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.

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) our ability to successfully enter into new contracts and complete new acquisitions in the timeframe contemplated; (9) the integration of the Company's strategic acquisitions; (10) the amount and timing of repurchases of the Company's common stock, if any; (11) 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; (12) 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 (13) 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 third quarter of 2009, the global recession continued to significantly impact the Company's results. As in the first half of 2009, major challenges included 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. Although the Company has begun to see some improvement in global steel production and an abatement of the strong U.S. dollar compared to prior quarters, challenges remain with commercial and multi-family construction projects being cancelled or postponed due to unavailability of credit. Additionally, pricing pressures are also having a negative impact as competitors pursue remaining projects and customers seek price reductions. The Company does not anticipate substantial improvement in these business drivers in the fourth quarter of 2009. Global governments' commitments for stimulus packages to fund infrastructure projects throughout the world have not had a major impact in most of the Company's markets, as funds have not been disbursed or have not yet resulted in a significant increase in project starts. The Company does not expect any substantial impact from stimulus projects.

The Company's third quarter 2009 revenues from continuing operations totaled $744.2 million, a decrease of $300.7 million or 29% from the third 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, North America and several other key European countries. Foreign currency translation decreased sales by $53.2 million and accounted for approximately 18% of the decline in sales. Operating income from continuing operations was $56.4 million compared with $133.9 million in 2008, a decrease of 58%. Diluted earnings per share from continuing operations were $0.40, a 60% decrease from 2008. Third quarter 2009 results also included a net non-cash charge of $0.11 per share for adjustments to correct errors generated principally by the improper recognition of certain revenues and delaying the recognition of certain expenses by one subsidiary, in one country, during the past three years. The Company assessed the individual and aggregate impact of these adjustments on the current year and all prior periods and determined that the cumulative effect of the adjustments was not material to the full year 2009 results and it did not result in a material misstatement to any previously issued annual or quarterly financial statements. Consequently, the Company recorded the net adjustment in the current quarter and has not revised any previously issued annual financial statements or interim financial data.

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 have enabled the Company to make substantial progress in reducing its cost structure and the related savings will continue to benefit the fourth quarter of 2009 and beyond. The Company's actions to minimize its cost base 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 4,000 employees since September 2008 and substantial reductions in discretionary spending;

ˇ continued expansion of the Company's LeanSigmaŽ continuous improvement initiative;

ˇ substantial reductions in capital spending;

ˇ strengthening certain key positions in the global leadership team;

ˇ implementation of supply chain optimization initiatives; and

ˇ implementation of further countermeasures to improve efficiency and remove unnecessary costs.

The Company continues to have significant available liquidity and remains well-positioned from a financial flexibility perspective. Net cash from operations for the third quarter and the first nine months of 2009 is less than comparable periods in 2008, but was offset by decreased capital expenditures compared with prior years. This has allowed the Company to further enhance its balance sheet, maintain its dividend, reduce debt to the extent possible under borrowing agreements and pursue prudent, bolt-on acquisitions that are consistent with the Company's growth strategies. During the third quarter of 2009, the Company generated net cash from operating activities of $120.4 million, compared with $171.6 million achieved in the third quarter of 2008. For the first nine months of 2009, the Company generated net cash from operating activities of $276.7 million compared with $382.0 million for the first nine months of 2008. For the first nine months of 2009, capital expenditures were $123.1 million compared with $380.9 million in the first nine months of 2008. 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. The Company's cash flows are further discussed in the Liquidity and Capital Resources section.

Segment Overview
The Harsco Infrastructure Segment recorded lower revenue and operating income in the third quarter and first nine months of 2009 compared to similar periods in 2008. The reductions in 2009 were due principally to reduced end-market demand, particularly in the United Kingdom, North America and several other key European countries, and negative foreign currency translation effects. Lower demand is being driven by the continued lack of available credit that has resulted in cancelled and delayed nonresidential construction projects, as well as a significant decline in export sales of infrastructure-related equipment. This Segment's revenues in the third quarter of 2009 were $279.5 million compared with $393.3 million in the third quarter of 2008, a 29% decrease. Operating income decreased by 63% to $22.5 million, from $60.0 million in the third quarter of 2008. Operating margins for the Segment declined by 720 basis points to 8.1% from 15.3% in the third quarter of 2008. In comparison with the first nine months of 2008, this Segment's revenue decreased by 27% to $872.0 million. Operating income in the first nine months of 2009 declined by 58% to $66.3 million from $156.0 million in the first nine months of 2008, and operating margins declined 540 basis points to 7.6% from 13.0%. Foreign currency translation decreased revenues and operating income for the first nine months of 2009 by $134.4 million and $16.7 million, respectively, in comparison with the first nine months of 2008. Harsco Infrastructure accounted for 38% and 39% of the Company's revenues for the third quarter and the first nine months of 2009, respectively; and 40% of the operating income for both the third quarter and first nine months of 2009.

