HARRISBURG, Pa., Jan. 30, 2003 (PRIMEZONE) --
-- Fourth quarter GAAP diluted earnings per share (EPS) of $0.59,
full year earnings per share of $2.21
-- 2002 free cash flow totals $163 million, up 99 percent from 2001
-- Debt reduced by more than $120 million
Worldwide industrial services and products company Harsco Corporation (NYSE:HSC) today reported results for the fourth quarter and year ending December 31, 2002.
Fourth Quarter Results
Income and diluted earnings per share (EPS) for the fourth quarter were as follows:
$Millions Per Share - Diluted
Dec. 31 Dec. 31 Dec. 31 Dec. 31
Quarter Ending 2002 2001 2002 2001
----- ----- ----- -----
Income from Continuing
Operations
$23.9 $11.0 $0.59 $0.27
Income (loss) Discontinued
Operations 0.2 (1.0) -- (0.02)
----- ----- ----- -----
Net Income (GAAP Basis) $24.1 $10.0 $0.59 $0.25
===== ===== ===== =====
Reconciliation of Unusual
Items to GAAP
Income Excluding Net Unusual
Costs, Special Charges
and Gains $22.4 $25.3 $0.55 $0.63
Net Gains, After Tax 4.6 5.4 0.11 0.13
Unusual Costs and Special
Charges, After Tax (2.9) (20.7) (0.07) (0.51)
----- ----- ----- -----
Net Income (GAAP Basis) $24.1 $10.0 $0.59 $0.25
===== ===== ===== =====
Fourth quarter 2002 net income was negatively affected by higher pension expense of $3.6 million after-tax or $0.09 per share, which largely offset the elimination of $2.8 million after-tax or $0.07 per share in goodwill amortization (per the Company's adoption of SFAS No. 142, "Goodwill and Other Intangible Assets"), and a $1.4 million after-tax or $0.04 per share benefit from positive foreign currency translation.
After-tax net unusual costs, special charges and gains resulted in a net gain of $1.7 million or $0.04 per share in the quarter. This amount includes a gain of $1.5 million after-tax or $0.04 per share on the sale of underperforming assets in the Access Services segment. Also included was a $1.1 million after-tax or $0.03 per share reduction in bad-debt expense associated with a U.S. mill service customer that filed for bankruptcy in 2001. These gains were offset somewhat by charges related primarily to reorganization costs.
Fourth quarter revenues from continuing operations of $497 million approximated those of the prior year period. Positive foreign currency translation increased sales by approximately $20 million in the quarter.
Due to reorganization changes, the Company has adopted a new reporting structure for its operations, which should also enhance investor understanding and evaluation of the Company's performance. This structure, shown below, is reflected in the discussion that follows and in the attached financial statements. For ease of comparison, the Company has also reformatted its prior period amounts to the new reporting structure.
-- Mill Services: Heckett MultiServ
-- Access Services: SGB Group and Patent Construction Systems
-- Gas and Fluid Control: Taylor-Wharton, American Welding and
Tank, Sherwood, Air-X-Changers, and Structural Composites
Industries
-- Other Infrastructure Products and Services: Harsco Track
Technologies, Reed Minerals, IKG Industries, and Patterson-
Kelley
Commenting on the Company's performance, Harsco Chairman, President and Chief Executive Officer Derek C. Hathaway said, "Results in the fourth quarter were in line with the expectations we shared during our Annual Analyst Conference and public webcast in mid-December, and with Wall Street's consensus estimates.
"Our Mill Services segment continued to perform satisfactorily, benefiting from its global diversity and the marginally improving conditions in the North American steel industry. Strong internal cost control initiatives enabled our Gas and Fluid Control and Other Infrastructure Products and Services segments to perform reasonably well at the operating income level, despite the fact that overall market conditions remain depressed for many of the business lines, as reflected in their lower top line results.
"Improved revenues from our worldwide Access Services segment reflect the benefits of a more favorable foreign currency exchange environment. Industry conditions remain difficult, with non-residential construction at multi-year lows. The current scenario, however, does not dampen our confidence in the longer-term prospects for this business. In the short-term, we will continue to reduce our costs, redeploy existing equipment to new markets, and focus on winning our share of available projects. Encouragingly, this segment generates a significant portion of its revenues from the industrial maintenance area, which by its nature is a more stable and recurring market sector.
"Strong cash flows in 2002 enabled us to significantly reduce debt and increase our dividend by 5 percent. We recently announced our 211th consecutive cash dividend to shareholders, a record of over 50 years of consistent dividend payments.
"Going forward, we see a continuation of the challenging economic conditions. Nevertheless, we remain committed to the vigorous pursuit of our previously stated growth objectives for 2003. This will be accomplished by further building on our strong mill services core business, investment in organic growth opportunities, and internal improvement initiatives from our Six Sigma and Economic Value Added (EVA(r)) programs."
