Harsco Corporation Reports Fourth Quarter 2012 Results Company Records $265 Million Non-Cash Goodwill Impairment Charge Related to Infrastructure Segment Adjusted Operating Income Increases 5 Percent CAMP HILL, Pa., Feb. 14, 2013 (GLOBE NEWSWIRE) -- Diversified global industrial company Harsco Corporation (NYSE:HSC) today reported fourth quarter 2012 results. Including a $3.29 per share non-cash goodwill impairment charge, fourth quarter 2012 U.S. GAAP ("GAAP") diluted loss per share from continuing operations was $3.27, compared with a loss of $1.14 in the fourth quarter of 2011. Excluding special items, adjusted diluted earnings per share from continuing operations were $0.30 in the fourth quarter of 2012, compared with $0.36 in the fourth quarter of 2011. (See Table 1 for a description of the special items and a reconciliation of GAAP and adjusted results). CEO Comment "We are encouraged that, despite further deterioration in the metals markets in the quarter, we grew adjusted operating income 5 percent and delivered adjusted earnings per share at the mid-point of our guidance," said Harsco President and CEO Patrick Decker. "As we move forward, we expect to see continued volatility in our end markets and certain geographies. As a result, we will heighten our focus on the elements of our business we can control. Improving cash flow and cash returns through disciplined capital allocation and increased operational efficiency will remain a key priority." Consolidated Fourth Quarter Operating Results Total revenues were $766 million in the fourth quarter of 2012, compared with $793 million in the prior-year quarter. During the past year the Company took several actions to increase long-term returns and invest capital more effectively. Two of these were exiting underperforming contracts in Metals & Minerals and, as part of the previously announced restructuring plan, ceasing underperforming operations in certain countries in Infrastructure, which together accounted for nearly $30 million of the year-over-year revenue decline. This revenue performance also reflects an acceleration of equipment deliveries per customers' schedules in Rail, which was partially offset by lower volume in the metals and commercial construction markets. Foreign currency translation negatively impacted revenues by $8 million in the quarter. Including a $265 million, non-cash goodwill impairment charge, GAAP operating loss from continuing operations was $247 million in the fourth quarter of 2012. This compares with a loss of $57 million in the prior-year quarter. Excluding special items, adjusted operating income from continuing operations increased 5 percent to $46 million in the quarter. Adjusted operating income margin increased 50 basis points to 6.1 percent. This performance primarily reflects the timing of equipment deliveries in Rail and benefits from the Company's cost reduction strategies. These factors were partially offset by lower results in Metals & Minerals. Foreign currency translation negatively impacted operating income by $2 million in the quarter. Non-Cash Goodwill Impairment Charge The Company recorded a $265 million, non-cash goodwill impairment charge related to the Infrastructure segment in the fourth quarter of 2012 as part of its annual goodwill impairment testing. While the business has demonstrated improved operating performance in the face of a prolonged market recovery, particularly in Europe, it was determined that a goodwill impairment charge was required at this time. Table 1—Special Items Fourth Quarter Year 2012 2011 2012 2011 GAAP diluted EPS from ($3.27) ($1.14) ($3.15) ($0.12) continuing operations Goodwill impairment (a) 3.29 3.29 Restructuring charges(b) 0.22 1.05 1.06 1.05 Charges to exit Metals 0.07 0.07 contract (c) Gains associated with (0.10) exited countries(d) Non-cash tax charge (e) 0.45 0.45 Former CEO separation 0.04 expense(f) Gains on pension (0.02) curtailment(g) One-time Rail benefit (h) (0.07) Adjusted diluted EPS from $0.30 (i) $0.36 $1.19 $1.31 continuing operations (a)Non-cash goodwill impairment charge in Infrastructure (4Q 2012 $265.0 million pre-tax). (b)Charges resulting from the Company's previously announced restructuring plans in Infrastructure (4Q 2012 $16.9 million pre-tax; 12 Months 2012 $88.6 million pre-tax; 4Q 2011 and 12 Months 2011 $87.6 million pre‑tax) and Metals & Minerals (4Q 2012 $4.0 million pre-tax; 12 Months 2012 $5.5 million pre-tax; 4Q and 12Months 2011 $12.8 million pre-tax). (c)Charges as a result of exiting an