UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2021

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to          

Commission File Number 001-03970

HARSCO CORPORATION

(Exact name of registrant as specified in its charter) 

Delaware			23-1483991
(State or other jurisdiction of incorporation or organization)			(I.R.S. employer identification number)
350 Poplar Church Road,	Camp Hill,	Pennsylvania	17011
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code  717-763-7064 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $1.25 per share	HSC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes ☒  NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒		Accelerated filer	☐
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☐
			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES ☐  NO ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Class	Outstanding at April 30, 2021
Common stock, par value $1.25 per share	79,165,630

HARSCO CORPORATION

FORM 10-Q

INDEX

		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets (Unaudited)	4
	Condensed Consolidated Statements of Operations (Unaudited)	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows (Unaudited)	7
	Condensed Consolidated Statements of Equity (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 6.	Exhibits	41
SIGNATURES		42

2

Glossary of Defined Terms

Unless the context requires otherwise, "Harsco," the "Company," "we," "our," or "us" refers to Harsco Corporation on a consolidated basis. The Company also uses several other terms in this Quarterly Report on Form 10-Q, which are further defined below:

Term	Description
AOCI	Accumulated Other Comprehensive Income (Loss)
AXC	The former Harsco Industrial Air-X-Changers business
CARES Act	Coronavirus Aid, Relief, and Economic Security Act
CCIRs	Cross-currency interest rate swaps
Clean Earth	CEHI Acquisition Corporation and Subsidiaries
COVID-19	The COVID-19 coronavirus pandemic
Credit Agreement	Credit Agreement governing the Senior Secured Credit Facilities
DEA	United States Drug Enforcement Agency
DTSC	California Department of Toxic Substances Control
EBITDA	Earnings before interest, tax, depreciation and amortization
ESOL	Stericycle Environmental Solutions business
FASB	Financial Accounting Standards Board
IBORs	Interbank offered rates
ICMS	Type of value-added tax in Brazil
IKG	The former Harsco Industrial IKG business
ISDA	International Swaps and Derivatives Association
LIBOR	London Interbank Offered Rates
New Term Loans	$500 million term loan raised in March 2021 under the Senior Secured Credit Facilities, maturing on March 10, 2028
Notes	5.75% Notes due July 31, 2027
OCI	Other Comprehensive Income (Loss)
PA DEP	Pennsylvania Department of Environmental Protection
PK	The former Harsco Industrial Patterson-Kelley business
Revolving Credit Facility	Multi-year revolving credit facility under the Senior Secured Credit Facility, with a facility limit of $700 million
ROU	Right of use
SBB	Federal railway system of Switzerland
SCE	Supreme Council for Environment in Bahrain
SEC	Securities and Exchange Commission
Senior Secured Credit Facilities	Primary source of borrowings comprised of the Revolving Credit Facility and the New Term Loan
SPRA	State Revenue Authorities from the State of São Paulo, Brazil
Term Loan A	$280 million term loan raised in March 2020 under the Senior Secured Credit Facilities, maturing on June 28, 2024
Term Loan B	Term loan issued under the Senior Secured Credit Facilities, maturing on December 8, 2024
TSDF	Treatment, storage, and disposal facility permits issued under the Resource Conservation and Recovery Act
U.S. GAAP	Accounting principles generally accepted in the U.S.

