The following discussion should be read in conjunction with the accompanying unaudited financial statements as well as the Company's annual Form 10-K for the year ended December 31, 2008, which included additional information about the

Company's critical accounting policies, contractual obligations, practices and the transactions that support the financial results, and provided a more comprehensive summary of the Company's outlook, trends and strategies for 2009 and beyond.

Forward-Looking Statements

The nature of the Company's business and the many countries in which it operates subject it to changing economic, competitive, regulatory and technological conditions, risks and uncertainties. In accordance with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary remarks regarding important factors which, among others, could cause future results to differ materially from the forward-looking statements, expectations and assumptions expressed or implied herein. Forward-looking statements contained herein could include, among other things, statements about our management confidence and strategies for performance; expectations for new and existing products, technologies, and opportunities; and expectations regarding growth, sales, cash flows, earnings and Economic Value Added ("EVAŽ"). These statements can be identified by the use of such terms as "may," "could," "expect," "anticipate," "intend," "believe," or other comparable terms.

Factors which could cause results to differ include, but are not limited to: (1) changes in the worldwide business environment in which the Company operates, including general economic conditions; (2) changes in currency exchange rates, interest rates, commodity and fuel costs and capital costs; (3) changes in the performance of stock and bond markets that could affect, among other things, the valuation of the assets in the Company's pension plans and the accounting for pension assets, liabilities and expenses; (4) changes in governmental laws and regulations, including environmental, tax and import tariff standards; (5) market and competitive changes, including pricing pressures, market demand and acceptance for new products, services and technologies; (6) unforeseen business disruptions in one or more of the many countries in which the Company operates due to political instability, civil disobedience, armed hostilities, public health issues or other calamities; (7) the seasonal nature of the business; (8) the integration of the Company's strategic acquisitions; (9) the amount and timing of repurchases of the Company's common stock, if any; (10) the ongoing global financial and credit crisis, which could result in our customers curtailing development projects, construction, production and capital expenditures, which, in turn, could reduce the demand for our products and services and, accordingly, our sales, margins and profitability; (11) the financial condition of our customers, including the ability of customers (especially those that may be highly leveraged and those with inadequate liquidity) to maintain their credit availability; and (12) other risk factors listed from time to time in the Company's SEC reports. A further discussion of these, along with other potential factors, can be found in Part I, Item 1A, "Risk Factors," of the Company's Form 10-K for the year ended December 31, 2008. The Company cautions that these factors may not be exhaustive and that many of these factors are beyond the Company's ability to control or predict. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. The Company undertakes no duty to update forward-looking statements except as may be required by law.

Executive Overview
In the second quarter of 2009, the global recession continued to significantly impact the Company's results. As in the first quarter of 2009, the strength of the U.S. dollar compared to 2008; unprecedented low global steel production; and a lack of available credit that continued to adversely impact non-residential construction projects worldwide presented major challenges. The Company does not anticipate substantial short-term improvement in these business drivers for the remainder of 2009.

The Company's second quarter 2009 revenues from continuing operations totaled $777.0 million, a decrease of $322.6 million or 29% from the second quarter of 2008. The Company experienced lower volume levels resulting from a deterioration of global steel markets and weaker demand for infrastructure services, particularly in the United Kingdom. Foreign currency translation decreased sales by $115.4 million and accounted for more than one third of the decline in sales. Operating income from continuing operations was $70.4 million compared with $145.8 million in 2008, a decrease of 52%. Diluted earnings per share from continuing operations were $0.52, a 51% decrease from 2008.

Revenues for the first six months of 2009 were $1.5 billion, a decrease of $613.5 million or 29% from the first six months of 2008. Operating income from continuing operations was $107.5 million compared with $245.2 million in the first six months of 2008, a 56% decrease. Diluted earnings per share from continuing operations were $0.77, a 56% decrease from the first six months of 2008. Foreign currency translation decreased revenues and operating income for the first six months of 2009 by $255.9 million and $28.3 million, respectively, in comparison with the first six months of 2008. The Company's geographic expansion strategy was maintained as revenues from emerging markets were approximately 20% of total revenues for the first six months of both 2009 and 2008.