Full Year Results
For the full year 2002, income and diluted earnings per share were as follows:
$Millions Per Share - Diluted
Dec. 31 Dec. 31 Dec. 31 Dec. 31
Twelve Months Ending 2002 2001 2002 2001
----- ----- ----- -----
Income from Continuing
Operations $88.4 $74.6 $2.17 $1.86
Income (loss) Discontinued
Operations 1.7 (2.9) 0.04 (0.07)
----- ----- ----- -----
Net Income (GAAP Basis) $90.1 $71.7 $2.21 $1.79
===== ===== ===== =====
Reconciliation of Unusual
Items to GAAP
Income Excluding Net
Unusual Costs, Special
Charges and Gains $90.4 $94.9 $2.22 $2.37
Net Gains, After Tax 12.4 10.2 0.31 0.25
Unusual Costs and Special
Charges, After Tax (12.7) (33.4) (0.32) (0.83)
----- ----- ----- -----
Net Income (GAAP Basis) $90.1 $71.7 $2.21 $1.79
===== ===== ===== =====
Revenues from continuing operations for 2002 approximated $2 billion, down 2 percent from 2001. The positive effect of foreign exchange translation increased revenues by approximately $30 million in 2002.
Fourth Quarter Business Segment Review (All amounts are from continuing operations, and exclude unusual costs, special charges and gains)
Mill Services -- Sales increased 12 percent to $183 million from $163 million in last year's fourth quarter, while operating income increased 8 percent to $21 million. Operating margins declined by 40 basis points to 11.3 percent. Positive foreign currency translation increased sales by approximately $11 million and operating income by approximately $1 million in the quarter.
Strong performance from services at international mill sites continued to lead the solid performance of this segment. Results from domestic operations were below last year's fourth quarter due to the timing of mill restarts and scheduling of mill maintenance, which resulted in some unplanned short-term outages.
Access Services -- Fourth quarter sales increased by 4 percent to $159 million, from $154 million last year. Positive foreign currency translation increased sales by approximately $10 million in the quarter. Operating income declined by 38 percent to $10.5 million. Operating income in the quarter benefited from approximately $1 million in positive foreign currency translation. Operating margins before net special gains declined to 6.6 percent from 11.1 percent in the fourth quarter of last year.
Performance continued to be negatively impacted by the prolonged weakness in the non-residential construction markets. While the signing in November of U.S. terrorism insurance legislation should, in part, revive previously stalled commercial development projects, a full recovery in the domestic and international non-residential construction markets is not expected until greater economic confidence is restored and the current geopolitical concerns are somewhat alleviated.
Despite this challenging operating environment, the Company's domestic access services business has accumulated a solid backlog of major projects, which are just starting or are scheduled to start soon in 2003. While not a windfall, this work is critical to replacing other projects that continue to be delayed. Further, the Company expects significant cost savings throughout the year from its ongoing Six Sigma and EVA-driven initiatives, particularly in the international access services business.
Gas and Fluid Control -- Fourth quarter sales were $86 million compared with $101 million for the prior year quarter. Operating income declined by 9 percent to $5.2 million from $5.7 million last year. However, operating margins increased by 50 basis points to 6.1 percent in response to the Company's aggressive restructuring and cost reduction initiatives.
Sales of valves were up for the quarter, but sales and pricing in other product lines remained generally soft due to the continuing recession in the manufacturing sector. On a positive note, the Company has begun to see a pick-up in quotation activity for its Air-X-Changers air cooler product line, which serves the oil and gas industry. While too early to suggest a turnaround in this sector, the development is seen as positive.
Other Infrastructure Products and Services -- Fourth quarter sales declined to $69 million from last year's $82 million. Operating income declined by $0.4 million to $7.5 million in the quarter. Here again, due to successful restructuring and cost control initiatives, margins before net special charges improved by 110 basis points to 10.8 percent.
The Reed Minerals product line continued to produce positive earnings growth, as did the smaller Patterson-Kelley unit. Results from Harsco Track Technologies were also above last year's quarter. The Company believes that the 2003 outlook for Harsco Track Technologies continues to be very favorable, as evidenced by increased bidding and order activity, particularly in the international arena. The remaining unit within this segment, IKG Industries, continued to be negatively affected by the decline in domestic manufacturing activity. The Company continues to reduce IKG's plant capacity and other costs to better align the business with the current depressed market conditions.
Financial Position
The Company made considerable progress in 2002 in achieving its strategic financial objectives, and met or exceeded all of its key financial management goals for the year.
