Delaware
|
23-1483991
|
|
(State
or other jurisdiction of
|
(I.R.S.
employer identification number)
|
|
incorporation
or organization)
|
||
350
Poplar Church Road, Camp Hill, Pennsylvania
|
17011
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Name
of each
|
|
Title
of each class
|
exchange
on which registered
|
Common
stock, par value $1.25 per share
|
New
York Stock Exchange and
|
Preferred
stock purchase rights
|
Pacific
Stock Exchange
|
Large
accelerated filer x
|
Accelerated
filer o
|
Non-accelerated
filer o
|
Classes
|
Outstanding
at February 28,
2006
|
Common
stock, par value $1.25 per share
|
41,835,886
|
Principal
Lines of Business
|
Principal
Business Drivers
|
· Outsourced,
on-site mill services under long-term contracts
|
· Steel
mill production and capacity utilization
· Outsourcing
of services
|
· Scaffolding,
forming, shoring and other access-related services, rentals and sales
|
· Non-residential
construction
· Annual
industrial and building maintenance cycles
|
· Railway
track maintenance services and equipment
|
· Domestic
and international railway track maintenance-of-way capital
spending
· Outsourcing
of track maintenance and new track construction by
railroads
|
· Industrial
grating products
|
· Industrial
production
· Non-residential
construction
|
· Industrial
abrasives and roofing granules
|
· Industrial
and infrastructure surface preparation and restoration
· Residential
roof replacement
|
· Powder
processing equipment and heat transfer products
|
· Pharmaceutical,
food and chemical production
· Commercial
and institutional boiler requirements
|
· Air-cooled
heat exchangers
|
· Natural
gas drilling and transmission
|
· Gas
control and containment products
|
|
-
Cryogenic containers and industrial cylinders
|
· General
industrial production and industrial gas production
|
-
Valves
|
· Use
of industrial fuel and refrigerant gases
· Respiratory
care market
· Consumer
barbeque grills market
|
-
Propane Tanks
|
· Use
of propane as a primary and/or backup fuel
|
-
Filament-wound composite cylinders
|
· Self-contained
breathing apparatus (SCBA) market
· Natural
gas vehicle (NGV) market
|
Mill
Services Segment
|
||
|
2005
Percentage
|
|
Region
|
of
Revenues
|
|
|
|
|
Europe
|
49%
|
|
North
America
|
23%
|
|
Latin
America (a)
|
12%
|
|
Asia/Pacific
|
8%
|
|
Middle
East and Africa
|
8%
|
Access
Services Segment
|
||
|
2005
Percentage
|
|
Region
|
of
Revenues
|
|
|
|
|
Europe
|
67%
|
|
North
America
|
22%
|
|
Middle
East and Africa
|
9%
|
|
Asia/Pacific
|
2%
|
(1) (i) |
The
products and services of the Company include a number of product
groups.
These product groups are more fully discussed in Note 14, Information
by
Segment and Geographic Area, to the Consolidated Financial Statements
under Part II, Item 8, “Financial Statements and Supplementary Data.” The
product groups that contributed 10% or more as a percentage of
consolidated sales in any of the last three fiscal years are set
forth in
the following table:
|
Percentage
of Consolidated Sales
|
||||
Product
Group
|
2005
|
2004
|
2003
|
|
Mill
Services
|
38%
|
40%
|
39%
|
|
Access
Services
|
29%
|
28%
|
29%
|
|
Industrial
Gas Products
|
13%
|
14%
|
14%
|
(1) (ii) |
New
products and services are added from time to time; however, in 2005
none
required the investment of a material amount of the Company's
assets.
|
(1) (iii) |
The
manufacturing requirements of the Company's operations are such that
no
unusual sources of supply for raw materials are required. The raw
materials used by the Company include principally steel and, to a
lesser
extent, aluminum, which are usually readily available. The profitability
of the Company’s manufactured products are affected by changing purchase
prices of steel and other materials and commodities. Beginning in
2004,
the price paid for steel and certain other commodities increased
significantly compared with prior years. In 2005, the cost increases
moderated for certain commodities. However, if steel or other material
costs associated with the Company’s manufactured products increase and the
costs cannot be passed on to the Company’s customers, operating income
would be adversely affected. Additionally, decreased availability
of steel
or other materials, such as carbon fiber used to manufacture
filament-wound composite cylinders, could affect the Company’s ability to
produce manufactured products in a timely manner. If the Company
cannot obtain the necessary raw materials for its manufactured products,
then revenues, operating income and cash flows will be adversely
affected.
|
(1) (iv) |
While
the Company has a number of trademarks, patents and patent applications,
it does not consider that any material part of its business is dependent
upon them.
|
(1) (v) |
The
Company furnishes products and materials and certain industrial services
within the Access Services and Gas Technologies Segments and the
Engineered Products and Services (“all other”) Category that are seasonal
in nature. As a result, the Company’s sales and net income for the first
quarter ending March 31 are normally lower than the second, third
and
fourth quarters. Additionally, the Company has historically generated
the
majority of its cash flows in the third and fourth quarters (periods
ending September 30 and December 31). This is a direct result of
normally
higher sales and income during the latter part of the year. The Company’s
historical revenue patterns and cash provided by operating activities
were
as follows:
|
In
millions
|
2005
|
2004
|
2003
|
2002
|
2001
|
||||||||||||
First
Quarter Ended March 31
|
$
|
640.1
|
$
|
556.3
|
$
|
487.9
|
$
|
458.6
|
$
|
505.0
|
|||||||
Second
Quarter Ended June 30
|
696.1
|
617.6
|
536.4
|
510.3
|
510.1
|
||||||||||||
Third
Quarter Ended September 30
|
697.5
|
617.3
|
530.2
|
510.5
|
510.3
|
||||||||||||
Fourth
Quarter Ended December 31
|
732.5
|
710.9
|
564.0
|
497.3
|
499.7
|
||||||||||||
Totals
|
$
|
2,766.2
|
$
|
2,502.1
|
$
|
2,118.5
|
$
|
1,976.7
|
$
|
2,025.2
(a
|
)
|
In
millions
|
2005
|
2004
|
2003
|
2002
|
2001
|
||||||||||||
First
Quarter Ended March 31
|
$
|
48.1
|
$
|
32.4
|
$
|
31.2
|
$
|
9.0
|
$
|
2.6
|
|||||||
Second
Quarter Ended June 30
|
86.3
|
64.6
|
59.2
|
71.4
|
65.1
|
||||||||||||
Third
Quarter Ended September 30
|
98.1
|
68.9
|
64.1
|
83.3
|
66.1
|
||||||||||||
Fourth
Quarter Ended December 31
|
82.7
|
104.6
|
108.4
|
90.1
|
106.9
|
||||||||||||
Totals
|
$
|
315.3
(a
|
)
|
$
|
270.5
|
$
|
262.8
(a
|
)
|
$
|
253.8
|
$
|
240.6
(a
|
)
|
(1) (vi) |
The
practices of the Company relating to working capital are similar
to those
practices of other industrial service providers or manufacturers
servicing
both domestic and international industrial services and commercial
markets. These practices include the
following:
|
· |
Standard
accounts receivable payment terms of 30 days to 60 days, with progress
payments required for certain long-lead-time or large
orders.
|
· |
Standard
accounts payable payment terms of 30 days to 90 days.
|
· |
Inventories
are maintained in sufficient quantities to meet forecasted demand.
Due to
the time required to manufacture certain railway maintenance equipment
to
customer specifications, inventory levels of this business tend to
increase during the production phase and then decline when the equipment
is sold.
|
(1) (vii) |
The
Company as a whole is not dependent upon any one customer for 10%
or more
of its revenues. However, the Mill Services Segment is dependent
largely
on the global steel industry and in 2005, there were three customers
that
each provided in excess of 10% of this segment’s revenues under multiple
long-term contracts at several mill sites, compared with two such
customers for the years 2004 and 2003. The loss of any one of the
contracts would not have a material adverse effect upon the Company’s
financial position or cash flows; however, it could have a material
effect
on quarterly or annual results of operations. Additionally, these
customers have significant accounts receivable balances. In December
2005,
the Company acquired the Northern Hemisphere mill services operations
of
Brambles Industrial Services (“BISNH”). This acquisition has increased the
Company’s corresponding concentration of credit risk to these customers.
Further consolidation in the global steel industry is also
possible. Should transactions occur involving some of the steel
industry’s larger companies that are customers of the Company, it would
result in an increase in concentration of credit risk for the Company.
If
a large customer were to experience financial difficulty, or file
for
bankruptcy protection, it could adversely impact the Company’s income,
cash flows and asset valuations. In an effort to mitigate the increased
concentration of credit risk, the Company is considering the purchase
of
credit insurance for part of its receivable portfolio.
|
(1) (viii) |
Backlog
of orders was $275.8 million and $243.0 million as of December 31,
2005
and 2004, respectively. It is expected that approximately 32% of
the total
backlog at December 31, 2005 will not be filled during 2006. The
Company’s
backlog is seasonal in nature and tends to follow in the same pattern
as
sales and net income which is discussed in section (1) (v) above.
Backlog
for scaffolding, shoring and forming services and for roofing granules
and
slag abrasives is not included in the total backlog because it is
generally not quantifiable, due to the timing and nature of the products
and services provided. Contracts for the Mill
|
Services
Segment are also excluded from the total backlog. These contracts
have
estimated future revenues of $4.3 billion at December 31, 2005.
For
additional information regarding backlog, see the Backlog section
included
in Part II, Item 7, “Management’s Discussion and Analysis of Financial
Condition and Results of
Operations.”
|
(1) (ix) |
At
December 31, 2005, the Company had no material contracts that were
subject
to renegotiation of profits or termination at the election of the
U.S.
Government.
|
(1) (x) |
The
Company encounters active competition in all of its activities from
both
larger and smaller companies who produce the same or similar products
or
services, or who produce different products appropriate for the same
uses.
|
(1) (xi) |
The
expense for product development activities was $2.7 million, $2.6
million
and $3.3 million in 2005, 2004 and 2003, respectively. For additional
information regarding product development activities, see the Research
and
Development section included in Part II, Item 7, “Management’s Discussion
and Analysis of Financial Condition and Results of
Operations.”
|
(1) (xii) |
The
Company has become subject, as have others, to stringent air and
water
quality control legislation. In general, the Company has not experienced
substantial difficulty complying with these environmental regulations
in
the past, and does not anticipate making any material capital expenditures
for environmental control facilities. While the Company expects that
environmental regulations may expand, and that its expenditures for
air
and water quality control will continue, it cannot predict the effect
on
its business of such expanded regulations. For additional information
regarding environmental matters see Note 10, Commitments and
Contingencies, to the Consolidated Financial Statements included
in Part
II, Item 8, "Financial Statements and Supplementary
Data."
|
(1) (xiii) |
As
of December 31, 2005, the Company had approximately 21,000
employees.
|
· |
The
Company’s Mill Services business may be adversely impacted by slowdowns in
steel mill production, excess capacity, consolidation or bankruptcy
of
steel producers or a reversal or slowing of current outsourcing trends
in
the steel industry;
|
· |
The
Company’s Access Services business may be adversely impacted by slowdowns
in non-residential construction and annual industrial and building
maintenance cycles;
|
· |
The
railway track maintenance business may be adversely impacted by
developments in the railroad industry that lead to lower capital
spending
or reduced maintenance spending;
|
· |
The
industrial abrasives and roofing granules business may be adversely
impacted by reduced home resales or economic conditions that slow
the rate
of residential roof replacement, or by slowdowns in the industrial
and
infrastructure refurbishment industries;
|
· |
The
industrial grating business may be adversely impacted by slowdowns
in
non-residential construction and industrial production;
|
· |
The
Air-X-Changers business is affected by cyclical conditions present
in the
natural gas industry. A high demand for natural gas is currently
creating
increased demand for the Company’s air-cooled heat exchangers. However, a
slowdown in natural gas production could adversely affect the
Air-X-Changers business; and
|
· |
The
Company’s Gas Technologies business may be adversely impacted by reduced
industrial production and lower demand for industrial gases, slowdowns
in
demand for medical cylinders, valves and consumer barbecue grills,
or
lower demand for natural gas
vehicles.
|
· |
periodic
economic downturns in the countries in which the Company does business;
|
· |
fluctuations
in currency exchange rates;
|
· |
customs
matters and changes in trade policy or tariff regulations;
|
· |
imposition
of or increases in currency exchange controls and hard currency shortages;
|
· |
changes
in regulatory requirements in the countries in which the Company
does
business;
|
· |
higher
tax rates and potentially adverse tax consequences including restrictions
on repatriating earnings, adverse tax withholding requirements and
"double
taxation'';
|
· |
longer
payment cycles and difficulty in collecting accounts receivable;
|
· |
complications
in complying with a variety of international laws and regulations;
|
· |
political,
economic and social instability, civil unrest and armed hostilities
in the
countries in which the Company does business;
|
· |
inflation
rates in the countries in which the Company does business;
|
· |
laws
in various international jurisdictions that limit the right and ability
of
subsidiaries to pay dividends and remit earnings to affiliated companies
unless specified conditions are met; and‚
|
· |
uncertainties
arising from local business practices, cultural considerations and
international political and trade tensions.
|
•
|
British
pound sterling
|
Weakened
by 1%
|
|
•
|
euro
|
Neutral
|
|
•
|
South
African rand
|
Neutral
|
|
•
|
Brazilian
real
|
Strengthened
by 17%
|
|
•
|
Australian
dollar
|
Strengthened
by 3%
|
•
|
British
pound sterling
|
Weakened
by 10%
|
|
•
|
euro
|
Weakened
by 13%
|
|
•
|
South
African rand
|
Weakened
by 11%
|
|
•
|
Brazilian
real
|
Strengthened
by 14%
|
|
•
|
Australian
dollar
|
Weakened
by 6%
|
· |
The
Company’s Mill Services business is sustained mainly through contract
renewals. Historically, the Company’s contract renewal rate has averaged
approximately 95%. If the Company is unable to renew its contracts
at the
historical rates or renewals are at reduced prices, revenue may decline.
|
· |
The
Company’s Access Services business rents and sells equipment and provides
erection and dismantling services to principally the non-residential
construction and industrial plant maintenance markets. Contracts
are
awarded based upon the Company’s engineering capabilities, product
availability, safety record, and the ability to competitively price
its
rentals and services. Commencing in 2000, due to economic downturns
in
their home markets, certain international competitors exported significant
quantities of rental equipment to the markets the Company serves,
particularly the U.S. This resulted in an oversupply of certain equipment
and a consequential reduction in product and rental pricing in the
markets
receiving the excess equipment. The effect of these actions was mitigated,
to some extent, in 2005 due to a buoyant U.S. non-residential construction
market. However, if the Company is unable to consistently provide
high-quality products and services at competitive prices, it may
lose
customers or operating margins may decline due to reduced selling
prices.
|
· |
The
Company’s manufacturing businesses compete with companies that manufacture
similar products both internationally and domestically. Certain
international competitors export their products into the United States
and
sell them at lower prices due to lower labor costs and government
subsidies for exports. Such practices may limit the prices the Company
can
charge for its products and services. Additionally, unfavorable foreign
exchange rates can adversely impact the Company’s ability to match the
prices charged by international competitors. If the Company is unable
to
match the prices charged by international competitors, it may lose
customers.
|
Location
|
Principal
Products
|
Access
Services Segment
|
|
Marion,
Ohio
|
Access
Equipment Maintenance
|
Dosthill,
United Kingdom
|
Access
Equipment Maintenance
|
Gas
Technologies Segment
|
|
Lockport,
New York
|
Valves
|
Niagara
Falls, New York
|
Valves
|
Washington,
Pennsylvania
|
Valves
|
Location
|
Principal
Products
|
Bloomfield,
Iowa
|
Propane
Tanks
|
Fremont,
Ohio
|
Propane
Tanks
|
Jesup,
Georgia
|
Propane
Tanks
|
West
Jordan, Utah
|
Propane
Tanks
|
Harrisburg,
Pennsylvania
|
High
Pressure Cylinders
|
Huntsville,
Alabama
|
High
Pressure Cylinders
|
Beijing,
China
|
Cryogenic
Storage Vessels
|
Jesup,
Georgia
|
Cryogenic
Storage Vessels
|
Kosice,
Slovakia
|
Cryogenic
Storage Vessels
|
Shah
Alam, Malaysia
|
Cryogenic
Storage Vessels
|
Theodore,
Alabama
|
Cryogenic
Storage Vessels
|
Engineered
Products and Services (“all other”) Category
|
|
Drakesboro,
Kentucky
|
Roofing
Granules/Abrasives
|
Gary,
Indiana
|
Roofing
Granules/Abrasives
|
Moundsville,
West Virginia
|
Roofing
Granules/Abrasives
|
Tampa,
Florida
|
Roofing
Granules/Abrasives
|
Brendale,
Australia
|
Railroad
Equipment
|
Fairmont,
Minnesota
|
Railroad
Equipment
|
Ludington,
Michigan
|
Railroad
Equipment
|
West
Columbia, South Carolina
|
Railroad
Equipment
|
Channelview,
Texas
|
Industrial
Grating Products
|
Leeds,
Alabama
|
Industrial
Grating Products
|
Queretaro,
Mexico
|
Industrial
Grating Products
|
East
Stroudsburg, Pennsylvania
|
Process
Equipment
|
Catoosa,
Oklahoma
|
Heat
Exchangers
|
Location
|
Principal
Products
|
Access
Services Segment
|
|
DeLimiet,
Netherlands
|
Access
Equipment Maintenance
|
Ratingen,
Germany
|
Access
Equipment Maintenance
|
Gas
Technologies Segment
|
|
Cleveland,
Ohio
|
Brass
Castings
|
Pomona,
California
|
Composite
Cylinders
|
Engineered
Products and Services (“all other”) Category
|
|
Memphis,
Tennessee
|
Roofing
Granules/Abrasives
|
Eastwood,
United Kingdom
|
Railroad
Equipment
|
Tulsa,
Oklahoma
|
Industrial
Grating Products
|
Garrett,
Indiana
|
Industrial
Grating Products
|
Catoosa,
Oklahoma
|
Heat
Exchangers
|
Sapulpa,
Oklahoma
|
Heat
Exchangers
|
Name
|
Age
|
Principal
Occupation or Employment
|
Executive
Officers:
|
||
D.
C. Hathaway
|
61
|
Chairman
and Chief Executive Officer of the Corporation since January 24,
2006 and
from January 1, 1998 to July 31, 2000. Served as Chairman, President
and
Chief Executive Officer from April 1, 1994 to December 31, 1997
and from
July 31, 2000 to January 23, 2006 and as President and Chief Executive
Officer from January 1, 1994 to April 1, 1994. Director since 1991.
From
1991 to 1993, served as President and Chief Operating Officer.
From 1986
to 1991 served as Senior Vice President-Operations of the Corporation.
Served as Group Vice President from 1984 to 1986 and as President
of the
Dartmouth Division of the Corporation from 1979 until
1984.
|
S.
D. Fazzolari
|
53
|
President,
Chief Financial Officer and Treasurer of the Corporation effective
January
24, 2006 and Director since January 2002. Served as Senior Vice
President,
Chief Financial Officer and Treasurer from August 24, 1999 to January
23,
2006 and as Senior Vice President and Chief Financial Officer from
January
1998 to August 1999. Served as Vice President and Controller from
January
1994 to December 1997 and as Controller from January 1993 to January
1994.
Previously served as Director of Auditing from 1985 to 1993 and
served in
various auditing positions from 1980 to 1985.
|
G.
