UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1995
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-3970
______
HARSCO CORPORATION
__________________
(Exact name of registrant as specified in its charter)
Delaware 23-1483991
_______________________ ____________________________________
(State of incorporation) (I.R.S. Employer Identification No.)
Camp Hill, Pennsylvania 17001-8888
_______________________________________ __________
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number(717) 763-7064
___________________________________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES [ X ] NO
Title of Each Class Outstanding Shares at June 30, 1995
___________________ ___________________________________
Common Stock Par Value $1.25 25,294,485
Preferred Stock Purchase Rights 25,294,485
HARSCO CORPORATION AND SUBSIDIARY COMPANIES
PART I - FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
___________________________
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
(In thousands, except per share amounts) 1995 1994 1995 1994
________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Revenues:
Net sales $377,282 $338,056 $734,161 $656,728
Equity in income of unconsolidated entities 9,206 20,796 27,743 35,824
Gain on sale of investments - - - 5,867
Other revenues 225 247 751 4,348
________________________________________________________________________________________________________________________________
Total revenues 386,713 359,099 762,655 702,767
________________________________________________________________________________________________________________________________
Costs and expenses:
Cost of sales 291,281 265,533 568,178 518,530
Selling, general and administrative expenses 48,783 50,335 98,408 97,995
Research and development 1,200 1,792 2,343 2,723
Facilities discontinuance and reorganization costs 1,182 2,802 2,495 2,819
Other (1,796) (910) (4,380) 124
________________________________________________________________________________________________________________________________
Total costs and expenses 340,650 319,552 667,044 622,191
________________________________________________________________________________________________________________________________
Income before interest, taxes,
and minority interest 46,063 39,547 95,611 80,576
Interest income 1,876 1,375 3,373 2,856
Interest expense (7,510) (8,805) (15,020) (17,135)
________________________________________________________________________________________________________________________________
Income before taxes and minority interest 40,429 32,117 83,964 66,297
Provision for income taxes 15,332 14,036 32,746 28,972
________________________________________________________________________________________________________________________________
Income before minority interest 25,097 18,081 51,218 37,325
Minority interest 538 534 1,199 1,150
________________________________________________________________________________________________________________________________
Net income $24,559 $17,547 $50,019 $36,175
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
Average shares of common stock outstanding 25,270 25,118 25,236 25,065
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
Net income per share $0.97 $0.70 $1.98 $1.44
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
Cash dividends declared per share $0.37 $0.35 $0.74 $0.70
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
</TABLE>
See accompanying notes to consolidated financial statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30 December 31
(In thousands) 1995 1994
_____________________________________________________________________________________________________
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $27,769 $43,550
Receivables 345,230 350,578
Inventories:
Finished goods 31,637 25,641
Work in process 32,325 28,625
Raw material and purchased parts 55,955 53,338
Stores and supplies 15,227 13,595
_____________________________________________________________________________________________________
Total inventories 135,144 121,199
Other current assets 32,128 21,432
_____________________________________________________________________________________________________
Total current assets 540,271 536,759
_____________________________________________________________________________________________________
Property, plant and equipment, at cost 1,049,159 984,930
Allowance for depreciation (594,513) (549,962)
_____________________________________________________________________________________________________
454,646 434,968
_____________________________________________________________________________________________________
Cost in excess of net assets of companies
acquired, net 216,237 213,480
Investments 36,424 43,711
Other assets 85,344 85,731
_____________________________________________________________________________________________________
$1,332,922 $1,314,649
_____________________________________________________________________________________________________
_____________________________________________________________________________________________________
LIABILITIES
Current liabilities:
Notes payable and current maturities $120,787 $25,738
Accounts payable 91,820 92,166
Accrued compensation 35,231 37,837
Income taxes 6,454 10,971
Other current liabilities 124,320 115,709
_____________________________________________________________________________________________________
Total current liabilities 378,612 282,421
Long-term debt 227,605 340,246
Deferred income taxes 28,311 29,217
Other liabilities 76,464 81,543
_____________________________________________________________________________________________________
710,992 733,427
_____________________________________________________________________________________________________
SHAREHOLDERS' EQUITY
Common stock and additional paid-in capital 139,311 134,499
Cumulative adjustments for translation and pension liability (10,659) (16,119)
Retained earnings 685,314 653,996
Treasury stock (192,036) (191,154)
_____________________________________________________________________________________________________
621,930 581,222
_____________________________________________________________________________________________________
$1,332,922 $1,314,649
_____________________________________________________________________________________________________
_____________________________________________________________________________________________________
</TABLE>
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
(In thousands) 1995 1994 <F1> 1995 1994 <F1>
______________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $24,559 $17,547 $50,019 $36,175
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 24,119 23,124 47,229 44,314
Amortization 2,435 2,135 4,973 4,498
Gain on sale of investments - - - (5,867)
Equity in earnings of unconsolidated entities (9,206) (20,887) (27,743) (35,300)
Dividends or distributions from unconsolidated entities 19,224 32,278 22,549 32,278
Other, net 2,697 3,495 (3,182) 1,569
Changes in assets and liabilities, net of acquisition
of a business and formation of a partnership:
Notes and accounts receivables (68) (10,432) 25,645 (14,898)
Inventories 1,016 (7,190) (13,961) (11,216)
Accounts payable (5,146) 12,151 (9,965) 946
Other assets and liabilities (19,835) (18,295) (9,191) (24,376)
______________________________________________________________________________________________________________________________
Net cash provided by operating activities 39,795 33,926 86,373 28,123
______________________________________________________________________________________________________________________________
Cash flows from investing activities:
Expenditures for property, plant and equipment,
net of disposals (30,944) (15,865) (54,076) (31,065)
Purchase of business, net of cash acquired (154) - (3,362) -
Net (Purchases), maturities, and sales of investments (3,067) - (2,067) 7,617
Other investing activities 1,660 - 2,174 (6,943)
______________________________________________________________________________________________________________________________
Net cash (used) by investing activities (32,505) (15,865) (57,331) (30,391)
______________________________________________________________________________________________________________________________
Cash flows from financing activities:
Short-term and long-term debt, net (87) (6,975) (3,429) (20,545)
Current maturities and long-term debt
Additions 27,586 53,351 42,695 87,765
Reductions (33,771) (50,839) (69,223) (54,160)
Cash dividends paid on common stock (9,340) (8,790) (18,659) (17,531)
Common stock issued-options 2,344 2,063 3,930 5,678
Other Financing Activities (19) 215 (240) 215
______________________________________________________________________________________________________________________________
Net cash provided (used) by financing activities (13,287) (10,975) (44,926) 1,422
______________________________________________________________________________________________________________________________
Effect of exchange rate changes on cash 58 822 103 229
______________________________________________________________________________________________________________________________
Net increase (decrease) in cash and cash equivalents (5,939) 7,908 (15,781) (617)
Cash and cash equivalents at beginning of period 33,708 50,215 43,550 58,740
______________________________________________________________________________________________________________________________
Cash and cash equivalents at end of period $27,769 $58,123 $27,769 $58,123
______________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________
<FN>
<F1> Reclassified
</FN>
</TABLE>
See accompanying notes to consolidated financial statements.
