UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event) September 27, 1995
__________________
HARSCO CORPORATION
___________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 1-3970 23-1483991
____________________________ ____________ ________________
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification
Number)
350 Poplar Church Road
Camp Hill, Pennsylvania 17001-8888
________________________________________ ________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (717) 763-7064
______________
Item 5. Other Events:
Settlement of Federal Excise Tax Issues with the United States Army and
Department of Justice
The Company, the United States Army, and the United States Department of
Justice have concluded a settlement of Harsco's previously reported claims
against the Army relating to Federal Excise Tax arising under a completed 1986
contract for the sale of five-ton trucks to the Army. On September 27, 1995,
the Army paid Harsco $49 million in accordance with the settlement terms.
Harsco released the Army from any further liability for those claims, and the
Department of Justice released Harsco from a threatened action for damages and
civil penalties based on an investigation conducted by the Department's
Commercial Litigation Branch that has been pending for several years. The
agreement was conditioned upon the Army making the $49 million payment by
September 30, 1995, and thus, the settlement became final on September 27,
1995 when Harsco received the payment.
In addition, Harsco and the Army released each other generally from further
liability under the five-ton truck contract except certain issues excluded
from the scope of the settlement with respect to all parties, including claims
and defenses under the Internal Revenue Code, certain amounts that may be owed
by the Army or Harsco to reconcile possible underpayments or overpayments on
the contract, and responsibilities for future warranty or certain product
liability matters, if any.
The settlement does not resolve the potential for a claim from the Internal
Revenue Service that, contrary to the Company's position, certain cargo truck
models have gross vehicle weights in excess of the 33,000 pound threshold
under the Federal Excise Tax law, and therefore are taxable. As previously
reported, the Internal Revenue Service has tentatively concluded that those
cargo truck models appear to be taxable. If the Internal Revenue Service
asserts that the tax is due on these vehicles, the total claim could be $39
million plus interest and penalty, if any. The Company plans to vigorously
contest any such tax deficiency. The settlement agreement preserves the
Company's right to seek reimbursement of after-imposed tax from the Army in
the event that the Internal Revenue Service finds the cargo trucks to be
taxable, but the agreement limits the reimbursement to a maximum of $21
million.
Under the settlement, the Army agrees that if the cargo trucks are found to be
taxable, the 1993 decision of the Armed Services Board of Contract Appeals
will apply to the question of Harsco's right to reimbursement from the Army
for after-imposed taxes on the cargo trucks, thus in Harsco's view, favorably
resolving the principal issues regarding any such future claim by Harsco.
Therefore, the Company believes that even if Harsco is unsuccessful in
defending against the imposition of the tax on the cargo trucks, the Army
would be obligated to reimburse the Company for a majority of the tax, (but
not interest or any penalty), resulting in a net maximum liability for Harsco
of $18 million plus interest and penalty, if any.
During the performance of the five-ton truck contract, the Company recorded an
account receivable of $62.5 million for its claims against the Army relating
to Federal Excise Tax. As a result of accepting the $49 million in
settlement, Harsco will record a non-recurring, pre-tax, non-cash charge of
$13.5 million (after-tax charge of $8.2 million, $.32 per share), in the third
quarter. Immediately upon receipt of the $49 million payment, the Company
applied $21 million of the settlement to the repayment of short-term
commercial paper. The Company anticipates utilizing the remainder of the cash
for income taxes and other general corporate purposes.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HARSCO CORPORATION
__________________
(Registrant)
Date: October 3, 1995 By: /S/ Paul C. Coppock
______________________________
Paul C. Coppock
Senior Vice President,
Chief Administrative Officer,
General Counsel and Secretary