D. H. Butler
|
59
|
Senior
Vice President-Operations of the Corporation effective September
26, 2000
and Director since January 2002. Concurrently serves as President
of the
MultiServ and SGB Divisions. From September 2000 through December
2003, he
was President of the Heckett MultiServ International and SGB Divisions.
Was President of the Heckett MultiServ-East Division from July
1, 1994 to
September 26, 2000. Served as Managing Director - Eastern Region
of the
Heckett MultiServ Division from January 1, 1994 to June 30, 1994.
Served
in various officer positions within MultiServ International, N.
V. prior
to 1994 and prior to the Company’s acquisition of that corporation in
August 1993.
|
Name
|
Age
|
Principal
Occupation or
Employment
|
M.
E. Kimmel
|
46
|
General
Counsel and Corporate Secretary effective January 1, 2004. Served
as
Corporate Secretary and Assistant General Counsel from May 1, 2003
to
December 31, 2003. Held various legal positions within the Corporation
since he joined the Company in August 2001. Prior to joining Harsco,
he
was Vice President, Administration and General Counsel, New World
Pasta
Company from January 1, 1999 to July 2001. Before joining New World
Pasta,
Mr. Kimmel spent approximately 12 years in various legal positions
with
Hershey Foods Corporation.
|
S.
J. Schnoor
|
52
|
Vice
President and Controller of the Corporation effective May 15, 1998.
Served
as Vice President and Controller of the Patent Construction Systems
Division from February 1996 to May 1998 and as Controller of the
Patent
Construction Systems Division from January 1993 to February 1996.
Previously served in various auditing positions for the Corporation
from
1988 to 1993. Prior to joining Harsco, he served in various auditing
positions for Coopers & Lybrand from September 1985 to
April 1988.
|
R.
C. Neuffer
|
63
|
President
of the Engineered Products and Services business group since his
appointment on January 24, 2006. Previously, he led the Patterson-Kelley,
IKG Industries and Air-X-Changers units as Vice President and General
Manager since 2004. In 2003, he was Vice President and General
Manager of
IKG Industries and Patterson-Kelley. Between 1997 and 2002, he
was Vice
President and General Manager of Patterson-Kelley. Mr. Neuffer
joined
Harsco in 1991.
|
Period
|
Total
Number
of
Shares
Purchased
|
Average
Price
Paid
per
Share
|
Total
Number of
Shares
Purchased
as
Part of Publicly
Announced
Plans or
Programs
|
Maximum
Number of
Shares
that May Yet
Be
Purchased Under
the
Plans or
Programs
|
October
1, 2005 - October 31, 2005
|
—
|
—
|
—
|
1,000,000
|
November
1, 2005 - November 30, 2005
|
—
|
—
|
—
|
1,000,000
|
December
1, 2005 - December 31, 2005
|
—
|
—
|
—
|
1,000,000
|
Total
|
—
|
—
|
—
|
(In
thousands, except per share, employee information and
percentages)
|
2005
(a)
|
2004
|
2003
|
2002
|
2001
|
|||||||||||
Income
Statement Information
|
||||||||||||||||
Revenues
from continuing operations
|
$
|
2,766,210
|
$
|
2,502,059
|
$
|
2,118,516
|
$
|
1,976,732
|
$
|
2,025,163
|
||||||
Income
from continuing operations
|
156,750
|
113,540
|
86,999
|
88,410
|
74,642
|
|||||||||||
Income
(loss) from discontinued operations
|
(93
|
)
|
7,671
|
5,218
|
1,696
|
(2,917
|
)
|
|||||||||
Net
income
|
156,657
|
121,211
|
92,217
|
90,106
|
71,725
|
|||||||||||
Financial
Position and Cash Flow Information
|
||||||||||||||||
Working
capital
|
$
|
352,620
|
$
|
346,768
|
$
|
269,276
|
$
|
228,552
|
$
|
231,156
|
||||||
Total
assets
|
2,975,804
|
2,389,756
|
2,138,035
|
1,999,297
|
2,090,766
|
|||||||||||
Long-term
debt
|
905,859
|
594,747
|
584,425
|
605,613
|
720,133
|
|||||||||||
Total
debt
|
1,009,888
|
625,809
|
613,531
|
639,670
|
762,115
|
|||||||||||
Depreciation
and amortization
|
198,065
|
184,371
|
168,935
|
155,661
|
176,531
|
|||||||||||
Capital
expenditures
|
290,239
|
204,235
|
143,824
|
114,340
|
156,073
|
|||||||||||
Cash
provided by operating activities
|
315,279
|
270,465
|
262,788
|
253,753
|
240,601
|
|||||||||||
Cash
used by investing activities
|
(645,185
|
)
|
(209,602
|
)
|
(144,791
|
)
|
(53,929
|
)
|
(125,213
|
)
|
||||||
Cash
provided (used) by financing activities
|
369,325
|
(56,512
|
)
|
(125,501
|
)
|
(205,480
|
)
|
(99,190
|
)
|
|||||||
Ratios
|
||||||||||||||||
Return
on sales(b)
|
5.7
|
%
|
4.5
|
%
|
4.1
|
%
|
4.5
|
%
|
3.7
|
%
|
||||||
Return
on average equity(c)
|
16.7
|
%
|
13.8
|
%
|
12.2
|
%
|
12.6
|
%
|
11.1
|
%
|
||||||
Current
ratio
|
1.5:1
|
1.6:1
|
1.5:1
|
1.5:1
|
1.5:1
|
|||||||||||
Total
debt to total capital(d)
|
50.4
|
%
|
40.6
|
%
|
44.1
|
%
|
49.8
|
%
|
52.6
|
%
|
||||||
Per
Share Information
|
||||||||||||||||
Basic -
Income from continuing operations
|
$
|
3.76
|
$
|
2.76
|
$
|
2.14
|
$
|
2.19
|
$
|
1.87
|
||||||
-
Income (loss) from discontinued operations
|
—
|
0.19
|
0.13
|
0.04
|
(0.07
|
)
|
||||||||||
-
Net income
|
$
|
3.76
|
$
|
2.95
|
$
|
2.27
|
$
|
2.23
|
$
|
1.80
|
||||||
Diluted -
Income from continuing operations
|
$
|
3.73
|
$
|
2.73
|
$
|
2.12
|
$
|
2.17
|
$
|
1.86
|
||||||
-
Income (loss) from discontinued operations
|
—
|
0.18
|
0.13
|
0.04
|
(0.07
|
)
|
||||||||||
-
Net income
|
$
|
3.72
(e
|
)
|
$
|
2.91
|
$
|
2.25
|
$
|
2.21
|
$
|
1.79
|
|||||
Book
value
|
$
|
23.79
|
$
|
22.07
|
$
|
19.01
|
$
|
15.90
|
$
|
17.16
|
||||||
Cash
dividends declared
|
1.225
|
1.125
|
1.0625
|
1.0125
|
0.97
|
|||||||||||
Other
Information
|
||||||||||||||||
Diluted
average number of shares outstanding
|
42,080
|
41,598
|
40,973
|
40,680
|
40,066
|
|||||||||||
Number
of employees
|
21,000
|
18,500
|
17,500
|
17,500
|
18,700
|
|||||||||||
Backlog
from continuing operations (f)
|
$
|
275,790
|
$
|
243,006
|
$
|
186,222
|
$
|
157,777
|
$
|
214,124
|
(a) |
Includes
the Northern Hemisphere mill services operations of Brambles Industrial
Services (BISNH) acquired December 29, 2005 (Mill Services) and Hünnebeck
Group GmbH acquired November 21, 2005 (Access
Services).
|
(b) |
“Return
on
sales”
is calculated by dividing income from continuing operations by revenues
from continuing operations.
|
(c) |
“Return
on average equity” is calculated by dividing income from continuing
operations by quarterly weighted-average
equity.
|
(d) |
“Total
debt to total capital” is calculated by dividing the sum of debt
(short-term borrowings and long-term debt including current maturities)
by
the sum of equity and debt.
|
(e) |
Does
not total due to rounding.
|
(f) |
Excludes
the estimated amount of long-term mill service contracts, which had
estimated future revenues of $4.3 billion at December 31, 2005. Also
excludes backlog of the Access Services Segment and the roofing granules
and slag abrasives business. These amounts are generally not quantifiable
due to the nature and timing of the products and services
provided.
|
Revenues
by Region
|
||||||||||||||||
Total
Revenues
Twelve
Months Ended December 31
|
Percentage
Growth From
2004
to 2005
|
|||||||||||||||
(Dollars
in millions)
|
2005
|
2004
|
Volume
|
Currency
|
Total
|
|||||||||||
North
America
|
$
|
1,219.8
|
$
|
1,103.7
|
10.2
|
%
|
0.3
|
%
|
10.5
|
%
|
||||||
Europe
|
1,109.1
|
1,018.1
|
9.6
|
(0.7
|
)
|
8.9
|
||||||||||
Middle
East and Africa
|
153.7
|
137.7
|
10.9
|
0.7
|
11.6
|
|||||||||||
Latin
America
|
149.2
|
122.9
|
9.9
|
11.5
|
21.4
|
|||||||||||
Asia/Pacific
|
134.4
|
119.7
|
9.8
|
2.5
|
12.3
|
|||||||||||
Total
|
$
|
2,766.2
|
$
|
2,502.1
|
10.0
|
%
|
0.6
|
%
|
10.6
|
%
|
· |
Strong
worldwide economic activity benefited the Company in 2005. This included
increased access equipment sales and rentals, especially in the U.S.,
Middle East and Europe; increased global demand for railway track
maintenance services and equipment; and increased demand for air-cooled
heat exchangers, industrial cylinders, cryogenics equipment and industrial
grating products. During the first half of 2005, the Company’s Mill
Services Segment benefited from strong steel production activity;
however,
during the second half of 2005, steel production at certain mills
served
by this Segment declined, negatively impacting
results.
|
· |
As
expected, during 2005, the Company experienced an overall leveling-off
of
commodity cost increases (particularly steel); however, fuel and
energy-related costs and certain other commodity costs continued
to
increase. To the extent that such costs cannot be passed to customers
in
the future, operating income may be adversely affected. The Company
uses
the last-in, first-out (LIFO) method of inventory accounting for
most of
its manufacturing businesses. LIFO matches the most recently incurred
costs with current revenues by charging cost of goods sold with the
costs
of goods most recently acquired or produced. In periods of rising
prices,
reported costs under LIFO are generally greater than under the first-in,
first-out (FIFO) method. Based on current economic forecasts, cost
inflation for certain commodities used by the Company is expected
to
increase slightly in 2006, although fuel and energy-related costs
are
expected to continue to increase at a higher rate. However, there
can be
no assurance that will occur.
|
· |
Total
pension expense for 2005 decreased $1.7 million from 2004. Defined
benefit
pension expense for 2005 decreased approximately $3.8 million from
2004
due to plan structural changes implemented in recent years. During
2005,
the defined benefit pension expense decrease was partially offset
by
increases of approximately $1.5 million and $0.7 million in defined
contribution plan and multi-employer plan expenses, respectively.
The
Company is currently taking additional actions to further reduce
pension
expense volatility. This is more fully discussed in the Outlook,
Trends
and Strategies section.
|
· |
Net
Other expenses for 2005 included $9.7 million in net gains on the
sale of
non-core assets, mostly offset by $9.1 million in employee termination
benefit costs. This compares with $1.5 million in net gains on the
sale of
assets and $3.9 million in employee termination benefit costs in
2004.
|
· |
During
2005, international sales and income were 58% and 67%, respectively,
of
total sales and income. This compares with the 2004 levels of 58%
of sales
and 69% of income. The international percentages are expected to
increase
in 2006 as a result of the late-2005 Hünnebeck and BISNH
acquisitions.
|
(Dollars
in millions)
|
2005
|
2004
|
||||||
Revenues
|
$
|
1,060.4
|
$
|
997.4
|
||||
Operating
income
|
109.6
|
105.5
|
||||||
Operating
margin percent
|
10.3
|
%
|
10.6
|
%
|
Mill
Services Segment - Significant Impacts on Revenues:
|
(In
millions)
|
||||
Revenues
- 2004
|
$
|
997.4
|
|||
Increased
volume and new business
|
42.0
|
||||
Benefit
of positive foreign currency translation
|
17.0
|
||||
Acquisition
- (principally Evulca SAS in France) (a)
|
4.0
|
||||
Revenues
- 2005
|
$
|
1,060.4
|
(a) |
Since
BISNH was acquired on December 29, 2005, it did not have a significant
effect on 2005 operations.
|
· |
Operating
income for 2005 increased slightly as a result of increased pricing
for
certain contracts and new business, particularly in Europe and Brazil,
mostly offset by increased operating costs (as noted below) and reduced
volume in South Africa and North America during the majority of 2005.
|
· |
Compared
with 2004, the Segment’s operating income and margins in 2005 were
negatively impacted by increased fuel and energy-related costs of
approximately $13 million.
|
· |
Selling,
general and administrative costs increased $5.4 million for 2005
(including approximately $1.1 million related to foreign currency
translation). These increases related primarily to increased compensation
costs.
|
· |
The
benefit of positive foreign currency translation in 2005 resulted
in
increased operating income of $2.1 million compared with 2004.
|
(Dollars
in millions)
|
2005
|
2004
|
||||||
Revenues
|
$
|
788.8
|
$
|
706.5
|
||||
Operating
income
|
74.7
|
44.4
|
||||||
Operating
margin percent
|
9.5
|
%
|
6.3
|
%
|
Access
Services Segment - Significant Impacts on Revenues:
|
(In
millions)
|
||||
Revenues
- 2004
|
$
|
706.5
|
|||
Net
increased volume (mostly U.S., Middle East and Continental
Europe)
|
72.0
|
||||
Net
effect of acquisitions and divestitures (Hünnebeck and SGB Raffia in
Australia
(acquired in April 2004)) offset by the Youngman light-access
manufacturing
unit divestiture)
|
12.5
|
||||
Impact
of negative foreign currency translation
|
(2.8
|
)
|
|||
Other
|
0.6
|
||||
Revenues
- 2005
|
$
|
788.8
|
· |
In
2005, there was a continued strengthening in the U.S. non-residential
construction markets that started in the latter half of 2004. During
2005,
the value of rental equipment on customer job sites was at an all-time
high. This had a positive effect on volume (particularly equipment
rentals) which caused overall margins in the U.S. to improve. Equipment
rentals, particularly in the construction sector, provide the highest
margins for this Segment.
|
· |
The
international access services business continued to increase outside
the
U.K., predominantly in the Middle East and Europe, due to certain
on-going
large projects as well as the Hünnebeck acquisition. During 2005, the
international operations outside of the U.K. had $305.3 million in
revenues and $45.5 million in operating income. This compares with
$231.5
million in revenues and $29.9 million in operating income for
2004.
|
· |
During
2005, the Segment was favorably affected by pre-tax income of $5.4
million
from the disposal of assets related to the closing of a branch location
and the sale of the Youngman light-access manufacturing unit. During
2004,
only $1.1 million of similar benefits
occurred.
|
· |
Lower
pension expense in 2005 increased operating income by approximately
$5.0
million when compared with 2004.
|
· |
The
net effect of acquisitions and divestitures had a positive effect
on 2005
operating income and margins, with the Hünnebeck business contributing
income during it first full month of
operation.
|
· |
The
benefit of positive foreign currency translation in 2005 for this
Segment
resulted in increased operating income of $0.9 million when compared
with
2004.
|
(Dollars
in millions)
|
2005
|
2004
|
||||||
Revenues
|
$
|
370.2
|
$
|
339.1
|
||||
Operating
income
|
17.9
|
14.4
|
||||||
Operating
margin percent
|
4.8
|
%
|
4.2
|
%
|
Gas
Technologies Segment - Significant Impacts on
Revenues:
|
(In
millions)
|
||||
Revenues
- 2004
|
$
|
339.1
|
|||
Increased
demand for cryogenics equipment and industrial cylinders
|
25.3
|
||||
Increased
demand for composite-wrapped cylinders and certain valves
|
8.1
|
||||
Decreased
sales of propane tanks (due to customers accelerating purchases in
2004 to
avoid price increases)
|
(2.0
|
)
|
|||
Other
|
(0.3
|
)
|
|||
Revenues
- 2005
|
$
|
370.2
|
· |
Operating
income increased in 2005 compared with 2004 due mainly to moderating
commodity cost increases, particularly steel. Since this Segment
accounts
for the majority of its U.S. inventory using the last-in, first-out
(LIFO)
method, this moderation of commodity costs has resulted in improved
operating income.
|
· |
The
international businesses, in Europe and, to a lesser extent, Asia,
contributed significantly to the increased performance of the cryogenics
business during 2005 compared with
2004.
|
· |
Higher
operating income in 2005 for composite-wrapped cylinders was due
to
increased shipments of natural gas vehicle (NGV) cylinders, partially
offset by an unfavorable product mix and higher raw material costs
for
carbon fiber and aluminum.
|
· |
Higher
operating income for industrial cylinders was due to increased demand
and
selling price increases, partially offset by higher energy-related
and
steel costs.
|
· |
Increased
costs and an unfavorable product mix in the valves business negatively
impacted operating income in 2005 compared with 2004. A strategic
action
plan has been implemented to improve the results of the valves business.
This plan is further discussed in the Outlook, Trends and Strategies
section.
|
· |
As
expected, the propane business had decreased revenues and operating
income
in 2005 when compared with 2004. As indicated last year, there was
increased demand for propane tanks in 2004 driven by customers
accelerating purchases in anticipation of future price increases
due to
higher steel prices.
|
· |
Foreign
currency translation in 2005 did not have a material impact on operating
income for this Segment compared with 2004.
|
(Dollars
in millions)
|
2005
|
2004
|
||||||
Revenues
|
$
|
546.9
|
$
|
459.1
|
||||
Operating
income
|
69.7
|
47.0
|
||||||
Operating
margin percent
|
12.7
|
%
|
10.2
|
%
|
Engineered
Products and Services (“all other”) Category -
Significant
Impacts on Revenues:
|
(In
millions)
|
||||
Revenues
- 2004
|
$
|
459.1
|
|||
Railway
track services and equipment
|
38.0
|
||||
Air-cooled
heat exchangers
|
32.2
|
||||
Industrial
grating products
|
12.4
|
||||
Boiler
and process equipment
|
3.3
|
||||
Roofing
granules and abrasives
|
1.4
|
||||
Benefit
of positive foreign currency translation
|
0.5
|
||||
Revenues
- 2005
|
$
|
546.9
|
· |
Higher
operating income in 2005 (including a record third quarter) in comparison
to 2004 for the railway track maintenance services and equipment
business
was due principally to increased rail equipment sales (principally
to
international customers), international contract services and repair
parts
sales. This was partially offset by increased engineering costs;
selling,
general and administrative expenses; and Other expenses related to
employee termination benefit costs.
|
· |
Operating
income for the air-cooled heat exchangers business improved in 2005
due to
increased volume resulting from an improved natural gas
market.
|
· |
Increased
2005 operating income for the industrial grating products business
was due
principally to reduced commodity costs; increased demand (partially
due to
the effects of Hurricanes Katrina and Rita); and, to a lesser extent,
increased prices and an improved product mix.
|
· |
The
boiler and process equipment business delivered improved 2005 results
due
to improved revenues from the new-generation Mach
boilers.
|
· |
Strong
demand for roofing granules and abrasives again resulted in sustained
levels of profitable results for that business in 2005, consistent
with
prior periods. This is despite difficulty throughout the third and
fourth
quarters of 2005 in obtaining rail cars to deliver its products,
and, to a
lesser extent, higher energy costs.
|
· |
The
impact of positive foreign currency translation in 2005 resulted
in
decreased operating income of $0.2 million for this Category when
compared
with 2004.
|
· |
The
Company will continue its focus on expanding the higher-margin industrial
services businesses, with a particular emphasis on growing the Mill
Services Segment, Access Services Segment and railway services through
the
provision of additional services to existing customers, new contracts
in
both mature and emerging markets and strategic acquisitions such
as the
2005 Hünnebeck and BISNH acquisitions in the Access Services and Mill
Services Segments, respectively.
|
· |
A
greater focus on corporate-wide expansion into China is expected
in 2006
and beyond. The opening of a representative office in Beijing in
the
fourth quarter of 2005 has provided a local presence to pursue new
business opportunities for all operating units of the
Company.
|
· |
The
continued growth of the Chinese steel industry could impact the Company
in
several ways. Increased steel mill production in China may provide
additional service opportunities for the Mill Services Segment. However,
increased Chinese steel exports could result in lower steel production
in
other parts of the world affecting the Company’s
|
customer
base. Additionally, although certain commodity cost increases (e.g.,
steel) have stabilized in 2005, continued increased Chinese economic
activity may result in increased commodity costs in the future, which
may
adversely affect the Company’s manufacturing businesses. The potential
impact of these risks is currently
unknown.
|
· |
Fuel
and energy costs increased approximately $18 million in 2005 compared
with
2004. Should these costs continue to rise, the Company’s operating costs
would further increase and profitability would decline to the extent
that
such costs cannot be passed to customers.
|
· |
Foreign
currency translation had an overall favorable effect on the Company’s
sales and income during 2005 (although during the fourth quarter
it was
negative), but a negative impact on Stockholders’ equity as a result of
translation adjustments. Should the U.S. dollar continue to strengthen,
particularly in relationship to the euro or British pound sterling,
the
impact on the Company would generally be negative in terms of reduced
sales, income and Stockholders’
equity.
|
· |
The
Company will continue to focus on improving Economic Value Added
(EVA®).
