HARRISBURG, Pa., July 18, 2002 (PRIMEZONE) -- Worldwide industrial services and products company Harsco Corporation (NYSE:HSC) today reported results for the second quarter and first half of 2002.
Income and diluted earnings per share (EPS) for the second quarter were as follows:
$ Millions Per Share - Diluted
June 30 June 30 June 30 June 30
Quarter Ending 2002 2001 2002 2001
------- ------- ------- -------
Income from Continuing
Operations $24.1 $24.5 $0.59 $0.62
Income from Discontinued
Operations 2.1 0.2 0.05 0.00
----- ----- ----- -----
Net Income (GAAP Basis) $26.2 $24.7 $0.64 $0.62
===== ===== ===== =====
Net Unusual Costs,
Special Charges and
Gains, After Tax (0.9) (1.2) (0.02) (0.03)
Income Excluding Net
Unusual Costs, Special
Charges and Gains $27.1 $25.9 $0.66 $0.65
===== ===== ===== =====
Second quarter net income was negatively affected by higher pension expense of $3.6 million after-tax or $0.09 per share, which offset the elimination of $2.8 million after-tax or $0.07 per share in goodwill amortization under the Company's adoption of SFAS No. 142, "Goodwill and Other Intangible Assets," and a $0.8 million after-tax or $0.02 per share benefit from positive foreign currency translation due to the weakening U.S. dollar.
After-tax net unusual costs, special charges and gains resulted in a net charge of $0.9 million or $0.02 per share in the quarter. These include a gain of $1.8 million after-tax or $0.04 per share from the Company's sale of its Capitol Manufacturing operations, offset by a bad debt expense of $1.9 million after-tax or $0.05 per share due to a customer's administrative receivership filing in the U.K. which occurred subsequent to quarter-end. Other unusual items included severance costs and other reorganization expenses.
Sales from continuing operations were $487 million, up 1 percent over the $480 million recorded in the second quarter of last year. Positive foreign currency translation increased sales by $8.3 million.
Commenting on the Company's second quarter performance, Harsco Chairman, President and Chief Executive Officer Derek C. Hathaway said, "Absent the unexpected post-period U.K. customer receivership filing on July 10th which negatively impacted earnings by $0.05 per share, our second quarter results approximated internal expectations and were within the lower range of analyst estimates. The quarter also evidenced significant progress toward our key strategic objectives, which include free cash flow growth, the sale of underperforming assets and meaningful debt reduction. Our accomplishments included the generation of $59 million in free cash flow including asset sales, $34 million above last year's second quarter; $31 million in debt reduction; and a $2.3 million reduction in net interest expense.
"The sale of our Capitol Manufacturing operations continues our strategic transformation toward higher margin, recurring revenue businesses. To this end, we are considering offers for an additional business identified for divestiture and have begun accounting for it in the quarter as a discontinued operation, in accordance with SFAS No. 144."
For the first six months of 2002, income and diluted earnings per share (EPS) were as follows:
$ Millions Per Share - Diluted
June 30 June 30 June 30 June 30
Six Months Ending 2002 2001 2002 2001
------- ------- ------- -------
Income from Continuing
Operations $38.5 $36.9 $0.95 $0.92
Income (Loss) from
Discontinued
Operations 1.8 (2.1) 0.04 (0.05)
----- ----- ----- -----
Net Income
(GAAP Basis) $40.3 $34.8 $0.99 $0.87
===== ===== ===== =====
Net Unusual Costs,
Special Charges and
Gains, After Tax (2.4) (8.0) (0.06) (0.20)
Income Excluding Net
Unusual Costs, Special
Charges and Gains $42.7 $42.8 $1.05 $1.07
===== ===== ===== =====
Revenues from continuing operations for the first six months were $923 million, compared with $959 million for the comparable period last year. Negative foreign currency translation during the first six months lowered sales by approximately $2.5 million and after-tax income by $0.3 million.
"Through the first six months of 2002, we have generated $38 million in free cash flow, including asset sales; $26 million in debt reduction; and $5.5 million in lower net interest expense," Mr. Hathaway said. "Entering the second half of the year, traditionally our strongest for free cash flow generation, we remain confident of our long-term growth strategies. We are raising our targeted proceeds from the sale of underperforming assets, and consequently increasing our debt reduction goal above its original $100 million target. These increases should allow us to further reduce our debt-to-capital ratio to the area of 45 percent by year-end, thus greatly increasing our financial flexibility.
