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## Fellow Shareholders: 

Nearly two years ago, I joined Harsco’s leadership team to help a venerable industrial manufacturing and services company rebuild its way to sustainable success. Our mission is simple and straight- forward: to deliver above-market improvements in income, cash flow and return on invested capital (ROIC) and create renewed value for our shareholders. 

Now, seven months into my tenure as Harsco’s CEO, I’m seeing clear signs that Harsco’s resurgence is underway. 

## The Harsco Blueprint 

We balanced disciplined, pragmatic thinking with decisive action throughout 2014. First, we completed the sale and merger of our Infrastructure division and retained a minority ownership position in the combined business. The value of this investment grew during the year, and we anticipate continued growth ahead. When we eventually exit our position in a few years, we expect to generate significant cash proceeds to invest in further growth opportunities. 

Second, we constructed and began to execute the detailed plan to boost the financial and operational performance of our Metals & Minerals business. Our Project Orion improvement plan focuses on a more disciplined, analytical process to allocate capital; a new organizational structure aligned around operational and functional excellence; and cost reduction. The result should be improved contract outcomes leading to higher profit margins and returns on capital. As evidence, we have now turned around approximately 30 percent of the locations previously identified as underperforming into contracts that are better able to gener- ate acceptable returns. We also are exiting a small number of sites where we did not see acceptable solutions. By early 2016, we expect to address all of the contracts that have previously 

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been identified as underperforming. In addition, we have refined and reinforced our global operating standards—The Harsco Way of Working—consistently throughout all Metals & Minerals sites. 

Drawn from the demonstrated success of our highest-performing locations, they bring uniform best practices to such site-level activities as safety, operations, maintenance and general manage- ment. For example, by streamlining operations and managing our maintenance and equipment more efficiently, we expect to realize approximately $35-$40 million in annualized benefits. 

Harsco’s two manufacturing businesses, Harsco Rail and Harsco Industrial, continue to win market share through product innovation, quality, reliability and an acute customer focus. Harsco Rail is emerging as a truly international business with a long runway for growth. Major new wins in Europe supporting the Swiss railway system speak to this group’s growing footprint and its capacity to build strong local relationships. Its Intelligent Solutions group is forming technology partnerships that respond directly to critical railway needs, such as keeping trackside employees safer with a new collision avoidance system. Harsco Rail is also leading the way with innovative equipment solutions for higher output and greater precision that help customers complete track maintenance faster and more efficiently. 

Harsco Industrial derives much of its revenue from the natural gas industry. This has been a solid growth platform over the past several years, and the recent dip in energy prices does not alter our strategic priorities or weaken our confidence in the long-term potential of this segment. In 2014 we successfully integrated our Hammco acquisition and gained an established position in the process cooler segment of the energy and petrochemical markets. 

We also moved forward on a new, consolidated manufacturing 