Results for the Harsco Metals Segment for the third quarter and first nine months of 2009 reflected ongoing unprecedented steel production cuts resulting from lower end-market demand due to the global recession. Revenues for the third quarter of 2009 for the Harsco Metals Segment were $275.1 million compared with $423.8 million in the third quarter of 2008, a 35% decrease. In comparison with the first nine months of 2008, this Segment's revenue decreased by $513.0 million to $773.0 million. Volume decreases attributable to steel production cuts drove 67% of the reduction in

The All Other Category ("Harsco Minerals & Rail"), revenues in the third quarter of 2009 were $189.6 million compared with $227.7 million in the third quarter of 2008, a decrease of 17%. Operating income decreased by 6% to $39.6 million, from $42.0 million in the third quarter of 2008 due principally to volume and commodity price declines in the minerals business and an overall market decline in the industrial grating products business. Despite the revenue and income decline, operating margins for the All Other Category increased by 250 basis points to 20.9% from 18.4% in the third quarter of 2008. Comparing the first nine months of 2009 to the first nine months of 2008, revenues decreased 11% to $573.0 million from $644.8 million, respectively, and operating income decreased 17% to $105.7 million from $128.0 million, respectively. Operating margins for the first nine months of 2009 decreased 130 basis points to 18.5% from 19.8% in the first nine months of 2008. The Harsco Rail business recorded increased revenues in the third quarter and first nine months of 2009 compared with the prior year periods due to shipments of equipment to China under contracts with the China Ministry of Railways. The minerals business continued to be adversely impacted by a lack of metals production and fluctuating commodity prices and the industrial products business experienced an overall market decline as customers reduced stock levels from high 2008 inventory levels. The All Other Category accounted for 26% of the Company's revenues for both the third quarter and first nine months of 2009; and 70% and 65% of the operating income for the third quarter and first nine months of 2009, respectively.

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 production; industrial production volume and maintenance activity; and the general business trend towards the outsourcing of services. The overall outlook for the fourth quarter of 2009 and beyond for most of these business drivers remains challenging due to the impact of the global recession. While some signs of recovery have begun to appear, it appears more substantial benefits of a general economic upswing and government stimulus packages will be delayed into 2010.

The overall strength of the U.S. dollar in 2009 compared to 2008 is expected to have a significant negative impact on the Company's performance for the full year 2009. While the U.S. dollar weakened in the third quarter of 2009, the positive impact that a weakened U.S. dollar may provide in the fourth quarter is not expected to offset the effect of the stronger U.S. dollar for the first nine months of 2009. Additionally, the Company's pension plans' assets declined in value at December 31, 2008, consistent with the weakening economy, resulting in significantly increased defined benefit net periodic pension cost during 2009. Therefore, net periodic pension cost is expected to be approximately $3 million higher in the fourth quarter of 2009 compared with the fourth quarter of 2008.

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 certain underperforming contracts with customers in the metals business, 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 2009. The cost savings from the combination of the 2008 and 2009 countermeasures will manifest themselves throughout the remainder of 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 economic climate, principally the lack of available credit that has resulted in cancelled or delayed projects, pricing pressures and the lack of stimulus spending for infrastructure projects. 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

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 cautious because of the uncertainty of economic recovery in the U.S. and Europe. The global recession deeply cut into demand for steel and associated steel production. Steel demand has begun to show signs of stabilization and a mild recovery is anticipated in 2010. It is expected that some of the negative impact from steel volume reductions will be mitigated by 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 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 for the minerals business will benefit if steel production levels continue their gradual improvement. The Company's railway track maintenance services and equipment business continues to have a strong order backlog, although quarterly performance could be influenced by the timing of completed unit deliveries. The industrial products businesses will continue to show some short-term weakness as end market drivers remain soft due to the slow pace of the industrial recovery in North America. Longer term, the Company also anticipates new contract opportunities for its minerals business and potential geographic expansion opportunities within its industrial products businesses.