3

PART I — FINANCIAL INFORMATION

ITEM 1.      FINANCIAL STATEMENTS

HARSCO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands)	March 31 2021		December 31 2020
ASSETS
Current assets:
Cash and cash equivalents	$	79,308	$	76,454
Restricted cash	3,017		3,215
Trade accounts receivable, net	417,830		407,390
Other receivables	32,998		34,253
Inventories	171,587		173,013
Current portion of contract assets	72,133		54,754
Prepaid expenses	55,231		56,099
Other current assets	14,217		10,645
Total current assets	846,321		815,823
Property, plant and equipment, net	655,462		668,209
Right-of-use assets, net	89,772		96,849
Goodwill	900,314		902,074
Intangible assets, net	430,589		438,565
Deferred income tax assets	10,155		15,274
Other assets	57,731		56,493
Total assets	$	2,990,344	$	2,993,287
LIABILITIES
Current liabilities:
Short-term borrowings	$	5,062	$	7,450
Current maturities of long-term debt	6,720		13,576
Accounts payable	209,988		218,039
Accrued compensation	43,092		45,885
Income taxes payable	4,698		3,499
Current portion of advances on contracts	41,089		39,917
Current portion of operating lease liabilities	23,632		24,862
Other current liabilities	184,451		184,727
Total current liabilities	518,732		537,955
Long-term debt	1,334,325		1,271,189
Retirement plan liabilities	206,178		231,335
Advances on contracts	31,403		45,017
Operating lease liabilities	64,029		69,860
Environmental liabilities	29,044		29,424
Deferred tax liabilities	33,178		40,653
Other liabilities	56,872		54,455
Total liabilities	2,273,761		2,279,888
COMMITMENTS AND CONTINGENCIES
HARSCO CORPORATION STOCKHOLDERS’ EQUITY
Preferred stock	—		—
Common stock	144,764		144,288
Additional paid-in capital	206,944		204,078
Accumulated other comprehensive loss	(643,446)		(645,741)
Retained earnings	1,797,894		1,797,759
Treasury stock	(846,182)		(843,230)
Total Harsco Corporation stockholders’ equity	659,974		657,154
Noncontrolling interests	56,609		56,245
Total equity	716,583		713,399
Total liabilities and equity	$	2,990,344	$	2,993,287

See accompanying notes to unaudited condensed consolidated financial statements.

4

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended
	March 31
(In thousands, except per share amounts)	2021		2020
Revenues from continuing operations:
Service revenues	$	424,449	$	291,589
Product revenues	104,406		107,252
Total revenues	528,855		398,841
Costs and expenses from continuing operations:
Cost of services sold	334,506		236,608
Cost of products sold	86,576		79,860
Selling, general and administrative expenses	83,043		72,499
Research and development expenses	818		1,260
Other (income) expenses, net	(912)		5,733
Total costs and expenses	504,031		395,960
Operating income from continuing operations	24,824		2,881
Interest income	585		193
Interest expense	(16,864)		(12,649)
Unused debt commitment fees, amendment fees and loss on extinguishment of debt	(5,258)		(488)
Defined benefit pension income	3,953		1,589
Income (loss) from continuing operations before income taxes and equity income	7,240		(8,474)
Income tax benefit (expense) from continuing operations	(4,229)		682
Equity income (loss) of unconsolidated entities, net	(119)		96
Income (loss) from continuing operations	2,892		(7,696)
Discontinued operations:
Gain on sale of discontinued business	—		18,462
Loss from discontinued businesses	(1,791)		(225)
Income tax benefit (expense) from discontinued businesses	464		(9,314)
Income (loss) from discontinued operations, net of tax	(1,327)		8,923
Net income	1,565		1,227
Less: Net income attributable to noncontrolling interests	(1,430)		(1,086)
Net income attributable to Harsco Corporation	$	135	$	141
Amounts attributable to Harsco Corporation common stockholders:
Income (loss) from continuing operations, net of tax	$	1,462	$	(8,782)
Income (loss) from discontinued operations, net of tax	(1,327)		8,923
Net income attributable to Harsco Corporation common stockholders	$	135	$	141
Weighted-average shares of common stock outstanding	79,088		78,761
Basic earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations	$	0.02	$	(0.11)
Discontinued operations	(0.02)		0.11
Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders	$	—	$	—
Diluted weighted-average shares of common stock outstanding	80,015		78,761
Diluted earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations	$	0.02	$	(0.11)
Discontinued operations	(0.02)		0.11
Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders	$	—	$	—

See accompanying notes to unaudited condensed consolidated financial statements.