$Millions
Free Cash Flow (Including Asset Sales) 2002 2001
------ ------
Cash from Operations $253.8 $240.6
Sale of Assets 63.7 35.7
Less Capital Expenditures (114.3) (156.1)
Less Dividends (40.3) (38.3)
------ ------
Free Cash Flow $162.9 $81.9
====== ======
Change From Prior Year +99%
Debt reduction in 2002 totaled $122 million. On a cash flow basis, debt was reduced by approximately $174 million, but due to appreciation of major currencies against the U.S. dollar, principally the euro and British pound sterling, the translated balance sheet reduction in debt was $122 million. Since peaking in July 2000, the Company has reduced its debt by approximately $256 million or 29 percent. The Company's debt-to-capital ratio, excluding the non-cash pension adjustment to shareholders' equity, stood at 44.5 percent at December 31, 2002, a notable improvement over last year's 52.4 percent. Including the pension adjustment, the debt-to-capital ratio at year-end 2002 was 49.8 percent.
The Company's initiatives to reduce its overall capital employed and increase EVA also produced positive results. During 2002, cash generated from operations and asset sales, less capital expenditures and dividends, resulted in free cash flow of $163 million, a 99 percent increase from 2001. Also, capital expenditures were reduced by 27 percent to $114 million, due in part to the Company's successful redeployment of underutilized equipment, principally in the Mill Services segment. An additional $64 million was generated from the sale of assets.
"We are pleased with the progress we have made regarding EVA in 2002, our first full year under this formalized, company-wide management and financial discipline," Mr. Hathaway said. "Average capital employed was reduced and a positive change in EVA was recorded in three of our four business segments. Unfortunately, the difficult market conditions in Access Services resulted in an EVA decline for this segment, and for the Company as a whole in 2002. We will continue our aggressive efforts to reduce our capital employed and increase EVA in 2003, and look forward to a successful year."
Pension Liabilities
The Company recorded a $147 million non-cash, net-of-tax reduction to shareholders' equity in the fourth quarter of 2002 to reflect the additional minimum liability under its pension plans. As fully detailed in the Company's third quarter 2002 earnings release and its corresponding 10-Q filing, this reduction was as a result of the under-funded position that arose, principally in the Company's U. K. pension plan, due to the adverse performance of the financial markets. The decline in pension asset values and changes in actuarial assumptions will result in additional pre-tax pension expense in 2003 in the area of $20 million, or approximately $0.34 per share.
As a result of plan amendments, a re-measurement of the U.K. pension plan was made in the fourth quarter of 2002 that will result in the restoration to shareholders' equity of approximately $20 million net-of-taxes from the original $147 million reduction. U.S. Generally Accepted Accounting Principles (GAAP) require this re-measurement restoration to be recorded as of March 31, 2003.
Outlook
The first quarter is traditionally the Company's slowest period. Consistent with previous guidance, the Company expects its first quarter 2003 earnings per share to be down from the prior year period, due to continuing difficult economic conditions in its Access Services and manufacturing businesses, and the inclusion of increased pension expense. Going forward, the Company expects to show gradually improving year-over-year performance as the benefits of its cost reduction and organic growth initiatives are realized. "We are no longer relying on an economic upturn in 2003," Mr. Hathaway said. "Our near-term strategies will be to continue our aggressive cost reduction efforts in line with current economic and market realities and at the same time, accelerate our investments in organic growth opportunities in our core business sectors."
The Company expects first quarter 2003 earnings from continuing operations, excluding any net special items but including an estimated $0.10 per share increase in pension expense, will be in the range of $0.20 to $0.24 per share.
As previously disclosed, increased pension expense will negatively affect the Company's reported performance in each quarter of 2003.
The Company expects full-year 2003 diluted earnings from continuing operations, excluding any net special items but including an estimated $0.34 per share increase in pension expense, will be in the range of the current Wall Street consensus estimates of $2.25 to $2.36 per share.
Forward-Looking Statements
The nature of the Company's operations and the many countries in which it operates subject it to changing economic, competitive, regulatory, and technological conditions, risks, and uncertainties. In accordance with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary remarks regarding important factors, which, among others, could cause future results to differ materially from the forward-looking statements, expectations and assumptions expressed or implied herein. These include statements about our management confidence and strategies for performance; expectations for new and existing products, technologies, and opportunities; and expectations for market segment and industry growth, sales, cash flows, earnings, and EVA.
These factors include, but are not limited to: (1) changes in the worldwide business environment in which the Company operates, including general economic conditions, particularly in the mill services, steel, infrastructure, non-residential construction and industrial gas markets; (2) changes in currency exchange rates, interest rates, and capital costs; (3) changes in the performance of stock and bond markets, particularly in the United States and United Kingdom, that could affect the valuation of the assets in the Company's pension plans and the accounting for pension assets, liabilities and expense; (4) changes in governmental laws and regulations, including taxes and import tariffs; (5) market and competitive changes, including pricing pressures, market demand and acceptance for new products, services, and technologies; (6) unforeseen business disruptions in one or more of the over 40 countries in which the Company operates due to political instability, civil disobedience, armed hostilities or other calamities; and (7) other risk factors listed from time to time in the Company's SEC reports. The Company does not intend to update this information and disclaims any legal liability to the contrary.