Under this program, the Company evaluates strategic investments based
upon
the investment’s economic profit. EVA equals after-tax operating profits
less a charge for the use of the capital employed to create those
profits
(only the service cost portion of defined benefit pension expense
is
included for EVA purposes). Therefore, value is created when a project
or
initiative produces a return above the cost of capital.
|
· |
A
record $400 million in net cash provided by operating activities
has been
targeted for 2006.
|
· |
Controllable
cost reductions and continuous process improvement initiatives across
the
Company are targeted to further enhance margins for most businesses.
These
initiatives include improved supply chain management; additional
outsourcing in the manufacturing businesses; and an added emphasis
on
corporate-wide procurement initiatives. The Company will use its
increased
size and leverage due to recent acquisitions to reduce vendor costs
and
focus on additional opportunities for cost reductions via procurement
in
low-cost countries such as China.
|
· |
Total
pension expense (defined benefit, defined contribution and multi-employer)
for 2006 is expected to approximate the 2005 level, or be slightly
lower.
In the U.K., pension expense is expected to decline in 2006 due to
the
significant level (approximately $20 million in the past 18 months)
of
voluntary cash contributions to the defined benefit pension plan
and the
improved 2005 performance of the plan’s assets. Domestically, the majority
of the twenty-year amortization of the transition asset (from the
initial
implementation of SFAS No. 87 in 1986) will cease during 2006. The
elimination of this benefit is projected to increase domestic
defined-benefit pension expense by approximately $1.0 million when
compared with 2005. The Company’s pension committee continues to evaluate
alternative strategies to further mitigate overall pension expense
including the on-going evaluation of investment fund managers’
performance; the balancing of plan assets and liabilities; the risk
assessment of all multi-employer pension plans; the possible merger
of
certain plans; the consideration of incremental cash contributions
to
certain plans; and other changes that will mitigate future volatility
and
expense.
|
· |
Changes
in worldwide interest rates could have a greater effect on the Company’s
overall interest expense as currently approximately 50% of the Company’s
borrowings are at variable interest rates (in comparison to approximately
12% at December 31, 2004). The Company is considering refinancing
certain
variable interest-rate borrowings at longer-term fixed rates to reduce
potential volatility. However, this may increase short-term interest
expense as currently, longer-term fixed interest rates are higher
than
variable shorter-term interest
rates.
|
· |
On
October 22, 2004, the American Jobs Creation Act of 2004 (“AJCA”) was
signed into law. The AJCA includes a deduction of 85% for certain
international earnings that are repatriated, as defined in the AJCA,
to
the U.S. The Company completed its evaluation of the repatriation
provisions of the AJCA and repatriated qualified earnings of approximately
$24 million in the fourth quarter of 2005. This resulted in the
Company receiving a one-time income tax benefit of approximately
$2.7
million during the fourth quarter of 2005. In 2006, the effective
income tax rate for continuing operations is expected to approximate
33%.
This compares with an effective income tax rate of 28.1% in 2005.
The difference is primarily due to the one-time tax benefit from
the AJCA
as indicated above and, consistent with the Company’s strategic plan of
investing for growth, the Company designated certain international
earnings as permanently reinvested which resulted in a one-time income
tax
benefit of $3.6 million.
|
· |
To
maintain pricing levels, a more disciplined steel industry has been
adjusting production levels to bring inventories in-line with current
demand. Based on current market conditions and industry reports, the
Company expects global steel production to increase in 2006.
|
· |
The
increased energy-related costs this Segment experienced during 2005
are
expected to persist through 2006. However, given the volatility of
such
costs, the effect cannot be
quantified.
|
· |
The
Company will be placing significant emphasis on improving operating
margins of this Segment. Specific plans for 2006 include global
procurement initiatives, process improvement programs, maintenance
best
practices programs and executing its reorganization
plan.
|
· |
The
BISNH acquisition will provide increased sales and income for this
Segment.
|
· |
Further
consolidation in the global steel industry is also possible. Should
transactions occur involving some of the steel industry’s larger companies
that are customers of the Company, it would result in an increase
in
concentration of
|
credit
risk for the Company. If a large customer were to experience financial
difficulty, or file for bankruptcy protection, it could adversely
impact
the Company’s income, cash flows and asset valuations. As part of its
credit risk management practices, the Company is developing strategies
to
mitigate this increased concentration of credit
risk.
|
· |
Both
the international and domestic Access Services businesses are expected
to
show continued improvement during 2006.
|
· |
In
2005, the Youngman light-access manufacturing unit was sold and certain
large customer projects in the U.K. and Middle East are close to
completion, which will eliminate the associated revenue. In 2006,
these
decreases are expected to be offset by increased sales and income
from the
Hünnebeck acquisition and through the further development of core
activities. Additionally, the sale of the Youngman unit will allow
for
greater focus on the more profitable rental
business.
|
· |
U.S.
non-residential construction activity continued to improve in 2005
and the
overall market outlook remains positive. Various industry sources
are
currently forecasting continued growth for U.S. non-residential
construction during 2006. Additionally, new product line additions
should
assist with growth in North
America.
|
· |
Although
cost inflation for steel and certain commodities moderated in 2005,
worldwide supply and demand for steel, aluminum and the availability
of
carbon fiber used to manufacture filament-wound composite cylinders
could
have adverse effects on future raw material costs and this Segment’s
ability to obtain the necessary raw materials. Additionally, the
price of
brass, a raw material used for certain valves production, continued
to
increase during 2005, despite expectations that it would moderate.
Should
brass prices continue to increase in 2006, this could result in reduced
operating income for certain products to the extent that such costs
cannot
be passed along to customers.
|
· |
Weak
market conditions and increased costs impacted the valves business
during
2005. A comprehensive strategic plan was developed and is currently
being executed to mitigate these conditions. The plan includes the
following: a new senior management team; development and marketing
of new
products; focus on an expanded international customer base; consolidating
certain manufacturing process; process improvements within the
manufacturing operations including outsourcing; and optimization
of the
organizational structure of the business. If the conditions encountered
during 2005 persist, despite execution of the strategic action plan,
the
valuation of this business could be negatively impacted.
|
· |
Despite
a decline in 2005, the propane business is expected to improve in
2006, as
it returns to its more normal business
cycle.
|
· |
The
industrial cylinder and cryogenics equipment businesses are expected
to
show continued improved performance in
2006.
|
· |
International
demand for the railway track maintenance services and equipment business’
products and services has been strong and is expected to remain so
in
2006. However, on a comparative basis, 2006 sales are expected to
be less
than 2005 due to the shipment of several large machine orders in
2005.
Despite this expected decrease in sales, operating income is expected
to
increase due to increased volume of higher-margin industrial services
and
manufacturing process improvements and efficiencies that are expected
to
improve margins on a long-term basis. Additionally, higher-margin
international equipment sales will continue to be pursued by this
business.
|
· |
The
industrial grating business is expected to sustain its current levels
of
sales and operating income for 2006. It is expected that the incremental
business received in 2005, as a result of recent hurricanes, will
be
replaced with new market
opportunities.
|
· |
Although
cost inflation for steel and certain commodities started to moderate
in
2005, worldwide supply and demand for steel could have an adverse
effect
on raw material costs and the ability to obtain the necessary raw
materials for most businesses in this Category.
|
· |
Consistent,
sustained profitable results are expected from the roofing granules
and
abrasives business, although increased energy costs could impact
margins.
This business is pursuing the use of more energy-efficient equipment
to
help mitigate the increased energy-related
costs.
|
· |
Due
to an improving natural gas market and additional North American
opportunities, demand for air-cooled heat exchangers is expected
to remain
strong for 2006.
|
(Dollars
are in millions, except per share information and
percentages)
|
2005
|
2004
|
2003
|
||||||||
Revenues
from continuing operations
|
$
|
2,766.2
|
$
|
2,502.1
|
$
|
2,118.5
|
|||||
Cost
of services and products sold
|
2,099.4
|
1,916.4
|
1,604.4
|
||||||||
Selling,
general and administrative expenses
|
393.2
|
368.4
|
330.0
|
||||||||
Other
expenses
|
2.0
|
4.9
|
7.0
|
||||||||
Operating
income from continuing operations
|
268.9
|
209.8
|
173.9
|
||||||||
Interest
expense
|
41.9
|
41.1
|
40.5
|
||||||||
Income
tax expense from continuing operations
|
64.8
|
49.0
|
41.7
|
||||||||
Income
from continuing operations
|
156.8
|
113.5
|
87.0
|
||||||||
Income/(loss)
from discontinued operations
|
(0.1
|
)
|
7.7
|
5.2
|
|||||||
Net
income
|
156.7
|
121.2
|
92.2
|
||||||||
Diluted
earnings per common (continuing operations)
|
3.73
|
2.73
|
2.12
|
||||||||
Diluted
earnings per common share
|
3.72
|
2.91
|
2.25
|
||||||||
Effective
income tax rate for continuing operations
|
28.1
|
%
|
28.6
|
%
|
30.7
|
%
|
|||||
Consolidated
effective income tax rate
|
28.1
|
%
|
29.1
|
%
|
31.0
|
%
|
In
millions
|
Change
in Revenues 2005 vs. 2004
|
|
$
72.5
|
Net
increased revenues in the Access Services Segment due principally
to
improved markets in the North America and the strength of the
international business, particularly in the Middle East and Europe
(excluding the net effect of acquisitions and
divestitures).
|
|
41.9
|
Net
increased volume, new contracts and price changes in the Mill Services
Segment (excluding acquisitions).
|
|
38.0
|
Net
increased revenues in the railway track maintenance services and
equipment
business due to increased contract services (principally in the U.K.),
rail equipment sales (primarily to international customers) and repair
part sales.
|
|
32.2
|
Increased
revenues of the air-cooled heat exchangers business due to an improved
natural gas market.
|
|
31.0
|
Net
increased revenues in the Gas Technologies Segment due principally
to
improved market conditions for industrial cylinders, cryogenics equipment
and composite-wrapped cylinders, partially offset by slightly decreased
demand for propane tanks. The decrease in propane tank sales was
due to
customers accelerating purchases in 2004 to avoid anticipated price
increases due to commodity cost inflation.
|
|
16.5
|
Net
effect of business acquisitions and divestitures. Increased revenues
of
$4.0 and $12.5 million in the Mill Services and Access Services Segments,
respectively.
|
|
14.8
|
Effect
of foreign currency translation.
|
|
12.4
|
Increased
revenues of the industrial grating products business due to increased
demand (partially due to the effects of Hurricanes Katrina and Rita)
and,
to a lesser extent, increased prices and a more favorable product
mix.
|
|
4.8
|
Other
(minor changes across the various units not already
mentioned).
|
|
$
264.1
|
Total
Change in Revenues 2005 vs. 2004
|
In
millions
|
Change
in Revenues 2004 vs. 2003
|
|
$ 108.9
|
Effect
of foreign currency translation.
|
|
83.1
|
Net
increased volume, new contracts and price changes in the Mill Services
Segment.
|
|
43.5
|
Net
increased revenues in the Gas Technologies Segment due principally
to
improved market conditions and selling price increases, partially
offset
by decreased demand for liquid propane gas (LPG) valves in the patio
grill
market and for composite-wrapped cylinders.
|
|
36.1
|
Effect
of business acquisitions. Increased revenues of $27.5 and $8.6 million
in
the Mill Services and Access Services Segments,
respectively.
|
|
33.6
|
Net
increased revenues in the railway track maintenance services and
equipment
business due principally to rail equipment sales and, to a lesser
extent,
contract services.
|
|
33.4
|
Net
increased revenues in the Access Services Segment due principally
to the
strength of the concrete forming business, particularly in the Middle
East
and U.K.
|
|
20.1
|
Increased
revenues of the industrial grating products business due to increased
demand and a focus on higher-margin standard product
orders.
|
|
18.9
|
Increased
revenues of the air-cooled heat exchangers business due to improved
natural gas markets.
|
|
5.9
|
Other
(minor changes across the various units not already
mentioned).
|
|
$
383.5
|
Total
Change in Revenues 2004 vs. 2003
|
In
millions
|
Change
in Cost of Services and Products Sold 2005 vs.
2004
|
|
$
177.8
|
Increased
costs due to increased revenues (exclusive of the effect of foreign
currency translation and business acquisitions and including the
impact of
increased costs included in selling prices).
|
|
12.7
|
Effect
of foreign currency translation.
|
|
4.1
|
Net
effect of business acquisitions and divestitures.
|
|
(11.6)
|
Other
(due to product mix; stringent cost controls; process improvements;
and
minor changes across the various units not already mentioned; partially
offset by increased fuel and energy-related costs).
|
|
$
183.0
|
Total
Change in Cost of Services and Products Sold 2005 vs.
2004
|
In
millions
|
Change
in Cost of Services and Products Sold 2004 vs.
2003
|
|
$
186.2
|
Increased
costs due to increased revenues (exclusive of effect of foreign currency
translation and including the impact of increased costs included
in
increased selling prices).
|
|
80.9
|
Effect
of foreign currency translation.
|
|
32.8
|
Effect
of business acquisitions.
|
|
12.1
|
Other
(due to increased commodity costs, increased fuel and energy-related
costs, product mix and minor changes across the various units not
already
mentioned; partially offset by stringent cost controls, process
improvements, and reorganization actions).
|
|
$
312.0
|
Total
Change in Cost of Services and Products Sold 2004 vs.
2003
|
In
millions
|
Change
in Selling, General and Administrative Expenses 2005 vs.
2004
|
|
$
6.5
|
Increased
employee compensation expense due to salary increases, increased
payroll
taxes and employee incentive plan increases due to improved performance,
partially offset by decreased defined benefit pension expense.
|
|
5.6
|
Net
effect of business acquisitions and dispositions.
|
|
3.5
|
Increased
sales commission expense due to increased revenues.
|
|
1.9
|
Increased
costs on a comparative basis due to income generated by the termination
of
postretirement benefit plans in 2004 that were not repeated in
2005.
|
|
1.4
|
Increased
travel expenses.
|
|
1.0
|
Increased
professional fees due to special projects.
|
|
0.4
|
Effect
of foreign currency translation.
|
|
4.5
|
Other
(including energy-related costs and the cost of new technology
projects).
|
|
$
24.8
|
Total
Change in Selling, General and Administrative Expenses 2005 vs.
2004
|
In
millions
|
Change
in Selling, General and Administrative Expenses 2004 vs.
2003
|
|
$
17.9
|
Effect
of foreign currency translation.
|
|
5.4
|
Increased
professional fees due to higher external auditor fees (related to
Sarbanes-Oxley Section 404) and increased consulting and legal
expense.
|
|
4.4
|
Increased
sales commission expense due to increased revenues.
|
|
4.2
|
Increased
pension expense in the Access Services Segment
|
|
1.7
|
Effect
of business acquisitions - principally SGB Raffia in
Australia
|
|
4.8
|
Other
(including energy-related costs partially offset by process improvements
and reorganization efforts).
|
|
$
38.4
|
Total
Change in Selling, General and Administrative Expenses 2004 vs.
2003
|
In
millions
|
Change
in Other Expenses 2005 vs. 2004
|
|
$
(8.2)
|
Increase
in net gains on disposals of non-core assets. This increase was
attributable principally to $9.7 million in net gains that were realized
in 2005 from the sale of non-core assets principally within the Access
Services and Mill Services Segments compared with $1.5 million in
2004.
|
|
5.2
|
Increase
in employee termination benefit costs. This increase related principally
to increased costs in the Mill Services and Access Services Segments
as
well as the Engineered Products and Services (“all other”) Category and
the Corporate headquarters compared with 2004.
|
|
0.1
|
Increase
in other expenses.
|
|
$
(2.9)
|
Total
Change in Other Expenses 2005 vs.
2004
|
In
millions
|
Change
in Other Expenses 2004 vs. 2003
|
|
$
(2.2)
|
Decline
in employee termination benefit costs. This decline related principally
to
reduced costs in the Mill Services and Access Services Segments compared
with 2003.
|
|
(1.7)
|
Decrease
in costs to exit activities.
|
|
2.0
|
Decline
in net gains on disposals of non-core assets. This decline was
attributable principally to $3.2 million in net gains that were realized
in 2003 from the sale of non-core assets within the Access Services
and
Mill Services Segments compared with $1.5 million in
2004.
|
|
(0.2)
|
Increase
in other expenses.
|
|
$
(2.1)
|
Total
Change in Other Expenses 2004 vs.
2003
|
In
millions
|
Change
in Income from Discontinued Operations 2004 vs.
2003
|
|
$
3.1
|
After-tax
income due to the settlement of the Company’s Federal Excise Tax (FET)
litigation in 2004 compared with after-tax income due to favorable
developments in the FET litigation in 2003. For additional information
on
the FET litigation see Note 10, Commitments and Contingencies, to
the
Consolidated Financial Statements under Part II, Item 8, "Financial
Statements and Supplementary Data,” to the Company’s 2004 Form
10-K.
|
|
(0.6)
|
Decline
in after-tax income related to the sale of the Company’s Capitol
Manufacturing business during 2002.
|
|
$
2.5
|
Total
Change in Income from Discontinued Operations 2004 vs.