REVIEW OF OPERATIONS BY GROUP
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
SALES June 30 June 30
(In millions) 1995 1994 1995 1994
__________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Metal Reclamation and Mill Services $151.2 $129.5 $292.9 $247.5
Infrastructure and Construction <F1> 109.1 103.5 202.1 194.9
Process Industry Products 117.0 105.0 239.2 214.3
__________________________________________________________________________________________________________________________
Total $377.3 $338.0 $734.2 $656.7
__________________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________________
<FN>
<F1> Effective January 1, 1995, the Infrastructure, Construction and Transportation Group was renamed the Infrastructure and
Construction Group due to the Company's announced exit from the school bus business. The Company ceased all bus operations in June
1995. School bus sales included under this Group were $7.2 million and $6.2 million for the second quarter of 1995 and 1994,
respectively. For the six months of 1995 and 1994, school bus sales were $15.7 million and $10.7 million, respectively.
Additionally, 1994 includes truck sales of $3.3 million for the second quarter and $3.5 million for the six months. Truck
operations were ended in June 1994.
</FN>
</TABLE>
<TABLE>
<CAPTION>
INCOME BEFORE TAX Three Months Ended Six Months Ended
AND MINORITY INTEREST June 30 June 30
(In millions) 1995 1994 1995 1994
__________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Group operating profit:
Metal Reclamation and Mill Services $23.2 $11.6 $37.3 $16.9
Infrastructure and Construction <F2> 9.6 4.1 13.2 6.7
Process Industry Products 8.6 8.9 21.1 19.9
__________________________________________________________________________________________________________________________
41.4 24.6 71.6 43.5
Facilities discontinuance and reorganization costs (.5) (2.6) (1.7) (2.7)
__________________________________________________________________________________________________________________________
Total group operating profit 40.9 22.0 69.9 40.8
Equity in income of unconsolidated entities 9.2 20.8 27.7 35.8
Gain on sale of investments - - - 5.9
Claim settlements - - - 3.8
Interest expense (7.5) (8.8) (15.0) (17.1)
Unallocated income (expense) (2.1) (1.9) 1.4 (2.9)
__________________________________________________________________________________________________________________________
Total pre-tax income $40.5 $32.1 $84.0 $66.3
__________________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________________
<FN>
<F2> The Infrastructure and Construction Group includes operating losses related to the school bus business for the second quarter
of 1995 and 1994 of $3.0 million and $3.6 million, respectively. For the six months of 1995 and 1994, operating losses were $6.2
million and $6.7 million, respectively. Additionally, 1994 includes truck operating losses of $.6 million for the second quarter
and $1.9 million for the six months.
</FN>
</TABLE>
Cash payments for interest on all debt, net of amounts capitalized, were
$14,708,000 for the first six months of 1995 and $17,715,000 for the first six
months of 1994. Cash payments for income taxes were $31,057,000 for the first
six months of 1995 and $20,728,000 for the first six months of 1994.
Notes to Consolidated Financial Statements
__________________________________________
Receivables:
As of June 30, 1995, Receivables include $62,455,000 of unbilled receivables
representing the Company's claim against the U.S. Government for Federal
Excise Taxes and related claims on the five-ton truck contract. See
"Commitments and Contingencies" for additional disclosure on this claim.
Commitments and Contingencies:
Federal Excise Tax and Other Matters Related to the Five-ton Truck Contract:
Subsequent to the award of the five-ton truck contract in 1986, the Federal
Excise Tax (FET) law, which was due to expire on October 1, 1988, was
extended. The Company and its legal counsel consider that the excise tax
required to be paid by the extension of the law constitutes an after-imposed
tax and therefore is subject to recovery by a price adjustment. In January
1993, the Armed Services Board of Contract Appeals decided in favor of the
Company's position, ruling that Harsco is entitled to a price adjustment to
the contract to reimburse FET paid on vehicles that were to be delivered after
October 1, 1988. The Government filed a motion requesting the Armed Services
Board of Contract Appeals to reopen the proceedings to admit additional
evidence or alternatively to reconsider its decision. On February 25, 1994,
the Armed Services Board of Contract Appeals denied the Government's motions.
In June 1994, the Government appealed these decisions to the Court of Appeals
for the Federal Circuit, but voluntarily withdrew its appeal effective August
16, 1994. On February 23, 1995, the Government filed another motion to reopen
the proceedings at the Armed Services Board of Contract Appeals to allow
additional discovery or alternatively, to reconsider its decision. The
Company will oppose this motion. The Government might also seek to overturn
the decision in a separate legal action based upon the results of the
continuing investigation described below.