In response to further deterioration of global markets during 2009, the Company supplemented its 2008 restructuring initiatives with additional countermeasures targeting expense reduction, revenue enhancement and asset optimization.

The combination of the 2008 and 2009 countermeasures will manifest themselves throughout 2009 and beyond. The Company's actions to minimize its cost structure include, but are not limited to, the following:
ˇ redeployment of its mobile asset base in the Harsco Infrastructure and Harsco Metals Segments to focus on market segments that remain strong and provide growth opportunities, such as the relocation of infrastructure rental assets from the United Kingdom to the Middle East and Asia Pacific;

ˇ reduction in the global workforce of approximately 4,200 employees since September 2008 and substantial reductions of discretionary spending;

ˇ continued expansion of the Company's LeanSigma Ō continuous improvement initiative; and

ˇ prudent reductions in capital spending.

The Company continues to have significant available liquidity and remains well-positioned from a financial flexibility perspective. During the second quarter of 2009, the Company generated net cash from operating activities of $116.7 million, a 35% decrease from the $178.5 million achieved in the second quarter of 2008. For the first six months of 2009, the Company generated net cash from operating activities of $156.3 million compared with $210.4 million for the first six months of 2008, a 26% decrease. Cash flow from operations for all of 2009 is expected to be approximately $400 million and total capital expenditures are expected to be approximately $150 million. For the first six months of 2009, capital expenditures were $82.6 million compared with $258.3 million in the first six months of 2008. This decreased level of capital expenditures compared with prior years will allow the Company to further enhance its balance sheet, maintain its dividend, reduce debt to the extent possible under borrowing agreements and pursue prudent, small, bolt-on acquisitions that are consistent with the Company's growth strategies. The Company's cash flows are further discussed in the Liquidity and Capital Resources section.

Segment Overview
The Harsco Infrastructure Segment's revenues in the second quarter of 2009 were $308.8 million compared with $429.2 million in the second quarter of 2008, a 28% decrease. Operating income decreased by 57% to $24.9 million, from $58.1 million in the second quarter of 2008. Operating margins for the Segment declined by 540 basis points to 8.1% from 13.5% in the second quarter of 2008. In comparison with the first six months of 2008, this Segment's revenue decreased by 27% to $592.5 million. Operating income in the first six months of 2009 declined by 54% to $43.8 million from $96.0 million in the first six months of 2008, and operating margins declined 450 basis points to 7.4% from 11.9%. The lower revenue and operating income in the second quarter and first six months of 2009 were due principally to reduced end-market demand, particularly in the United Kingdom, and negative foreign currency translation effects. The lower demand is being driven by the continued lack of available credit that has resulted in cancelled and delayed construction projects, as well as a significant decline in export sales of infrastructure-related equipment. Foreign currency translation decreased revenues and operating income for the first six months of 2009 by $110.0 million and $13.6 million, respectively, in comparison with the first six months of 2008. Harsco Infrastructure accounted for 40% of the Company's revenues for both the second quarter and the first six months of 2009; and 35% and 41% of the operating income for the second quarter and first six months of 2009, respectively.

Revenues for the second quarter of 2009 for the Harsco Metals Segment were $259.5 million compared with $445.5 million in the second quarter of 2008, a 42% decrease. Unprecedented steel production cuts resulting from lower end-market demand drove 29% of the reduction in year-over-year sales and negative foreign currency translation contributed the remaining 13%. This Segment generated operating income of $4.2 million in the second quarter of 2009, compared to operating income of $37.1 million in the second quarter of 2008. Operating margins were 1.6% for the second quarter of 2009 compared with 8.3% last year. In comparison with the first six months of 2008, this Segment's revenue decreased by 42% to $497.9 million. Operating income in the first six months of 2009 declined to $1.4 million from $66.3 million in the first six months of 2008, and operating margins declined to 0.3% from 7.7%. Foreign currency translation decreased revenues and operating income for the first six months of 2009 by $131.7 million and $12.6 million, respectively, in comparison with the first six months of 2008. Harsco Metals accounted for 33% and 34% of the Company's revenues for the second quarter and the first six months of 2009, respectively; and 6% and 1% of the operating income for the second quarter and first six months of 2009, respectively.