2003
|
Summary
of Changes to Credit Facilities and Commercial Paper
Programs
|
|||||||||||
(In
millions)
|
September
30, 2005 Facility Limit
|
December
31, 2005 Facility Limit
|
Change
|
||||||||
U.S.
commercial paper program
|
$
|
350.0
|
$
|
400.0
|
$
|
50.0
|
|||||
Euro
commercial paper program (a)
|
120.5
|
236.8
|
116.3
|
||||||||
Revolving
credit facility (b)
|
350.0
|
450.0
|
100.0
|
||||||||
Supplemental
credit facility (b)
|
—
|
100.0
|
100.0
|
||||||||
Bilateral
credit facility (c)
|
25.0
|
50.0
|
25.0
|
||||||||
Totals
|
$
|
845.5
|
$
|
1,236.8
|
$
|
391.3
|
(a)
|
100
million euros expanded to 200 million
euros
|
(b)
|
U.S.-based
program
|
(c)
|
International-based
program
|
Contractual
Obligations as of December 31, 2005 (a)
|
|||||||||||||||||
Payments
Due by Period
|
|||||||||||||||||
(In
millions)
|
Total
|
Less
than
1
year
|
1-3
years
|
4-5
years
|
After
5 years
|
||||||||||||
Short-term
Debt
|
$
|
98.0
|
$
|
98.0
|
$
|
—
|
$
|
—
|
$
|
—
|
|||||||
Long-term
Debt
(including
current maturities and capital leases)
|
911.9
|
6.1
|
18.6
|
733.8
|
153.4
|
||||||||||||
Projected
interest payments on Long-term Debt (b)
|
262.3
|
52.9
|
97.6
|
90.9
|
20.9
|
||||||||||||
Pension
and Other Post- retirement Obligations (c)
|
469.1
|
39.0
|
81.5
|
89.9
|
258.7
|
||||||||||||
Operating
Leases
|
144.8
|
41.0
|
51.7
|
29.4
|
22.7
|
||||||||||||
Purchase
Obligations
|
113.6
|
110.4
|
0.8
|
2.2
|
0.2
|
||||||||||||
Foreign
Currency Forward Exchange Contracts (d)
|
157.9
|
157.9
|
—
|
—
|
—
|
||||||||||||
Total
Contractual Obligations
|
$
|
2,157.6
|
$
|
505.3
|
$
|
250.2
|
$
|
946.2
|
$
|
455.9
|
(a)
|
See
Note 6, Debt and Credit Agreements; Note 7, Leases; Note 8, Employee
Benefit Plans; and Note 13, Financial Instruments, to the Consolidated
Financial Statements under Part II, Item 8, “Financial Statements and
Supplementary Data,” for additional disclosures on short-term and
long-term debt; operating leases; pensions and other postretirement
benefits; and foreign currency forward exchange contracts, respectively.
|
(b)
|
The
total projected interest payments on Long-term Debt are based upon
borrowings, interest rates and foreign currency exchange rates as
of
December 31, 2005. The interest rates on variable-rate debt and the
foreign currency exchange rates are subject to changes beyond the
Company’s control and may result in actual interest expense and payments
differing from the amounts projected
above.
|
(c)
|
Amounts
represent expected benefit payments for the next 10
years.
|
(d)
|
This
amount represents the notional value of the foreign currency exchange
contracts outstanding at December 31, 2005. Due to the nature of
these
transactions, there will be offsetting cash flows to these contracts,
with
the difference recognized as a gain or loss in the consolidated income
statement. See Note 13, Financial Instruments, to the Consolidated
Financial Statements under Part II, Item 8, “Financial Statements and
Supplementary Data.”
|
Commercial
Commitments as of December 31, 2005
|
||||||||||||||||||||
Amount
of Commitment Expiration Per Period
|
||||||||||||||||||||
(In
millions)
|
Total
Amounts
Committed
|
Less
Than
1
Year
|
1-3
Years
|
4-5
Years
|
Over
5
Years
|
Indefinite
Expiration
|
||||||||||||||
Standby
Letters of Credit
|
$
|
113.5
|
$
|
104.4
|
$
|
9.1
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||
Guarantees
|
33.4
|
10.1
|
0.7
|
0.1
|
0.9
|
21.6
|
||||||||||||||
Performance
Bonds
|
16.2
|
9.7
|
0.8
|
—
|
—
|
5.7
|
||||||||||||||
Other
Commercial Commitments
|
12.8
|
1.7
|
—
|
—
|
—
|
11.1
|
||||||||||||||
Total
Commercial Commitments
|
$
|
175.9
|
$
|
125.9
|
$
|
10.6
|
$
|
0.1
|
$
|
0.9
|
$
|
38.4
|
Summary
of Credit Facilities and Commercial Paper
Programs
|
As
of December 31, 2005
|
||||||||||
(In
millions)
|
Facility
Limit
|
Outstanding
Balance
|
Available
Credit
|
||||||||
U.S.
commercial paper program
|
$
|
400.0
|
$
|
351.3
|
$
|
48.7
|
|||||
Euro
commercial paper program
|
236.8
|
127.5
|
109.3
|
||||||||
Revolving
credit facility (a)
|
450.0
|
—
|
450.0
|
||||||||
Supplement
credit facility (a)
|
100.0
|
—
|
100.0
|
||||||||
Bilateral
credit facility (b)
|
50.0
|
—
|
50.0
|
||||||||
Totals
at December 31, 2005
|
$
|
1,236.8
|
$
|
478.8
|
$
|
758.0
(c
|
)
|
(a)
|
U.S.-based
Program
|
(b)
|
International-based
Program
|
(c)
|
Although
the Company has significant available credit, it is the Company’s policy
to limit aggregate commercial paper and credit facility borrowings
at any
one time to a maximum of $600 million.
|
Long-term
Notes
|
U.S.-Based
Commercial
Paper
|
Outlook
|
||
Standard
& Poor’s (S&P)
|
A-
|
A-2
|
Stable
|
|
Moody’s
|
A3
|
P-2
|
Stable
|
|
Fitch
|
A-
|
F2
|
Stable
|
(Dollars
are in millions)
|
December
31
2005
|
December
31
2004
|
Increase
(Decrease)
|
||||||||
Current
Assets
|
|||||||||||
Cash
and cash equivalents
|
$
|
120.9
|
$
|
94.1
|
$
|
26.8
|
|||||
Accounts
receivable, net
|
666.3
|
555.2
|
111.1
|
||||||||
Inventories
|
251.1
|
217.0
|
34.1
|
||||||||
Other
current assets
|
60.4
|
58.6
|
1.8
|
||||||||
Assets
held for sale
|
2.3
|
1.0
|
1.3
|
||||||||
Total
current assets
|
1,101.0
|
925.9
|
175.1
|
||||||||
Current
Liabilities
|
|||||||||||
Notes
payable and current maturities
|
104.0
|
31.1
|
72.9
|
||||||||
Accounts
payable
|
247.2
|
220.3
|
26.9
|
||||||||
Accrued
compensation
|
75.7
|
63.8
|
11.9
|
||||||||
Income
taxes
|
42.3
|
40.2
|
2.1
|
||||||||
Other
current liabilities
|
279.2
|
223.0
|
56.2
|
||||||||
Liabilities
associated with assets held for sale
|
—
|
0.7
|
(0.7
|
)
|
|||||||
Total
current liabilities
|
748.4
|
579.1
|
169.3
|
||||||||
Working
Capital
|
$
|
352.6
|
$
|
346.8
|
$
|
5.8
|
|||||
Current
Ratio
|
1.5:1
|
1.6:1
|
· |
Cash
increased by $26.8 million as of December 31, 2005 due principally
to
acquisitions.
|
· |
Net
receivables increased by $111.1 million in 2005. This increase was
principally due to acquisitions and increases in insurance receivables
(primarily related to claims covered by third-party insurance). Partially
offsetting these increases were decreases in the Access Services
Segment
due to divestitures of the Youngman operations and negative foreign
currency translation related to the weakening of the British pound
sterling.
|
· |
Inventory
increased by $34.1 million in 2005 due principally to acquisitions.
|
· |
Notes
payable and current maturities increased $72.9 million in 2005 due
principally to the increase in net cash borrowings for the acquisitions,
a
portion of which has been classified to current based on the Company’s
intent and ability to repay it in
2006.
|
· |
Accounts
payable increased $26.9 million in 2005. This increase was due principally
to acquisitions. Partially offsetting this increase were decreases
in the
Mill Services and Access Services Segments due to negative foreign
currency translation and the timing of payments.
|
· |
Other
current liabilities increased $56.2 million in 2005. This increase
was due
principally to acquisitions and increases in accrued insurance liabilities
(primarily related to claims covered by third-party
insurance).
|
(In
millions)
|
2005
|
2004
|
2003
|
||||||||
Net
cash provided by (used in):
|
|||||||||||
Operating
activities
|
$
|
315.3
|
$
|
270.5
|
$
|
262.8
|
|||||
Investing
activities
|
(645.2
|
)
|
(209.6
|
)
|
(144.8
|
)
|
|||||
Financing
activities
|
369.3
|
(56.5
|
)
|
(125.5
|
)
|
||||||
Effect
of exchange rate changes on cash
|
(12.6
|
)
|
9.5
|
17.6
|
|||||||
Net
change in cash and cash equivalents
|
$
|
26.8
|
$
|
13.9
|
$
|
10.1
|
· |
Increased
net income in 2005 compared with 2004.
|
· |
The
timing of accounts receivable collections at the railway track maintenance
services and equipment business and Gas Technologies businesses,
partially
offset by the timing of receipts on third-party insurance claims
and the
timing of cash collections in the Mill Services business, resulting
in a
positive effect on cash from operations for 2005. The increase in
receivables due to third-party insurance claims was directly offset
by an
increase in insurance liabilities.
|
· |
Partially
offsetting the above improvements was the timing of cash payments
to
vendors in the railway track maintenance services and equipment business
and Mill Services business, somewhat offset by favorable timing
differences in the Gas Technologies business.
|
(Dollars
are in millions)
|
December
31
2005
|
December
31
2004
|
||||||
Notes
Payable and Current Maturities
|
$
|
104.0
|
$
|
31.1
|
||||
Long-term
Debt
|
905.9
|
594.7
|
||||||
Total
Debt
|
1,009.9
|
625.8
|
||||||
Total
Equity
|
993.9
|
914.2
|
||||||
Total
Capital
|
$
|
2,003.9
(a
|
)
|
$
|
1,540.0
|
|||
Total
Debt to Total Capital
|
50.4
|
%
|
40.6
|
%
|
Approximate
Changes in Pre-tax Defined Benefit
Pension
Expense
|
||||
U.S.
Plans
|
U.K.
Plan
|
|||
Discount
rate
|
||||
One-half
percent increase
|
Decrease
of $1.8 million
|
Decrease
of $4.8 million
|
||
One-half
percent decrease
|
Increase
of $2.0 million
|
Increase
of $5.2 million
|
||
Expected
long-term rate of return on plan assets
|
||||
One-half
percent increase
|
Decrease
of $1.2 million
|
Decrease
of $3.0 million
|
||
One-half
percent decrease
|
Increase
of $1.2 million
|
Increase
of $3.0 million
|
Research
and Development Expense
|
|||||||||||
(In
millions)
|
2005
|
2004
|
2003
|
||||||||
Mill
Services Segment
|
$
|
1.4
|
$
|
1.3
|
$
|
1.3
|
|||||
Access
Services Segment
|
0.5
|
0.4
|
0.5
|
||||||||
Gas
Technologies Segment
|
0.2
|
0.3
|
0.6
|
||||||||
Segment
Totals
|
2.1
|
2.0
|
2.4
|
||||||||
Engineered
Products and Services (“all other”) Category
|
0.6
|
0.6
|
0.9
|
||||||||
Consolidated
Totals
|
$
|
2.7
|
$
|
2.6
|
$
|
3.3
|
Order
Backlog
|
||||||||
(In
millions)
|
2005
|
2004
|
||||||
Gas
Technologies Segment
|
$
|
45.2
|
$
|
48.7
|
||||
Engineered
Products and Services (“all other”) Category
|
230.6
|
194.3
|
||||||
Consolidated
Backlog
|
$
|
275.8
|
$
|
243.0
|
Index
to Consolidated Financial Statements and Supplementary
Data
|
||
Page
|
||
Consolidated
Financial Statements of Harsco Corporation:
|
||
Management’s
Report on Internal Control Over Financial Reporting
|
46
|
|
|
||
Report
of Independent Registered Public Accounting Firm
|
47
|
|
Consolidated
Balance Sheets
|
||
December
31, 2005 and 2004
|
49
|
|
Consolidated
Statements of Income
|
||
for
the years 2005, 2004 and 2003
|
50
|
|
Consolidated
Statements of Cash Flows
|
||
for
the years 2005, 2004 and 2003
|
51
|
|
Consolidated
Statements of Stockholders' Equity
|
||
for
the years 2005, 2004 and 2003
|
52
|
|
Consolidated
Statements of Comprehensive Income
|
||
for
the years 2005, 2004 and 2003
|
53
|
|
Notes
to Consolidated Financial Statements
|
54
|
|
Supplementary
Data (Unaudited):
|
||
Two-Year
Summary of Quarterly Results
|
88
|
|
Common
Stock Price and Dividend Information
|
88
|
|
· |
Pertain
to the maintenance of records that, in reasonable detail, accurately
and
fairly reflect transactions and dispositions of assets of the
Company;
|
· |
Provide
reasonable assurance that transactions are recorded as necessary
to permit
preparation of financial statements in accordance with U.S. generally
accepted accounting principles, and that receipts and expenditures
of the
Company are being made only in accordance with authorizations of
management and the directors of the Company; and
|
· |
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s assets that
could have a material effect on the Company’s financial statements.
|
/s/ Derek C. Hathaway | /s/ Salvatore D. Fazzolari | ||
|
|
||
Derek
C. Hathaway
Chairman
and Chief
Executive Officer
March 13, 2006 |
Salvatore
D.
Fazzolari
President,
Chief
Financial Officer and Treasurer
March 13, 2006 |
HARSCO
CORPORATION
CONSOLIDATED
BALANCE SHEETS
|
|||||||
(In
thousands, except share and per share amounts)
|
December
31
2005
|
December
31
2004
(a)
|
|||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
120,929
|
$
|
94,093
|
|||
Accounts
receivable, net
|
666,252
|
555,191
|
|||||
Inventories
|
251,080
|
217,026
|
|||||
Other
current assets
|
60,436
|
58,614
|
|||||
Assets
held-for-sale
|
2,326
|
932
|
|||||
Total
current assets
|
1,101,023
|
925,856
|
|||||
Property,
plant and equipment, net
|
1,139,808
|
932,298
|
|||||
Goodwill,
net
|
559,629
|
433,125
|
|||||
Intangible
assets, net
|
78,839
|
10,837
|
|||||
Other
assets
|
96,505
|
87,640
|
|||||
Total
assets
|
$
|
2,975,804
|
$
|
2,389,756
|
|||
LIABILITIES
|
|||||||
Current
liabilities:
|
|||||||
Short-term
borrowings
|
$
|
97,963
|
$
|
16,145
|
|||
Current
maturities of long-term debt
|
6,066
|
14,917
|
|||||
Accounts
payable
|
247,179
|
220,322
|
|||||
Accrued
compensation
|
75,742
|
63,776
|
|||||
Income
taxes payable
|
42,284
|
40,227
|
|||||
Dividends
payable
|
13,580
|
12,429
|
|||||
Insurance
liabilities
|
47,244
|
23,470
|
|||||
Other
current liabilities
|
218,345
|
187,111
|
|||||
Liabilities
associated with assets held-for-sale
|
—
|
691
|
|||||
Total
current liabilities
|
748,403
|
579,088
|
|||||
Long-term
debt
|
905,859
|
594,747
|
|||||
Deferred
income taxes
|
123,334
|
95,702
|
|||||
Insurance
liabilities
|
55,049
|
53,960
|
|||||
Retirement
plan liabilities
|
98,946
|
97,586
|
|||||
Other
liabilities
|
50,319
|
54,483
|
|||||
Total
liabilities
|
1,981,910
|
1,475,566
|
|||||
COMMITMENTS
AND CONTINGENCIES
|
|||||||
STOCKHOLDERS'
EQUITY
|
|||||||
Preferred
stock, Series A junior participating cumulative preferred
stock
|
-
|
-
|
|||||
Common
stock, par value $1.25, issued 68,257,785 and 67,911,031 shares as
of
December 31, 2005 and 2004, respectively
|
85,322
|
84,889
|
|||||
Additional
paid-in capital
|
154,017
|
139,532
|
|||||
Accumulated
other comprehensive loss
|
(167,318
|
)
|
(127,491
|
)
|
|||
Retained
earnings
|
1,526,216
|
1,420,637
|
|||||
Treasury
stock, at cost (26,474,609 and 26,479,782 shares,
respectively)
|
(603,225
|
)
|
(603,377
|
)
|
|||
Unearned
stock-based compensation
|
(1,118
|
)
|
-
|
||||
Total
stockholders’ equity
|
993,894
|
914,190
|
|||||
Total
liabilities and stockholders’
equity
|
$
|
2,975,804
|
$
|
2,389,756
|
(a)
|
Reclassified
for comparative purposes.
|
Years
ended December 31
|
2005
|
2004
|
2003
|
|||||||
Revenues
from continuing operations:
|
||||||||||
Service
sales
|
$
|
1,928,539
|
$
|
1,764,159
|
$
|
1,493,942
|
||||
Product
sales
|
837,671
|
737,900
|
624,574
|
|||||||
Total
revenues
|
2,766,210
|
2,502,059
|
2,118,516
|
|||||||
Costs
and expenses from continuing operations:
|
||||||||||
Cost
of services sold
|
1,425,222
|
1,313,075
|
1,104,873
|
|||||||
Cost
of products sold
|
674,177
|
603,309
|
499,500
|
|||||||
Selling,
general and administrative expenses
|
393,187
|
368,385
|
329,983
|
|||||||
Research
and development expenses
|
2,676
|
2,579
|
3,313
|
|||||||
Other
expenses
|
2,000
|
4,862
|
6,955
|
|||||||
Total
costs and expenses
|
2,497,262
|
2,292,210
|
1,944,624
|
|||||||
Operating
income from continuing operations
|
268,948
|
209,849
|
173,892
|
|||||||
Equity
in income of unconsolidated entities, net
|
74
|
128
|
321
|
|||||||
Interest
income
|
3,165
|
2,319
|
2,202
|
|||||||
Interest
expense
|
(41,918
|
)
|
(41,057
|
)
|
(40,513
|
)
|
||||
Income
from continuing operations before income taxes and minority
interest
|
230,269
|
171,239
|
135,902
|
|||||||
Income
tax expense
|
(64,771
|
)
|
(49,034
|
)
|
(41,708
|
)
|
||||
Income
from continuing operations before minority
interest
|
165,498
|
122,205
|
94,194
|
|||||||
Minority
interest in net income
|
(8,748
|
)
|
(8,665
|
)
|
(7,195
|
)
|
||||
Income
from continuing operations
|
156,750
|
113,540
|
86,999
|
|||||||
Discontinued
operations:
|
||||||||||
Loss
from operations of discontinued business
|
(430
|
)
|
(801
|
)
|
(668
|
)
|
||||
Gain/(loss)
on disposal of discontinued business
|
261
|
(102
|
)
|
765
|
||||||
Income
related to discontinued defense business
|
20
|
12,849
|
8,030
|
|||||||
Income
tax benefit (expense)
|
56
|
(4,275
|
)
|
(2,909
|
)
|
|||||
Income/(loss)
from discontinued operations
|
(93
|
)
|
7,671
|
5,218
|
||||||
Net
Income
|
$
|
156,657
|
$
|
121,211
|
$
|
92,217
|
||||
Average
shares of common stock outstanding
|
41,642
|
41,129
|
40,690
|
|||||||
Basic
earnings per common share:
|
||||||||||
Continuing
operations
|
$
|
3.76
|
$
|
2.76
|
$
|
2.14
|
||||
Discontinued
operations
|
—
|
0.19
|
0.13
|
|||||||
Basic
earnings per common share
|
$
|
3.76
|
$
|
2.95
|
$
|
2.27
|
||||
Diluted
average shares of common stock outstanding
|
42,080
|
41,598
|
40,973
|
|||||||
Diluted
earnings per common share:
|
||||||||||
Continuing
operations
|
$
|
3.73
|
$
|
2.73
|
$
|
2.12
|
||||
Discontinued
operations
|
—
|
0.18
|
0.13
|
|||||||
Diluted
earnings per common share
|
$
|
3.72
(a
|
)
|
$
|
2.91
|
$
|
2.25
|
(a)
|
Does
not total due to rounding.