Conference Call
As previously announced, the Company will hold a conference call today at 2:00 p.m. Eastern Time (ET) 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. Replays will be available via the Harsco website beginning approximately 5:00 pm ET today until approximately 4:30 pm ET Tuesday, February 4, 2003.
About Harsco
Harsco Corporation is a $2 billion industrial services and products company employing approximately 17,500 people in more than 40 countries of operation. Harsco's market-leading businesses provide mill services, access services, gas and fluid control products, and other infrastructure products and services to customers worldwide. Additional information about Harsco can be found at www.harsco.com.
Harsco Corporation
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
Three Months Ended Twelve Months Ended
December 31 December 31
2002 2001 (a) 2002 2001 (a)
--------- --------- ---------- ----------
(In thousands, except
per share amounts)
Revenues from
continuing operations:
Service sales $ 353,641 $ 335,176 $1,341,867 $1,324,233
Product sales 143,624 164,556 634,865 700,930
--------- --------- ---------- ----------
Total revenues 497,265 499,732 1,976,732 2,025,163
--------- --------- ---------- ----------
Costs and expenses
from continuing
operations:
Cost of services sold 262,915 240,111 981,754 954,417
Cost of products sold 111,757 130,546 500,010 561,983
Selling, general,
and administrative
expenses 75,481 81,668 312,704 314,268
Research and
development
expenses 614 1,086 2,820 3,973
Other expense 572 18,638 3,473 22,786
--------- --------- ---------- ----------
Total costs and
expenses 451,339 472,049 1,800,761 1,857,427
--------- --------- ---------- ----------
Operating income
from continuing
operations 45,926 27,683 175,971 167,736
Equity in income
(loss) of affiliates,
net (65) (29) 363 (1,852)
Interest income 450 1,037 3,688 5,589
Interest expense (9,764) (11,558) (43,323) (53,190)
--------- --------- ---------- ----------
Income from
continuing operations
before income taxes
and minority interest 36,547 17,133 136,699 118,283
Provision for
income taxes 11,313 4,624 42,240 38,553
--------- --------- ---------- ----------
Income from
continuing
operations before
minority interest 25,234 12,509 94,459 79,730
Minority interest
in net income 1,351 1,442 6,049 5,088
--------- --------- ---------- ----------
Income from
continuing
operations 23,883 11,067 88,410 74,642
--------- --------- ---------- ----------
Discontinued
operations:
Loss from
operations of
discontinued
business (370) (1,576) (2,952) (4,488)
Gain on disposal of
discontinued
business 667 -- 5,606 --
Provision for income
taxes (107) 552 (958) 1,571
--------- --------- ---------- ----------
Income (loss) from
discontinued
operations 190 (1,024) 1,696 (2,917)
--------- --------- ---------- ----------
Net Income $ 24,073 $ 10,043 $ 90,106 $ 71,725
========= ========= ========== ==========
Average shares of
common stock
outstanding 40,525 39,967 40,360 39,876
Basic earnings (loss)
per common share:
Continuing
operations $ .59 $ .28 $ 2.19 $ 1.87
Discontinued
operations -- (.03) .04 (.07)
--------- --------- ---------- ----------
Basic earnings per
common share $ .59 $ .25 $ 2.23 $ 1.80
========= ========= ========== ==========
Diluted average
shares of common
shares outstanding 40,602 40,293 40,680 40,066
Diluted earnings
(loss) per common
share:
Continuing
operations $ .59 $ .27 $ 2.17 $ 1.86
Discontinued
operations -- (.02) .04 (.07)
--------- --------- ---------- ----------
Diluted earnings per
common share $ .59 $ .25 $ 2.21 $ 1.79
========= ========= ========== ==========
(a) In order to comply with the Financial Accounting Standards Board
(FASB) Statement No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," 2001 information has been
reclassified for comparative purposes.