Revenues in the second quarter of 2009 for the All Other Category ("Harsco Minerals & Rail") were $208.7 million compared with $224.9 million in the second quarter of 2008, a decrease of 7%. Operating income decreased by 18% to $42.7 million, from $52.0 million in the second quarter of 2008 due principally to volume and commodity price declines in the reclamation and recycling services business. Operating margins for the All Other Category decreased by 270 basis points to 20.4% from 23.1% in the second quarter of 2008. Comparing the first six months of 2009 to the first six months of 2008, revenues decreased 8%, to $383.4 million from $417.1 million, respectively, and operating income decreased 23%, to $66.1 million from $86.0 million, respectively. Operating margins for the first six months of 2009 decreased 340 basis points to 17.2% from 20.6% in the first six months of 2008. The Harsco Rail business recorded increased revenues

in the second quarter and first six months of 2009 compared with the prior year periods due to shipments of equipment to China. The reclamation and recycling services business continued to be adversely impacted by a lack of metals production and depressed commodity prices. The All Other Category accounted for 27% and 26% of the Company's revenues for the second quarter and first six months of 2009, respectively; and 61% of the operating income for both the second quarter and first six months of 2009.

Outlook Overview
The Company's operations span several industries and products as more fully discussed in Part I, Item 1, "Business," of the Company's Form 10-K for the year-ended December 31, 2008. On a macro basis, the Company is affected by:
non-residential and infrastructure construction and infrastructure maintenance and capital improvement activities; worldwide steel mill production and capacity utilization; industrial production volume and maintenance activity; and the general business trend towards the outsourcing of services. The overall outlook for 2009 for most of these business drivers remains challenging due to the impact of the global recession. While some recovery may begin in 2009, it appears more substantial benefits of a general economic upswing and government stimulus packages will be delayed into 2010.

The strength of the U.S. dollar in 2009 compared to 2008 is expected to have a significant negative impact on the Company's performance in 2009. Additionally, the Company's pension plans' assets declined in value at December 31, 2008, consistent with the weakening economy and will result in significantly increased defined benefit net periodic pension cost during 2009.

In the fourth quarter of 2008, the Company implemented a restructuring program designed to improve organizational efficiency and enhance profitability and stockholder value. The restructuring program included exiting from certain underperforming contracts with customers, closing certain facilities and reducing the Company's global workforce. The actions taken in 2008 were supplemented by additional countermeasures targeting expense reduction, revenue enhancement and asset optimization throughout the first half of 2009. The combination of the 2008 and 2009 countermeasures will manifest themselves throughout 2009 and beyond. Targeted reductions in capital spending, coupled with redeployment of equipment from slowing markets into strategically important, growing markets will also help control cash flow and contribute to liquidity. The Company is confident its strong balance sheet, available liquidity and ability to generate strong cash flows position it to take advantage of reversing economic trends as they occur. Current economic conditions may provide the Company with expansion opportunities to pursue its prudent acquisition strategy of seeking bolt-on acquisitions.

The long-term outlook across the global footprint of the Harsco Infrastructure business remains positive. The near-term outlook however, is challenging due to the global recession. This Segment will leverage its global breadth and mobile asset base to relocate equipment to focus on: emerging markets as well as market segments that remain stable such as infrastructure maintenance services; institutional services such as hospitals and education; and global infrastructure work. Operating performance for this Segment in the long term is expected to continue to benefit from: the execution of numerous global government stimulus packages which are expected to fund much needed infrastructure projects; selective strategic investments and acquisitions in existing and new markets; enterprise business optimization opportunities including new technology applications, consolidated procurement and logistics; and LeanSigma continuous improvement initiatives.