|
Years
ended December 31
|
2005
|
2004
|
2003
|
|||||||
Cash
flows from operating activities:
|
||||||||||
Net
income
|
$
|
156,657
|
$
|
121,211
|
$
|
92,217
|
||||
Adjustments
to reconcile net income to net
|
||||||||||
cash
provided (used) by operating activities:
|
||||||||||
Depreciation
|
195,139
|
181,914
|
167,161
|
|||||||
Amortization
|
2,926
|
2,457
|
1,774
|
|||||||
Equity
in income of unconsolidated entities, net
|
(74
|
)
|
(128
|
)
|
(321
|
)
|
||||
Dividends
or distributions from unconsolidated entities
|
170
|
589
|
1,383
|
|||||||
Other,
net
|
8,134
|
(2,781
|
)
|
(2,678
|
)
|
|||||
Changes
in assets and liabilities, net of acquisitions
|
||||||||||
and
dispositions of businesses:
|
||||||||||
Accounts
receivable
|
(64,580
|
)
|
(81,403
|
)
|
(21,211
|
)
|
||||
Inventories
|
(25,908
|
)
|
(22,278
|
)
|
(2,078
|
)
|
||||
Accounts
payable
|
10,787
|
22,310
|
5,834
|
|||||||
Net
receipts (disbursements) related to discontinued defense
business
|
(141
|
)
|
12,280
|
(1,328
|
)
|
|||||
Other
assets and liabilities
|
32,169
|
36,294
|
22,035
|
|||||||
Net
cash provided by operating activities
|
315,279
|
270,465
|
262,788
|
|||||||
Cash
flows from investing activities:
|
||||||||||
Purchases
of property, plant and equipment
|
(290,239
|
)
|
(204,235
|
)
|
(143,824
|
)
|
||||
Purchase
of businesses, net of cash acquired*
|
(394,493
|
)
|
(12,264
|
)
|
(23,718
|
)
|
||||
Proceeds
from sales of assets
|
39,543
|
6,897
|
22,794
|
|||||||
Other
investing activities
|
4
|
-
|
(43
|
)
|
||||||
Net
cash used by investing activities
|
(645,185
|
)
|
(209,602
|
)
|
(144,791
|
)
|
||||
Cash
flows from financing activities:
|
||||||||||
Short-term
borrowings, net (including reclassifications to/from long-term
debt)
|
73,530
|
(5,863
|
)
|
(20,013
|
)
|
|||||
Current
maturities and long-term debt:
|
||||||||||
Additions
|
571,928
|
198,032
|
323,366
|
|||||||
Reductions
(including reclassifications to short-term borrowings)
|
(230,010
|
)
|
(214,551
|
)
|
(389,599
|
)
|
||||
Cash
dividends paid on common stock
|
(49,928
|
)
|
(45,170
|
)
|
(42,688
|
)
|
||||
Common
stock issued-options
|
9,097
|
16,656
|
8,758
|
|||||||
Other
financing activities
|
(5,292
|
)
|
(5,616
|
)
|
(5,325
|
)
|
||||
Net
cash provided (used) by financing activities
|
369,325
|
(56,512
|
)
|
(125,501
|
)
|
|||||
Effect
of exchange rate changes on cash
|
(12,583
|
)
|
9,532
|
17,582
|
||||||
Net
increase in cash and cash equivalents
|
26,836
|
13,883
|
10,078
|
|||||||
Cash
and cash equivalents at beginning of period
|
94,093
|
80,210
|
70,132
|
|||||||
Cash
and cash equivalents at end of period
|
$
|
120,929
|
$
|
94,093
|
$
|
80,210
|
||||
*Purchase
of businesses, net of cash acquired
|
||||||||||
Working
capital, other than cash
|
$
|
(26,832
|
)
|
$
|
(60
|
)
|
$
|
(225
|
)
|
|
Property,
plant and equipment
|
(169,172
|
)
|
(3,024
|
)
|
(16,694
|
)
|
||||
Other
noncurrent assets and liabilities, net
|
(198,490
|
)
|
(9,180
|
)
|
(6,799
|
)
|
||||
Net
cash used to acquire businesses
|
$
|
(394,494
|
)
|
$
|
(12,264
|
)
|
$
|
(23,718
|
)
|
Common
Stock
|
||||||||||||||||||||||
(In
thousands, except share and per share amounts)
|
Issued
|
Treasury
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Comprehensive Income (Loss)
|
Unearned
Stock-Based Compensation
|
Total
|
|||||||||||||||
Balances,
January 1, 2003
|
$
|
83,793
|
$
|
(603,769
|
)
|
$
|
110,639
|
$
|
1,296,855
|
$
|
(242,978
|
)
|
$
|
0
|
$
|
644,540
|
||||||
Net
income
|
92,217
|
92,217
|
||||||||||||||||||||
Cash
dividends declared, $1.0625 per share
|
(43,285
|
)
|
(43,285
|
)
|
||||||||||||||||||
Translation
adjustments
|
72,032
|
72,032
|
||||||||||||||||||||
Cash
flow hedging instrument adjustments, net of $4 deferred income
taxes
|
(8
|
)
|
(8
|
)
|
||||||||||||||||||
Pension
liability adjustments, net of $(482) deferred income taxes
|
1,523
|
1,523
|
||||||||||||||||||||
Marketable
securities adjustments, net of $(2) deferred income taxes
|
4
|
4
|
||||||||||||||||||||
Stock
options exercised, 325,480 shares
|
404
|
69
|
9,436
|
9,909
|
||||||||||||||||||
Other,
1,590 shares
|
61
|
(5
|
)
|
56
|
||||||||||||||||||
Balances,
December 31, 2003
|
$
|
84,197
|
$
|
(603,639
|
)
|
$
|
120,070
|
$
|
1,345,787
|
$
|
(169,427
|
)
|
$
|
0
|
$
|
776,988
|
||||||
Net
income
|
121,211
|
121,211
|
||||||||||||||||||||
Cash
dividends declared, $1.125 per share
|
(46,361
|
)
|
(46,361
|
)
|
||||||||||||||||||
Translation
adjustments
|
46,230
|
46,230
|
||||||||||||||||||||
Cash
flow hedging instrument adjustments, net of $(86) deferred income
taxes
|
159
|
159
|
||||||||||||||||||||
Pension
liability adjustments, net of $2,062 deferred income taxes
|
(4,453
|
)
|
(4,453
|
)
|
||||||||||||||||||
Stock
options exercised, 564,529 shares
|
692
|
253
|
19,308
|
20,253
|
||||||||||||||||||
Other,
250 shares, and 3,500 restricted stock units
|
9
|
154
|
163
|
|||||||||||||||||||
Balances,
December 31, 2004
|
$
|
84,889
|
$
|
(603,377
|
)
|
$
|
139,532
|
$
|
1,420,637
|
$
|
(127,491
|
)
|
$
|
0
|
$
|
914,190
|
||||||
Net
income
|
156,657
|
156,657
|
||||||||||||||||||||
Cash
dividends declared, $1.225 per share
|
(51,078
|
)
|
(51,078
|
)
|
||||||||||||||||||
Translation
adjustments, net of $2,846 deferred income taxes
|
(54,399
|
)
|
(54,399
|
)
|
||||||||||||||||||
Cash
flow hedging instrument adjustments, net of $82 deferred income
taxes
|
(152
|
)
|
(152
|
)
|
||||||||||||||||||
Pension
liability adjustments, net of $(6,407) deferred income
taxes
|
14,724
|
14,724
|
||||||||||||||||||||
Stock
options exercised, 350,840 shares
|
433
|
116
|
12,596
|
13,145
|
||||||||||||||||||
Other,
1,087 shares, and 36,250 restricted stock units (net of
forfeitures)
|
36
|
1,889
|
(1,847
|
)
|
78
|
|||||||||||||||||
Amortization
of unearned compensation on restricted stock units
|
729
|
729
|
||||||||||||||||||||
Balances,
December 31, 2005
|
$
|
85,322
|
$
|
(603,225
|
)
|
$
|
154,017
|
$
|
1,526,216
|
$
|
(167,318
|
)
|
$
|
(1,118
|
)
|
$
|
993,894
|
Years
ended December 31
|
2005
|
2004
|
2003
|
|||||||
Net
Income
|
$
|
156,657
|
$
|
121,211
|
$
|
92,217
|
||||
Other
comprehensive income (loss):
|
||||||||||
Foreign
currency translation adjustments
|
(54,399
|
)
|
46,230
|
72,032
|
||||||
Net
gains (losses) on cash flow hedging instruments, net of deferred
income
taxes of $79, $(30) and $6 in 2005, 2004 and 2003,
respectively
|
(147
|
)
|
55
|
(11
|
)
|
|||||
Reclassification
adjustment for loss on cash flow hedging instruments, net of deferred
income taxes of $3, $(56), and $(2) in 2005, 2004 and 2003,
respectively
|
(5
|
)
|
104
|
3
|
||||||
Pension
liability adjustments, net of deferred income taxes of $(6,407),
$2,062
and $(482) in 2005, 2004 and 2003, respectively
|
14,724
|
(4,453
|
)
|
1,523
|
||||||
Unrealized
gain on marketable securities, net of deferred income taxes of $(1)
in
2003
|
—
|
—
|
2
|
|||||||
Reclassification
adjustment for loss on marketable securities included in net income,
net
of deferred income taxes of $(1) in 2003
|
—
|
—
|
2
|
|||||||
Other
comprehensive income (loss)
|
(39,827
|
)
|
41,936
|
73,551
|
||||||
Total
comprehensive income
|
$
|
116,830
|
$
|
163,147
|
$
|
165,768
|
Warranty
Activity
|
||||||||||
(In
thousands)
|
2005
|
2004
|
2003
|
|||||||
Balance
at the beginning of the period
|
$
|
4,161
|
$
|
2,788
|
$
|
2,248
|
||||
Accruals
for warranties issued during the period
|
3,851
|
4,135
|
(a)
|
2,125
|
||||||
Increase/(reductions)
related to pre-existing warranties
|
60
|
(414
|
)
|
(233
|
)
|
|||||
Warranties
paid
|
(3,083
|
)
|
(2,361
|
)
|
(1,344
|
)
|
||||
Other
(principally foreign currency translation)
|
(27
|
)
|
13
|
(8
|
)
|
|||||
Balance
at end of the period
|
$
|
4,962
|
$
|
4,161
|
$
|
2,788
|
Pro
forma Impact of SFAS 123 on Earnings
|
||||||||||
(In
thousands, except per share)
|
2005
|
2004
|
2003
|
|||||||
Net
income:
|
||||||||||
As
reported
|
$
|
156,657
|
$
|
121,211
|
$
|
92,217
|
||||
Compensation
expense (a)
|
—
|
(96
|
)
|
(1,673
|
)
|
|||||
Pro
forma
|
$
|
156,657
|
$
|
121,115
|
$
|
90,544
|
||||
Basic
earnings per share:
|
||||||||||
As
reported
|
$
|
3.76
|
$
|
2.95
|
$
|
2.27
|
||||
Pro
forma
|
3.76
|
2.94
|
2.23
|
|||||||
Diluted
earnings per share:
|
||||||||||
As
reported
|
3.72
|
2.91
|
2.25
|
|||||||
Pro
forma
|
3.72
|
2.91
|
2.21
|
(a) |
Total
stock-based employee compensation expense related to stock options
determined under fair value-based method for all awards, net
of related
income tax effects.
|
(In
thousands)
As
of December 31
|
2005
|
2004
|
|||||
ASSETS
|
|||||||
Accounts
receivable, net
|
$
|
—
|
$
|
15
|
|||
Inventories
|
—
|
133
|
|||||
Other
current assets
|
—
|
23
|
|||||
Property,
plant and equipment, net
|
2,326
|
761
|
|||||
Total
assets “held-for-sale”
|
$
|
2,326
|
$
|
932
|
|||
LIABILITIES
|
|||||||
Accounts
payable
|
$
|
—
|
$
|
24
|
|||
Other
current liabilities
|
—
|
542
|
|||||
Other
liabilities
|
—
|
125
|
|||||
Total
liabilities associated with assets
“held-for-sale”
|
$
|
—
|
$
|
691
|
Inventories
|
|||||||
(In
thousands)
|
2005
|
2004
|
|||||
Finished
goods
|
$
|
85,325
|
$
|
60,554
|
|||
Work-in-process
|
43,830
|
37,882
|
|||||
Raw
materials and purchased parts
|
87,251
|
91,965
|
|||||
Stores
and supplies
|
34,674
|
26,625
|
|||||
Total
inventories
|
$
|
251,080
|
$
|
217,026
|
|||
Valued
at lower of cost or market:
|
|||||||
Last-in,
first out (LIFO) basis
|
$
|
137,101
|
$
|
129,064
|
|||
First-in,
first out (FIFO) basis
|
26,003
|
17,399
|
|||||
Average
cost basis
|
87,976
|
70,563
|
|||||
Total
inventories
|
$
|
251,080
|
$
|
217,026
|
(In
thousands)
|
2005
|
2004
|
|||||
Land
and improvements
|
$
|
39,306
|
$
|
39,838
|
|||
Buildings
and improvements
|
168,727
|
185,807
|
|||||
Machinery
and equipment
|
2,291,294
|
2,027,765
|
|||||
Uncompleted
construction
|
91,186
|
45,083
|
|||||
Gross
property, plant and equipment
|
2,590,513
|
2,298,493
|
|||||
Less
accumulated depreciation
|
(1,450,705
|
)
|
(1,366,195
|
)
|
|||
Net
property, plant and equipment
|
$
|
1,139,808
|
$
|
932,298
|
Land improvements | 5 to 20 years | |||
Buildings and improvements | 10 to 40 years | |||
Certain
plant, buildings and installations
(Principally
Mill Services Segment)
|
3 to 10 years
|
|||
Machinery and equipment |
3 to 20 years
|
|||
Leasehold improvements |
Estimated useful life of the improvement
or, if shorter, the life of the lease
|
Goodwill
by Segment
|
||||||||||||||||
(In
thousands)
|
Mill
Services
Segment
|
Access
Services
Segment
|
Gas
Technologies
Segment
|
Engineered
Products
and
Services
(“all
other”)
Category
|
Consolidated
Totals
|
|||||||||||
Balance
as of December 31, 2003, net of accumulated amortization
|
$
|
211,318
|
$
|
151,698
|
$
|
36,693
|
$
|
8,137
|
$
|
407,846
|
||||||
Goodwill
acquired during year
|
—
|
5,046
|
—
|
—
|
5,046
|
|||||||||||
Other
(principally foreign currency translation)
|
9,175
|
11,058
|
—
|
—
|
20,233
|
|||||||||||
Balance
as of December 31, 2004, net of accumulated amortization
|
$
|
220,493
|
$
|
167,802
|
$
|
36,693
|
$
|
8,137
|
$
|
433,125
|
||||||
Goodwill
acquired during year
|
93,268
|
71,068
|
—
|
—
|
164,336
|
|||||||||||
Goodwill
written off related to sale of business unit
|
—
|
(5,370
|
)
|
—
|
—
|
(5,370
|
)
|
|||||||||
Other
(principally foreign currency translation)
|
(16,542
|
)
|
(15,920
|
)
|
—
|
—
|
(32,462
|
)
|
||||||||
Balance
as of December 31, 2005, net of accumulated
amortization
|
$
|
297,219
|
$
|
217,580
|
$
|
36,693
|
$
|
8,137
|
$
|
559,629
|
Intangible
Assets
|
|||||||||||||
December
31, 2005
|
December
31, 2004
|
||||||||||||
(In
thousands)
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
|||||||||
Customer
relationships
|
$
|
73,224
|
$
|
1,262
|
$
|
7,662
|
$
|
609
|
|||||
Non-compete
agreements
|
5,036
|
4,402
|
4,898
|
4,032
|
|||||||||
Patents
|
4,426
|
3,587
|
4,416
|
3,757
|
|||||||||
Other
|
7,962
|
2,558
|
4,411
|
2,087
|
|||||||||
Total
|
$
|
90,648
|
$
|
11,809
|
$
|
21,387
|
$
|
10,485
|
Acquired
Intangible Assets
|
||||||||||
(In
thousands)
|
Gross
Carrying
Amount
|
Residual
Value
|
Weighted-average
amortization
period
|
|||||||
Customer
relationships
|
$
|
67,789
|
None
|
18
years
|
||||||
Non-compete
agreements
|
147
|
None
|
10
years
|
|||||||
Patents
|
586
|
None
|
10
years
|
|||||||
Other
|
4,104
|
None
|
11
years
|
|||||||
Total
|
$
|
72,626
|
(In
thousands)
|
2006
|
2007
|
2008
|
2009
|
2010
|
|||||||||||
Estimated
amortization expense
|
$
|
6,335
|
$
|
6,076
|
$
|
5,766
|
$
|
5,488
|
$
|
5,302
|
Summary
of Credit Facilities and Commercial Paper
Programs
|
As
of December 31, 2005
|
|||||||||
(In
thousands)
|
Facility
Limit
|
Outstanding
Balance
|
Available
Credit
|
|||||||
U.S.
commercial paper program
|
$
|
400,000
|
$
|
351,317
|
$
|
48,683
|
||||
Euro
commercial paper program
|
236,800
|
127,444
|
109,356
|
|||||||
Revolving
credit facility (a)
|
450,000
|
—
|
450,000
|
|||||||
Supplemental
credit facility (a)
|
100,000
|
—
|
100,000
|
|||||||
Bilateral
credit facility (b)
|
50,000
|
—
|
50,000
|
|||||||
Totals
at December 31, 2005
|
$
|
1,236,800
|
$
|
478,761
|
$
|
758,039
|
(c)
|
(a)
|
U.S.-based
program
|
(b)
|
International-based
program
|
(c)
|
Although
the Company has significant available credit, it is the Company’s policy
to limit aggregate commercial paper and credit facility borrowings
at any
one time to a maximum of $600 million.
|
Long-term
Debt
|
|||||||
(In
thousands)
|
2005
|
2004
|
|||||
7.25%
British pound sterling-denominated notes due October 27,
2010
|
|
$
|
341,063
|
|
$
|
379,751
|
|
5.125%
notes due September 15, 2013
|
|
|
148,856
|
|
|
148,738
|
|
Commercial
paper borrowings, with a weighted average interest rate of 3.9%
and 2.3%
as of December 31, 2005 and 2004, respectively
|
|
|
390,074
|
|
|
33,665
|
|
Faber
Prest loan notes due October 31, 2008 with interest based on sterling
LIBOR minus .75% (3.9% and 4.2% at December 31, 2005 and 2004,
respectively)
|
|
|
6,731
|
|
|
9,361
|
|
Industrial
development bonds, payable in varying amounts from 2010 to 2011
with a
weighted average interest rate of 3.7% and 2.1% as of December
31, 2005
and 2004, respectively
|
|
|
6,500
|
|
|
6,500
|
|
Other
financing payable in varying amounts to 2011 with a weighted average
interest rate of 5.5% and 6.0% as of December 31, 2005 and 2004,
respectively
|
18,701
|
31,649
|
|||||
911,925
|
609,664
|
||||||
Less:
current maturities
|
(6,066
|
)
|
(14,917
|
)
|
|||
$
|
905,859
|
$
|
594,747
|
(In
thousands)
|
|||||
2007
|
$
|
10,693
|
|||
2008
|
7,961
|
||||
2009
|
560
|
||||
2010
|
733,279
|
(In
thousands)
|
|||||
2006
|
$
|
40,981
|
|||
2007
|
30,866
|
||||
2008
|
20,882
|
||||
2009
|
21,746
|
||||
2010
|
7,624
|
||||
After
2010
|
22,661
|
(In
thousands)
|
U.