As previously reported, the Company had already anticipated prevailing on its
claims and recorded as an account receivable the amount of the FET it has paid
on these vehicles of approximately $47 million, and the related claim arising
from changes in shipment destinations of approximately $15 million. The
January 1993 decision only rules upon the Company's claim for reimbursement of
the taxes paid without establishing the specific amount of the reimbursement.
Subject to the Company prevailing against the Government motions and any other
legal challenges to the judgment, the government contracting officer will be
required to determine the proper amount of the price adjustment consistent
with the ruling. Under applicable law, interest also accrues on the amount
owed. Although the January 1993 decision does not directly deal with the
claim for $15 million on the related destination change issue, the Company
believes that the ruling resolves the key factual issues in that claim in
favor of Harsco as well. The Company continues to anticipate favorable
resolution with respect to both claims and continues to negotiate with the
Government. Final resolution of the issues in favor of the Company would not
result in the recording of additional income other than any interest received,
but would have a positive cash flow effect. To the extent that any portion of
the FET and related claims is not recovered, additional losses on the contract
will have to be recognized which could have a material effect on quarterly or
annual operating results.
The Commercial Litigation Branch of the Department of Justice is continuing an
investigation with respect to the facts underlying the Company's claim for
reimbursement of Federal Excise Tax payments and its related claim regarding
destination changes. In addition, the investigation is examining the way the
Company charged the Army for sales of certain cargo truck models for which the
Company did not pay Federal Excise Tax based upon an exemption in the law. If
the Government files a civil action against the Company as a result of the
civil investigation, it may seek various remedies including forfeiture by the
Company of its claims for reimbursement of FET and related claims, treble
damages, and civil penalties.
In a related matter, the Internal Revenue Service is reviewing Harsco's
position that certain cargo truck models are not taxable due to a provision in
the tax law that exempts trucks having a gross vehicle weight of 33,000 pounds
or less, and has tentatively concluded that they appear to be taxable. If the
Internal Revenue Service asserts that 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. Although there is risk
of an adverse outcome, the Company and its counsel believe that these trucks
are not taxable. Even if they are held to be taxable, the Company and its
counsel believe the Government would be obligated to reimburse the Company for
the majority of the tax, because it would constitute an after-imposed tax that
would be subject to the ruling of the Armed Services Board of Contract Appeals
discussed above, resulting in a net maximum liability for Harsco of $17
million plus interest and penalty, if any.
M9 Armored Combat Earthmover Claim:
The Company and its legal counsel are of the opinion that the U.S. Government
did not exercise option three under the M9 Armored Combat Earthmover (ACE)
contract in a timely manner, with the result that the unit price for options
three, four and five are subject to renegotiation. Claims reflecting the
Company's position have been filed with respect to all options purported to be
exercised, totaling in excess of $60 million plus interest. No recognition
has been given in the accompanying financial statements for any recovery on
these claims. In July 1995, the Armed Services Board of Contract Appeals
denied the motions for summary judgment which had been filed by both the
Company and the Government. The Company intends to continue to pursue its
claim before the Armed Services Board of Contract Appeals.
In addition, the Company negotiated a settlement with the U.S. Government of a
smaller outstanding claim concerning this contract which provided for payment
of $3.8 million by the U.S. Government to Harsco. The Company recognized such
amount as other revenue in the Consolidated Statements of Income in the first
quarter of 1994 and payment has been received.
Other Litigation:
On March 13, 1992, the U.S. Government filed a counterclaim against the
Company in a civil suit alleging violations of the False Claims Act and breach
of a contract to supply M109A2 Self-Propelled Howitzers. The counterclaim was
filed in the United States Claims Court along with the Government's answer to
the Company's claim of approximately $5 million against the Government for
costs incurred on this contract relating to the same issue. The Government
claims breach of contract damages of $7.3 million and in addition seeks treble
that amount under the False Claims Act plus unquantified civil penalties which
the Company estimates to be approximately $3.3 million. The Company and its
counsel believe it is unlikely that resolution of these claims will have a
material adverse effect on the Company's financial position, however, it could
have a material effect on quarterly or annual results of operations.
Iran's Ministry of Defense initiated arbitration procedures against the
Company in 1991 under the rules of the International Chamber of Commerce for
damages allegedly resulting from breach of various contracts executed by the
Company and the Ministry of Defense between 1970 and 1978. The contracts were
terminated in 1978 and 1979 during the period of civil unrest in Iran that
preceded the Iranian revolution. Iran has asserted a claim under one contract
for repayment of a $7.5 million advance payment it made to the Company, plus
interest at 12% through June 27, 1991 in the amount of $25.3 million. Iran
has also asserted a claim for damages under other contracts for $76.3 million.
The Company has asserted various defenses and also has filed counterclaims
against Iran for damages in excess of $7.5 million which it sustained as a
result of Iran's breach of contract, plus interest. The Company's management
and its counsel believe it is unlikely that resolution of these claims will
have a material adverse effect on the Company's financial position or results
of operations.
In 1992, the United States Government through its Defense Contract Audit
Agency commenced an audit of certain contracts for sale of tracked vehicles by
the Company to foreign governments, which were financed by the United States
Government through the Defense Security Assistance Agency. The Company
cooperated with the audit and responded to a number of issues raised by the
audit. In September 1994, the Company received a subpoena issued by the
Department of Defense Inspector General seeking various documents relating to
sale contracts between the Company and foreign governments which were funded
by the Defense Security Assistance Agency. The Company is continuing to
cooperate and is responding to the subpoena. Although the Government has not
clearly identified to the Company the focus of its investigation, based on
discussions with the agent in charge, it appears that it focuses on whether
the Company received progress payments in advance of the schedule permitted by
the Defense Security Assistance Agency regulations and Company certifications.
The Company's management and its counsel believe it is unlikely that this
issue will have a material adverse effect on the Company's financial position
or results of operations.