Harsco Corporation
CONSOLIDATED BALANCE SHEET (Unaudited)
December 31 December 31
(In thousands) 2002 2001 (a)
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 70,132 $ 67,407
Accounts receivable, net 388,872 386,252
Inventories 181,712 174,644
Other current assets 61,686 68,546
----------- -----------
Total current assets 702,402 696,849
----------- -----------
Property, plant and equipment, net 807,935 822,080
Goodwill, net 377,220 353,221
Other assets 102,493 180,439
Assets held for sale 9,247 38,177
----------- -----------
Total assets $ 1,999,297 $ 2,090,766
=========== ===========
LIABILITIES
Current liabilities:
Short-term borrowings $ 22,362 $ 29,560
Current maturities of long-term
debt 11,695 12,422
Accounts payable 166,871 162,481
Accrued compensation 39,456 37,245
Income taxes 43,411 35,061
Dividends payable 10,642 9,996
Other current liabilities 179,413 178,928
----------- -----------
Total current liabilities 473,850 465,693
----------- -----------
Long-term debt 605,613 720,133
Deferred income taxes 62,096 103,082
Insurance liabilities 44,090 49,019
Other liabilities 167,069 57,621
Liabilities associated with
assets held for sale 2,039 9,045
----------- -----------
Total liabilities 1,354,757 1,404,593
----------- -----------
SHAREHOLDERS' EQUITY
Common stock 83,793 83,106
Additional paid-in capital 110,639 94,597
Accumulated other
comprehensive expense (242,978) (135,263)
Retained earnings 1,296,855 1,247,680
----------- -----------
1,248,309 1,290,120
Treasury stock (603,769) (603,947)
----------- -----------
Total shareholders' equity 644,540 686,173
----------- -----------
Total liabilities and
shareholders' equity $ 1,999,297 $ 2,090,766
=========== ===========
(a) In order to comply with the Financial Accounting Standards Board
(FASB) Statement No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," 2001 information has been
reclassified for comparative purposes.
Harsco Corporation
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
Three Months Ended Twelve Months Ended
December 31 December 31
2002 2001(a) 2002 2001(a)
-------- -------- -------- --------
(In thousands)
Cash flows from operating
activities:
Net income $ 24,073 $ 10,043 $ 90,106 $ 71,725
Adjustments to reconcile
net income to net cash
provided by (used by)
operating activities:
Depreciation 38,068 39,376 153,979 159,157
Amortization 437 4,296 1,682 17,374
Equity in (income)
loss of affiliates,
net 65 29 (363) 1,852
Dividends or
distributions from
affiliates -- 50 144 895
Other (income) and
expenses (1,788) 15,590 (273) 18,940
Other, net 2,607 (2,671) 8,776 (1,049)
Changes in assets and
liabilities, net of
acquisitions and
dispositions of
businesses:
Accounts receivable 52,889 58,112 30,038 12,352
Inventories (7,312) 10,324 (13,280) 11,893
Accounts payable (342) 13,751 (13,055) (11,744)
Net disbursements
related to discontinued
defense business (381) (391) (1,435) (1,328)
Other assets and
liabilities (18,244) (41,603) (2,566) (39,466)
-------- -------- -------- --------
Net cash provided by
operating activities 90,072 106,906 253,753 240,601
-------- -------- -------- --------
Cash flows from investing
activities:
Purchases of property,
plant and equipment (28,208) (38,759) (114,340) (156,073)
Purchase of businesses,
net of cash acquired (2,896) -- (3,332) (4,914)
Proceeds from sales
of assets 8,825 10,742 63,731 35,668
Other investing
activities (4) 90 12 106
-------- -------- -------- --------
Net cash used by
investing activities (22,283) (27,927) (53,929) (125,213)
-------- -------- -------- --------
Cash flows from financing
activities:
Short-term borrowings,
net 3,281 4,975 (16,272) (15,181)
Current maturities and
long-term debt:
Additions 33,877 40,208 136,970 195,678
Reductions (104,491) (101,749) (294,799) (241,862)
Cash dividends paid on
common stock (10,130) (9,591) (40,286) (38,261)
Common stock issued-
options 552 622 14,011 4,773
Common stock acquired
for treasury -- -- -- (167)
Other financing
activities (1,518) (1,441) (5,104) (4,170)
-------- -------- -------- --------
Net cash used by
financing activities (78,429) (66,976) (205,480) (99,190)
-------- -------- -------- --------
Effect of exchange rate
changes on cash 4,346 (422) 8,380 (5,211)
Net decrease in cash of
discontinued operations -- -- 1 --
-------- -------- -------- --------
Net increase (decrease)
in cash and cash
equivalents (6,294) 11,581 2,725 10,987
Cash and cash equivalents
at beginning of period 76,426 55,826 67,407 56,420
-------- -------- -------- --------
Cash and cash equivalents
at end of period $ 70,132 $ 67,407 $ 70,132 $ 67,407
======== ======== ======== ========
(a) In order to comply with the Financial Accounting Standards Board
(FASB) Statement No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," 2001 information has been
reclassified for comparative purposes.