"Moreover, with the sale of Capitol Manufacturing and other smaller product lines in the first half of the year and the anticipated sale in the second half of additional non-core manufacturing businesses, we expect revenues from our higher margin and less cyclical industrial services businesses to approach or exceed 70 percent by the end of the second half. The timing of these divestitures may initially lower our earnings from continuing operations, but we fully expect that the reinvestment in higher return assets will lead to increased earnings and margins over the medium term. By year-end, we anticipate that upwards of 55 percent of our revenues will be generated from the international marketplace, where we presently see better growth opportunities.
"The delay in capital investment decisions by some of our customers is having a dampening effect on the expected second half rebound, particularly in parts of our Gas and Fluid Control segment where the economic recovery in some manufacturing product lines is not occurring as quickly as we had anticipated. The recent, more severe downturn in non-residential construction, including hotels and office buildings, is affecting our Infrastructure segment. Capital investment delays, coupled with the timing of our divestitures, the recent general decline in confidence, and other national apprehensions, make it more difficult to achieve our previously stated goal of 10 percent EPS growth, and cause us to take a cautious view of the second half. Quarter three will be our lead indicator as to whether it will be necessary to modify our view."
Second Quarter Business Segment Review
Infrastructure -- Sales from continuing operations for this segment were up slightly in the quarter to $201 million from $196 million last year, due to $6.0 million in positive foreign currency translation. Operating income from continuing operations, before $0.4 million in net special charges, declined from $22.2 million to $16.7 million, despite a $0.7 million benefit from foreign currency translation. Operating margins, before special charges, declined from 11.3 percent in last year's second quarter to 8.3 percent.
Performance was impeded by widespread deferrals of non-residential construction spending due to the generally unsettled economic conditions. This was coupled with a less favorable mix of product sales in both the access products and track technologies product lines.
Mill Services -- Sales from continuing operations increased 5 percent to $194 million from $185 million in last year's second quarter. Operating income from continuing operations, before $3.4 million in net special charges, increased 12 percent to $26.4 million, while operating margins, before special charges, increased 90 basis points to 13.6 percent in the quarter. Positive foreign currency translation increased sales by $2.1 million and operating income by $0.3 million in the quarter.
Before special items, this segment's results benefited from improved operating performance from all three of its business units: international mill services, domestic mill services, and roofing granules and abrasives. As noted previously, these improvements were negatively offset by the charge taken for the administrative receivership announced by a U.K. customer, the first such occurrence there for a mill services customer in Harsco's experience. Operations are presently continuing at this site under special financing arrangements in receivership.
Gas and Fluid Control -- Sales from continuing operations for this segment declined from $99 million in the second quarter of last year to $91 million this year. Operating income from continuing operations, before $0.1 million in net special charges, declined by a modest 6 percent to $8.1 million in the quarter from the prior year, while operating margins improved by 20 basis points, to 8.9 percent.
Although slightly down, the segment's second quarter operating income was the best year-over-year comparison since the third quarter of 2000. While not all product lines are yet showing favorable trends, it would appear that the manufacturing recession, as it relates to these products, may finally be moderating, with the prospects for improved results in early 2003, if not sooner.
Financial Position
As previously noted, Harsco continued to make progress in its strategic objectives for cash optimization during the second quarter of 2002. Net cash from operating activities improved by $6.3 million and proceeds from asset sales grew by $12.2 million over the second quarter of 2001. Coupled with a reduction in capital expenditures of $15.5 million, free cash flow in the quarter improved by approximately $34 million. Year-to-date free cash flow has improved by approximately $49 million over the first half of last year. In addition, the Company's debt-to-capital ratio has improved by 270 basis points since year-end 2001, to 49.9 percent at June 30, 2002 compared with 52.6 percent at December 31, 2001.
While still down year-over-year, the Company's EVA(r) performance has begun to improve in recent months, and is expected to maintain gradual improvement in future quarters as the Company begins to more fully realize the benefits of its initiatives to increase returns on invested capital.
As previously announced, Harsco will hold a conference call today at 2:00 p.m. ET to discuss its results and respond to questions from the investment community. The conference call will be broadcast live through the Harsco Corporation Web site at www.harsco.com. The call can also be accessed by telephone by dialing (800) 611-4920, or (706) 634-5923 from outside the United States and Canada. Listeners are advised to dial in at least five minutes prior to the call. Replays will be available via both the Harsco Web site and by telephone beginning approximately 5:00 pm ET today until approximately 4:00 pm ET Thursday, July 25. The telephone replay dial-in number is (800) 642-1687, or (706) 645-9291 from outside the United States and Canada. Enter Conference ID number 4415102.