5

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

	Three Months Ended
	March 31
(In thousands)	2021		2020
Net income	$	1,565	$	1,227
Other comprehensive income (loss):
Foreign currency translation adjustments, net of deferred income taxes of $623 and $(4,082) in 2021 and 2020, respectively	(3,296)		(58,566)
Net income (loss) on cash flow hedging instruments, net of deferred income taxes of $(144) and $517 in 2021 and 2020, respectively	689		(1,687)
Pension liability adjustments, net of deferred income taxes of $(338) and $(1,710) in 2021 and 2020, respectively	3,819		30,269
Unrealized gain (loss) on marketable securities, net of deferred income taxes of $(7) and $8 in 2021 and 2020, respectively	17		(18)
Total other comprehensive income (loss)	1,229		(30,002)
Total comprehensive income (loss)	2,794		(28,775)
Less: Comprehensive (income) loss attributable to noncontrolling interests	(364)		61
Comprehensive income (loss) attributable to Harsco Corporation	$	2,430	$	(28,714)

See accompanying notes to unaudited condensed consolidated financial statements.

6

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Three Months Ended March 31
(In thousands)	2021		2020
Cash flows from operating activities:
Net income	$	1,565	$	1,227
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation	32,748		29,933
Amortization	8,967		6,557
Deferred income tax (benefit) expense	(3,421)		4,412
Equity (income) loss of unconsolidated entities, net	119		(96)
Gain on sale from discontinued business	—		(18,462)
Loss on early extinguishment of debt	2,668		—
Other, net	1,128		(2,007)
Changes in assets and liabilities, net of acquisitions and dispositions of businesses:
Accounts receivable	(16,446)		(22,050)
Inventories	407		(16,412)
Contract assets	(19,070)		(20,311)
Right-of-use assets	6,768		3,429
Accounts payable	(8,592)		12,308
Accrued interest payable	(7,320)		(9,891)
Accrued compensation	(1,541)		(2,752)
Advances on contracts	(9,698)		40,464
Operating lease liabilities	(6,750)		(3,358)
Retirement plan liabilities, net	(19,267)		(15,534)
Income taxes payable - Gain on sale of discontinued businesses	—		3,843
Other assets and liabilities	14,562		(2,836)
Net cash used by operating activities	(23,173)		(11,536)
Cash flows from investing activities:
Purchases of property, plant and equipment	(27,382)		(27,894)
Purchases of businesses, net of cash acquired	—		(4,157)
Proceeds from sale of discontinued business, net	—		37,219
Proceeds from sales of assets	3,862		2,185
Expenditures for intangible assets	(68)		(58)
Net proceeds (payments) from settlement of foreign currency forward exchange contracts	(1,427)		11,327
Other investing activities, net	46		—
Net cash provided (used) by investing activities	(24,969)		18,622
Cash flows from financing activities:
Short-term borrowings, net	575		3,697
Current maturities and long-term debt:
Additions	434,873		52,875
Reductions	(374,530)		(38,709)
Stock-based compensation - Employee taxes paid	(2,485)		(3,437)
Deferred financing costs	(6,525)		(1,632)
Other financing activities, net	(400)		—
Net cash provided by financing activities	51,508		12,794
Effect of exchange rate changes on cash and cash equivalents, including restricted cash	(710)		(10,824)
Net increase in cash and cash equivalents, including restricted cash	2,656		9,056
Cash and cash equivalents, including restricted cash, at beginning of period	79,669		59,732
Cash and cash equivalents, including restricted cash, at end of period	$	82,325	$	68,788
Supplementary cash flow information:
Change in accrual for purchases of property, plant and equipment included in accounts payable	$	1,865	$	(281)

See accompanying notes to unaudited condensed consolidated financial statements.

7

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

	Harsco Corporation Stockholders’ Equity
	Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests
(In thousands, except share  amounts)	Issued		Treasury										Total
Balances, December 31, 2019	$	143,400	$	(838,893)	$	200,595	$	1,824,100	$	(587,622)	$	48,079	$	789,659
Net income							141				1,086		1,227
Total other comprehensive loss, net of deferred income taxes of $(5,267)									(28,854)		(1,148)		(30,002)
Vesting of restricted stock units and other stock grants, net 104,840 shares	230		(889)		(230)								(889)
Vesting of performance share units, net 265,151 shares	589		(3,205)		(589)								(3,205)
Amortization of unearned portion of stock-based compensation, net of forfeitures					2,080								2,080
Balances, March 31, 2020	$	144,219	$	(842,987)	$	201,856	$	1,824,241	$	(616,476)	$	48,017	$	758,870