underperforming contract in Metals & Minerals (4Q 2012 $7.6 million pre-tax). (d)Non-cash gains related to the closure of certain European operations in Infrastructure (12 Months 2012 $10.9million pre-tax). (e)Non-cash tax charge against U.K. deferred tax assets (4Q 2011 $36.8 million after-tax). (f)Separation expense for former CEO (1Q 2012 $4.1 million pre-tax). (g)Pension curtailment gain in Metals & Minerals (1Q 2012 $1.7 million pre-tax). (h)Reduction of estimated costs related to the first phase of Rail's large China order (2Q 2011 $8.0 million pre‑tax). (i)Does not total due to rounding. Consolidated 2012 Results Including the $3.29 per share goodwill impairment charge, GAAP diluted loss per share from continuing operations was $3.15 for the full year 2012, compared with a loss of $0.12 in 2011. Excluding special items, adjusted diluted earnings per share from continuing operations were $1.19 in 2012, compared with $1.31 in 2011, as noted above in Table 1. Total revenues were $3.0 billion in 2012, compared with $3.3 billion in 2011. Exiting underperforming contracts in Metals & Minerals and ceasing operations in certain countries in Infrastructure accounted for $68 million and $61 million, respectively, of the year-over-year revenue decline. Foreign currency translation negatively impacted revenues by $123 million in 2012. This revenue performance also reflects lower volumes due to soft end markets in metals and commercial construction. In Rail, revenues grew 17 percent primarily due to the volume of equipment deliveries under the large order with the China Ministry of Railways, which is now nearing completion. Industrial revenues increased 15percent, driven by strong energy markets early in 2012. Including the $265 million non-cash goodwill impairment charge, GAAP operating loss from continuing operations was $175 million in 2012, compared with operating income from continuing operations of $88 million in 2011. Excluding special items, adjusted operating income from continuing operations increased 2 percent to $184 million in 2012 from $180 million in 2011. Adjusted operating income margin increased 50 basis points to 6.0 percent in 2012. This performance primarily reflects the benefits from the Company's cost reduction strategies and strong results in the Industrial and Rail groups. Foreign currency translation negatively impacted operating income by $10 million in 2012. Fourth Quarter Business Review Harsco Metals & Minerals Revenues were $334 million in the fourth quarter of 2012, compared with $372 million in the prior-year quarter. Exiting certain underperforming contracts accounted for $15 million of the year-over-year revenue decline. This revenue performance also reflects lower volumes due to further softening in theglobal metals industry. Foreign currency translation negatively impacted revenues by $6 million in the quarter. Excluding $4 million in restructuring charges and $8 million in charges as a result of exiting an underperforming contract, Metals & Minerals' adjusted operating income was $18 million in the fourth quarter of 2012. In the prior-year quarter, adjusted operating income was $28 million, which excluded $13 million in restructuring charges. Adjusted operating margin decreased 220 basis points to 5.2percent in the quarter. This performance primarily reflects lower customer steel production. The Company is pleased to have started operations on its 25-year environmental solutions contract with TISCO in the fourth quarter of 2012, as well as recent contract wins in India. These contracts are expected to benefit Metals & Minerals' results in the latter part of 2013. Harsco Infrastructure Revenues were $235 million in the fourth quarter of 2012 compared with $266 million in the prior-year quarter. Ceasing operations in certain countries reduced revenues by $14 million in the quarter. The revenue performance also reflects lower industrial maintenance services activity in North America, reduced equipment sales in Europe and continued softness in the global commercial construction markets. Foreign currency translation negatively impacted revenues by $2 million in the quarter. Excluding the $265 million non-cash goodwill impairment charge and $17 million in restructuring charges, Infrastructure's adjusted operating loss was $3 million in the fourth quarter. In the prior-year quarter, Infrastructure's adjusted operating loss was $12 million, which excluded $88 million in restructuring charges. This performance reflects the benefits from the