Forward-Looking Statements
The nature of Harsco'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, Harsco 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, earnings, cash flow, and other financial performance measures.
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 service, infrastructure and industrial gas markets; currency exchange rates; interest rates; and capital costs; (2) changes in governmental laws and regulations, including taxes; (3) market and competitive changes, including pricing pressures, market demand and acceptance for new products, services, and technologies; (4) effects of unstable governments and business conditions in emerging economies; and (5) 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.
Harsco Corporation is a diversified provider of market-leading industrial services and products serving the worldwide infrastructure development, steel and metals, railway transportation, and gas and energy industries. The company employs approximately 18,000 people in 40 countries of operation. Additional information can be found at www.harsco.com.
Harsco Corporation
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30 June 30
2002 2001 (a) 2002 2001 (a)
Revenues from
continuing
operations:
Service sales $ 335,696 $ 332,310 $ 645,571 $ 657,780
Product sales 150,919 147,854 277,227 301,054
--------- --------- --------- ---------
Total revenues 486,615 480,164 922,798 958,834
========= ========= ========= =========
Costs and expenses
from continuing
operations:
Cost of services
sold 241,922 237,635 469,109 475,278
Cost of products
sold 119,367 115,372 220,083 241,268
Selling, general,
and administrative
expenses 75,927 72,775 149,903 148,770
Research and
development
expenses 708 885 1,564 1,470
Other expense 1,436 1,258 2,342 3,845
--------- --------- --------- ---------
Total costs and
Expenses 439,360 427,925 843,001 870,631
========= ========= ========= =========
Operating income
from continuing
operations 47,255 52,239 79,797 88,203
Equity in income
(loss) of
affiliates, net 85 190 290 (2,048)
Interest income 830 1,139 2,090 2,311
Interest expense (11,086) (13,711) (22,153) (27,850)
--------- --------- --------- ---------
Income from
continuing
operations before
income taxes and
minority interest 37,084 39,857 60,024 60,616
Provision for
income taxes 11,395 13,950 18,465 21,239
--------- --------- --------- ---------
Income from
continuing
operations before
minority interest 25,689 25,907 41,559 39,377
Minority interest
in net income 1,588 1,366 3,033 2,452
--------- --------- --------- ---------
Income from
continuing
operations 24,101 24,541 38,526 36,925
========= ========= ========= =========
Discontinued operations:
Income (loss) from
operations of
discontinued
businesses 415 253 (2) (3,234)
Gain on disposal
of discontinued
businesses 2,868 -- 2,868 --
Provision for
income taxes (1,183) (89) (1,030) 1,155
--------- --------- --------- ---------
Income (loss) from
Discontinued
Operations 2,100 164 1,836 (2,079)
--------- --------- --------- ---------
Net Income $ 26,201 $ 24,705 $ 40,362 $ 34,846
========= ========= ========= =========
Average shares of
common stock
outstanding 40,353 39,828 40,198 39,818
Basic earnings per
common share:
Continuing
Operations .60 .62 .96 .93
Discontinued
operations .05 -- .04 (.05)
--------- --------- --------- ---------
Basic earnings
per common share $ .65 $ .62 $ 1.00 $ .88
========= ========= ========= =========
Diluted average
shares of common
shares outstanding 40,938 39,933 40,738 39,906
