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Harsco Corporation Reports Fourth Quarter 2012 Results

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 at  www.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 December 31 Twelve Months Ended December 31
(In thousands, except per share amounts) 2012 2011 2012 2011
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 administrative expenses  126,686  127,722  503,339  535,679
Research and development expenses  2,231  1,754  9,139  6,044
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 continuing operations  (247,137)  (56,648)  (174,790)  87,649
         
Interest income  671  729  3,676  2,751
Interest expense  (11,340)  (11,926)  (47,381)  (48,735)
         
Income (loss) from continuing operations before income taxes and equity income  (257,806)  (67,845)  (218,495)  41,665
         
Income tax (expense)  (6,762)  (25,035)  (35,251)  (49,848)
Equity in income of unconsolidated entities, net  85  160  564  690
         
Loss from continuing operations  (264,483)  (92,720)  (253,182)  (7,493)
         
Discontinued operations:        
Loss on disposal of discontinued business  (626)  (598)  (1,843)  (3,306)
Income tax benefit related to discontinued business  239  225  924  1,243
Loss from discontinued operations  (387)  (373)  (919)  (2,063)
Net Loss  (264,870)  (93,093)  (254,101)  (9,556)
Less: Net (income) loss attributable to noncontrolling interests  512  625  (511)  (1,954)
Net loss attributable to Harsco Corporation $ (264,358) $ (92,468) $ (254,612) $ (11,510)
         
Amounts attributable to Harsco Corporation common stockholders:        
Loss from continuing operations, net of tax $ (263,971) $ (92,095) $ (253,693) $ (9,447)
Loss from discontinued operations, net of tax  (387)  (373)  (919)  (2,063)
Net loss attributable to Harsco Corporation common stockholders $ (264,358) $ (92,468) $ (254,612) $ (11,510)
         
Weighted-average shares of common stock outstanding  80,659  80,732  80,632  80,736
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 Corporation common stockholders $ (3.28) (a) $ (1.15) (a) $ (3.16) $ (0.14) (a)
         
Diluted weighted-average shares of common stock outstanding  80,659  80,732  80,632  80,736
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 Corporation common stockholders $ (3.28) (a) $ (1.15)(a) $ (3.16) $ (0.14) (a)
(a) Does not total due to rounding.        
     
     
HARSCO CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited )    
  (In thousands) December 31 2012 December 31 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 entities 308 226
Harsco 2011/2012 Restructuring Program non-cash adjustment 31,443 67,320
Goodwill impairment charge 265,038 --
Other, net (27,098) (7,432)
Changes in assets and liabilities, net of acquisitions and 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 Program accrual (5,211) (19,629)
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 December 31, 2012 Three Months Ended December 31, 2011
(In thousands) Revenues Operating Income (Loss) Revenues Operating 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 December 31, 2012 Twelve Months Ended December 31, 2011
(In thousands) Revenues Operating Income (Loss) Revenues Operating 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 Metals & Minerals Harsco Infrastructure Harsco Rail Harsco Industrial Corporate Consolidated Totals
Three Months Ended December 31, 2012            
Revenues, as reported  $ 334,362  $ 235,464  $ 112,938  $ 83,561  $ --  $ 766,325
Operating income (loss) excluding special items  17,532  (2,755)  20,807  12,497  (1,600)  46,481
Operating margin excluding special items -- % 5.2% -1.2% 18.4% 15.0%   6.1%
             
  Three Months Ended December 31, 2011            
Revenues, as reported  $ 372,298  $ 266,073  $ 72,044  $ 82,315  $ --  $ 792,730
Operating income (loss) excluding special items  27,604  (12,076)  16,517  13,188  (1,101)  44,132
Operating margin excluding special items -- % 7.4% -4.5% 22.9% 16.0%   5.6%
             