Company's costreduction strategies, which were partially offset by the negative impact of foreign currency translation. Harsco Rail Revenues grew 57 percent to $113 million in the fourth quarter of 2012 from $72 million in the prior-year quarter. Operating income increased 26 percent to $21 million in the quarter from $17million in the prior-year quarter. Operating margin was 18.4percent in the quarter, compared with 22.9 percent in the prior-year quarter. Rail's performance was driven by the mix and acceleration of equipment deliveries based on customers' schedules, particularly in China as part of its large order with the Ministry of Railways. These gains were partially offset by lower volume for replacement parts and contractservices. Harsco Industrial Revenues were $84 million in the fourth quarter of 2012, up from $82 million in the prior-year quarter. Operating income was $12 million in the quarter, compared with $13 million in the prior-year quarter. Operating margin decreased 100 basis points to 15.0 percent in the quarter. Industrial's fourth quarter performance was impacted by soft demand in the industrial boiler business, which had an unfavorable effect on margins. First Quarter Outlook The first calendar quarter has been historically the Company's lowest EPS quarter of the year. Harsco anticipates the first quarter of 2013 will reflect this normal seasonality, which is driven primarily by lower levels of commercial construction in the winter months. Metals & Minerals' revenues in the first quarter are expected to be approximately 6 to 8 percent lower than the prior-year quarter. This is due to lower expected steel production at certain customers and the carry-over impact of exited contracts, which are not yet fully offset by the start-up of new contracts that the Company has recently won. Despite this expected revenue decline, operating margin is anticipated to be in line with the prior-year quarter due to the Company's cost reduction actions and the growth of higher-return contracts as part of the overall mix. Infrastructure's revenues in the first quarter are expected to be generally in line with the prior-year quarter. The business is expected to deliver a modest year-over-year reduction of adjusted operating loss due to the benefits from prior restructuring actions. Rail's first quarter operating income is expected to decline approximately $9 million in the first quarter from the prior-year quarter. This is principally due to an unfavorable mix of equipment deliveries and the expected shift of certain high-margin equipment deliveries from the first quarter to the second quarter of 2013 driven by customers' delivery schedules. These delayed deliveries represent approximately $4million of operating income. Industrial's revenues and operating margin in the first quarter are expected to be in line with the first quarter of 2012. This outlook reflects similar volume for air-cooled heat exchangers and slightly increased order activity for grating and industrial boilers compared with the first quarter of 2012. The Company expects its effective income tax rate to approximate 30 percent for both the first quarter and the full year 2013.This modest increase from historical levels is due to losses from operations in certain jurisdictions where tax benefits will not be able to be recognized and the geographic mix of income. Going forward, there may be some variability in the reported GAAP tax rate from quarter to quarter depending on the actual geographic mix of earnings. Based on the aforementioned factors, most notably the mix and timing of equipment deliveries in Rail, the Company expects diluted earnings per share from continuing operations to range from $0.00 to $0.05 in the first quarter, excluding special items. The Company reported diluted earnings per share from continuing operations of $0.07, excluding special items, in the first quarter of 2012. Conference Call As previously announced, the Company will hold a conference call today at 10:00a.m. Eastern Time to discuss its results and respond to questions from the investment community. The conference call will be broadcast live through the Harsco Corporation website at www.harsco.com. The Company will refer to a slide presentation that accompanies its formal remarks. The slide presentation will be available on the Company's website. The call can also be accessedby telephone by dialing (800)611-4920, or (973) 200-3957 for international callers. Enter Conference ID number 89419527. Listeners are advised to dial in at least five minutes prior to the call. Replays will be available via the Harsco website. 