Diluted earnings
per common share:
Continuing
Operations .59 .62 .95 .92
Discontinued
Operations .05 -- .04 (.05)
--------- --------- --------- ---------
Diluted earnings
per common share $ .64 $ .62 $ .99 $ .87
========= ========= ========= =========
(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)
(In thousands)
June 30 December 31
2002 2001 (a)
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 65,615 $ 66,638
Accounts Receivable, net 400,687 369,569
Inventories 170,972 165,105
Other current assets 68,663 68,046
----------- -----------
Total current assets 705,937 669,358
----------- -----------
Property, plant and
equipment, net 802,608 811,274
Cost in excess of net
assets of businesses
acquired, net 363,418 353,170
Other assets 183,574 179,422
Assets held for sale 60,204 77,542
----------- -----------
Total assets $ 2,115,741 $ 2,090,766
=========== ===========
LIABILITIES
Current liabilities:
Short-term borrowings $ 35,616 $ 29,602
Current maturities of
long-term debt 10,491 12,422
Accounts payable 136,817 156,739
Accrued compensation 34,067 35,726
Income taxes 24,923 35,091
Dividends payable 10,127 9,996
Other current liabilities 193,283 174,161
----------- -----------
Total current liabilities 445,324 453,737
----------- -----------
Long-term debt 690,103 720,133
Deferred income taxes 116,121 103,082
Insurance liabilities 49,383 49,019
Other liabilities 58,054 57,621
Liabilities held for sale 16,821 21,001
----------- -----------
Total liabilities 1,375,806 1,404,593
----------- -----------
SHAREHOLDERS' EQUITY
Common stock 83,754 83,106
Additional paid-in capital 109,822 94,597
Accumulated other
comprehensive income
(expense) (117,722) (135,263)
Retained earnings 1,267,882 1,247,680
----------- -----------
1,343,736 1,290,120
Treasury stock (603,801) (603,947)
----------- -----------
Total shareholders' equity 739,935 686,173
----------- -----------
Total liabilities and
shareholders' equity $ 2,115,741 $ 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)
(In thousands)
Three Months Ended Six Months Ended
June 30 June 30
2002 2001(a) 2002 2001(a)
-------- -------- -------- --------
Cash flows from
operating
activities:
Net income $ 26,201 $ 24,705 $ 40,362 $ 34,846
Adjustments to
reconcile net
income to net
cash provided by
operating
activities:
Depreciation 38,196 40,234 76,171 79,508
Amortization 501 4,391 838 8,718
Equity in (income)
loss of affiliates,
net (85) (190) (290) 2,048
Dividends or
distributions
from affiliates 144 108 144 108
Other, net 5,820 719 7,227 4,615
Changes in assets
and liabilities,
net of acquisitions
and dispositions
of businesses:
Accounts receivable (9,302) (6,095) (18,621) (32,211)
Inventories 9,022 (912) (3,744) (7,087)
Accounts payable (8,402) (293) (29,115) (22,072)
Net disbursements
related to
discontinued
defense
business (214) (282) (505) (468)
Other assets and
Liabilities 9,509 2,674 7,936 (392)
-------- -------- -------- --------
Net cash provided by
operating activities 71,390 65,059 80,403 67,613
-------- -------- -------- --------
Cash flows from
investing activities:
Purchases of
property,
plant and
equipment (28,765) (44,241) (60,020) (77,850)
Purchase of
businesses, net
of cash acquired -- (4,880) -- (4,880)
Proceeds from sales
of assets 26,723 14,538 37,186 17,573
Other investing
Activities (19) 41 (19) 50
-------- -------- -------- --------
Net cash (used) by
investing
activities (2,061) (34,542) (22,853) (65,107)
-------- -------- -------- --------
Cash flows from