In June 1994, the shareholder of the Ferrari Group, a Belgium holding company
involved in steel mill services and other activities, filed a legal action in
Belgium against Heckett MultiServ, S.A. and S.E.A.E., subsidiaries of
MultiServ International N.V. (a subsidiary of Harsco Corporation). The action
alleges that these two subsidiaries breached contracts arising from letters of
intent signed in 1992 and 1993 concerning the possible acquisition of the
Ferrari Group, claiming that the subsidiaries were obligated to proceed with
the acquisition and failed to do so. The action seeks damages of 504 million
Belgian Francs (approximately U.S. $18 million). The Company intends to
vigorously defend against the action and believes that based on conditions
contained in the letters of intent and other defenses it will prevail. The
Company and its counsel believe that is unlikely that these claims will have a
material adverse effect on the Company's financial position or results of
operations.
On August 29, 1994, the Company filed a legal action in the United States
District Court for the Southern District of New York against certain former
shareholders of MultiServ International N.V. seeking recovery of damages
arising from misrepresentations which the Company claims were made to it in
connection with its purchase of the MultiServ International N.V. stock on
August 31, 1993. The Complaint seeks damages in an amount to be determined.
On April 4, 1995, the court dismissed various elements of the Company's claims
and allowed the Company to amend its complaint with respect to other elements.
At the Company's request, the Court dismissed the remaining claims which then
allowed the Company to file an appeal in the United States Court of Appeals
for the Second Circuit. The Company has settled its claims with A. H. H.
Bowden, but continues to pursue its appeal with respect to claims against the
other defendants.
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 June 30,
1995 and December 31, 1994, include an accrual of $5.9 and $6.2 million
respectively for environmental matters. The first six months of 1995 and 1994
include charges to earnings amounting to $.3 and $.1 million, 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. Subject to the imprecision in estimating future environmental
costs, 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
or results of operations.
Other:
The Company is subject to various other claims, legal proceedings and
investigations 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 or results of operations
of the Company.
Opinion of Management:
Financial information furnished herein, which is unaudited, reflects in the
opinion of management all adjustments (all of which are of a recurring nature)
that are necessary to present a fair statement of the interim period.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition
Cash provided by operating activities was $86.4 million in the first six
months of 1995, reflecting, among other things, a $25.6 million decrease in
accounts receivable which include the claim settlement of $20.4 million
recognized in December 1994 and received from the U.S. Government in February
1995. During the first six months, distributions of $22.5 million were
received from unconsolidated entities. As previously reported, included in
receivables is $62.4 million for amounts expended, or income not received,
related to the Federal Excise Tax (FET) and related claims for the completed
five-ton truck contract. Final resolution of the FET and related claims in
favor of the Company would not result in the recording of additional income
other than any interest received, but would have a positive cash flow effect.
To the extent that any portion of the FET and related claims is not recovered,
additional losses on the contract will have to be recognized, but there would
be little impact on cash outflows.
Cash used by investing activities included capital expenditures of $57.4
million and $3.4 million for the acquisition of Fabsco. Total consideration
for Fabsco was $14.8 million with the assumption of debt and other
liabilities. Cash flow used for financing activities included a net decrease
in long-term debt of $26.5 million, which included the purchase at market of
$10.5 million of the Company's outstanding 8-3/4% 10 year notes due May 1996,
a $3.4 million reduction of short-term debt, and $18.7 million of cash
dividends paid on common stock. Cash and cash equivalents decreased $15.8
million to $27.8 million at June 30, 1995.
Other matters which could significantly affect cash flows in the future are
discussed in the 1994 Annual Report to Shareholders under Note 10,
"Commitments and Contingencies."
Harsco continues to maintain a good financial position, with net working
capital of $161.7 million, down from the $254.3 million at December 31, 1994,
principally due to the increase in current maturities of debt related to 8
3/4% 10 year notes due May 1996. Current assets amounted to $540.3 million,
and current liabilities were $378.6 million, resulting in a current ratio of
1.4 to 1, below the 1.9 to 1 at year-end 1994. With total debt at $348.4
million and equity at $621.9 million at June 30, 1995, the total debt as a
percent of capital was 35.9%, which is lower than the 38.6% at December 31,
1994.
The stock price range during the first six months was 52 7/8 - 39 5/8.
Harsco's book value per share at June 30, 1995, was $24.59, compared with
$23.08 at year-end 1994. The Company's annualized return on average equity
for the first six months of 1995 was 16.7%, compared with 15.7% for the year
1994. The annualized return on average assets was 14.9%, compared with the
13.5% for the year 1994. The annualized return on capital for the first six
months was 12.4%, compared with 11.0% for year 1994.
During the second quarter, the Company renegotiated its $300 million credit
facility, established in October 1993, with a syndicate of banks. The new
five-year facility consolidates two prior agreements and, as amended, extends
maturity to June 2000, provides for greater financial flexibility and updates
pricing for favorable bank market dynamics. The new agreement is a $300
million unsecured revolving five-year facility denominated in U.S. dollars and
Eurocurrencies. As of June 30, 1995, there were no borrowings outstanding
under this syndicated credit facility.
The Company also has a commercial paper borrowing program under which it can
issue up to $150 million of short-term notes in the U.S. commercial paper
market. The Company limits the aggregate commercial paper and credit facility
borrowings at any one time to a maximum $300 million. At June 30, 1995, the
Company had outstanding $35.9 million in commercial paper.
Harsco's outstanding notes are rated A by Standard & Poor's and Baa1 by
Moody's. Harsco's commercial paper is rated A-1 by Standard & Poor's, F-1 by
Fitch Investors Service and P-2 by Moody's. The Company also has on file,
with the Securities and Exchange Commission, a Form S-3 shelf registration for
the possible issuance of up to an additional $200 million of new debt
securities, preferred stock or common stock.
As indicated by the above, the Company's financial position and debt capacity
should enable it to meet its current and future requirements. As additional
resources are needed, the Company should be able to obtain funds at
competitive costs.