Harsco Corporation
REVIEW OF OPERATIONS BY SEGMENT (a) (Unaudited)
(In millions)
Three Months Ended Three Months Ended
December 31, 2002 December 31, 2001 (b)
Operating Operating
Sales (c) Income (d) Sales (c) Income
(loss) (d)
--------------------- ----------------------
Mill Services $ 183.0 $ 20.5 $ 163.3 $ 5.9
Access Services 159.4 12.2 153.7 17.2
Gas and Fluid Control 85.7 5.6 101.1 1.6
Other Infrastructure
Products and Services 69.2 7.3 81.6 (0.9)
General Corporate -- 0.3 -- 3.9
--------- --------- --------- ---------
Consolidated Totals $ 497.3 $ 45.9 $ 499.7 $ 27.7
========= ========= ========= =========
Twelve Months Ended Twelve Months Ended
December 31, 2002 December 31, 2001 (b)
Operating Operating
Sales (c) Income (d) Sales (c) Income (d)
--------------------- ----------------------
Mill Services $ 696.8 $ 73.5 $ 664.7 $ 57.5
Access Services 587.9 41.7 583.4 59.1
Gas and Fluid
Control 350.6 23.0 400.1 24.3
Other Infrastructure
Products and
Services 341.4 37.6 377.0 23.1
General Corporate -- 0.2 -- 3.7
--------- --------- --------- ---------
Consolidated Totals $ 1,976.7 $ 176.0 $ 2,025.2 $ 167.7
========= ========= ========= =========
(a) Segment information for prior periods has been reclassified to
conform with the current presentation.
(b) In order to comply with the Financial Accounting Standards Board
(FASB) Statement No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," 2001 information has been
reclassified for comparative purposes.
(c) Net sales from continuing operations to unaffiliated customers.
(d) Operating income (loss) from continuing operations.
Harsco Corporation
REVIEW OF OPERATIONS BY SEGMENT (a) (Unaudited)
(In millions)
Three Months Ended Three Months Ended
March 31, 2002 March 31, 2001 (b)
Operating Operating
Sales (c) Income (d) Sales (c) Income
(loss) (d)
--------------------- ----------------------
Mill Services $ 161.1 $ 14.7 $ 168.4 $ 17.0
Access Services 133.5 8.0 139.9 9.6
Gas and Fluid Control 82.5 4.3 105.1 7.9
Other Infrastructure
Products and Services 81.5 6.2 91.7 0.1
General Corporate -- 0.3 -- (0.2)
--------- --------- --------- ---------
Consolidated Totals $ 458.6 $ 33.5 $ 505.1 $ 34.4
========= ========= ========= =========
Three Months Ended Three Months Ended
June 30, 2002 June 30, 2001 (b)
Operating Operating
Sales (c) Income (d) Sales (c) Income (d)
--------------------- ----------------------
Mill Services $ 175.1 $ 17.8 $ 167.4 $ 17.8
Access Services 145.2 11.3 143.8 15.4
Gas and Fluid Control 91.4 8.2 97.5 8.5
Other Infrastructure
Products and Services 98.6 11.2 101.4 11.6
General Corporate -- -- -- --
--------- --------- --------- ---------
Consolidated
Totals (e) $ 510.3 $ 48.5 $ 510.1 $ 53.3
========= ========= ========= =========
Three Months Ended Three Months Ended
September 30, 2002 September 30, 2001 (b)
Operating
Income Operating
Sales (c) (loss) (d) Sales (c) Income (d)
--------------------- ----------------------
Mill Services $ 177.6 $ 20.5 $ 165.6 $ 16.8
Access Services 149.8 10.2 146.0 16.9
Gas and Fluid Control 91.0 4.9 96.4 6.3
Other Infrastructure
Products and Services 92.1 12.9 102.3 12.3
General Corporate -- (0.4) -- --
--------- --------- --------- ---------
Consolidated Totals $ 510.5 $ 48.1 $ 510.3 $ 52.3
========= ========= ========= =========
(a) Segment information for prior periods has been reclassified to
conform with the current presentation.
(b) In order to comply with the Financial Accounting Standards Board
(FASB) Statement No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," 2001 information has been
reclassified for comparative purposes.
(c) Net sales from continuing operations to unaffiliated customers.
(d) Operating income (loss) from continuing operations.
(e) Sales and operating income have been reclassified to include
the results of IKG Industries that were originally classified
as discontinued operations as of June 30, 2002. Due to
management's decision not to sell this business, it is no
longer classified as discontinued operations.