financing
activities:
Short-term
borrowings, net 13,083 8,406 520 6,891
Current maturities
and long-term
debt:
Additions 27,669 27,148 88,805 107,331
Reductions (107,713) (59,008) (142,296) (90,188)
Cash dividends
paid on common
stock (10,033) (9,556) (20,029) (19,109)
Common stock
issued-options 9,566 508 13,177 659
Common stock
acquired for
treasury -- -- -- (50)
Other financing
activities (1,920) (1,074) (3,298) (2,280)
-------- -------- -------- --------
Net cash provided
(used) by financing
activities (69,348) (33,576) (63,121) 3,254
-------- -------- -------- --------
Effect of exchange
rate changes
on cash 5,685 (1,156) 4,282 (5,030)
Net (increase)
decrease in cash
of discontinued
operations 313 (504) 266 (706)
-------- -------- -------- --------
Net increase
(decrease) in
cash and cash
equivalents 5,979 (4,719) (1,023) 24
Cash and cash
equivalents at
beginning of period 59,636 60,051 66,638 55,308
-------- -------- -------- --------
Cash and cash
equivalents at
end of period $ 65,615 $ 55,332 $ 65,615 $ 55,332
======== ======== ======== ========
(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
(Unaudited)
(In millions)
Infra- Gas and S3- Gen'l Consol-
struc- Mill Fluid Networks Corpo- idated
ture Svcs Control LLC rate Totals
Three Months Ended
June 30, 2002
Net sales from
continuing
operations to
unaffiliated
customers $201.3 $193.9 $ 91.4 $ -- $ -- $486.6
Operating income
from continuing
operations $ 16.3 $ 23.0 $ 8.0 $ -- $ -- $ 47.3
Equity in income
of affiliates,
net 0.1 -- -- -- -- 0.1
Interest income -- 0.7 0.1 -- -- 0.8
Interest expense (7.1) (0.9) (0.1) -- (3.0) (11.1)
Income tax
(expense) benefit (2.7) (7.3) (2.4) -- 1.0 (11.4)
Minority interest
in net
(income) loss (0.3) (1.4) 0.1 -- -- (1.6)
Segment income
(loss) from
continuing
operations 6.3 14.1 5.7 -- (2.0) 24.1
Income from
discontinued
operations 0.7 -- 1.4 -- -- 2.1
Segment net
income (loss) $ 7.0 $ 14.1 $ 7.1 $ -- $(2.0) $ 26.2
Infra- Gas and S3- Gen'l Consol-
struc- Mill Fluid Networks Corpo- idated
ture Svcs Control LLC rate Totals
Three Months Ended
June 30, 2001 (a)
Net sales from
continuing
operations to
unaffiliated
customers $195.9 $185.3 $ 99.0 $ -- $ -- $480.2
Operating income
from continuing
operations $ 22.2 $ 21.6 $ 8.4 $ -- $ -- $ 52.2
Equity in income
(loss) of
affiliates, net 0.4 -- -- (0.2) -- 0.2
Interest income -- 1.0 0.1 -- -- 1.1
Interest expense (8.4) (2.5) (0.4) -- (2.4) (13.7)
Income tax
(expense) benefit (5.8) (6.1) (2.9) 0.1 0.8 (13.9)
Minority interest
in net income (0.1) (1.3) -- -- -- (1.4)
Segment income
(loss) from
continuing
operations 8.3 12.7 5.2 (0.1) (1.6) 24.5
Income (loss)
from
discontinued
operations 0.4 -- (0.2) -- -- 0.2
Segment net
income (loss) $ 8.7 $ 12.7 $ 5.0 $ (0.1) $ (1.6) $ 24.7
(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 (Unaudited)
(In millions)
Infra- Gas and S3- Gen'l Consol-
struc- Mill Fluid Networks Corpo- idated
ture Svcs Control LLC rate Totals
Six Months Ended
June 30, 2002
Net sales from
continuing
operations to
unaffiliated
customers $377.2 $370.6 $175.0 $ -- $ -- $922.8
Operating income
from continuing
operations $ 26.6 $ 40.7 $ 12.3 $ -- $ 0.2 $ 79.8
Equity in income
of affiliates, net 0.3 -- -- -- -- 0.3
Interest income 0.2 1.6 0.1 -- 0.2 2.1
Interest expense (14.0) (2.2) (0.2) -- (5.8) (22.2)
Income tax
(expense) benefit (3.9) (12.8) (3.6) -- 1.8 (18.5)
Minority interest
in net (income)
loss (0.3) (2.8) 0.1 -- -- (3.0)
Segment income
(loss) from
continuing
operations 8.9 24.5 8.7 -- (3.6) 38.5
Income from