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 that, among others, could cause future results to differ materially from the results contemplated by forward-looking statements, including the expectations and assumptions expressed or implied herein. Forward-looking statements contained herein could include, among other things, statements about management's confidence in and strategies for performance; expectations for new and existing products, technologies and opportunities; and expectations regarding growth, sales, cash flows, earnings and Economic Value Added ("EVA®"). Forward-looking statements can be identified by the use of such terms as "may," "could," "expect," "anticipate," "intend," "believe," "likely," "estimate," "plan" or other comparable terms. Factors that could cause actual results to differ, perhaps materially, from those implied by forward-looking statements include, but are not limited to: (1) changes in the worldwide business environment in which the Company operates, including general economic conditions; (2) changes in currency exchange rates, interest rates, commodity and fuel costs and capital costs; (3) changes in the performance of stock and bond markets that could affect, among other things, the valuation of the assets in the Company's pension plans and the accounting for pension assets, liabilities and expenses; (4) changes in governmental laws and regulations, including environmental, tax and import tariff standards; (5) market and competitive changes, including pricing pressures, market demand and acceptance for new products, services and technologies; (6) unforeseen business disruptions in one or more of the many countries in which the Company operates due to political instability, civil disobedience, armed hostilities, public health issues or other calamities; (7) the seasonal nature of the Company's business; (8) the Company's ability to successfully enter into new contracts and complete new acquisitions or joint ventures in the timeframe contemplated, or at all; (9) the integration of the Company's strategic acquisitions; (10) the amount and timing of repurchases of the Company's common stock, if any; (11) the prolonged recovery in global financial and credit markets and economic conditions generally, which could result in the Company's customers curtailing development projects, construction, production and capital expenditures, which, in turn, could reduce the demand for the Company's products and services and, accordingly, the Company's revenues, margins and profitability; (12) the outcome of any disputes with customers; (13) the financial condition of the Company's customers, including the ability of customers (especially those that may be highly leveraged and those with inadequate liquidity) to maintain their credit availability; (14) the Company's ability to successfully implement and receive the expected benefits of cost-reduction and restructuring initiatives, including the achievement of expected cost savings in the expected time frame; (15) risk and uncertainty associated with intangible assets; and (16) other risk factors listed from time to time in the Company's SEC reports. A further discussion of these, along with other potential risk factors, can be found in Part I, Item 1A, "Risk Factors," of this Annual Report on 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 except as may be required by law. About Harsco Harsco Corporation serves key industries that play a fundamental role in worldwide economic development, including steel and metals production, construction, railways and energy. Harsco's common stock is a component of the S&P MidCap 400 Index and the Russell 1000 Index. Additional information can be found atwww.harsco.com. The Harsco Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=361 HARSCO CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Twelve Months Ended December 31 December 31 (In thousands, except per 2012 2011 2012 2011 share amounts) Revenues from continuing operations: Service revenues $571,581 $ 640,736 $2,340,996 $2,700,664 Product revenues 194,744 151,994 705,022 602,076 Total revenues 766,325 792,730 3,046,018 3,302,740 Costs and expenses from continuing operations: Cost of services sold 455,005 519,746 1,861,732 2,162,948 Cost of products sold 136,077 101,847 487,784 407,680 Selling, general and 126,686 127,722 503,339 535,679 administrative expenses Research and development 