ENGINEERED PRODUCTS z The  pr olonged  domestic  manufacturing  r ecession  of  2000-2003  pr oved especially  challenging  for  the  industrial  gas  cylinders,  tanks  and  valve pr oducts  manufactur ed  by  Harsco's  Gas  and  Fluid  Contr ol  Gr oup.  Despite these  dif ficulties,  the  Gr oup  has  maintained  overall  pr ofitability  and continues  to  be  a  positive  cash  flow  generator . z Impr oving  economic  conditions,  both  in  the  United  States  and inter nationally ,  ar e  expected  to  stimulate  a  manufacturing  r ecovery  this year .  This  should  r esult  in  impr oved  demand  for  Harsco's  gas  and  fluid contr ol  pr oducts,  although  competitive  pr essur es  r emain  intense.  z Harsco's  Reed  Minerals  and  Patterson-Kelley  businesses  continue  to  be among  the  Company's  most  consistent  performers.  These  businesses operate  in  stable  markets,  generate  consistent  ear nings  and  margin performance,  and  pr oduce  superior  r etur ns  on  capital  and  Economic  V alue Added  (EV A ® ). z Incr eased  capital  spending  for  natural  gas  exploration  and  drilling  is expected  to  generate  additional  or ders  for  Harsco's  Air -X-Changers  air - cooled  heat  exchangers. z A  sustainable  r etur n  to  pr ofitability  is  anticipated  in Harsco's  IKG  industrial  grating  business  following substantial  consolidation  and  cost  r eduction  actions taken  in  2003. z Several  new  specialty  pr oducts  for  2004  ar e expected  to  support  an  impr oving  sales outlook  for the  Company's  manufacturing  businesses. H ARSCO C ORPORA TION 2003 A NNU AL R EPORT 7 Harsco's air-cooled heat exchangers pr ovide critical pipeline and compr essor cooling for natural gas exploration and distribution locations. Two  n e w v a l v e pr oducts ar e being intr oduced to the market in 2004. The new Oxy-Gen 1 integrates valve and r egulator functions into a single compact unit ideal for  hospital and home oxygen supply . The new  Global V alve for industrial gases raises valve  technology to a new level of compliance with virtually all inter national regul a t i o n s a n d c u s t o m e r s p e c i f i c a t i o n s . E ngineer ed pr oducts continue to be a sizeable component of Harsco's operating pr ofile. These manufacturing-based businesses generally operate in smaller  niche  markets  with  minimal capital  investment  r equir ements.  All  ar e  market  leaders  in  their  r espective  sectors,  and  ar e expected  to  play  a  supporting  part  in  Harsco's  futur e  gr owth  thr ough  their  continued  ear nings and  cash  flow  performance. 