  Year Ended December 31, 2012            
Revenues, as reported  $ 1,404,103  $ 937,293  $ 352,036  $ 352,586  $ -- $  3,046,018
Operating income (loss) excluding special items  96,925  (25,938)  56,146  60,160  (3,399)  183,894
Operating margin excluding special items -- % 6.9% -2.8% 15.9% 17.1%   6.0%
             
  Year Ended December 31, 2011            
Revenues, as reported  $ 1,588,302  $1,108,293  $ 300,029  $ 306,116  $ --  $3,302,740
Operating income (loss) excluding special items  122,368  (37,951)  50,830  50,656  (5,440)  180,463
Operating margin excluding special items -- % 7.7% -3.4% 16.9% 16.5%   5.5%
 
(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 Metals & Minerals Harsco Infrastructure Harsco Rail Harsco Industrial Corporate Consolidated Totals
  Three Months Ended December 31, 2012            
Operating income (loss) as reported  $ 5,861  $ (284,701)  $ 20,807  $ 12,497  $ (1,601)  $ (247,137)
- 2011/2012 Restructuring Program charge 4,026 16,908 -- -- 1 20,935
- Goodwill impairment charge – Harsco Infrastructure -- 265,038 -- -- -- 265,038
- Charges to exit Harsco Metals & Minerals contract (b) 7,645 -- -- -- -- 7,645
Operating income (loss) excluding special items  $ 17,532  $ (2,755)  $ 20,807  $ 12,497  $ (1,600)  $ 46,481
             
             
Three Months Ended December 31, 2011            
Operating income (loss) as reported  $ 14,829  $ (99,680)  $ 16,467  $ 13,188  $ (1,452)  $ (56,648)
- 2011/2012 Restructuring Program charge 12,775 87,604 50 -- 351 100,780
Operating income (loss) excluding special items  $ 27,604  $ (12,076)  $ 16,517  $ 13,188  $ (1,101)  $ 44,132
             
             
Year Ended December 31, 2012            
Operating income (loss) as reported  $ 85,523  $ (368,657)  $ 56,079  $ 60,160  $ (7,895)  $ (174,790)
- 2011/2012 Restructuring Program charge 5,473 88,587 67 -- 371 94,498
- Goodwill impairment charge – Harsco Infrastructure -- 265,038 -- -- -- 265,038
- Charges to exit Harsco Metals & Minerals contract (b) 7,645 -- -- -- -- 7,645
- Gains associated with exited countries (c) -- (10,906) -- -- -- (10,906)
- Former CEO separation expense -- -- -- -- 4,125 4,125
- Gain on pension curtailment (1,716) -- -- -- -- (1,716)
Operating income (loss) excluding special items  $ 96,925  $ (25,938)  $ 56,146  $ 60,160  $ (3,399)  $ 183,894
             
             
Year Ended December 31, 2011            
Operating income (loss) as reported  $ 109,593  $ (125,555)  $ 58,746  $ 50,656  $ (5,791)  $ 87,649
- 2011/2012 Restructuring Program charge 12,775 87,604 50 -- 351 100,780
- One-time Rail benefit (d) -- -- (7,966) -- -- (7,966)
Operating income (loss) excluding special items  $ 122,368  $ (37,951)  $ 50,830  $ 50,656  $ (5,440)  $ 180,463
             
(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 activities  $ 198,879  $ 298,776  
Plus restructuring cash payments  81,283  22,643  
Sub-total  280,162  321,419  
Plus total proceeds from sales of assets (b)  49,779  42,653  
Less proceeds from sale of assets under restructuring plans  (18,028)  (25,225)  
Less maintenance capital expenditures (c)  (137,808)  (178,261)  
Less growth capital expenditures (d)  (127,215)  (134,840)  
Plus capital expenditures for strategic ventures (e)  12,786  1,245  
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
         jjacobson@harsco.com
         
         Media Contact
         Kenneth D. Julian
         717.730.3683
         kjulian@harsco.com

Harsco Corporation Company logo

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