2,231 1,754 9,139 6,044 expenses Goodwill impairment charge 265,038 -- 265,038 -- Other expense 28,425 98,309 93,776 102,740 Total costs and expenses 1,013,462 849,378 3,220,808 3,215,091 Operating income (loss) from (247,137) (56,648) (174,790) 87,649 continuing operations Interest income 671 729 3,676 2,751 Interest expense (11,340) (11,926) (47,381) (48,735) Income (loss) from continuing operations before (257,806) (67,845) (218,495) 41,665 income taxes and equity income Income tax (expense) (6,762) (25,035) (35,251) (49,848) Equity in income of 85 160 564 690 unconsolidated entities, net Loss from continuing (264,483) (92,720) (253,182) (7,493) operations Discontinued operations: Loss on disposal of (626) (598) (1,843) (3,306) discontinued business Income tax benefit related 239 225 924 1,243 to discontinued business Loss from discontinued (387) (373) (919) (2,063) operations Net Loss (264,870) (93,093) (254,101) (9,556) Less: Net (income) loss attributable to 512 625 (511) (1,954) noncontrolling interests Net loss attributable to $(264,358) $(92,468) $(254,612) $(11,510) Harsco Corporation Amounts attributable to Harsco Corporation common stockholders: Loss from continuing $(263,971) $(92,095) $(253,693) $(9,447) operations, net of tax Loss from discontinued (387) (373) (919) (2,063) operations, net of tax Net loss attributable to Harsco Corporation common $(264,358) $(92,468) $(254,612) $(11,510) stockholders Weighted-average shares of 80,659 80,732 80,632 80,736 common stock outstanding Basic loss per common share attributable to Harsco Corporation common stockholders: Continuing operations $(3.27) $(1.14) $(3.15) $(0.12) Discontinued operations -- -- (0.01) (0.03) Basic loss per share attributable to Harsco $(3.28)(a) $(1.15) (a) $(3.16) $(0.14) (a) Corporation common stockholders Diluted weighted-average shares of common stock 80,659 80,732 80,632 80,736 outstanding Diluted loss per common share attributable to Harsco Corporation common stockholders: Continuing operations $(3.27) $(1.14) $(3.15) $(0.12) Discontinued operations -- -- (0.01) (0.03) Diluted loss per share attributable to Harsco $(3.28)(a) $(1.15)(a) $(3.16) $(0.14) (a) Corporation common stockholders (a)Does not total due to rounding. HARSCO CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) December 31 December 31 (In thousands) 2012 2011 ASSETS Current assets: Cash and cash equivalents $95,250 $121,184 Trade accounts receivable, net 600,264 618,475 Other receivables 39,836 44,431 Inventories 236,512 241,934 Other current assets 94,581 133,407 Total current assets 1,066,443 1,159,431 Property, plant and equipment, net 1,266,225 1,274,484 Goodwill 429,198 680,901 Intangible assets, net 77,726 93,501 Other assets 136,377 130,560 Total assets $2,975,969 $3,338,877 LIABILITIES Current liabilities: Short-term borrowings $8,560 $51,414 Current maturities of long-term debt 3,278 3,558 Accounts payable 221,479 252,329 Accrued compensation 94,398 92,603 Income taxes payable 10,109 8,409 Dividends payable 16,520 16,498 Insurance liabilities 19,434 25,075 Advances on contracts 47,696 111,429 Other current liabilities 216,101 220,953 Total current liabilities 637,575 782,268 Long-term debt 957,428 853,800 Deferred income taxes 18,880 27,430 Insurance liabilities 63,248 60,864 Retirement plan liabilities 385,062 343,842 Other liabilities 52,152 50,755 Total liabilities 2,114,345 2,118,959 EQUITY Harsco Corporation stockholders' equity: Common stock 140,080 139,914 Additional paid-in capital 152,645 149,066 Accumulated other comprehensive loss (411,168) (364,191) Retained earnings 1,675,490 1,996,234 Treasury stock (745,205) (744,644) Total Harsco Corporation stockholders' equity 811,842 1,176,379 Noncontrolling interests 49,782 43,539 Total equity 861,624 1,219,918 Total liabilities and equity $2,975,969 $3,338,877 HARSCO CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Twelve Months Ended December 31 (In thousands) 2012 2011 Cash flows from operating activities: Net loss $ (254,101) $(9,556) Adjustments to reconcile loss to net cash provided by operating activities: Depreciation 251,905 276,021 Amortization 20,212 34,420 Deferred income tax expense (benefit) (10,708) 20,826 Equity in income of unconsolidated entities, net (564) (690) Dividends or distributions from unconsolidated 308 226 entities Harsco 2011/2012 Restructuring Program non-cash 31,443 67,320 adjustment Goodwill impairment charge 265,038 -- Other, net (27,098) (7,432) Changes in assets and liabilities, net of acquisitionsand