RESULTS OF OPERATIONS
SECOND QUARTER OF 1995 COMPARED
WITH SECOND QUARTER OF 1994
Second quarter revenues of $386.7 million were 8% higher than last year's
comparable period. Increased sales were reported in each of our three
operating groups, with the Metal Reclamation and Mill Services being the
leader with a 17% increase. Other product classes with considerable increases
include gas control and containment equipment and grating. Process equipment
also had higher sales, due principally to the acquisition made in the first
quarter of 1995. Equity in income of unconsolidated entities decreased due to
the expected lower income from our partnership, United Defense, L.P., a joint
venture formed effective January 1, 1994, in which the Company has a 40%
interest.
Cost of sales increased, principally due to higher volume. Selling expenses
were slightly higher due to increased sales commissions, while general and
administrative expenses decreased as the result of the planned close down of
the school bus operation and the favorable effects of cost reduction efforts.
Income before taxes and minority interest increased 26% from the comparable
period last year, due primarily to the improved operations of the Metal
Reclamation and Mill Services Group. Higher earnings were also recorded for
grating and gas control and containment product classes. Also on a
comparative basis, income before taxes and minority interest increased, due to
lower facilities discontinuance and reorganization costs and net favorable
foreign exchange transactions.
Net income of $24.6 million, the highest second quarter ever, was up 40% from
the comparable period in 1994. The effective income tax rate for the second
quarter of 1995 is 37.9%, versus 43.7% in 1994. The lower income tax rate is
primarily due to reduced losses sustained in certain foreign operations for
which there is no tax benefit.
Sales of the Metal Reclamation and Mill Services Group, at $151.2 million,
were significantly above 1994's second quarter, due to improved business
conditions particularly in Europe and North America. The favorable impact of
the decline in the U.S. dollar against certain European currencies principally
the French Franc, Belgian Franc and the German Mark also contributed to the
increased sales. Sales for the Infrastructure and Construction Group, at
$109.1 million, were also ahead of last year's similar period, reflecting
greater demand for all product classes with the exception of school buses
which the Company had announced earlier that it would exit. Sales for the
Process Industry Products Group, at $117.0 million, were well ahead of the
prior year's second quarter, as each Division posted higher volume.
Operating profit for the Metal Reclamation and Mill Services Group was $23.2
million, reflecting the improved operating performance as well as business
conditions, the favorable effects of cost reduction efforts and the favorable
impact of the decline of the U.S. dollar against certain European currencies
as previously discussed. The Infrastructure and Construction Group posted an
operating profit of $9.6 million, well above 1994's second quarter. This
significant improvement is attributable to the grating product line and
reduced losses from the closed school bus and truck operations. Operating
profit for the Process Industry Products Group, at $8.6 million was slightly
below the prior year's reflecting mainly lower profit margins for the pipe
fittings product class.
FIRST SIX MONTHS OF 1995 COMPARED WITH
FIRST SIX MONTHS OF 1994
Revenues for the first six months were $762.7 million, 9% above last year's
comparable period. The increase was primarily due to higher sales for metal
reclamation and mill services, gas control and containment equipment, grating,
scaffolding, shoring and forming equipment, and to a lesser extent roofing
granules and abrasives. Additionally, higher revenues included sales from an
acquisition made in the first quarter of 1995. These increases were partially
offset by decreased income from the Company's equity investment in United
Defense, L.P., as well as lower sales of railway maintenance equipment and
process equipment. On a comparative basis, revenues for the first six months
of 1994 include a $5.9 million pre-tax gain on the sale of the remaining
holdings of an investment in a marketable equity security and $3.8 million due
to the negotiated settlement of a claim with the U.S. Government.
Cost of sales increased, principally due to higher volume. Selling, general
and administrative expenses increased slightly, as a result of higher
compensation costs, increased legal and business development costs, and the
inclusion of an acquired company which were partially offset by closing the
school bus operation, the impact of divesting a company in the fourth quarter
of 1994 and lower sales commissions.
Income before taxes and minority interest was up 27% from the comparable
period last year due to higher earnings. The effective income tax rate for
1995 is 39.0%, versus 43.7% in 1994. The lower income tax rate is primarily
due to a reduction in losses sustained in certain foreign operations for which
there is no tax benefit.
Higher earnings in the first six months of 1995 were due principally to
improved results for metal reclamation and mill services, grating, gas control
and containment equipment, as well as roofing granules and abrasives. Lower
earnings were recorded for the Company's share of income in its equity
investment in United Defense, L.P., as well as pipe fittings and railway
maintenance equipment. Income benefited in 1995 from the impact of a pre-tax
$6.7 million net foreign currency translation exchange gain arising from the
decline in the U.S. Dollar against certain European currencies which more than
offset a pre-tax $3.5 million foreign currency translation exchange loss due
to the devaluation of the Mexican peso. On a comparative basis, favorably
affecting 1994's first six months results were a gain on the sale of the
remaining holdings of an investment in a marketable equity security and income
resulting from the negotiated settlement of a claim with the U.S. Government.
Interest expense decreased as a result of the continued liquidation of the
Company's outstanding debt. Finally, continuing losses during the planned
shutdown of the school bus operation, approximated losses incurred in the
first six months of 1994.
Net income of $50.0 million, was up 38% from the comparable period in 1994.
This income was the highest first six months performance, excluding an
accounting change in the first six months of 1993.
Sales of the Metal Reclamation and Mill Services Group, at $292.9 million,
were significantly above 1994's first six months, due to improved business
conditions, particularly in Europe, as well as North America, which in 1994
was adversely affected by severe winter weather. The favorable impact of the
decline in the U.S. Dollar against certain European currencies, particularly
the French franc, Belgian franc and German mark also contributed to increased
revenues for the Group. Sales for the Infrastructure and Construction Group
at $202.1 million, were 4% ahead of last year's similar period. Grating and
scaffolding equipment sales increased modestly from 1994. Sales for the
Process Industry Products Group, at $239.2 million, were well ahead of the
prior year's first six months. The improvement included increased sales for
most product classes, as well as sales from an acquisition made in the first
quarter of 1995.