Harsco Corporation
REVIEW OF OPERATIONS BY SEGMENT
EXCLUDING NET UNUSUAL COSTS, SPECIAL CHARGES AND GAINS (a)
- Addendum (Unaudited)
(In millions)
Three Months Ended
December 31, 2002 Operating Income (Loss)
-------------------------------
Before After
Special Special Special
Sales (b) Items (c) Items (d) Items (e)
--------- --------- -------- --------
Mill Services $ 183.0 $ 20.7 $ (0.2) $ 20.5
Access Services 159.4 10.5 1.7 12.2
Gas and Fluid Control 85.7 5.2 0.4 5.6
Other Infrastructure
Products and Services 69.2 7.5 (0.2) 7.3
General Corporate -- (0.2) 0.5 0.3
--------- --------- -------- --------
Consolidated Totals $ 497.3 $ 43.7 $ 2.2 $ 45.9
========= ========= ======== ========
Three Months Ended
December 31, 2001 (f) Operating Income (Loss)
-------------------------------
Before After
Special Special Special
Sales (b) Items (c) Items (d) Items (e)
--------- --------- -------- --------
Mill Services $ 163.3 $ 19.1 $ (13.2) $ 5.9
Access Services 153.7 17.0 0.2 17.2
Gas and Fluid Control 101.1 5.7 (4.1) 1.6
Other Infrastructure
Products and Services 81.6 7.9 (8.8) (0.9)
General Corporate -- 0.1 3.8 3.9
--------- --------- -------- --------
Consolidated Totals $ 499.7 $ 49.8 $ (22.1) $ 27.7
========= ========= ======== ========
Twelve Months Ended
December 31, 2002 Operating Income (Loss)
-------------------------------
Before After
Special Special Special
Sales (b) Items (c) Items (d) Items (e)
--------- --------- -------- --------
Mill Services $ 696.8 $ 78.4 $ (4.9) $ 73.5
Access Services 587.9 41.8 (0.1) 41.7
Gas and Fluid Control 350.6 23.9 (0.9) 23.0
Other Infrastructure
Products and Services 341.4 37.4 0.2 37.6
General Corporate -- (0.5) 0.7 0.2
--------- --------- -------- --------
Consolidated Totals $ 1,976.7 $ 181.0 $ (5.0) $ 176.0
========= ========= ======== ========
Twelve Months Ended
December 31, 2001 (f) Operating Income (Loss)
-------------------------------
Before After
Special Special Special
Sales (b) Items (c) Items (d) Items (e)
--------- --------- -------- --------
Mill Services $ 664.7 $ 75.8 $ (18.3) $ 57.5
Access Services 583.4 59.2 (0.1) 59.1
Gas and Fluid Control 400.1 28.5 (4.2) 24.3
Other Infrastructure
Products and Services 377.0 34.1 (11.0) 23.1
General Corporate -- 0.8 2.9 3.7
--------- --------- -------- --------
Consolidated Totals $ 2,025.2 $ 198.4 $ (30.7) $ 167.7
========= ========= ======== ========
(a)Segment information for prior periods has been reclassified to
conform with the current presentation.
(b)Net sales from continuing operations to unaffiliated customers.
(c)Operating income (loss) from continuing operations before special
items.
(d)Net unusual costs, special (charges) and gains.
(e)Operating income (loss) from continuing operations.
(f)In order to comply with the Financial Accounting Standards
Board (FASB) Statement No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets," 2001 information has been
reclassified for comparative purposes.
Harsco Corporation
REVIEW OF OPERATIONS BY SEGMENT
EXCLUDING NET UNUSUAL COSTS, SPECIAL CHARGES AND GAINS (a)
- Addendum (Unaudited)
(In millions)
Three Months Ended March 31, 2002 Operating Income (Loss)
Before After
Special Special Special
Sales (b) Items (c) Items (d) Items (e)
--------- --------- -------- --------
Mill Services $ 161.1 $ 15.7 $ (1.0) $ 14.7
Access Services 133.5 8.0 -- 8.0
Gas and Fluid Control 82.5 5.2 (0.9) 4.3
Other Infrastructure
Products and Services 81.5 6.8 (0.6) 6.2
General Corporate -- -- 0.3 0.3
--------- --------- -------- --------
Consolidated Totals $ 458.6 $ 35.7 $ (2.2) $ 33.5
========= ========= ======== ========
Three Months Ended June 30, 2002 Operating Income (Loss)
Before After
Special Special Special
Sales (b) Items (c) Items (d) Items (e)
--------- --------- -------- --------
Mill Services $ 175.1 $ 21.3 $ (3.5) $ 17.8
Access Services 145.2 11.5 (0.2) 11.3
Gas and Fluid Control 91.4 8.3 (0.1) 8.2
Other Infrastructure
Products and Services 98.6 11.7 (0.5) 11.2
General Corporate -- (0.1) 0.1 --
--------- --------- -------- --------
Consolidated Totals (f) $ 510.3 $ 52.7 $ (4.2) $ 48.5
========= ========= ======== ========
Three Months Ended
September 30, 2002 Operating Income (Loss)
Before After
Special Special Special
Sales (b) Items (c) Items (d) Items (e)
--------- --------- -------- --------
Mill Services $ 177.6 $ 20.7 $ (0.2) $ 20.5
Access Services 149.8 11.8 (1.6) 10.2
Gas and Fluid Control 91.0 5.2 (0.3) 4.9
Other Infrastructure
Products and Services 92.1 11.4 1.5 12.9
General Corporate -- (0.2) (0.2) (0.4)
--------- --------- -------- --------
Consolidated Totals $ 510.5 $ 48.9 $ (0.8) $ 48.1
========= ========= ======== ========
(a)Segment information for prior periods has been reclassified to
conform with the current presentation.
(b)Net sales from continuing operations to unaffiliated customers.