dispositions of businesses: Accounts receivable 22,016 (58,011) Inventories 2,365 7,976 Accounts payable (37,649) (2,713) Accrued interest payable (319) (375) Accrued compensation 517 12,554 Harsco Infrastructure Segment 2010 Restructuring (5,211) (19,629) Program accrual Harsco 2011/2012 Restructuring Program accrual (7,883) 30,471 Other assets and liabilities (51,392) (52,632) Net cash provided by operating activities 198,879 298,776 Cash flows from investing activities: Purchases of property, plant and equipment (265,023) (313,101) Proceeds from sales of assets 49,779 42,653 Purchases of businesses, net of cash acquired (740) (1,938) Other investing activities (3,284) 16,564 Net cash used by investing activities (219,268) (255,822) Cash flows from financing activities: Short-term borrowings, net (43,464) 21,637 Current maturities and long-term debt: Additions 285,850 301,515 Reductions (184,372) (297,854) Cash dividends paid on common stock (66,068) (66,146) Dividends paid to noncontrolling interests (2,605) (4,171) Contributions from noncontrolling interests 8,097 8,851 Common stock issued-options 725 2,403 Common stock acquired for treasury -- (5,788) Other financing activities (2,709) (1) Net cash used by financing activities (4,546) (39,554) Effect of exchange rate changes on cash (999) (6,454) Net decrease in cash and cash equivalents (25,934) (3,054) Cash and cash equivalents at beginning of period 121,184 124,238 Cash and cash equivalents at end of period $95,250 $121,184 HARSCO CORPORATION REVIEW OF OPERATIONS BY SEGMENT (Unaudited) Three Months Ended Three Months Ended December 31, 2012 December 31, 2011 (In thousands) Revenues Operating Revenues Operating Income (Loss) Income (Loss) Harsco Metals & Minerals $334,362 $5,861 $372,298 $14,829 Harsco Infrastructure 235,464 (284,701) 266,073 (99,680) Harsco Rail 112,938 20,807 72,044 16,467 Harsco Industrial 83,561 12,497 82,315 13,188 General Corporate -- (1,601) -- (1,452) Consolidated Totals $766,325 $(247,137) $792,730 $(56,648) Twelve Months Ended Twelve Months Ended December 31, 2012 December 31, 2011 (In thousands) Revenues Operating Revenues Operating Income (Loss) Income (Loss) Harsco Metals & Minerals $1,404,103 $85,523 $1,588,302 $109,593 Harsco Infrastructure 937,293 (368,657) 1,108,293 (125,555) Harsco Rail 352,036 56,079 300,029 58,746 Harsco Industrial 352,586 60,160 306,116 50,656 General Corporate -- (7,895) -- (5,791) Consolidated Totals $3,046,018 $(174,790) $3,302,740 $87,649 HARSCO CORPORATION REVIEW OF OPERATIONS BY SEGMENT EXCLUDING SPECIAL ITEMS (a) (Unaudited) (In thousands) Harsco Harsco Harsco Harsco Consolidated Metals & Infrastructure Rail Industrial Corporate Totals Minerals Three Months Ended December 31, 2012 Revenues, as $334,362 $235,464 $112,938 $83,561 $-- $766,325 reported Operating income (loss) 17,532 (2,755) 20,807 12,497 (1,600) 46,481 excluding special items Operating margin excluding 5.2% -1.2% 18.4% 15.0% 6.1% special items -- % Three Months Ended December 31, 2011 Revenues, as $372,298 $266,073 $72,044 $82,315 $-- $792,730 reported Operating income (loss) 27,604 (12,076) 16,517 13,188 (1,101) 44,132 excluding special items Operating margin excluding 7.4% -4.5% 22.9% 16.0% 5.6% special items -- % Year Ended December 31, 2012 Revenues, $ as 1,404,103 $937,293 $352,036 $352,586 $-- $3,046,018 reported Operating income (loss) 96,925 (25,938) 56,146 60,160 (3,399) 183,894 excluding special items Operating margin excluding 6.9% -2.8% 15.9% 17.1% 6.0% special items -- % Year Ended December 31, 2011 Revenues, $ as 1,588,302 $1,108,293 $300,029 $306,116 $-- $3,302,740 reported Operating income (loss) 122,368 (37,951) 50,830 50,656 (5,440) 180,463 excluding special items Operating margin excluding 7.7% -3.4% 16.9% 16.5% 5.5% special items -- % (a) The Company's management believes operating margin excluding special items, a non-GAAP financial measure, is useful to investors because it provides an overall understanding of the Company's historical and future prospects. Exclusion of special items permits evaluation and comparison of results for the Company's core business operations, and it is on this basis that management internally assesses the Company's performance. HARSCO CORPORATION RECONCILIATION OF OPERATING INCOME (LOSS) BY SEGMENT EXCLUDING SPECIAL ITEMS (a) (Unaudited) (In thousands) Harsco Harsco Harsco Harsco Consolidated Metals & Infrastructure Rail Industrial Corporate Totals Minerals Three Months Ended December 31, 2012 Operating income (loss) $5,861 $ (284,701) $20,807 $12,497 $(1,601) $ (247,137) as reported - 2011/2012 Restructuring 4,026 16,908 -- -- 1 20,935 Program charge - Goodwill impairment charge – -- 265,038 -- -- -- 265,038 Harsco Infrastructure - Charges to exit Harsco Metals & 7,645 -- -- -- -- 7,645 Minerals contract (b) Operating income (loss) $17,532 $(2,755) $20,807 $12,497 $(1,600) $46,481 excluding special items Three Months Ended December 31, 2011 Operating income (loss) $14,829 $(99,680) $16,467 $13,188 $(1,452) $(56,648) as reported - 2011/2012 Restructuring 12,775 87,604 50 -- 351 100,780 Program charge Operating income (loss) $27,604 $(12,076) $16,517 $13,188 $(1,101) $44,132 excluding special items Year Ended December 31, 2012 Operating income (loss) $85,523 $ (368,657) $56,079 $60,160 $(7,895) $ (174,790) as reported - 2011/2012 Restructuring 5,473 88,587 67 -- 371 94,498 Program charge - Goodwill impairment charge – -- 265,038 -- -- -- 265,038 Harsco Infrastructure - Charges to exit Harsco Metals & 7,645 -- -- -- -- 7,645 Minerals contract (b) - Gains associated -- (10,906) -- -- -- (10,906) with exited countries (c) - Former CEO separation -- -- -- -- 4,125 4,125 expense - Gain on pension (1,716) -- -- -- -- (1,716) curtailment Operating income (loss) $96,925 $(25,938) $56,146 $60,160 $(3,399) $183,894 excluding special items Year Ended December 31, 2011 Operating income (loss) $109,593 $ (125,555) $58,746 $50,656 $(5,791) $87,649 as reported - 2011/2012 Restructuring 12,775 87,604 50 -- 351 100,780 Program charge - One-time Rail benefit -- -- (7,966) -- -- (7,966) (d) Operating income (loss) $122,368 $(37,951) $50,830 $50,656 $(5,440) $180,463 excluding special items (a) The Company's management believes operating income excluding special items, a non-GAAP financial measure, is useful to investors because it provides an overall understanding of the Company's historical and future prospects. Exclusion of special items permits evaluation and comparison of results for the Company's core business operations, and it is on this basis that management internally assesses the Company's performance. (b) Charges incurred to exit an underperforming contract in the Metals & Minerals Segment. (c) Gains associated with exited countries are non-cash items recognized when the Company has substantially liquidated its investment in a foreign entity. As part of the 2011/2012 Restructuring Program, Harsco Infrastructure exited several countries and recognized gains. (d) One-time Rail benefit relates to the first phase of Harsco Rail's large order in China with the Ministry of Railways. HARSCO CORPORATION FREE CASH FLOW (a) (Unaudited) Twelve Months Ended December 31 (In thousands) 2012 2011 Net cash provided by operating $198,879 $298,776 activities Plus restructuring cash payments 81,283 22,643 Sub-total 280,162 321,419 Plus total proceeds from sales of 49,779 42,653 assets (b) Less proceeds from sale of assets (18,028) (25,225) under restructuring plans Less maintenance capital expenditures (137,808) (178,261) (c) Less growth capital expenditures (d) (127,215) (134,840) Plus capital expenditures for 12,786 1,245 strategic ventures (e) Free Cash Flow $59,676 $26,991 (a) The Company's management believes that free cash flow, a non-GAAP financial measure, is meaningful to investors because management reviews cash flows generated from operations after taking into consideration the cash impact of net restructuring plan expenditures, proceeds from sales of assets and capital expenditures. It is important to note that free cash flow does not represent the total residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure. (b) Asset sales are a normal part of the business model, primarily for the Harsco Infrastructure and Harsco Metals & Minerals Segments. (c) Maintenance capital expenditures are necessary to sustain the Company's current revenue streams and include contract renewals. (d) Growth capital expenditures, for which management has discretion as to amount, timing and geographic placement, expand the Company's revenue base and create additional future cash flow. (e) Capital expenditures for strategic ventures represent the partner's share of capital expenditures in certain ventures consolidated in the Company's financial statements. CONTACT: Investor Contact Jim Jacobson 717.612.5628 firstname.lastname@example.org Media Contact Kenneth D. Julian 717.730.3683 email@example.com Harsco Corporation Company logo
Harsco Corporation Reports Fourth Quarter 2012 Results
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