	Harsco Corporation Stockholders’ Equity
(In thousands, except share amounts)	Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests
	Issued		Treasury										Total
Balances, December 31, 2020	$	144,288	$	(843,230)	$	204,078	$	1,797,759	$	(645,741)	$	56,245	$	713,399
Net income							135				1,430		1,565
Total other comprehensive income (loss), net of deferred income taxes of $134									2,295		(1,066)		1,229
Stock appreciation rights exercised, net 3,842 shares	9		(70)		(9)								(70)
Vesting of restricted stock units and other stock grants, net 144,967 shares	312		(1,850)		(312)								(1,850)
Vesting of performance share units, net 69,127 shares	155		(1,032)		(155)								(1,032)
Amortization of unearned portion of stock-based compensation, net of forfeitures					3,342								3,342
Balances, March 31, 2021	$	144,764	$	(846,182)	$	206,944	$	1,797,894	$	(643,446)	$	56,609	$	716,583

See accompanying notes to unaudited condensed consolidated financial statements.

8

HARSCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.     Basis of Presentation

The Company has prepared these unaudited condensed consolidated financial statements in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the SEC. Accordingly, the unaudited condensed consolidated financial statements do not include all information and disclosure required by U.S. GAAP for annual financial statements. The December 31, 2020 Condensed Consolidated Balance Sheet information contained in this Quarterly Report on Form 10-Q was derived from the 2020 audited consolidated financial statements.  The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. In the opinion of management, all adjustments (all of which are of a normal recurring nature) that are necessary for a fair statement are reflected in the unaudited condensed consolidated financial statements. 

Restricted Cash

The Company had restricted cash of $3.0 million and $3.2 million at March 31, 2021 and December 31, 2020, respectively, and the restrictions are primarily related to collateral provided for certain guarantees of the Company's performance.

Impact of COVID-19

Beginning in early 2020, overall global economic conditions were significantly impacted by COVID-19. The Company has operated, since the onset of the pandemic, as a provider of certain essential services in the U.S. and other countries and overall business conditions have strengthened since the second quarter of 2020. And while the ultimate duration and impact of COVID-19 on the Company and its operations is presently unclear, the Company expects that business conditions will improve meaningfully in 2021 compared with 2020.

The Company did not record any long-lived asset impairments, indefinite-lived asset impairments, goodwill impairments, significant inventory write-downs or incremental accounts receivable reserves for current expected credit losses during the three months ended March 31, 2021. However, should the COVID-19 situation deteriorate, such charges are possible in future periods, which could have an adverse effect on the Company's future results of operations, cash flows, or financial condition.

Reclassifications

Certain reclassifications have been made to prior year amounts to conform with current year classifications.

2.     Recently Adopted and Recently Issued Accounting Standards

The following accounting standards have been adopted in 2021:

On January 1, 2021 the Company adopted changes issued by the FASB which are intended to reduce complexity and simplify the accounting for income taxes in accordance with U.S. GAAP by removing certain exceptions related to investments, intraperiod allocations and interim calculations and clarifying existing guidance to improve consistent application. These changes did not have a material impact on the Company's condensed consolidated financial statements.

The following accounting standards have been issued and become effective for the Company at a future date:

In March 2020 the FASB issued changes that provide companies with optional guidance to ease the potential accounting burden associated with transitioning from reference rates that are expected to be discontinued. In response to the concerns about risks of IBORs and, particularly, the risk of cessation of LIBOR, regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction-based and less susceptible to manipulation. The changes provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In January 2021, the FASB issued additional clarification changes. The changes can be adopted no later than December 31, 2022 with early adoption permitted. Management does not believe these changes will have a material impact on its condensed consolidated financial statements.

In August 2020, the FASB issued changes which simplified the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The changes can be adopted

9

no later than January 1, 2022, with early adoption permitted. Management has concluded that this standard will not have an impact on its condensed consolidated financial statements.