                                                   Revenues by Region
                             Total Revenues
                           Three Months Ended                  Percentage Change From
                              September 30                          2008 to 2009
(Dollars in millions)      2009          2008        Volume/Price        Currency        Total
Western Europe           $   310.0     $   450.8             (23.4 )%         (7.8 )%     (31.2 )%
North America                256.6         363.2             (29.0 )          (0.4 )      (29.4 )
Middle East and Africa        59.7          69.4             (14.3 )           0.3        (14.0 )
Latin America (a)             53.0          72.5             (17.5 )          (9.4 )      (26.9 )
Eastern Europe                33.7          54.5             (21.8 )         (16.4 )      (38.2 )
Asia Pacific                  31.2          34.5              (7.5 )          (2.1 )       (9.6 )
Total                    $   744.2     $ 1,044.9             (23.7 )%         (5.1 )%     (28.8 )%

(a) Includes Mexico

                                                   Revenues by Region
                             Total Revenues
                            Nine Months Ended                  Percentage Change From
                              September 30                          2008 to 2009
(Dollars in millions)      2009          2008        Volume/Price        Currency        Total
Western Europe           $   923.4     $ 1,416.9             (19.9 )%        (14.9 )%     (34.8 )%
North America                823.0       1,057.1             (21.1 )          (1.0 )      (22.1 )
Middle East and Africa       172.0         197.5             (11.0 )          (1.9 )      (12.9 )
Latin America (a)            134.9         202.5             (16.7 )         (16.7 )      (33.4 )
Eastern Europe                86.2         152.1             (20.6 )         (22.7 )      (43.3 )
Asia Pacific                  78.6         106.2             (12.3 )         (13.7 )      (26.0 )
Total                    $ 2,218.1     $ 3,132.3             (19.3 )%         (9.9 )%     (29.2 )%

(a) Includes Mexico

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

Company Wide:
ˇ Revenues and operating income were impacted by the global recession as:

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

o restrictive lending and credit practices continued to adversely affect non-residential construction projects worldwide, coupled with pricing pressure as customers seek price breaks and competitors pursue a limited number of available projects.

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 implemented during the first nine months of 2009 targeting expense reduction, revenue enhancement and asset optimization. Cost savings from the combination of the 2008 and 2009 countermeasures will manifest themselves throughout the fourth quarter of 2009 and beyond with significant annualized benefits.

ˇ Defined benefit net periodic pension cost increased $9.1 million for the nine months ended September 30, 2009 compared with 2008.

ˇ Due to strong operating cash flows and controlled capital spending, the Company repaid debt of $88.2 million in the first nine months of 2009. However, this was offset by the effect of foreign currency translation as balance sheet debt declined by $51.1 million in the same period.

ˇ Cash flow from operations for the first nine months of 2009 was $276.7 million. This was more than sufficient to fund the cash requirements for investing activities of $127.3 million while also providing excess funds to reduce debt.

Harsco Infrastructure Segment:
                                Three Months                 Nine Months
                             Ended September 30          Ended September 30
(Dollars in millions)         2009          2008         2009          2008
Revenues                   $    279.5      $ 393.3     $   872.0     $ 1,201.3
Operating income                 22.5         60.0          66.3         156.0
Operating margin percent          8.1 %       15.3 %         7.6 %        13.0 %



                                                            Three Months     Nine Months
Harsco Infrastructure Segment - Significant Impacts on         Ended            Ended
Revenues                                                    September 30     September 30
(In millions)
Revenues - 2008                                             $      393.3     $    1,201.3
Impact of foreign currency translation                             (24.3 )         (134.4 )
Net decreased volume                                               (90.3 )         (197.4 )
Acquisitions                                                         0.8              2.5
Revenues - 2009                                             $      279.5     $      872.0

Harsco Infrastructure Segment - Significant Impacts on Operating Income:
ˇ In the third quarter and first nine months of 2009, the Segment's operating results decreased due to reduced non-residential, commercial and infrastructure construction spending, particularly in the United Kingdom, North America and several other key European countries. This was partially offset by continued strength 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, asset optimization and facility rationalization. . . .