The long-term outlook for the Harsco Metals Segment remains stable as the global steel market is expected to grow at more historical rates over the long-term. The key factor behind this anticipated growth is the demand from emerging economies for significant infrastructure development needs. The near-term outlook, however, is extremely challenging due to the global recession which has deeply cut into demand for steel and associated steel production. Steel demand is expected to begin to stabilize in the latter half of 2009, leading to a mild recovery in 2010. It is expected that some of this impact will be mitigated by comparatively lower fuel costs, improved overall contract performance, new contract signings and cost optimization initiatives being implemented by the Company. The Segment continues to engage in enterprise business optimization initiatives including active engagement of the LeanSigma continuous improvement program, which over time is expected to result in broad-scale improvement in business practices and, consequently, operating margin. In addition, new contract signings and start-ups, as well as the Company's geographic expansion strategy, particularly in emerging markets, are expected to gradually have a positive effect on results in the longer term.

For the All Other Category (Harsco Minerals & Rail), the long-term outlook also remains positive, as recovery from the global recession will provide opportunity to expand activity in the businesses. The near-term outlook, however, for the reclamation and recycling services business, which recovers and recycles high-value metals, is negatively impacted by a significant decline in production volume and metal prices that has carried over from 2008. The Company continues to experience strong bidding activity in its railway track maintenance services and equipment business and the large China order from 2007 will underpin its strength through 2011. Longer term, the Company also anticipates new contract opportunities for its minerals and recycling technologies business and potential geographic expansion opportunities within its industrial products businesses.

                                              Revenues by Region
                                       Total Revenues
                                     Three Months Ended                    Percentage Change From
                                          June 30                               2008 to 2009
(Dollars in millions)                2009          2008        Volume/Price        Currency          Total
Western Europe                    $    323.9     $   503.3           (19.9)%          (15.7)%          (35.6)%
North America                          296.8         370.2          (18.7)            (1.1)           (19.8)
Middle East and Africa                  57.3          67.9          (14.2)            (1.4)           (15.6)
Latin America (a)                       42.7          68.8          (19.7)           (18.2)           (37.9)
Eastern Europe                          29.8          53.2          (18.9)           (25.1)           (44.0)
Asia/Pacific                            26.5          36.2          (11.7)           (15.0)           (26.7)
Total                             $    777.0     $ 1,099.6           (18.8)%          (10.5)%          (29.3)%

(a) Includes Mexico

                                             Revenues by Region
                                      Total Revenues
                                     Six Months Ended                     Percentage Change From
                                          June 30                              2008 to 2009
(Dollars in millions)               2009          2008        Volume/Price        Currency          Total
Western Europe                    $   613.4     $   966.1           (18.3)%          (18.2)%          (36.5)%
North America                         566.5         693.8          (17.0)            (1.4)           (18.4)
Middle East and Africa                112.3         128.2           (9.3)            (3.1)           (12.4)
Latin America (a)                      81.8         129.9          (16.2)           (20.8)           (37.0)
Eastern Europe                         52.5          97.7          (20.0)           (26.2)           (46.2)
Asia/Pacific                           47.4          71.7          (14.7)           (19.2)           (33.9)
Total                             $ 1,473.9     $ 2,087.4           (17.1)%          (12.3)%          (29.4)%

(a) Includes Mexico

2009 Highlights
The following significant items affected the Company overall during the second quarter and first six months of 2009, in comparison with the second quarter and first six months of 2008:

Company Wide:
ˇ Revenues and operating income were impacted by the economic turbulence of the global recession:

o the value of the U.S. dollar increased significantly from 2008 to 2009, accounting for 36% and 42% of the sales decline for the second quarter and six month comparisons, respectively; and 19% and 21% of the decline in operating income for the second quarter and six month comparisons, respectively;

o global steel production, which declined in the latter part of 2008, remained at unprecedentedly low levels; and

o lending and credit practices in response to the ongoing financial crisis continued to adversely affect non-residential construction projects world-wide.

ˇ During 2009, the Company's operating income benefitted from the restructuring actions implemented in the fourth quarter of 2008. Operational improvements were also recognized as a result of additional countermeasures enacted during the first and second quarters of 2009 targeting expense reduction, revenue enhancement and asset optimization. The combination of the 2008 and 2009 countermeasures will manifest themselves throughout 2009 and beyond with significant annualized benefits.

ˇ Defined benefit net periodic pension cost increased $5.7 million for the six months ended June 30, 2009 compared to 2008 due to lower plan assets at the 2008 plan measurement date which resulted in a decrease in expected return on plan assets and an increase in recognized actuarial losses in 2009.