3. Acquisitions and Dispositions

ESOL

On April 6, 2020 the Company completed the acquisition of 100% of ESOL, an established waste transportation, processing and services provider with a comprehensive portfolio of disposal solutions for customers primarily across the industrial, retail and healthcare markets from Stericycle, Inc. for $429.0 million of cash consideration, inclusive of post-closing adjustments. In addition, as part of the acquisition, the Company entered into a non-compete agreement with Stericycle, Inc.

The fair value recorded for the assets acquired and liabilities assumed for ESOL is as follows:

	Final
(In millions)	April 6 2020		Measurement Period Adjustments		March 31 2021
Cash and cash equivalents	$	0.4	$	—	$	0.4
Trade accounts receivable	124.1		(1.5)		122.6
Inventory	5.0		—		5.0
Other current assets	0.7		(0.7)		—
Property, plant and equipment	105.3		(3.9)		101.4
Right-of-use assets	56.0		—		56.0
Goodwill	152.0		1.3		153.3
Intangible assets	161.0		—		161.0
Other assets	0.2		—		0.2
Accounts payable	(48.6)		(1.5)		(50.1)
Accrued expenses	(17.5)		(1.8)		(19.3)
Current portion of operating lease liabilities	(16.6)		—		(16.6)
Other current liabilities	(6.4)		(0.2)		(6.6)
Environmental liabilities	(24.4)		—		(24.4)
Deferred income taxes	(15.5)		(1.5)		(17.0)
Operating lease liabilities	(39.4)		—		(39.4)
Total identifiable net assets of ESOL	436.3		(9.8)		426.5
Non-compete agreement	2.5		—		2.5
Total identifiable net assets of ESOL, including non-compete agreement	$	438.8	$	(9.8)	$	429.0

The goodwill is primarily attributed to expected operational efficiencies and synergies from the expanded geographical scale of hazardous waste processing facilities resulting from combining the ESOL business with the existing Clean Earth business of the Company, as well as the value associated with the assembled workforce of ESOL. The Company expects $36.8 million of goodwill to be deductible for income tax purposes through 2030.

The following table details the valuation of identifiable intangible assets and amortization periods for ESOL and the non-compete agreement entered into by the Company upon acquisition of ESOL:

		Final
(Dollars in millions)	Weighted-Average Amortization Period	April 6 2020		Measurement Period Adjustments		March 31 2021
Permits and rights	22 years	$	138.0	$	—	$	138.0
Customer relationships	10 years	23.0		—		23.0
Total identifiable intangible assets of ESOL		161.0		—		161.0
Non-compete agreement	4 years	2.5		—		2.5
Total identifiable intangible assets acquired		$	163.5	$	—	$	163.5

The Company valued the identifiable intangible assets using methodologies under the income approach including the multi-period excess earnings method, the distributor method, and the with-and-without method.

ESOL contributed revenue of $134.2 million and operating income of $7.0 million for the three months ended March 31, 2021. The operations of ESOL have been combined and included as part of the Harsco Clean Earth Segment.

10

Clean Earth

On June 28, 2019, the Company acquired 100% of the outstanding stock of Clean Earth, one of the largest U.S. providers of specialty waste processing and beneficial reuse solutions for hazardous wastes, contaminated materials and dredged volumes, for an enterprise valuation of approximately $625 million on a cash free, debt free basis, subject to normal working capital adjustments. The Company transferred approximately $628 million of cash consideration and agreed to reimburse the sellers for any usage of assumed net operating losses in a post-closing period for up to five years.

Pro forma financial information

The pro forma information below gives effect to the ESOL acquisition as if it had been completed on January 1, 2019. The pro forma information is not necessarily indicative of the Company’s results of operations had the acquisition been completed on the above date, nor is it necessarily indicative of future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisition and does not reflect the additional revenue opportunities following the acquisition. The pro forma information below includes the adjustments necessary to reflect additional depreciation and amortization expense based on the estimated fair value and useful lives of intangible assets and fixed assets acquired; includes additional interest expense of approximately $4.7 million for the three months ended March 31, 2020 on the acquisition related borrowings used to finance the acquisition and excludes certain directly attributable acquisition and integration costs. In addition, the historical ESOL results include $8.9 million for the three months ended March 31, 2020 of corporate expenses charged to ESOL from Stericycle.