Operating profit for the Metal Reclamation and Mill Services Group was
significantly ahead of 1994's first six months, despite $3.1 million of net
foreign currency translation exchange losses due principally to the
devaluation of the Mexican peso. The increase reflects improved operating
performance as well as business conditions, the favorable effects of cost
reduction efforts, and the favorable impact of the decline in the U.S. Dollar
against certain European currencies as previously discussed. The
Infrastructure and Construction Group posted an operating profit of $13.2
million, which also significantly exceeded 1994's first six months, as all
product classes posted improved results, except railway maintenance equipment
which benefited in 1994 from two large shipments to two international
customers. On a comparative basis, continuing losses from the planned
shutdown of the school bus operation, approximated losses incurred in the
first six months of 1994. Operating profit for the Process Industry Products
Group, at $21.1 million, was up 6% from the prior year's first six months and
reflected significantly improved results for gas control and containment
equipment which more than offset lower earnings for pipe fittings.
HARSCO CORPORATION AND SUBSIDIARY COMPANIES
PART II - OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
________________________
Information on legal proceedings is included under Part I, Item 1., the
section labeled "Commitments and Contingencies."
ITEM 5. OTHER INFORMATION
__________________________
DIVIDEND ACTION:
* On June 27, 1995, Harsco Corporation announced that the Board of Directors
declared a quarterly cash dividend of 37 cents per share, payable August 15,
1995, to shareholders of record on July 14, 1995.
GENERAL:
* In November 1994, the Board of Directors authorized the Company to exit
from the school bus business and in January 1995, Harsco Corporation announced
that it would close its school bus manufacturing division in Marysville, Ohio.
The school bus manufacturing division ceased all operations June 30, 1995.
* On July 25, 1995, Harsco Corporation announced that it had renegotiated its
$300 million credit facility, established in October 1993, with a syndicate
of 19 banks led by Chemical Bank. The new five-year facility consolidates two
prior agreements and, as amended, extends maturity to June 2000, provides for
greater financial flexibility and updated pricing for favorable bank market
dynamics. The amended agreement combines a previous $150 million 364-day
credit facility and a $150 million five-year credit facility into a $300
million unsecured revolving five-year facility denominated in the U.S. dollars
and Eurocurrencies.
ITEM 6(a).EXHIBITS
__________________
The following exhibits are incorporated by reference:
a.)Exhibit No. 10 Material Contracts - Management Contracts and Compensating
Plans
(i)Harsco Corporation 1995 Executive Incentive Compensation Plan located in
the Proxy Statement dated March 22, 1995 as Exhibit A pages A-1 through A-12.
(ii)Harsco Corporation 1995 Non-Employee Directors' Stock Plan located in the
Proxy Statement dated March 22, 1995 as Exhibit B pages B-1 through B-6.
The following exhibits are attached:
a.)Exhibit No. 10 Material Contracts - Credit Facility
(i)Amendment Agreement dated June 20, 1995 to the $150 million Credit
Agreement (364-Day Competitive Advance and Revolving Credit Facility) dated as
of August 1993, and to the $150 million Credit Agreement (5-year Advance and
Revolving Credit Facility) dated as of August 1993, among Harsco Corporation,
the lenders named therein and Chemical Bank.
b.)Exhibit No. 11 Computation of Fully Diluted Net Income Per Common Share.
c.)Exhibit No. 12 Computation of Ratios of Earnings to Fixed Charges.
d.)There were no reports filed on Form 8-K during the second quarter ending
June 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HARSCO CORPORATION
__________________
(Registrant)
DATE /S/ Leonard A. Campanaro
Leonard A. Campanaro
Senior Vice President and
Chief Financial Officer
DATE /S/ Salvatore D. Fazzolari
Salvatore D. Fazzolari
Vice President and Controller
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
HARSCO CORPORATION
COMPUTATION OF FULLY DILUTED NET INCOME PER COMMON SHARE
(dollars in thousands except per share)
<CAPTION>
YEARS ENDED
__________________________________________________________________________
1994 1993 1992 1991 1990
__________ __________ __________ __________ __________
<S> <C> <C> <C> <C> <C>
Net income $ 86,553 $ 87,618 $ 84,332 $ 76,543 $ 72,504
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
Average shares of common stock
outstanding used to compute
primary earnings per common
share 25,114,874 25,036,893 25,966,755 26,278,384 26,217,027
Additional common shares to be
issued assuming exercise of
stock options, net of shares
assumed reacquired 105,388 149,408 198,220 118,208 28,355
__________ __________ __________ __________ __________
Shares used to compute dilutive
effect of stock options 25,220,262 25,186,301 26,164,975 26,396,592 26,245,382
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
Fully diluted net income per
common share $ 3.43 $ 3.48 $ 3.22 $ 2.90 $ 2.76
________ ________ ________ ________ ________
________ ________ ________ ________ ________
Net income per common share
as reported in report to
shareholders $ 3.45 $ 3.50 $ 3.25 $ 2.91 $ 2.77
________ ________ ________ ________ ________
________ ________ ________ ________ ________
</TABLE>
AMENDMENT AGREEMENT (this "Amendment Agreement"), dated as of June 20, 1995,
among HARSCO CORPORATION, a Delaware corporation (the "Company"), the Lenders
listed on the signature pages hereof (the "Lenders") and CHEMICAL BANK, a New
York banking corporation, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent"). Capitalized terms used herein and
defined in the Agreement (as such term is defined below) have the meanings
assigned to such terms in the Agreement.
