----------------
                                                                                  
12             Computation of Ratio of Earnings to Fixed Charges                        Exhibit volume, 2004 10-K

21             Subsidiaries of the Registrant                                           Exhibit volume, 2004 10-K

23             Consent of Independent Accountants                                       Exhibit volume, 2004 10-K

31(a)          Certification Pursuant to Rule 13a-14(a) and 15d-14(a) as Adopted        Exhibit volume, 2004 10-K
               Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31(b)          Certification Pursuant to Rule 13a-14(a) and 15d-14(a) as Adopted        Exhibit volume, 2004 10-K
               Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32(a)          Certification Pursuant to 18 U.S.C. Section 1350, as Adopted             Exhibit volume, 2004 10-K
               Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32(b)          Certification Pursuant to 18 U.S.C. Section 1350, as Adopted             Exhibit volume, 2004 10-K
               Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


Exhibits other than those listed above are omitted for the reason that they are
either not applicable or not material.

The foregoing Exhibits are available from the Secretary of the Company upon
receipt of a fee of $10 to cover the Company's reasonable cost of providing
copies of such Exhibits.















                                      -94-


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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

Date   3-10-05                         By /S/ Salvatore D. Fazzolari
     ------------                         ---------------------------------
                                          Salvatore D. Fazzolari
                                          Senior Vice President, Chief Financial
                                          Officer and Treasurer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacity and on the dates indicated.

SIGNATURE                        CAPACITY                                DATE

/S/ Derek C. Hathaway            Chairman, President and Chief           3-10-05
- ---------------------------      Executive Officer                       -------
(Derek C. Hathaway)

/S/ Geoffrey D. H. Butler        Senior Vice President - Operations      3-10-05
- ---------------------------      and Director                            -------
(Geoffrey D. H. Butler)

/S/ Salvatore D. Fazzolari       Senior Vice President, Chief            3-10-05
- ---------------------------      Financial Officer, Treasurer and        -------
(Salvatore D. Fazzolari)         Director (Principal Financial
                                 Officer)


/S/ Stephen J. Schnoor           Vice President and Controller           3-10-05
- ---------------------------      (Principal Accounting Officer)          -------
(Stephen J. Schnoor)

/S/ Kathy G. Eddy                Director                                3-10-05
- ---------------------------                                              -------
(Kathy G. Eddy)

/S/ Jerry J. Jasinowski          Director                                3-10-05
- ---------------------------                                              -------
(Jerry J. Jasinowski)

/S/ D. Howard Pierce             Director                                3-10-05
- ---------------------------                                              -------
(D. Howard Pierce)

/S/ Carolyn F. Scanlan           Director                                3-10-05
- ---------------------------                                              -------
(Carolyn F. Scanlan)

/S/ James I. Scheiner            Director                                3-10-05
- ---------------------------                                              -------
(James I. Scheiner)

/S/ Andrew J. Sordoni III        Director                                3-10-05
- ---------------------------                                              -------
(Andrew J. Sordoni III)

/S/ Joseph P. Viviano            Director                                3-10-05
- ---------------------------                                              -------
(Joseph P. Viviano)

/S/ Dr. Robert C. Wilburn        Director                                3-10-05
- ---------------------------                                              -------
(Dr. Robert C. Wilburn)

                                      -95-