S. Plans
|
International
Plans
|
|||||||||||||||||
2005
|
2004
|
2003
|
2005
|
2004
|
2003
|
||||||||||||||
Pension
Expense (Income)
|
|||||||||||||||||||
Defined
benefit plans:
|
|||||||||||||||||||
Service
cost
|
$
|
3,380
|
$
|
2,610
|
$
|
7,339
|
$
|
8,195
|
$
|
9,561
|
$
|
10,439
|
|||||||
Interest
cost
|
13,914
|
13,592
|
13,201
|
40,475
|
37,876
|
32,627
|
|||||||||||||
Expected
return on plan assets
|
(19,112
|
)
|
(17,960
|
)
|
(15,758
|
)
|
(44,796
|
)
|
(39,765
|
)
|
(34,083
|
)
|
|||||||
Recognized
prior service costs
|
767
|
754
|
726
|
1,208
|
1,245
|
1,117
|
|||||||||||||
Recognized
losses
|
3,617
|
2,982
|
4,409
|
12,247
|
13,431
|
9,813
|
|||||||||||||
Amortization
of transition (asset) liability
|
(1,455
|
)
|
(1,466
|
)
|
(1,466
|
)
|
117
|
(567
|
)
|
(626
|
)
|
||||||||
Settlement/Curtailment
loss (gain)
|
(3
|
)
|
131
|
36
|
50
|
—
|
8
|
||||||||||||
Defined
benefit plans pension expense
|
1,108
|
643
|
8,487
|
17,496
|
21,781
|
19,295
|
|||||||||||||
Multi-employer
plans
|
8,156
|
7,674
|
6,020
|
5,579
|
5,395
|
4,389
|
|||||||||||||
Defined
contribution plans
|
7,522
|
6,197
|
527
|
5,901
|
5,722
|
2,329
|
|||||||||||||
Pension
expense
|
$
|
16,786
|
$
|
14,514
|
$
|
15,034
|
$
|
28,976
|
$
|
32,898
|
$
|
26,013
|
Defined
Benefit Pension Benefits
|
U.
S. Plans
|
International
Plans
|
|||||||||||
(In
thousands)
|
2005
|
2004
|
2005
|
2004
|
|||||||||
Change
in benefit obligation:
|
|||||||||||||
Benefit
obligation at beginning of year
|
$
|
243,568
|
$
|
221,695
|
$
|
746,573
|
$
|
660,441
|
|||||
Service
cost
|
3,380
|
2,610
|
8,195
|
9,561
|
|||||||||
Interest
cost
|
13,914
|
13,592
|
40,475
|
37,876
|
|||||||||
Plan
participants’ contributions
|
—
|
—
|
1,866
|
2,691
|
|||||||||
Amendments
|
711
|
—
|
—
|
—
|
|||||||||
Actuarial
loss
|
5,300
|
18,094
|
86,447
|
15,074
|
|||||||||
Settlements/curtailments
|
—
|
(22
|
)
|
(541
|
)
|
(54
|
)
|
||||||
Benefits
paid
|
(11,244
|
)
|
(12,401
|
)
|
(28,602
|
)
|
(30,113
|
)
|
|||||
Obligations
of added plans
|
—
|
—
|
20,695
|
—
|
|||||||||
Effect
of foreign currency
|
—
|
—
|
(76,774
|
)
|
51,097
|
||||||||
Benefit
obligation at end of year
|
$
|
255,629
|
$
|
243,568
|
$
|
798,334
|
$
|
746,573
|
|||||
Change
in plan assets:
|
|||||||||||||
Fair
value of plan assets at beginning of year
|
$
|
223,108
|
$
|
209,130
|
$
|
617,097
|
$
|
522,185
|
|||||
Actual
return on plan assets
|
26,377
|
23,096
|
104,295
|
52,900
|
|||||||||
Employer
contributions
|
8,439
|
3,283
|
40,367
|
34,528
|
|||||||||
Plan
participants’ contributions
|
—
|
—
|
1,868
|
2,692
|
|||||||||
Benefits
paid
|
(11,244
|
)
|
(12,401
|
)
|
(28,225
|
)
|
(29,774
|
)
|
|||||
Plan
assets of added plans
|
—
|
—
|
10,292
|
—
|
|||||||||
Effect
of foreign currency
|
—
|
—
|
(75,545
|
)
|
34,566
|
||||||||
Fair
value of plan assets at end of year
|
$
|
246,680
|
$
|
223,108
|
$
|
670,149
|
$
|
617,097
|
|||||
Funded
status:
|
|||||||||||||
Funded
status at end of year
|
$
|
(8,949
|
)
|
$
|
(20,460
|
)
|
$
|
(128,185
|
)
|
$
|
(129,476
|
)
|
|
Unrecognized
net loss
|
54,593
|
60,173
|
229,454
|
240,797
|
|||||||||
Unrecognized
transition (asset) obligation
|
(361
|
)
|
(1,817
|
)
|
332
|
478
|
|||||||
Unrecognized
prior service cost
|
3,802
|
3,858
|
9,643
|
12,085
|
|||||||||
Net
amount recognized
|
$
|
49,085
|
$
|
41,754
|
$
|
111,244
|
$
|
123,884
|
|||||
Amounts
recognized in the Consolidated Balance Sheets consist of the
following:
|
|||||||||||||
Prepaid
benefit cost
|
$
|
62,407
|
$
|
54,613
|
$
|
—
|
$
|
—
|
|||||
Accrued
benefit liability
|
(31,416
|
)
|
(37,187
|
)
|
(85,625
|
)
|
(91,115
|
)
|
|||||
Intangible
asset
|
2,173
|
3,209
|
9,537
|
11,733
|
|||||||||
Accumulated
other comprehensive loss
|
15,921
|
21,119
|
187,332
|
203,266
|
|||||||||
Net
amount recognized
|
$
|
49,085
|
$
|
41,754
|
$
|
111,244
|
$
|
123,884
|
(In
millions)
|
U.S.
Plans
|
International
Plans
|
||||||
2006
|
$
|
10.3
|
$
|
28.4
|
||||
2007
|
11.2
|
28.5
|
||||||
2008
|
11.8
|
29.4
|
||||||
2009
|
12.6
|
30.4
|
||||||
2010
|
13.5
|
32.8
|
||||||
2011
- 2015
|
81.6
|
175.7
|
Global
Weighted Average
December
31
|
|||||||||||
2005
|
2004
|
2003
|
|||||||||
Discount
rates
|
5.7
|
%
|
5.9
|
%
|
6.0
|
%
|
|||||
Expected
long-term rates of return on plan assets
|
7.8
|
%
|
7.9
|
%
|
8.0
|
%
|
|||||
Rates
of compensation increase
|
3.4
|
%
|
3.5
|
%
|
3.4
|
%
|
U.
S. Plans
December
31
|
International
Plans
December
31
|
|||||||||||||||||||
2005
|
2004
|
2003
|
2005
|
2004
|
2003
|
|||||||||||||||
Discount
rates
|
5.75
|
%
|
6.25
|
%
|
6.75
|
%
|
5.7
|
%
|
5.7
|
%
|
5.8
|
%
|
||||||||
Expected
long-term rates of return on plan assets
|
8.75
|
%
|
8.75
|
%
|
8.9
|
%
|
7.5
|
%
|
7.5
|
%
|
7.6
|
%
|
||||||||
Rates
of compensation increase
|
4.0
|
%
|
4.0
|
%
|
3.8
|
%
|
3.3
|
%
|
3.4
|
%
|
3.3
|
%
|
Global
Weighted Average
December
31
|
|||||||||||
2005
|
2004
|
2003
|
|||||||||
Discount
rates
|
5.3
|
%
|
5.7
|
%
|
5.9
|
%
|
|||||
Rates
of compensation increase
|
3.4
|
%
|
3.5
|
%
|
3.5
|
%
|
U.
S. Plans
December
31
|
International
Plans
December
31
|
|||||||||||||||||||
2005
|
2004
|
2003
|
2005
|
2004
|
2003
|
|||||||||||||||
Discount
rates
|
5.87
|
%
|
5.75
|
%
|
6.25
|
%
|
5.2
|
%
|
5.7
|
%
|
5.7
|
%
|
||||||||
Rates
of compensation increase
|
4.36
|
%
|
4.0
|
%
|
4.0
|
%
|
3.2
|
%
|
3.3
|
%
|
3.4
|
%
|
(In
millions)
|
U.S.
Plans
|
International
Plans
|
||||||
2005
|
$
|
244.4
|
$
|
744.7
|
||||
2004
|
231.6
|
705.3
|
U.
S. Plans
|
International
Plans
|
||||||||||||||
(In
millions)
|
2005
|
2004
|
2005
|
2004
|
|||||||||||
Projected
benefit obligation
|
$
|
76.8
|
$
|
75.6
|
$
|
778.2
|
$
|
737.3
|
|||||||
Accumulated
benefit obligation
|
74.2
|
73.8
|
730.1
|
697.8
|
|||||||||||
Fair
value of plan assets
|
44.9
|
40.7
|
644.8
|
605.4
|
U.S. Plans |
Target
2006
|
Percentage
of Plan Assets at October 31
|
||||||||
Asset Category |
Allocation
|
2005
|
2004
|
|||||||
Domestic
Equity Securities
|
47%
- 57
|
%
|
51.9
|
%
|
52.6
|
%
|
||||
Fixed
Income Securities
|
27%
- 37
|
%
|
29.0
|
%
|
32.5
|
%
|
||||
International
Equity Securities
|
4.5%
- 14.5
|
%
|
10.7
|
%
|
10.5
|
%
|
||||
Cash
& Cash Equivalents
|
0%
- 5
|
%
|
4.1
|
%
|
1.8
|
%
|
||||
Other
|
2%
- 6
|
%
|
4.3
|
%
|
2.6
|
%
|
International Plans |
Target
2006
|
Percentage
of Plan Assets at September 30
|
||||||||
Asset Category |
Allocation
|
2005
|
2004
|
|||||||
Equity
Securities
|
55.5%
- 64.5
|
%
|
57.1
|
%
|
57.5
|
%
|
||||
Fixed
Income Securities
|
37.5%
- 42.5
|
%
|
40.8
|
%
|
42.0
|
%
|
||||
Cash
& Cash Equivalents
|
0
|
%
|
1.0
|
%
|
0.4
|
%
|
||||
Other
|
0
|
%
|
1.1
|
%
|
0.1
|
%
|
(In
thousands)
|
2005
|
2004
|
2003
|
|||||||
Postretirement
Benefits Expense (Income)
|
||||||||||
Service
cost
|
$
|
7
|
$
|
11
|
$
|
21
|
||||
Interest
cost
|
200
|
342
|
553
|
|||||||
Recognized
prior service costs
|
7
|
32
|
32
|
|||||||
Recognized
(gains) or losses
|
(37
|
)
|
39
|
66
|
||||||
Curtailment
gains
|
(318
|
)
|
(2,236
|
)
|
(4,898
|
)
|
||||
Postretirement
benefit income
|
$
|
(141
|
)
|
$
|
(1,812
|
)
|
$
|
(4,226
|
)
|
(In
thousands)
|
2005
|
2004
|
|||||
Change
in benefit obligation:
|
|||||||
Benefit
obligation at beginning of year
|
$
|
4,187
|
$
|
7,405
|
|||
Service
cost
|
7
|
11
|
|||||
Interest
cost
|
200
|
342
|
|||||
Actuarial
gain
|
(117
|
)
|
(654
|
)
|
|||
Plan
participants’ contributions
|
25
|
48
|
|||||
Benefits
paid
|
(311
|
)
|
(369
|
)
|
|||
Plan
amendments
|
—
|
4
|
|||||
Curtailment
|
(670
|
)
|
(2,600
|
)
|
|||
Benefit
obligation at end of year
|
$
|
3,321
|
$
|
4,187
|
Funded
status:
|
|||||||
Funded
status at end of year
|
$
|
(3,321
|
)
|
$
|
(4,187
|
)
|
|
Unrecognized
prior service cost
|
17
|
296
|
|||||
Unrecognized
net actuarial gain
|
(256
|
)
|
(95
|
)
|
|||
Net
amount recognized as accrued benefit liability
|
$
|
(3,560
|
)
|
$
|
(3,986
|
)
|
(Dollars
in thousands)
|
2005
|
2004
|
2003
|
|||||||
Assumed
discount rate
|
5.87
|
%
|
5.75
|
%
|
6.25
|
%
|
||||
Health
care cost trend rate
|
10.00
|
%
|
10.00
|
%
|
12.00
|
%
|
||||
Decreasing
to ultimate rate
|
5.00
|
%
|
5.00
|
%
|
5.00
|
%
|
||||
Effect
of one percent increase in health care cost trend rate:
|
||||||||||
On
total service and interest cost components
|
$
|
10
|
$
|
15
|
$
|
24
|
||||
On
postretirement benefit obligation
|
$
|
166
|
$
|
239
|
$
|
373
|
||||
Effect
of one percent decrease in health care cost trend rate:
|
||||||||||
On
total service and interest cost components
|
$
|
(9
|
)
|
$
|
(13
|
)
|
$
|
(21
|
)
|
|
On
postretirement benefit obligation
|
$
|
(149
|
)
|
$
|
(212
|
)
|
$
|
(336
|
)
|
(In
thousands)
|
Benefits
Payments Before Subsidy
|
Expected
Subsidy Under Medicare Modernization Act
|
||||||
2006
|
$
|
326
|
$
|
27
|
||||
2007
|
320
|
27
|
||||||
2008
|
321
|
28
|
||||||
2009
|
319
|
28
|
||||||
2010
|
314
|
28
|
||||||
2011
- 2015
|
1,435
|
125
|
Company
Shares in Plans
|
|||||||||||||||||||
December
31, 2005
|
December
31, 2004
|
December
31, 2003
|
|||||||||||||||||
(Dollars
in millions)
|
Number
of Shares
|
Fair
Market Value
|
Number
of Shares
|
Fair
Market Value
|
Number
of Shares
|
Fair
Market Value
|
|||||||||||||
Savings
Plan
|
929,537
|
$
|
62.8
|
1,017,241
|
$
|
56.7
|
2,143,820
|
$
|
93.9
|
||||||||||
HRSIP
|
921,258
|
62.2
|
954,442
|
53.2
|
—
|
—
|
(In
thousands)
|
2005
|
2004
|
2003
|
|||||||
United
States
|
$
|
74,013
|
$
|
57,566
|
$
|
53,549
|
||||
International
|
156,107
|
125,619
|
90,480
|
|||||||
Total
income before income taxes and minority interest
|
$
|
230,120
|
$
|
183,185
|
$
|
144,029
|
||||
Income
tax expense/(benefit):
|
||||||||||
Currently
payable:
|
||||||||||
Federal
|
$
|
24,260
|
$
|
(2,788
|
)
|
$
|
5,275
|
|||
State
|
637
|
(281
|
)
|
(961
|
)
|
|||||
International
|
34,381
|
31,471
|
24,233
|
|||||||
Total
income taxes currently payable
|
59,278
|
28,402
|
28,547
|
|||||||
Deferred
federal and state
|
4,550
|
17,110
|
12,255
|
|||||||
Deferred
international
|
887
|
7,797
|
3,815
|
|||||||
Total
income tax expense
|
$
|
64,715
|
$
|
53,309
|
$
|
44,617
|
||||
Continuing
Operations
|
$
|
64,771
|
$
|
49,034
|
$
|
41,708
|
||||
Discontinued
Operations
|
(56
|
)
|
4,275
|
2,909
|
||||||
Total
income tax expense
|
$
|
64,715
|
$
|
53,309
|
$
|
44,617
|
2005
|
2004
|
2003
|
||||||||
U.S.
federal income tax rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
||||
State
income taxes, net of federal income tax benefit
|
0.7
|
1.0
|
0.3
|
|||||||
Export
sales corporation benefit/domestic manufacturing deduction
|
(0.6
|
)
|
(0.6
|
)
|
(0.7
|
)
|
||||
Deductible
401(k) dividends
|
(0.4
|
)
|
(0.4
|
)
|
(0.6
|
)
|
||||
Losses
for which no tax benefit was recorded
|
0.0
|
0.0
|
0.1
|
|||||||
Difference
in effective tax rates on international earnings and
remittances
|
(5.4
|
)
|
(1.7
|
)
|
(2.2
|
)
|
||||
Settlement
of tax contingencies
|
(0.9
|
)
|
(3.3
|
)
|
(1.1
|
)
|
||||
Other,
net
|
(0.3
|
)
|
(0.9
|
)
|
0.2
|
|||||
Effective
income tax rate
|
28.1
|
%
|
29.1
|
%
|
31.0
|
%
|
(In thousands) |
2005
|
2004
|
|||||||||||
Deferred
income taxes
|
Asset
|
Liability
|
Asset
|
Liability
|
|||||||||
Depreciation
|
$
|
—
|
$
|
143,802
|
$
|
—
|
$
|
111,967
|
|||||
Expense
accruals
|
23,951
|
—
|
22,437
|
—
|
|||||||||
Inventories
|
3,510
|
—
|
3,268
|
—
|
|||||||||
Provision
for receivables
|
1,578
|
—
|
3,225
|
—
|
|||||||||
Postretirement
benefits
|
1,340
|
—
|
1,475
|
—
|
|||||||||
Deferred
revenue
|
—
|
4,941
|
—
|
3,770
|
|||||||||
Operating
loss carryforwards
|
22,340
|
—
|
19,667
|
—
|
|||||||||
Deferred
foreign tax credits
|
8,708
|
—
|
—
|
—
|
|||||||||
Pensions
|
26,764
|
17,129
|
25,649
|
9,493
|
|||||||||
Currency
translation adjustment
|
2,846
|
—
|
—
|
—
|
|||||||||
Other
|
4,615
|
428
|
5,292
|
4,071
|
|||||||||
Subtotal
|
95,652
|
166,300
|
81,013
|
129,301
|
|||||||||
Valuation
allowance
|
(21,682
|
)
|
—
|
(17,492
|
)
|
—
|
|||||||
Total
deferred income taxes
|
$
|
73,970
|
$
|
166,300
|
$
|
63,521
|
$
|
129,301
|
No.
of Shares
Authorized
to be
Purchased
January
1
|
No.
of Shares
Purchased
|
Additional
Shares
Authorized
for
Purchase
|
Remaining
No. of
Shares
Authorized
for
Purchase
December
31
|
||||||||||
2003
|
499,154
|
—
|
500,846
|
1,000,000
|
|||||||||
2004
|
1,000,000
|
—
|
—
|
1,000,000
|
|||||||||
2005
|
1,000,000
|
(133)
|
(a)
|
—
|
1,000,000
|
(a)
|
The
133 shares purchased were not part of the share repurchase program.