discontinued
operations 1.3 -- 0.5 -- -- 1.8
Segment net
income (loss) $ 10.2 $ 24.5 $ 9.2 $ -- $(3.6) $ 40.3
Infra- Gas and S3- Gen'l Consol-
struc- Mill Fluid Networks Corpo- idated
ture Svcs Control LLC rate Totals
Six Months Ended
June 30, 2001 (a)
Net sales from
continuing
operations to
unaffiliated
customers $385.0 $368.4 $205.4 $ -- $ -- $958.8
Operating income
(loss) from
continuing
operations $ 32.0 $ 40.1 $ 16.3 $ -- $(0.2) $ 88.2
Equity in income
(loss) of
affiliates, net 0.8 0.1 -- (2.9) -- (2.0)
Interest income 0.2 2.0 0.1 -- -- 2.3
Interest expense (17.2) (4.7) (0.7) -- (5.3) (27.9)
Income tax
(expense) benefit (6.3) (11.3) (5.8) 1.0 1.2 (21.2)
Minority interest
in net income (0.1) (2.4) -- -- -- (2.5)
Segment income
(loss) from
continuing
operations 9.4 23.8 9.9 (1.9) (4.3) 36.9
Loss from
discontinued
operations (0.8) -- (1.3) -- -- (2.1)
Segment net
income (loss) $ 8.6 $ 23.8 $ 8.6 $ (1.9) $(4.3) $ 34.8
(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 - Addendum (Unaudited)
(In millions)
Infra- Gas and S3- Gen'l Consol-
struc- Mill Fluid Networks Corpo- idated
ture Svcs Control LLC rate Totals
Three Months Ended
June 30, 2002
Net sales from
continuing
operations to
unaffiliated
customers $201.3 $193.9 $ 91.4 $ -- $ -- $486.6
Operating income
from continuing
operations before
special items $ 16.7 $ 26.4 $ 8.1 $ -- $(0.1) $ 51.1
Net unusual costs,
special (charges)
gains (0.4) (3.4) (0.1) -- 0.1 (3.8)
Operating income
from continuing
operations 16.3 23.0 8.0 -- -- 47.3
Equity in income
of affiliates,
net 0.1 -- -- -- -- 0.1
Interest income -- 0.7 0.1 -- -- 0.8
Interest expense (7.1) (0.9) (0.1) -- (3.0) (11.1)
Income tax
(expense) benefit (2.7) (7.3) (2.4) -- 1.0 (11.4)
Minority interest
in net income (0.3) (1.4) 0.1 -- -- (1.6)
Segment income
(loss) from
continuing
operations 6.3 14.1 5.7 -- (2.0) 24.1
Income (loss)
from discontinued
operations
before special
items 0.9 -- (0.4) -- -- 0.5
Net unusual costs,
special (charges)
gains - after tax (0.2) -- 1.8 -- -- 1.6
Income from
discontinued
operations 0.7 -- 1.4 -- -- 2.1
Segment net
income (loss) $ 7.0 $ 14.1 $ 7.1 $ -- $(2.0) $ 26.2
Infra- Gas and S3- Gen'l Consol-
struc- Mill Fluid Networks Corpo- idated
ture Svcs Control LLC rate Totals
Three Months Ended
June 30, 2001 (a)
Net sales from
continuing
operations to
unaffiliated
customers $195.9 $185.3 $ 99.0 $ -- $ -- $480.2
Operating income
from continuing
operations
before special
items $ 22.2 $ 23.6 $ 8.6 $ -- $(0.3) $ 54.1
Net unusual costs,
special (charges)
gains -- 2.0) (0.2) (0.2) 0.3 (2.1)
Operating income
from continuing
operations 22.2 21.6 8.4 -- -- 52.2(b)
Equity in income
(loss) of
affiliates, net 0.4 -- -- (0.2) -- 0.2
Interest income -- 1.0 0.1 -- -- 1.1
Interest expense (8.4) (2.5) (0.4) -- (2.4) (13.7)
Income tax
(expense) benefit (5.8) (6.1) (2.9) 0.1 0.8 (13.9)
Minority interest
in net income (0.1) (1.3) -- -- -- (1.4)
Segment income
(loss) from
continuing
operations 8.3 12.7 5.2 (0.1) (1.6) 24.5
Income (loss) from
discontinued
operations
before special
items 0.3 -- (0.2) -- -- 0.1
Net unusual costs,
special (charges)
gains - after tax 0.1 -- -- -- -- 0.1
Income (loss) from
discontinued
operations 0.4 -- (0.2) -- -- 0.2
Segment net
income (loss) $ 8.7 $ 12.7 $ 5.0 $(0.1) $(1.6) $ 24.7
(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.
(b) Excludes $0.2 million of losses for S3Networks, LLC that are
included as special items above. The $0.2 million is included in
Equity in income (loss) of affiliates, net.