	Three Months Ended
	March 31
(In millions)	2020
Pro forma revenues	$	529.5
Pro forma net income attributed to Harsco Corporation (including discontinued operations) (a)	0.9

(a) Pro forma net income includes the after tax gain on the sale of IKG of approximately $9 million.

Harsco Industrial Segment

In January 2020 the Company sold IKG for $85.0 million, including a note receivable with a face value of $40.0 million (initial fair value $34.3 million), and recognized an $18.5 million pre-tax gain on sale (or approximately $9 million after-tax). Together with the 2019 sales of AXC and PK, this completed the divestiture of the former Harsco Industrial Segment originally announced in May 2019. See Note 4, Accounts Receivable and Note Receivable, for additional information related to the note receivable.

The Harsco Industrial Segment has historically been a separate reportable segment with primary operations in North America and Latin America. In accordance with U.S. GAAP, the results of the former Harsco Industrial Segment are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for the three months ended March 31, 2020.

Certain key selected financial information included in net income (loss) from discontinued operations for the former Harsco Industrial Segment is as follows:

	Three Months Ended
	March 31
(In millions)	2021		2020
Amounts for the former Harsco Industrial Segment:
Total revenues	$	—	$	10,203
Cost of products sold	—		8,082
Income (loss) from discontinued business	—		218
Additional amounts allocated to the former Harsco Industrial Segment:
Selling, general and administrative expenses (b)	$	1,046	$	1,266

(b) The Company has allocated directly attributable transaction costs to discontinued operations. In addition, this caption includes costs directly attributable to retained contingent liabilities of the Harsco Industrial Segment.

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4.    Accounts Receivable and Note Receivable

Accounts receivable consist of the following:

(In thousands)	March 31 2021		December 31 2020
Trade accounts receivable	$	425,808	$	414,891
Less: Allowance for expected credit losses	(7,978)		(7,501)
Trade accounts receivable, net	$	417,830	$	407,390
Other receivables (a)	$	32,998	$	34,253

(a) Other receivables include employee receivables, insurance receivable, tax claims and refunds and other miscellaneous items not included in Trade accounts receivable, net.

The provision for doubtful accounts related to trade accounts receivable was as follows:

	Three Months Ended
	March 31
(In thousands)	2021		2020
Provision for expected credit losses and doubtful accounts related to trade accounts receivable	$	1,157	$	219

At March 31, 2021 approximately $10.3 million of the Company's trade accounts receivable were past due by twelve months or more. Approximately $5.2 million of this amount is effectively reserved, and collection of the remaining balance is still ultimately expected. The increase from December 31, 2020 is due to the aging of certain customer balances in the Harsco Rail Segment, the balance of which the Company ultimately expects to collect.

In January 2020 the Company sold IKG for $85.0 million including cash and a note receivable, subject to post-closing adjustments. The note receivable from the buyer has a face value of $40.0 million, bearing interest at 2.50%, that is paid in kind and matures on January 31, 2027. Any unpaid principal, along with any accrued but unpaid interest is payable at maturity. Prepayment is required in case of a change in control or a percentage of excess cash flow, as defined in the note receivable agreement. Because there are no scheduled payments under the terms of the note receivable, the balance is not classified as current as of March 31, 2021 and is included in the caption Other assets on the Condensed Consolidated Balance Sheet. The initial fair value of the note receivable was $34.3 million which was calculated using an average of various discounted cash flow scenarios based on anticipated timing of repayments (Level 3) and was a non-cash transaction. The note receivable is subsequently measured at amortized cost. Key inputs into the valuation model include: projected timing and amount of cash flows, pro forma debt rating, option-adjusted spread and U.S. Treasury spot rate. At March 31, 2021 the amortized cost of the note receivable was $36.2 million, compared with a fair value of $36.2 million.

(In thousands)	March 31 2021		December 31 2020
Note receivable	$	36,229	$	35,806

5.    Inventories

Inventories consist of the following:

(In thousands)	March 31 2021		December 31 2020
Finished goods	$	10,467	$	8,505
Work-in-process	7,846		16,522
Raw materials and purchased parts