They were shares which a retired employee sold to the Company in
order to
pay personal federal and state income taxes on shares issued to
the
employee upon retirement.
|
Common
Stock
|
||||||||||
Shares
Issued
|
Treasury
Shares
|
Outstanding
Shares
|
||||||||
Outstanding,
January 1, 2003
|
67,034,010
|
26,494,610
|
40,539,400
|
|||||||
Stock
Options Exercised
|
323,437
|
(2,043
|
)
|
325,480
|
||||||
Other
|
—
|
(1,590
|
)
|
1,590
|
||||||
Outstanding,
December 31, 2003
|
67,357,447
|
26,490,977
|
40,866,470
|
|||||||
Stock
Options Exercised
|
553,584
|
(10,945
|
)
|
564,529
|
||||||
Other
|
—
|
(250
|
)
|
250
|
||||||
Outstanding,
December 31, 2004
|
67,911,031
|
26,479,782
|
41,431,249
|
|||||||
Stock
Options Exercised
|
346,754
|
(4,086
|
)
|
350,840
|
||||||
Other
|
—
|
(1,220
|
)
|
1,220
|
||||||
Purchases
|
—
|
133
|
(133
|
)
|
||||||
Outstanding,
December 31, 2005
|
68,257,785
|
26,474,609
|
41,783,176
|
(Amounts
in thousands, except per share data)
|
2005
|
2004
|
2003
|
|||||||
Income
from continuing operations
|
$
|
156,750
|
$
|
113,540
|
$
|
86,999
|
||||
Average
shares of common stock outstanding used to compute basic earnings
per
common share
|
41,642
|
41,129
|
40,690
|
|||||||
Dilutive
effect of stock options and restricted stock units
|
438
|
469
|
283
|
|||||||
Shares
used to compute dilutive effect of stock options
|
42,080
|
41,598
|
40,973
|
|||||||
Basic
earnings per common share from continuing operations
|
$
|
3.76
|
$
|
2.76
|
$
|
2.14
|
||||
Diluted
earnings per common share from continuing operations
|
$
|
3.73
|
$
|
2.73
|
$
|
2.12
|
Stock
Options
|
2003
|
|||
Expected
term
|
7.5
years
|
|||
Expected
stock volatility
|
32.7
|
%
|
||
Risk-free
interest rate
|
3.46
|
%
|
||
Dividend
|
$
|
1.05
|
||
Rate
of dividend increase
|
4.63
|
%
|
||
Fair
value
|
$
|
9.70
|
Stock
Options
|
|||||||
Shares
Under
Option
|
Weighted
Average Exercise Price
|
||||||
Outstanding,
January 1, 2003
|
2,123,113
|
$
|
30.30
|
||||
Granted
|
16,000
|
(a)
|
33.92
|
||||
Exercised
|
(325,480
|
)
|
27.15
|
||||
Terminated
and expired
|
(118,553
|
)
|
33.76
|
||||
Outstanding,
December 31, 2003
|
1,695,080
|
30.72
|
|||||
Granted
|
—
|
—
|
|||||
Exercised
|
(564,529
|
)
|
30.02
|
||||
Terminated
and expired
|
(9,450
|
)
|
40.25
|
||||
Outstanding,
December 31, 2004
|
1,121,101
|
(b)
|
31.01
|
||||
Granted
|
—
|
—
|
|||||
Exercised
|
(370,836
|
)
|
29.10
|
||||
Terminated
and expired
|
(1,240
|
)
|
33.41
|
||||
Outstanding,
December 31, 2005
|
749,025
|
(c)
|
$
|
31.93
|
(a) |
During
2003, options were only granted to non-employee
directors.
|
(b) |
Included
in options outstanding at December 31, 2004 were 5,107 options
granted to
SGB key employees as part of the Company’s acquisition of SGB in 2000.
These options are not a part of the 1995 Executive Compensation
Plan, or
the 1995 Non-Employee Directors’ Stock
Plan.
|
(c) |
Included
in options outstanding at December 31, 2005 were 681 options granted
to
SGB key employees as part of the Company's acquisition of SGB in
2000.
These options are not a part of the 1995 Executive Compensation
Plan, or
the 1995 Non-Employee Directors' Stock
Plan.
|
Stock
Options Outstanding
|
Stock
Options Exercisable
|
|||||||||||||||
Range
of
Exercisable
Prices
|
Number
Outstanding
|
Remaining
Contractual
Life
In
Years
|
Weighted
Average
Exercise
Price
|
Number
Exercisable
|
Weighted
Average
Exercise
Price
|
|||||||||||
$25.63
- $29.00
|
263,852
|
4.27
|
$
|
27.49
|
254,892
|
$
|
27.56
|
|||||||||
29.31 - 32.65
|
272,005
|
5.99
|
32.53
|
272,005
|
32.53
|
|||||||||||
32.81 - 46.16
|
213,168
|
2.60
|
36.67
|
204,808
|
36.72
|
|||||||||||
749,025
|
731,705
|
Forward
Exchange Contracts
|
|||||||||||||
(In
thousands)
|
As
of December 31, 2005
|
||||||||||||
Type
|
U.S.
Dollar
Equivalent
|
Maturity
|
Recognized
Gain
(Loss)
|
||||||||||
Euros
|
Buy
|
$
|
14,343
|
January
through June 2006
|
$
|
(211
|
)
|
||||||
Euros
|
Sell
|
1,987
|
January
2006
|
15
|
|||||||||
British
pounds sterling
|
Buy
|
75,743
|
January
2006
|
(1,334
|
)
|
||||||||
British
pounds sterling
|
Sell
|
56,929
|
January
2006
|
436
|
|||||||||
Canadian
dollars
|
Buy
|
942
|
January
2006
|
5
|
|||||||||
Canadian
dollars
|
Sell
|
1,886
|
January
2006
|
15
|
|||||||||
Taiwan
dollars
|
Sell
|
6,088
|
August
through November 2006
|
—
|
|||||||||
Total
|
$
|
157,918
|
$
|
(1,074
|
)
|
Forward
Exchange Contracts
|
|||||||||||||
(In
thousands)
|
As
of December 31, 2004
|
||||||||||||
Type
|
U.S.
Dollar
Equivalent
|
Maturity
|
Recognized
Gain
(Loss)
|
||||||||||
Euros
|
Buy
|
$
|
33,210
|
Through
February 2005
|
$
|
368
|
|||||||
Euros
|
Sell
|
40,779
|
January
2005
|
(968
|
)
|
||||||||
British
pounds sterling
|
Buy
|
7,287
|
January
2005
|
(195
|
)
|
||||||||
Canadian
dollars
|
Buy
|
7,210
|
January
2005
|
178
|
|||||||||
Canadian
dollars
|
Sell
|
3,149
|
January
2005
|
(73
|
)
|
||||||||
Australian
dollars
|
Buy
|
433
|
January
2005
|
14
|
|||||||||
Australian
dollars
|
Sell
|
1,629
|
Through
April 2005
|
(29
|
)
|
||||||||
Total
|
$
|
93,697
|
$
|
(705
|
)
|
Financial
Instruments
|
|||||||||||||
(In
thousands)
|
2005
|
2004
|
|||||||||||
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
||||||||||
Assets:
|
|||||||||||||
Cash
and cash equivalents
|
$
|
120,929
|
$
|
120,929
|
$
|
94,093
|
$
|
94,093
|
|||||
Liabilities:
|
|||||||||||||
Long-term
debt including current maturities
|
$
|
911,925
|
$
|
947,406
|
$
|
609,664
|
$
|
651,456
|
|||||
Foreign
currency forward exchange contracts
|
1,074
|
1,074
|
705
|
705
|
Segment
Information
|
|||||||||||||||||||
Twelve
Months Ended
|
|||||||||||||||||||
December
31, 2005
|
December
31, 2004
|
December
31, 2003 (a)
|
|||||||||||||||||
(In
thousands)
|
Sales
|
Operating
Income
(Loss)
|
Sales
|
Operating
Income
(Loss)
|
Sales
|
Operating
Income
(Loss)
|
|||||||||||||
Mill
Services Segment
|
$
|
1,060,354
|
$
|
109,591
|
$
|
997,410
|
$
|
105,490
|
$
|
827,521
|
$
|
85,874
|
|||||||
Access
Services Segment
|
788,750
|
74,742
|
706,490
|
44,464
|
619,069
|
37,388
|
|||||||||||||
Gas
Technologies Segment
|
370,201
|
17,912
|
339,086
|
14,393
|
293,965
|
14,544
|
|||||||||||||
Segment
Totals
|
2,219,305
|
202,245
|
2,042,986
|
164,347
|
1,740,555
|
137,806
|
|||||||||||||
Engineered
Products and Services (“all other”) Category
|
546,905
|
69,699
|
459,073
|
47,029
|
377,961
|
36,474
|
|||||||||||||
General
Corporate
|
—
|
(2,996
|
)
|
—
|
(1,527
|
)
|
—
|
(388
|
)
|
||||||||||
Consolidated
Totals
|
$
|
2,766,210
|
$
|
268,948
|
$
|
2,502,059
|
$
|
209,849
|
$
|
2,118,516
|
$
|
173,892
|
(a) |
Segment
information for 2003 has been reclassified to conform with the
current
presentation.
|
Reconciliation
of Segment Operating Income to Consolidated Income
Before
Income Taxes and Minority Interest
|
||||||||||
Twelve
Months Ended
|
||||||||||
(In
thousands)
|
December
31 2005
|
December
31 2004
|
December
31 2003 (a)
|
|||||||
Segment
operating income
|
$
|
202,245
|
$
|
164,347
|
$
|
137,806
|
||||
Engineered
Products and Services (“all
other”) Category
|
69,699
|
47,029
|
36,474
|
|||||||
General
Corporate Expense
|
(2,996
|
)
|
(1,527
|
)
|
(388
|
)
|
||||
Operating
income from continuing operations
|
268,948
|
209,849
|
173,892
|
|||||||
Equity
in income of unconsolidated entities, net
|
74
|
128
|
321
|
|||||||
Interest
Income
|
3,165
|
2,319
|
2,202
|
|||||||
Interest
Expense
|
(41,918
|
)
|
(41,057
|
)
|
(40,513
|
)
|
||||
Income
from continuing operations before income taxes and minority
interest
|
$
|
230,269
|
$
|
171,239
|
$
|
135,902
|
(a)
|
Segment
information for 2003 has been reclassified to conform with the
current
presentation.
|
Segment
Information
|
|||||||||||||||||||
Assets
(a)
|
Depreciation
and
Amortization
|
||||||||||||||||||
(In
thousands)
|
2005
|
2004
|
2003
(b)
|
2005
|
2004
|
2003
(b)
|
|||||||||||||
Mill
Services Segment
|
$
|
1,273,522
|
$
|
985,538
|
$
|
898,057
|
$
|
114,952
|
$
|
107,682
|
$
|
96,906
|
|||||||
Access
Services Segment
|
976,936
|
763,916
|
696,226
|
53,263
|
48,005
|
41,665
|
|||||||||||||
Gas
Technologies Segment
|
253,276
|
257,233
|
239,500
|
12,610
|
12,735
|
13,086
|
|||||||||||||
Segment
Totals
|
2,503,734
|
2,006,687
|
1,833,783
|
180,825
|
168,422
|
151,657
|
|||||||||||||
Engineered
Products and Services (“all other”) Category
|
315,241
|
274,627
|
215,663
|
15,735
|
14,675
|
15,918
|
|||||||||||||
Corporate
|
156,829
|
108,442
|
88,589
|
1,505
|
1,274
|
1,360
|
|||||||||||||
Total
|
$
|
2,975,804
|
$
|
2,389,756
|
$
|
2,138,035
|
$
|
198,065
|
$
|
184,371
|
$
|
168,935
|
(a) |
Assets
from discontinued operations of $0.4 million, $0.5 million and
$1.0
million in 2005, 2004 and 2003, respectively, are included in
the Gas
Technologies Segment.
|
(b)
|
Segment
information for 2003 has been reclassified to conform with the
current
presentation.
|
Capital
Expenditures
|
||||||||||
(In
thousands)
|
2005
|
2004
|
2003
(a)
|
|||||||
Mill
Services Segment
|
$
|
155,595
|
$
|
120,890
|
$
|
88,132
|
||||
Access
Services Segment
|
86,668
|
50,439
|
41,214
|
|||||||
Gas
Technologies Segment
|
6,438
|
8,958
|
7,837
|
|||||||
Segment
Totals
|
248,701
|
180,287
|
137,183
|
|||||||
Engineered
Products and Services (“all other”) Category
|
39,834
|
22,585
|
6,274
|
|||||||
Corporate
|
1,704
|
1,363
|
367
|
|||||||
Total
|
$
|
290,239
|
$
|
204,235
|
$
|
143,824
|
(a)
|
Segment
information for 2003 has been reclassified to conform with the
current
presentation.
|
Information
by Geographic Area (a)
|
|||||||||||||||||||
Sales
to Unaffiliated Customers
|
Net
Property, Plant and Equipment
|
||||||||||||||||||
(In
thousands)
|
2005
|
2004
|
2003
|
2005
|
2004
|
2003
|
|||||||||||||
Geographic Area | |||||||||||||||||||
United
States
|
$
|
1,157,034
|
$
|
1,047,416
|
$
|
902,400
|
$
|
371,039
|
$
|
313,391
|
$
|
306,997
|
|||||||
United
Kingdom
|
546,673
|
534,097
|
453,388
|
258,786
|
218,127
|
199,631
|
|||||||||||||
All
Other
|
1,062,503
|
920,546
|
762,728
|
509,983
|
400,780
|
358,815
|
|||||||||||||
Totals
excluding Corporate
|
$
|
2,766,210
|
$
|
2,502,059
|
$
|
2,118,516
|
$
|
1,139,808
|
$
|
932,298
|
$
|
865,443
|
(a) |
Revenues
are attributed to individual countries based on the location of
the
facility generating the revenue.
|
Information
about Products and Services
|
||||||||||
Sales
to Unaffiliated Customers
|
||||||||||
(In
thousands)
|
2005
|
2004
|
2003
|
|||||||
Product
Group
|
||||||||||
Mill
services
|
$
|
1,060,354
|
$
|
997,410
|
$
|
827,521
|
||||
Access
services
|
788,750
|
706,490
|
619,069
|
|||||||
Industrial
gas products
|
370,201
|
339,086
|
293,965
|
|||||||
Railway
track maintenance services and equipment
|
247,452
|
209,765
|
173,050
|
|||||||
Industrial
grating products
|
98,845
|
85,609
|
66,248
|
|||||||
Industrial
abrasives and roofing granules
|
72,216
|
70,863
|
68,896
|
|||||||
Heat
exchangers
|
92,339
|
60,103
|
41,161
|
|||||||
Powder
processing equipment and heat transfer products
|
36,053
|
32,733
|
28,606
|
|||||||
Consolidated
Sales
|
$
|
2,766,210
|
$
|
2,502,059
|
$
|
2,118,516
|
Other
(Income) and Expenses
|
||||||||||
(In
thousands)
|
2005
|
2004
|
2003
|
|||||||
Net
gains
|
$
|
(9,674
|
)
|
$
|
(1,524
|
)
|
$
|
(3,543
|
)
|
|
Impaired
asset write-downs
|
579
|
484
|
168
|
|||||||
Employee
termination benefit costs
|
9,060
|
3,892
|
6,064
|
|||||||
Costs
to exit activities
|
1,028
|
975
|
2,725
|
|||||||
Other
expense
|
1,007
|
1,035
|
1,541
|
|||||||
Total
|
$
|
2,000
|
$
|
4,862
|
$
|
6,955
|
Net
Gains
|
||||||||||
(In
thousands)
|
2005
|
2004
|
2003
|
|||||||
Mill
Services Segment
|
$
|
(4,202
|
)
|
$
|
(354
|
)
|
$
|
(720
|
)
|
|
Access
Services Segment
|
(5,413
|
)
|
(1,124
|
)
|
(2,521
|
)
|
||||
Gas
Technologies Segment
|
—
|
—
|
—
|
|||||||
Engineered
Products and Services (“all other”) Category
|
(59
|
)
|
(46
|
)
|
(298
|
)
|
||||
Corporate
|
—
|
—
|
(4
|
)
|
||||||
Total
|
$
|
(9,674
|
)
|
$
|
(1,524
|
)
|
$
|
(3,543
|
)
|
Employee
Termination Benefit Costs
|
||||||||||
(In
thousands)
|
2005
|
2004
|
2003
|
|||||||
Mill
Services Segment
|
$
|
4,827
|
$
|
1,338
|
$
|
3,101
|
||||
Access
Services Segment
|
1,647
|
1,504
|
1,778
|
|||||||
Gas
Technologies Segment
|
107
|
229
|
174
|
|||||||
Engineered
Products and Services (“all other”) Category
|
1,256
|
685
|
749
|
|||||||
Corporate
|
1,223
|
136
|
262
|
|||||||
Total
|
$
|
9,060
|
$
|
3,892
|
$
|
6,064
|
Original
reorganization action period
|
|||||||||||||
(In
thousands)
|
2005
|
2004
|
2003
|
2002
|
|||||||||
Employee
termination benefits expense
|
$
|
9,060
|
$
|
3,892
|
$
|
6,064
|
$
|
7,140
|
|||||
Payments:
|
|||||||||||||
In
2002
|
—
|
—
|
—
|
(4,438
|
)
|
||||||||
In
2003
|
—
|
—
|
(3,838
|
)
|
(2,627
|
)
|
|||||||
In
2004
|
—
|
(2,178
|
)
|
(1,859
|
)
|
(52
|
)
|
||||||
In
2005
|
(3,826
|
)
|
(1,282
|
)
|
(310
|
)
|
(60
|
)
|
|||||
Total
payments:
|
(3,826
|
)
|
(3,460
|
)
|
(6,007
|
)
|
(7,177
|
)
|
|||||
Other:
|
(33
|
)
|
(52
|
)
|
53
|
42
|
|||||||
Remaining
payments as of December 31, 2005
|
$
|
5,201
|
$
|
380
|
$
|
110
|
$
|
5
|
(In
millions, except per share amounts)
|
2005
|
||||||||||||
Quarterly
|
First
|
Second
|
Third
|
Fourth
|
|||||||||
Sales
|
$
|
640.1
|
$
|
696.1
|
$
|
697.5
|
$
|
732.5
|
|||||
Gross
profit (a)
|
146.4
|
169.8
|
164.8
|
185.7
|
|||||||||
Net
income
|
23.1
|
41.7
|
40.0
|
51.9
|
|||||||||
Basic
earnings per share
|
0.56
|
1.00
|
0.96
|
1.24
|
|||||||||
Diluted
earnings per share
|
0.55
|
0.99
|
0.95
|
1.23
|
(In
millions, except per share amounts)
|
2004
|
||||||||||||
Quarterly
|
First
|
Second
|
Third
|
Fourth
|
|||||||||
Sales
|
$
|
556.3
|
$
|
617.6
|
$
|
617.3
|
$
|
710.9
|
|||||
Gross
profit (a)
|
127.3
|
149.7
|
146.5
|
162.1
|
|||||||||
Net
income
|
16.9
|
30.7
|
38.6
|
35.0
|
|||||||||
Basic
earnings per share
|
0.41
|
0.75
|
0.94
|
0.85
|
|||||||||
Diluted
earnings per share
|
0.41
|
0.74
|
0.93
|
0.84
|
(a) |
Gross
profit is defined as Sales less costs and expenses associated directly
with or allocated to products sold or services
rendered.
|
Market
Price Per Share
|
Dividends
Declared
|
|||||||||
High
|
Low
|
Per
Share
|
||||||||
2005
|
||||||||||
First
Quarter
|
$
|
61.35
|
$
|
49.87
|
$
|
0.3000
|
||||
Second
Quarter
|
61.10
|
52.37
|
0.3000
|
|||||||
Third
Quarter
|
66.20
|
53.56
|
0.3000
|
|||||||
Fourth
Quarter
|
70.57
|
59.70
|
0.3250
|
|||||||
|
||||||||||
2004
|
||||||||||
First
Quarter
|
$
|
48.78
|
$
|
43.00
|
$
|
0.2750
|
||||
Second
Quarter
|
47.00
|
40.10
|
0.2750
|
|||||||
Third
Quarter
|
47.35
|
41.87
|
0.2750
|
|||||||
Fourth
Quarter
|
56.24
|
44.55
|
0.3000
|
Item
9.
|
Changes
In and Disagreements with Accountants on Accounting and Financial
Disclosures
|
Item 9A. |
Controls
and Procedures
|
Item
9B.
|
Other
Information
|
Equity
Compensation Plan Information
|
||||
Column
(a)
|
Column
(b)
|
Column
(c)
|
||
Plan
category
|
Number
of securities to be
issued
upon exercise of
outstanding
options,
warrants
and rights
|
Weighted-average
exercise
price
of outstanding
options,
warrants and
rights
|
Number
of securities
remaining
available for
future
issuance under
equity
compensation plans
(excluding
securities
reflected
in Column (a))
|
|
Equity
compensation plans approved by security holders (1)
|
748,344
|
$31.93
|
1,439,431
|
|
Equity
compensation plans not approved by security holders
|
681 (2)
|
35.99 (3)
|
—
|
|
Total
|
749,025
|
$31.93
|
1,439,431
|
(1) |
Plans
include the 1995 Executive Incentive Compensation Plan, as amended,
and
the 1995 Non-Employee Directors’ Stock Plan, as amended.
|
(2) |
Represents
the shares of Harsco common stock issuable as replacement option
shares in
satisfaction of the exercise of stock options granted by SGB under
the SGB
Plan as described below. This plan is not a material equity compensation
plan of the Company.
|
(3) |
These
stock options denominate the exercise price in British pounds sterling.