WHEREAS the Company, the Lenders and the Administrative Agent are parties to
an Amended and Restated Credit Agreement (Five-Year Competitive Advance and
Revolving Credit Facility) dated as of August 24, 1993, as amended and
restated as of June 21, 1994 (the "Agreement");
WHEREAS the Company, the Lenders and the Administrative Agent are parties to
an Amended and Restated Credit Agreement (364-Day Competitive Advance and
Revolving Credit Facility) dated as of August 24, 1993, as amended and
restated as of June 21, 1994 (the "364-Day Agreement"); and
WHEREAS the Company has requested the Lenders, and the Administrative Agent
and the Lenders are willing, to amend the Agreement on the terms and
conditions set forth herein;
NOW, THEREFORE, for and in consideration of the premises and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree, on the terms and subject to the conditions
set forth herein, as follows:
1. Definitions. (a) The definition of "Maturity Date" in Section 1.01 of
the Agreement is hereby deleted and replaced by the following sentence:
"Maturity Date" shall mean June 20, 2000.
(b) The table in the definition of "Facility Fee Percentage" in Section 1.01
of the Agreement is hereby deleted and replaced by the following table:
Facility
Fee
Percentage
__________
Category 1
__________
A- or higher by S&P;
A3 or higher by Moody's .10%
Category 2
__________
BBB+ by S&P;
Baa1 by Moody's .125%
Category 3
__________
BBB by S&P;
Baa2 by Moody's .15%
Category 4
__________
BBB- by S&P;
Baa3 by Moody's .1875%
Category 5
__________
BB+ or lower by S&P;
Ba1 or lower by Moody's .25%
(c) The table in the definition of "Applicable Margin" in Section 1.01 of the
Agreement is hereby deleted and replaced by the following table:
Eurocurrency
Loan Spread
____________
Category 1
__________
A- or higher by S&P;
A3 or higher by Moody's .20%
Category 2
__________
BBB+ by S&P;
Baa1 by Moody's .25%
Category 3
__________
BBB by S&P;
Baa2 by Moody's .30%
Category 4
__________
BBB- by S&P;
Baa3 by Moody's .3125%
Category 5
__________
BB+ or lower by S&P;
Ba1 or lower by Moody's .50%
2. The figure $150,000,000 in the preamble to the Agreement is hereby deleted
and replaced by the following figure: $300,000,000.
3. Section 2.01 of the Agreement is hereby amended by inserting the following
paragraph at the end of Section 2.01:
(c) Notwithstanding anything in this Agreement to the contrary, Dauphin
Deposit Bank and Trust Company shall not make Loans as part of any non-US
Dollar Borrowing. The amount of any such requested Borrowing shall, subject
in all cases to the limitations contained in paragraph (a) above, be divided
among the other Lenders pro rata in accordance with their respective shares of
the Total Commitment.
4. Section 2.16 of the Agreement is hereby amended by inserting the following
paragraph at the end of Section 2.16:
Provided, however, that with respect to Loans denominated in a currency other
than U.S. Dollars in which Dauphin Deposit Bank and Trust Company does not
participate, each payment or prepayment of principal and each payment of
interest shall be allocated pro rata among the other Lenders in accordance
with their respective shares of the outstanding principal amount of such
Loans.
5. Section 6.01(i) of the Agreement is hereby deleted and replaced by the
following paragraph:
(i) additional Liens upon real and/or personal property created after the date
hereof; provided that the aggregate Indebtedness secured thereby and incurred
on and after the date hereof shall not exceed $25,000,000 in the aggregate at
any one time outstanding; and
6. Section 6.02 of the Agreement is hereby deleted and replaced by the
following paragraph:
SECTION 6.02 Sales and Lease-Back Transactions. Enter into any arrangement,
directly or indirectly, with any person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned
or hereafter acquired, and thereafter rent or lease such property or other
property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred (such an arrangement, a
"Sale and Lease-Back Transaction"), other than (i) Sale and Lease-Back
Transactions capitalized on the books of the Company in an aggregate
capitalized amount not in excess of $25,000,000 entered into in connection
with the financing of aircraft to be used in connection with the Company's
business and (ii) Sale and Lease-Back Transactions capitalized on the books of
the Company (other than a Sale and Lease-Back Transaction permitted by clause
(i) above) if the capitalized amount of all such Sale and Lease-Back
Transactions shall not exceed $20,000,000 in aggregate amount at any time
outstanding.
7. Section 6.06 of the Agreement is hereby deleted and replaced by the
following paragraph:
SECTION 6.06 Net Worth. The Company will not permit its Net Worth at any
time to be less than $475,000,000.
8. Section 6.07 of the Agreement is hereby deleted and replaced by the
following paragraph:
SECTION 6.07 Total Debt to Total Capital Ratio. The Company will not permit
the ratio of Total Debt to Total Capital at any time on or after the date
hereof to exceed the ratio of 0.55 to 1.
9. Paragraph (f) of Article VII of the Agreement is hereby deleted and
replaced by the following paragraph:
(f) (i) the Company or any Subsidiary shall (A) fail to pay any principal or
interest, regardless of amount, due in respect of any Indebtedness in a
principal amount in excess of (I) $20,000,000, in the case of any single
obligation, or (II) $20,000,000, in the case of all obligations in the
aggregate, in each case, when and as the same shall become due and payable, or
(B) fail to observe or perform any other term, covenant, condition or
agreement contained in any agreement or instrument evidencing or governing any
Indebtedness in an aggregate principal amount in excess of $20,000,000 and
such failure shall continue beyond any applicable grace period; or (ii)
Indebtedness of the Company and its Subsidiaries, or any of them, in a
principal amount in excess of (A) $20,000,000, in the case of any single
obligation, or (B) $20,000,000, in the case of all obligations in the
aggregate, shall be declared due and payable or required to be prepaid prior
to its stated maturity;
10. Section 10.04(f) of the Agreement is hereby deleted and replaced by
the following paragraph:
(f) Upon giving written notice to the Company, each Lender may without the
consent of the Company or the Administrative Agent sell participations to one
or more banks or other entities in all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating banks or other
entities shall be entitled to the benefit of the cost protection provisions
contained in Sections 2.13, 2.15 and 2.19 to the same extent as if they were
Lenders and (iv) the Borrowers, the Administrative Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement, and such Lender
shall retain the sole right to enforce the obligations of the Borrowers
relating to the Loans and to approve any amendment, modification or waiver of
any provision of this Agreement (other than amendments, modifications or
waivers decreasing any fees payable hereunder or the amount of principal of or
the rate at which interest is payable on the Loans, extending any scheduled
principal payment date or date fixed for the payment of interest on the Loans
or changing or extending the Commitments).