Harsco Corporation
REVIEW OF OPERATIONS BY SEGMENT - Addendum (Unaudited)
(In millions)
Infra- Gas and S3- Gen'l Consol-
struc- Mill Fluid Networks Corpo- idated
ture Svcs Control LLC rate Totals
Six Months Ended
June 30, 2002
Net sales from
continuing
operations to
unaffiliated
customers $377.2 $370.6 $175.0 $ -- $ -- $922.8
Operating income
from continuing
operations before
special items $ 27.0 $ 45.2 $ 13.4 $ -- $(0.2) $ 85.4
Net unusual costs,
special (charges)
gains (0.4) (4.5) (1.1) -- 0.4 (5.6)
Operating income
from continuing
operations 26.6 40.7 12.3 -- 0.2 79.8
Equity in income
of affiliates, net 0.3 -- -- -- -- 0.3
Interest income 0.2 1.6 0.1 -- 0.2 2.1
Interest expense (14.0) (2.2) (0.2) -- (5.8) (22.2)
Income tax
(expense) benefit (3.9) (12.8) (3.6) -- 1.8 (18.5)
Minority interest
in net income (0.3) (2.8) 0.1 -- -- (3.0)
Segment income
(loss) from
continuing
operations 8.9 24.5 8.7 -- (3.6) 38.5
Income (loss) from
discontinued
operations before
special items 1.8 -- (1.3) -- -- 0.5
Net unusual costs,
special (charges)
gains - after tax (0.5) -- 1.8 -- -- 1.3
Income from
discontinued
operations 1.3 -- 0.5 -- -- 1.8
Segment net
income (loss) $ 10.2 $ 24.5 $ 9.2 $ -- $(3.6) $ 40.3
Infra- Gas and S3- Gen'l Consol-
struc- Mill Fluid Networks Corpo- idated
ture Svcs Control LLC rate Totals
Six Months Ended
June 30, 2001 (a)
Net sales from
continuing
operations to
unaffiliated
customers $385.0 $368.4 $205.4 $ -- $ -- $958.8
Operating income
from continuing
operations before
special items $ 33.7 $ 44.5 $ 17.2 $ -- $ 0.4 $ 95.8
Net unusual costs,
special (charges)
gains (1.7) (4.4) (0.9) (2.9) (0.6) (10.5)
Operating income
(loss) from
continuing
operations 32.0 40.1 16.3 -- (0.2) 88.2(b)
Equity in income
(loss) of
affiliates, net 0.8 0.1 -- (2.9) -- (2.0)
Interest income 0.2 2.0 0.1 -- -- 2.3
Interest expense (17.2) (4.7) (0.7) -- (5.3) (27.9)
Income tax
(expense) benefit (6.3) (11.3) (5.8) 1.0 1.2 (21.2)
Minority interest
in net income (0.1) (2.4) -- -- -- (2.5)
Segment income
(loss) from
continuing
operations 9.4 23.8 9.9 (1.9) (4.3) 36.9
Income (loss) from
discontinued
operations before
special items 0.3 -- (1.2) -- -- (0.9)
Net unusual costs,
special (charges)
gains - after tax (1.1) -- (0.1) -- -- (1.2)
Loss from
discontinued
operations (0.8) -- (1.3) -- -- (2.1)
Segment net
income (loss) $ 8.6 $ 23.8 $ 8.6 $ (1.9) $ (4.3) $ 34.8
(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.
(b) Excludes $2.9 million of losses for S3Networks, LLC that are
included as special items above. The $2.9 million is included in
Equity in income (loss) of affiliates, net.
Harsco Corporation
RECONCILIATION OF NET INCOME TO INCOME EXCLUDING NET UNUSUAL COSTS,
SPECIAL CHARGES AND GAINS
(In millions)
Three Months Ended Six Months Ended
June 30 June 30
2002 2001 2002 2001
------------------- -----------------
Net income (GAAP basis) $ 26.2 $ 24.7 $ 40.3 $ 34.8
------- ------- ------- -------
Net unusual costs,
special charges
and gains:
Gains on sale of assets 3.0 1.5 3.4 2.3
Impaired asset
write-downs -- (0.3) -- (1.7)
Employee termination
benefit costs (1.0) (1.5) (2.0) (4.1)
Costs to exit S3Networks,
LLC equity investment -- (0.2) -- (2.9)
Other exit costs -- (0.5) (0.6) (1.3)
Provision for doubtful
accounts of steel mill
customers in bankruptcy (2.8) (0.4) (3.6) (1.2)
Other items (0.5) (0.5) (0.7) (3.5)
------- ------- ------- -------
Net unusual costs, special
charges and gains,
before tax (1.3) (1.9) (3.5) (12.4)
Tax benefit 0.4 0.7 1.1 4.4
------- ------- ------- -------
Net unusual costs, special
charges and gains,
after tax (0.9) (1.2) (2.4) (8.0)
------- ------- ------- -------
Income excluding net
unusual costs, special
charges and gains $ 27.1 $ 25.9 $ 42.7 $ 42.8
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