The price shown is translated into U. S. dollars at an exchange
rate of
$1.7205 effective December 31,
2005.
|
(a) 1. |
The
Consolidated Financial Statements are listed in the index to Item
8,
"Financial Statements and Supplementary Data," on page
45.
|
(a) 2. |
The
following financial statement schedule should be read in conjunction
with
the Consolidated Financial Statements (see Item 8, “Financial Statements
and Supplementary Data”):
|
Page
|
|
Report
of Independent Registered Public Accounting Firm
|
47
|
Schedule
II - Valuation and Qualifying Accounts for the years 2005, 2004
and 2003
|
93
|
COLUMN
A
|
COLUMN
B
|
COLUMN
C
Additions
|
COLUMN
D
(Deductions) Additions
|
COLUMN
E
|
||||||||||||
Description
|
Balance
at
Beginning
of
Period
|
Charged
to
Cost
and
Expenses
|
Due
to
Currency
Translation
Adjustments
|
Other
(a)
|
Balance
at
End
of Period
|
|||||||||||
For
the year 2005:
|
||||||||||||||||
Deducted
from receivables:
|
||||||||||||||||
Uncollectible
accounts
|
$
|
19,095
|
$
|
6,453
|
$
|
(832
|
)
|
$
|
(312
|
)
|
$
|
24,404
|
||||
Deducted
from inventories:
|
||||||||||||||||
Inventory
valuations
|
$
|
5,058
|
$
|
8,736
|
$
|
(427
|
)
|
$
|
4,015
|
$
|
17,382
|
|||||
Other
reorganization and
valuation
reserves
|
$
|
5,239
|
$
|
9,081
|
$
|
(380
|
)
|
$
|
(1,811
|
)
|
$
|
12,129
|
||||
For
the year 2004:
|
||||||||||||||||
Deducted
from receivables:
|
||||||||||||||||
Uncollectible
accounts
|
$
|
24,612
|
$
|
5,048
|
$
|
863
|
$
|
(11,428(b
|
))
|
$
|
19,095
|
|||||
Deducted
from inventories:
|
||||||||||||||||
Inventory
valuations
|
$
|
5,950
|
$
|
2,849
|
$
|
343
|
$
|
(4,084
|
)
|
$
|
5,058
|
|||||
Other
reorganization and
valuation
reserves
|
$
|
6,692
|
$
|
4,811
|
$
|
283
|
$
|
(6,547
|
)
|
$
|
5,239
|
|||||
For
the year 2003:
|
||||||||||||||||
Deducted
from receivables:
|
||||||||||||||||
Uncollectible
accounts
|
$
|
36,483
|
$
|
3,389
|
$
|
1,609
|
$
|
(16,869(c
|
))
|
$
|
24,612
|
|||||
Deducted
from inventories:
|
||||||||||||||||
Inventory
valuations
|
$
|
4,541
|
$
|
2,775
|
$
|
535
|
$
|
(1,901
|
)
|
$
|
5,950
|
|||||
Other
reorganization and
valuation
reserves
|
$
|
8,373
|
$
|
7,409
|
$
|
643
|
$
|
(9,733
|
)
|
$
|
6,692
|
(a) |
Includes
principally the use of previously reserved amounts and changes
related to
acquired companies.
|
(b) |
Includes
$5,322 for the write-off of six accounts receivable in the Mill
Services
Segment as well as the write-off of other accounts receivable for
all
segments.
|
(c) |
Includes
$6,276 for the write-off of two accounts receivable in the Mill
Services
Segment as well as the write-off of other accounts receivable for
all
segments.
|
Exhibit
Number
|
Data
Required
|
Location
in Form 10-K
|
|
2(a)
|
Share
Purchase Agreement between Sun HB Holdings, LLC, Boca Raton,
Florida,
United States of America and Harsco Corporation, Camp Hill, Pennsylvania,
United States of America dated September 20, 2005 regarding the
sale and
purchase of the issued share capital of Hünnebeck Group GmbH, Ratingen,
Germany.
|
Exhibit
to Form 10-Q for the period ended September 30, 2005
|
|
2(b)
|
Agreement,
dated as of December 29, 2005, by and among the Harsco Corporation
(for
itself and as agent for each of MultiServ France SA, Harsco Europa
BV and
Harsco Investment Limited), Brambles U.K. Limited, a company
incorporated
under the laws of England and Wales, Brambles France SAS, a company
incorporated under the laws of France, Brambles USA, Inc., a
Delaware
corporation, Brambles Holdings Europe B.V., a company incorporated
under
the laws of the Netherlands, and Brambles Industries Limited,
a company
incorporated under the laws of Australia. In accordance with
Item
601(b)(2) of Regulation S-K, the registrant hereby agrees to
furnish
supplementally a copy of any omitted schedule to the Commission
upon
request. Portions of Exhibit 2(a) have been omitted pursuant
to a request
for confidential treatment. The omitted portions have been filed
separately with the Securities and Exchange Commission.
|
Exhibit
volume, 2005 10-K
|
|
3(a)
|
Articles
of Incorporation as amended April 24, 1990
|
Exhibit
volume, 1990 10-K
|
|
3(b)
|
Certificate
of Amendment of Articles of Incorporation filed June 3, 1997
|
Exhibit
volume, 1999 10-K
|
|
3(c)
|
Certificate
of Designation filed September 25, 1997
|
Exhibit
volume, 1997 10-K
|
|
3(d)
|
By-laws
as amended April 25, 1990
|
Exhibit
volume, 1990 10-K
|
|
4(a)
|
Harsco
Corporation Rights Agreement dated as of September 28, 1997,
with Chase
Mellon Shareholder Services L.L.C.
|
Incorporated
by reference to Form 8-A, filed September 26, 1997
|
|
4(b)
|
Registration
of Preferred Stock Purchase Rights
|
Incorporated
by reference to Form 8-A dated October 2, 1987
|
|
4(c)
|
Current
Report on dividend distribution of Preferred Stock Purchase
Rights
|
Incorporated
by reference to Form 8-K dated October 13, 1987
|
Exhibit
Number
|
Data
Required
|
Location
in Form 10-K
|
4(f)
|
Debt
and Equity Securities Registered
|
Incorporated
by reference to Form S-3, Registration No. 33-56885 dated December
15,
1994, effective date January 12, 1995
|
|
4(g)
|
Harsco
Finance B. V. £200 million, 7.25% Guaranteed Notes due 2010
|
Exhibit
to Form 10-Q for the period ended September 30, 2000
|
|
4(h)
(i)
|
Indenture,
dated as of May 1, 1985, by and between Harsco Corporation and
The Chase
Manhattan Bank (National Association), as trustee (incorporated
herein by
reference to Exhibit 4(d) to the Registration Statement on Form
S-3, filed
by Harsco Corporation on August 23, 1991 (Reg. No. 33-42389))
|
Exhibit
to Form 8-K dated September 8, 2003
|
|
4(h)
(ii)
|
First
Supplemental Indenture, dated as of April 12, 1995, by and among
Harsco
Corporation, The Chase Manhattan Bank (National Association),
as resigning
trustee, and Chemical Bank, as successor trustee
|
Exhibit
to Form 8-K dated September 8, 2003
|
|
4(h)
(iii)
|
Form
of Second Supplemental Indenture, by and between Harsco Corporation
and
JPMorgan Chase Bank, as Trustee
|
Exhibit
to Form 8-K dated September 8, 2003
|
|
4(h)
(iv)
|
Second
Supplemental Indenture, dated as of September 12, 2003, by and
between Harsco Corporation and J.P. Morgan Chase Bank, as
Trustee
|
Exhibit
to 10-Q for the period ended September 30, 2003
|
|
4(i)
(i)
|
Form
of 5.125% Global Senior Note due September 15, 2013
|
Exhibit
to Form 8-K dated September 8, 2003
|
|
4(i)
(ii)
|
5.125%
2003 Notes due September 15, 2013 described in Prospectus Supplement
dated
September 8, 2003 to Form S-3 Registration under Rule 415 dated
December 15, 1994
|
Incorporated
by reference to the Prospectus Supplement dated September 8,
2003 to Form
S-3, Registration No. 33-56885 dated December 15, 1994
|
Material
Contracts - Credit and Underwriting Agreements
|
10(a)
(i)
|
$50,000,000
Facility agreement dated December 15, 2000
|
Exhibit
volume, 2000 10-K
|
|
10(a)
(ii)
|
Agreement
extending term of $50,000,000 Facility agreement dated December
15,
2000
|
Exhibit
volume, 2001 10-K
|
|
10(a)
(iii)
|
Agreement
amending term and amount of $50,000,000 Facility agreement
dated December
15, 2000
|
Exhibit
volume, 2002 10-K
|
|
10(a)
(iv)
|
Agreement
extending term of $50,000,000 Facility agreement dated December
15,
2000
|
Exhibit
volume, 2003 10-K
|
Exhibit
Number
|
Data
Required
|
Location
in Form 10-K
|
10(a)
(v)
|
Agreement
extending term of $50,000,000 Facility agreement dated December
15,
2000
|
Exhibit
to Form 8-K dated January 25, 2005
|
|
10(a)
(vi)
|
Agreement
extending term of $50,000,000 Facility agreement dated December
15,
2000
|
Exhibit
volume, 2005 10-K
|
|
10(b)
|
Commercial
Paper Dealer Agreement dated September 24, 2003, between ING
Belgium SA/NV
and Harsco Finance B.V.
|
Exhibit
volume, 2003 10-K
|
|
10(b)(i)
|
Commercial
Paper Dealer Agreement dated September 24, 2003, between ING
Belgium SA/NV
and Harsco Finance B.V. - Supplement No. 1 to the Dealer
Agreement
|
Exhibit
to Form 8-K dated November 8, 2005
|
|
10(c)
|
Commercial
Paper Payment Agency Agreement Dated October 1, 2000, between
Salomon
Smith Barney Inc. and Harsco Corporation
|
Exhibit
volume, 2000 10-K
|
|
10(e)
|
Issuing
and Paying Agency Agreement, Dated October 12, 1994, between
Morgan
Guaranty Trust Company of New York and Harsco
Corporation
|
Exhibit
volume, 1994 10-K
|
|
10(f)
|
364-Day
Credit Agreement
|
Exhibit
to Form 8-K dated December 23, 2005
|
|
10(g)
|
Five
Year Credit Agreement
|
Exhibit
to Form 8-K dated November 23, 2005
|
|
10(i)
|
Commercial
Paper Dealer Agreement dated June 7, 2001, between Citibank
International
plc, National Westminster Bank plc, The Royal Bank of Scotland
plc and
Harsco Finance B.V.
|
Exhibit
to 10-Q for the period ended
June
30, 2001
|
|
10(j)
|
Commercial
Paper Placement Agency Agreement dated November 6, 1998, between
Chase
Securities, Inc. and Harsco Corporation
|
Exhibit
volume, 1998 10-K
|
Material
Contracts - Management Contracts and Compensatory
Plans
|
10(d)
|
Form
of Change in Control Severance Agreement (Chairman, President
and CEO and
Senior Vice Presidents)
|
Exhibit
to Form 8-K dated June 21, 2005
|
|
10(k)
|
Harsco
Corporation Supplemental Retirement Benefit Plan as amended
October 4,
2002
|
Exhibit
volume, 2002 10-K
|
Exhibit
Number
|
Data
Required
|
Location
in Form 10-K
|
10(l)
|
Trust
Agreement between Harsco Corporation and Dauphin Deposit Bank
and Trust
Company dated July 1, 1987 relating to the Supplemental Retirement
Benefit
Plan
|
Exhibit
volume, 1987 10-K
|
|
10(m)
|
Harsco
Corporation Supplemental Executive Retirement Plan as amended
|
Exhibit
volume, 1991 10-K
|
|
10(n)
|
Trust
Agreement between Harsco Corporation and Dauphin Deposit Bank
and Trust
Company dated November 22, 1988 relating to the Supplemental
Executive
Retirement Plan
|
Exhibit
volume, 1988 10-K
|
|
10(o)
|
Harsco
Corporation 1995 Executive Incentive Compensation Plan As Amended
and
Restated
|
Proxy
Statement dated March 23, 2004 on Exhibit B pages B-1 through
B-15
|
|
10(p)
|
Authorization,
Terms and Conditions of the Annual Incentive Awards, as amended
and
Restated November 15, 2001, under the 1995 Executive Incentive
Compensation Plan
|
Exhibit
volume, 2001 10-K
|
|
10(r)
|
Special
Supplemental Retirement Benefit Agreement for
D. C. Hathaway
|
Exhibit
Volume, 1988 10-K
|
|
10(s)
|
Harsco
Corporation Form of Restricted Stock Units Agreement
(Directors)
|
Exhibit
to Form 8-K dated April 26, 2005
|
|
10(u)
|
Harsco
Corporation Deferred Compensation Plan for Non-Employee Directors,
as
amended and restated January 1, 2005
|
Exhibit
to Form 8-K dated April 26, 2005
|
|
10(v)
|
Harsco
Corporation 1995 Non-Employee Directors' Stock Plan As Amended
and
Restated at January 27, 2004
|
Proxy
Statement dated March 23, 2004 on Exhibit A pages A-1 through
A-9
|
|
10(x)
|
Settlement
and Consulting Agreement
|
Exhibit
to 10-Q for the period ended March 31, 2003
|
|
10(y)
|
Restricted
Stock Units Agreement
|
Exhibit
to Form 8-K dated January 24, 2006
|
|
10(z)
|
Form
of Change in Control Severance Agreement (Certain Harsco Vice
Presidents)
|
Exhibit
to Form 8-K dated June 21, 2005
|
Director
Indemnity Agreements -
|
10(t)
|
A.
J. Sordoni, III
|
Exhibit
volume, 1989 10-K Uniform agreement, same as shown for J. J.
Burdge
|
|
″
|
R.
C. Wilburn
|
″ ″
|
|
″
|
J.
I. Scheiner
|
″ ″
|
|
″
|
C.
F. Scanlan
|
″ ″
|
|
″
|
J.
J. Jasinowski
|
″ ″
|
|
″
|
J.
P. Viviano
|
″ ″
|
|
″
|
D.
H. Pierce
|
″ ″
|
|
″
|
K.
G. Eddy
|
Exhibit
to Form 8-K dated August 27, 2004
|
|
12
|
Computation
of Ratios of Earnings to Fixed Charges
|
Exhibit
volume, 2005 10-K
|
|
21
|
Subsidiaries
of the Registrant
|
Exhibit
volume, 2005 10-K
|
|
23
|
Consent
of Independent Accountants
|
Exhibit
volume, 2005 10-K
|
|
31(a)
|
Certification
Pursuant to Rule 13a-14(a) and 15d-14(a) as Adopted Pursuant
to Section
302 of the Sarbanes-Oxley Act of 2002
|
Exhibit
volume, 2005 10-K
|
|
31(b)
|
Certification
Pursuant to Rule 13a-14(a) and 15d-14(a) as Adopted Pursuant
to Section
302 of the Sarbanes-Oxley Act of 2002
|
Exhibit
volume, 2005 10-K
|
|
32(a)
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002
|
Exhibit
volume, 2005 10-K
|
|
32(b)
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002
|
Exhibit
volume, 2005 10-K
|
HARSCO CORPORATION | ||
|
|
|
Date 3-13-06 | By: | /s/ Salvatore D. Fazzolari |
Salvatore D. Fazzolari |
||
President,
Chief Financial Officer
and
Treasurer
|
SIGNATURE
|
CAPACITY
|
DATE
|
/S/ Derek
C. Hathaway
(Derek
C. Hathaway)
|
Chairman
and Chief Executive Officer
|
3-13-06
|
/S/ Salvatore
D.
Fazzolari
(Salvatore
D. Fazzolari)
|
President,
Chief Financial Officer,
Treasurer
and Director
(Principal
Financial Officer)
|
3-13-06
|
/S/ Geoffrey
D. H.
Butler
(Geoffrey
D. H. Butler)
|
Senior
Vice President - Operations
and
Director
|
3-13-06
|
/S/ Stephen
J. Schnoor
(Stephen
J. Schnoor)
|
Vice
President and Controller
(Principal
Accounting Officer)
|
3-13-06
|
/S/ Kathy
G. Eddy
(Kathy
G. Eddy)
|
Director
|
3-13-06
|
/S/ Jerry
J. Jasinowski
(Jerry
J. Jasinowski)
|
Director
|
3-13-06
|
/S/ D.
Howard Pierce
(D.
Howard Pierce)
|
Director
|
3-13-06
|
/S/ Carolyn
F. Scanlan
(Carolyn
F. Scanlan)
|
Director
|
3-13-06
|
/S/ James
I. Scheiner
(James
I. Scheiner)
|
Director
|
3-13-06
|
/S/ Andrew
J. Sordoni, III
(Andrew
J. Sordoni, III)
|
Director
|
3-13-06
|
/S/ Joseph
P. Viviano
(Joseph
P. Viviano)
|
Director
|
3-13-06
|
/S/ Dr.
Robert C. Wilburn
(Dr.
Robert C. Wilburn)
|
Director
|
3-13-06
|