11. Schedule 2.01 to the Agreement is hereby deleted in its entirety and
replaced by Schedule 2.01 hereto.
12. This Amendment Agreement may be executed in two or more counterparts,
any one of which need not contain the signatures of more than one party, but
all such counterparts taken together will constitute one and the same
Agreement.
13. The Company represents and warrants as follows:
(a) The Company has all requisite power and authority to enter into this
Amendment Agreement, and this Amendment Agreement has been duly and validly
authorized, executed and delivered by the Company and is the legal, valid and
binding obligation of the Company.
(b) The representations and warranties in the Agreement are correct in all
material respects on and as of the date hereof, before and after the execution
and delivery of this Amendment Agreement, as though made on and as of the date
hereof and no event has occurred and is continuing, or would result from the
execution and delivery of this Amendment Agreement, that constitutes or would
constitute a Default or Event of Default.
(c) No Loans under the Agreement or the 364-Day Agreement are outstanding as
of the date hereof.
14. This Amendment Agreement shall become effective only upon the receipt
by the Administrative Agent of an opinion of counsel for the Company
confirming the representation and warranty set forth in paragraph (a) of
Section 8, together with evidence of the Company's authority to enter into
this Agreement, in each case satisfactory to the Administrative Agent.
15. The 364-Day Agreement shall be terminated upon the effectiveness of
this Amendment Agreement.
16. THIS AMENDMENT AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK AS THOUGH
WHOLLY MADE AND PERFORMED WITHIN SUCH STATE.
IN WITNESS WHEREOF, the Company, the Administrative Agent and the Lenders have
caused this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
HARSCO CORPORATION,
by
/s/ Leonard A. Campanaro
________________________
Name: Leonard A. Campanaro
Title: Senior Vice President & CFO
by
/s/ Barry M. Sullivan
_____________________
Name: Barry M. Sullivan
Title: Vice President & Treasurer
CHEMICAL BANK, individually and as Administrative Agent,
by
s/ Scott S. Ward
_________________
Name: Scott S. Ward
Title: Vice President
Additional bank signature pages are not included in this exhibit.
HARSCO CORPORATION
COMPUTATION OF FULLY DILUTED NET INCOME PER COMMON SHARE
(dollars in thousands except per share)
___________________________
<TABLE>
<CAPTION>
3 MONTHS ENDED JUNE 30 6 MONTHS ENDED JUNE 30
1995 1994 1995 1994
____ ____ ____ ____
<S> <C> <C> <C> <C>
Net income $24,559 $17,547 $50,019 $36,175
_______ _______ _______ _______
_______ _______ _______ _______
Average shares of common stock
outstanding used to compute
earnings per common share 25,269,920 25,118,244 25,236,174 25,065,274
Additional common shares to be
issued assuming exercise of
stock options, net of shares
assumed reacquired 166,010 82,849 177,059 100,304
_______ _______ _______ _______
Shares used to compute dilutive
effect of stock options 25,435,930 25,201,093 25,413,233 25,165,578
__________ __________ __________ __________
__________ __________ __________ __________
Fully diluted net income per
common share $0.96 $0.70 $1.97 $1.44
_____ _____ _____ _____
_____ _____ _____ _____
Net income per common share $0.97 $0.70 $1.98 $1.44
_____ _____ _____ _____
_____ _____ _____ _____
</TABLE>
HARSCO CORPORATION
Exhibit 12
Computation of Ratios of Earnings to Fixed Charges
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Six
YEARS ENDED DECEMBER 31 Months
________________________________________________________________
Ended
1990 1991 1992 1993 1994 6/30/95
________ ________ ________ ________ ________ _______
<S> <C> <C> <C> <C> <C> <C>
Consolidated Earnings:
Pre-tax income from continuing
operations <F1> $115,587 $119,647 $140,576 $137,151 $146,089 $82,765
Add fixed charges computed below 21,864 23,544 22,425 23,879 37,982 16,964
Net adjustments for equity companies (532) (439) (454) (363) (134) (627)
Net adjustments for capitalized
interest (255) (469) (134) (172) (274) -
_______ _______ _______ _______ _______ ______
Consolidated Earnings Available for
Fixed Charges $136,664 $142,283 $162,413 $160,495 $183,663 $99,102
_______ _______ _______ _______ _______ ______
_______ _______ _______ _______ _______ ______
Consolidated Fixed Charges:
Interest expense per financial
statements <F2> $17,506 $18,925 $18,882 $19,974 $34,048 $15,020
Interest expense capitalized 345 574 355 332 338 222
Portion of rentals (1/3 ) representing
an interest factor 4,013 4,045 3,188 3,573 3,576 1,722
Interest expense for equity companies
whose debt is guaranteed <F3> - - - - - -
_______ _______ _______ _______ _______ ______
Consolidated Fixed Charges $21,864 $23,544 $22,425 $23,879 $37,982 $16,964
_______ _______ _______ _______ _______ ______
_______ _______ _______ _______ _______ ______
Consolidated Ratio of Earnings to
Fixed Charges 6.25 6.04 7.24 6.72 4.84 5.84
_______ _______ _______ _______ _______ ______
_______ _______ _______ _______ _______ ______
<FN>
<F1> 1992 excludes the cumulative effect of change in accounting method for post-retirement benefits other than pensions.
<F2> Includes amortization of debt discount and expense.
<F3> No fixed charges were associated with debt of less than fifty percent owned companies guaranteed by Harsco during the five
year period 1990 through 1994, and the six months ended June 30, 1995.
</FN>
</TABLE>