(c)Operating income (loss) from continuing operations before special
items.
(d)Net unusual costs, special (charges) and gains.
(e)Operating income (loss) from continuing operations.
(f)Sales and operating income have been reclassified to include
the results of IKG Industries that were originally classified
as discontinued operations as of June 30, 2002. Due to
management's decision not to sell this business, it is no
longer classified as discontinued operations.
Harsco Corporation
REVIEW OF OPERATIONS BY SEGMENT
EXCLUDING NET UNUSUAL COSTS, SPECIAL CHARGES AND GAINS (a)
- Addendum (Unaudited)
(In millions)
Three Months Ended
March 31, 2001 (b) Operating Income (Loss)
Before After
Special Special Special
Sales (c) Items (d) Items (e) Items (f)
--------- --------- -------- --------
Mill Services $ 168.4 $ 19.3 $ (2.3) $ 17.0
Access Services 139.9 10.1 (0.5) 9.6
Gas and Fluid Control 105.1 8.5 (0.6) 7.9
Other Infrastructure
Products and Services 91.7 3.4 (3.3) 0.1
General Corporate -- 0.7 (0.9) (0.2)
--------- --------- -------- --------
Consolidated Totals $ 505.1 $ 42.0 $ (7.6) $ 34.4
========= ========= ======== ========
Three Months Ended
June 30, 2001 (b) Operating Income (Loss)
Before After
Special Special Special
Sales (c) Items (d) Items (e) Items (f)
--------- --------- -------- --------
Mill Services $ 167.4 $ 19.6 $ (1.8) $ 17.8
Access Services 143.8 15.4 -- 15.4
Gas and Fluid Control 97.5 8.7 (0.2) 8.5
Other Infrastructure
Products and Services 101.4 11.6 -- 11.6
General Corporate -- (0.3) 0.3 --
--------- --------- -------- --------
Consolidated Totals (g) $ 510.1 $ 55.0 $ (1.7) $ 53.3
========= ========= ======== ========
Three Months Ended
September 30, 2001 (b) Operating Income (Loss)
Before After
Special Special Special
Sales (c) Items (d) Items (e) Items (f)
--------- --------- -------- --------
Mill Services $ 165.6 $ 17.8 $ (1.0) $ 16.8
Access Services 146.0 16.7 0.2 16.9
Gas and Fluid Control 96.4 5.6 0.7 6.3
Other Infrastructure
Products and Services 102.3 11.2 1.1 12.3
General Corporate -- 0.4 (0.4) --
--------- --------- -------- --------
Consolidated Totals $ 510.3 $ 51.7 $ 0.6 $ 52.3
========= ========= ======== ========
(a)Segment information for prior periods has been reclassified to
conform with the current presentation.
(b)In order to comply with the Financial Accounting Standards
Board (FASB) Statement No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets," 2001 information has been
reclassified for comparative purposes.
(c)Net sales from continuing operations to unaffiliated customers.
(d)Operating income (loss) from continuing operations before special
items.
(e)Net unusual costs, special (charges) and gains.
(f)Operating income (loss) from continuing operations.
(g)Sales and operating income have been reclassified to include
the results of IKG Industries that were originally classified
as discontinued operations as of June 30, 2002. Due to
management's decision not to sell this business, it is no
longer classified as discontinued operations.
Harsco Corporation
RECONCILIATION OF NET INCOME TO INCOME EXCLUDING NET UNUSUAL COSTS,
SPECIAL CHARGES AND GAINS (Unaudited)
(In millions)
Three Months Twelve Months
Ended Ended
December 31 December 31
2002 2001 2002 2001
------ ------ ------ ------
Net income (GAAP basis) $ 24.1 $ 10.0 $ 90.1 $ 71.7
------ ------ ------ ------
Net unusual costs, special
(charges) and gains:
Gains on sale of assets 2.9 3.4 13.1 6.9
Impaired asset write-downs -- (13.5) (0.4) (15.4)
Employee termination benefit costs (2.3) (5.2) (7.1) (10.5)
Costs to exit S3Networks,
LLC equity investment -- -- -- (2.9)
Other exit costs (0.7) (1.7) (2.9) (2.8)
Provision for doubtful accounts of
steel mill customers in bankruptcy 2.1 (6.8) (1.7) (7.9)
Other items 0.5 1.4 (1.4) (1.8)
------ ------ ------ ------
Net unusual costs, special
(charges) and gains, before tax 2.5 (22.4) (0.4) (34.4)
Tax (expense) benefit (0.8) 7.1 0.1 11.2
------ ------ ------ ------
Net unusual costs, special
(charges) and gains, after tax 1.7 (15.3) (0.3) (23.2)
------ ------ ------ ------
Income excluding net unusual
costs, special (charges)
and gains $ 22.4 $ 25.3 $ 90.4 $ 94.9
====== ====== ====== ======