ˇ The significant weakening of most major foreign currencies in relationship to the U.S. dollar reduced both revenues and operating income during 2009. The weakening of the British pound sterling (26% for the quarter; 33% for six months), the euro (14% for the quarter; 16% for six months) and Poland's zloty (49% for the quarter; 51% for six months) had the biggest impacts on the Company's results.

ˇ Due to strong operating cash flows and controlled capital spending, the Company repaid debt of $56.5 million in the first half of 2009. However, this was offset by the effect of foreign currency translation as balance sheet debt declined by $10.6 million in the same period.

ˇ Cash flow from operations for the first six months of 2009 was $156.3 million. This was more than sufficient to fund the cash requirements for investing activities of $75.1 million while also providing excess funds to reduce debt. This result in the first six months of 2009 was significantly better than the comparable 2008 period when cash required for

investing activities of $249.4 million exceeded cash flow from operations of $210.4 million, thereby, requiring additional borrowings.

Harsco Infrastructure Segment:
                                Three Months            Six Months
                               Ended June 30          Ended June 30
  (Dollars in millions)       2009        2008       2009        2008
  Revenues                   $ 308.8    $ 429.2     $ 592.5    $ 808.0
  Operating income              24.9       58.1        43.8       96.0
  Operating margin percent        8.1%      13.5%        7.4%      11.9%

Harsco Infrastructure Segment - Significant Impacts Three Months Six Months

   on Revenues                                           Ended June 30 Ended June 30
   (In millions)
   Revenues - 2008                                          $ 429.2       $ 808.0
   Impact of foreign currency translation                     (50.9)       (110.1)
   Net decreased volume                                       (69.5)       (107.1)
   Acquisitions                                                  -            1.7
   Revenues - 2009                                          $ 308.8       $ 592.5

Harsco Infrastructure Segment - Significant Impacts on Operating Income:
ˇ In the second quarter and first six months of 2009, the Segment's operating results decreased due to reduced non-residential, commercial and infrastructure construction spending, particularly in the United Kingdom. This was partially offset by improvements in emerging economies in the Middle East and Asia/Pacific regions, as well as global industrial maintenance. The Company has benefited from its capital investments made in these markets in prior years and its ability to redeploy equipment throughout the globe.

ˇ In response to further deterioration of global infrastructure markets during 2009, this Segment implemented additional countermeasures targeting expense reduction, revenue enhancement and asset optimization.

ˇ Foreign currency translation in the second quarter and the first six months of 2009 decreased operating income for this Segment by $7.8 million and $13.6 million, respectively, compared with the second quarter and first six months of 2008.

Harsco Metals Segment:
                                Three Months           Six Months
                               Ended June 30          Ended June 30
  (Dollars in millions)       2009        2008       2009       2008
  Revenues                   $ 259.5    $ 445.5     $ 497.9    $ 862.2
  Operating income               4.2       37.1         1.4       66.3
  Operating margin percent        1.6%       8.3%        0.3%      7.7%

                                                           Three Months   Six Months
   Harsco Metals Segment - Significant Impacts on Revenues Ended June 30 Ended June 30
   (In millions)
   Revenues - 2008                                            $ 445.5       $ 862.2
   Net decreased volume                                        (127.9)       (232.6)
   Impact of foreign currency translation                       (58.1)       (131.7)
   Revenues - 2009                                            $ 259.5       $ 497.9

Harsco Metals Segment - Significant Effects on Operating Income:
ˇ Revenues, operating income and margins for the second quarter and the first six months of 2009 were negatively affected by unprecedented declines in global steel production and the stronger U.S. dollar in 2009 compared with 2008.

ˇ During the second quarter and the first six months of 2009, the Company's operating income benefitted from the restructuring actions implemented in the fourth quarter of 2008. Operational improvements were also recognized as a result of additional countermeasures implemented during 2009 targeting expense reduction, revenue enhancement and asset optimization.

ˇ Foreign currency translation in the second quarter and first six months of 2009 decreased operating income for this Segment by $5.6 million and $12.6 million, respectively, compared with the second quarter and first six months of 2008.

. . .