REPORT TO STOCKHOLDERS T he theme of this year's cover r eflects the successful transformation of your Company , begun some years ago. Once an old-style U.S. manufacturing business with limited inter national activity , Harsco is now r ecognized as a moder n, industrial services-focused business having br oad inter national scope and global opportunities for gr owth. The success of our principal strategies for industrial services and inter national expansion ar e evidenced in our major accomplishments of this past year . Led by solid performance in our mill services and track technologies businesses and the str engthening of several of the key inter national curr encies in which we operate, Harsco r evenues incr eased to mor e than $2.1 billion, a new r ecor d for the Company and an impr ovement of mor e than 7 per cent over the pr evious year . Net cash pr ovided by operating activities totaled nearly $263 million, also a re c o rd . C o n s i s t e n t w i t h o u r c h a n g e o b j e c t i v e s , i n d u s t r i a l s e r v i c e s e x c e e d e d 7 0 p e rc e n t o f t o t a l re v e n u e s f o r t h e f i r s t t i m e i n o u r h i s t o r y . N e a r l y 6 0 p e rc e n t o f t o t a l re v e n u e s w e re g e n e r a t e d outside the United States. In 2003, income fr om continuing operations was $87.0 million, or $2.12 diluted ear nings per shar e, compar ed with income of $88.4 million, or $2.17 diluted ear nings per shar e in 2002. Including discontinued operations, net income was $92.2 million or $2.25 diluted ear nings per shar e, compar ed with net income of $90.1 million, or $2.21 diluted ear nings per shar e in 2002. Income fr om discontinued operations was $5.2 million, compar ed with $1.7 million in 2002. The year was not without its challenges, notably the lingering U.S. manufacturing r ecession and the weak non-r esidential construction market that continued to impede the better performance expected fr om our manufacturing and access services businesses. W e also experienced a second year of significant pension expense incr ease. T o arr est further incr eases, we took decisive pension plan design actions that will assur e mor e pr edictability and af for dability in this ar ea, while for ecasts of a modest r ecovery in the manufacturing and non-r esidential construction sectors add to our impr oving outlook overall. Harsco's ability to generate substantial cash fr om operations r emains one of the Company's str engths and the principal catalyst to our futur e gr owth. In the past five years alone, our transformed business model has enabled us to channel mor e than $1.1 billion into capital expenditur es and targeted acquisitions in execution of our long-range gr owth plan. This past year , we incr eased our capital expenditur es by appr oximately $30 million to further r einfor ce the gr owth of our cor e industrial services businesses. Our cash r esour ces have also enabled us to r e- arm our balance sheet, including the further pay-down of debt by appr oximately $86 million on 2 HARSCO C ORPORA TION 2003 A NNU AL R EPORT