**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**


**FORM
      10-Q**





**(** Mark
      One)


x Quarterly
      report
      pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for
      the
      quarterly period ended March 31, 2008 or


o 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 1-10776





CALGON
                CARBON CORPORATION(Exact
                name of registrant as specified in its
                charter)





Delaware
            
            25-0530110(State
                or other jurisdiction of
            
            (I.R.S.
                Employerincorporation
                or organization)
            
            Identification
                No.)





P.O.
                Box 717, Pittsburgh, PA 15230-0717(Address
                of principal executive offices)(Zip
                Code)





**(412)
                787-6700****(Registrant’s
                telephone number, including area
                code)**





**(Former
                name, former address and former fiscal year****if
                changed since last report)**





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
x No
o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange
      Act.





Large
      accelerated filer o Accelerated
      filer x Non-accelerated
      filer o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Securities Exchange Act of 1934).





Yes
o   No
x




**Applicable
      only to corporate issuers:**


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





Class
            
            Outstanding
                at May 6, 2008Common
                Stock, $.01 par value
            
            40,914,091
                shares







CALGON
      CARBON CORPORATION


FORM
      10-Q


QUARTER
      ENDED March 31, 2008





The
      Quarterly Report on Form 10-Q contains historical information and
      forward-looking statements. Statements looking forward in time are included
      in
      this Form 10-Q pursuant to the “safe harbor” provisions of the Private
      Securities Litigation Reform Act of 1995. They involve known and unknown risks
      and uncertainties that may cause the Company’s actual results in the future to
      differ from performance suggested herein. In the context of forward-looking
      information provided in this Form 10-Q and in other reports, please refer to
      the
      discussion of risk factors detailed in, as well as the other information
      contained in the Company’s filings with the Securities and Exchange Commission.





I
      N D
      E X




PagePART
                1 – CONDENSED CONSOLIDATED FINANCIAL
                INFORMATIONItem
                1.
            Condensed
                Consolidated Financial StatementsIntroduction
                to the Condensed Consolidated Financial Statements
            2Condensed
                Consolidated Statements of Income (unaudited)
            3Condensed
                Consolidated Balance Sheets (unaudited)
            4Condensed
                Consolidated Statements of Cash Flows (unaudited)
            5Notes
                to Condensed Consolidated Financial Statements (unaudited)
            6Item
                2.
            Management's
                Discussion and Analysis of Results of Operations and Financial
                Condition
            25Item
                3.
            Qualitative
                and Quantitative Disclosures about Market Risk
            31Item
                4.
            Controls
                and Procedures
            32PART
                II - OTHER INFORMATIONItem
                1.
            Legal
                Proceedings
            33Item
                1a.
            Risk
                Factors
            33Item
                2c.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            33Item
                6.
            Exhibits
            33SIGNATURES
            34CERTIFICATIONS


1


PART
      I – CONDENSED CONSOLIDATED FINANCIAL INFORMATION




Item
      1.  Condensed
      Consolidated Financial Statements




INTRODUCTION
      TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




The
      unaudited interim condensed consolidated financial statements included herein
      have been prepared by Calgon Carbon Corporation and subsidiaries (the Company),
      without audit, pursuant to the rules and regulations of the Securities and
      Exchange Commission. Certain information and footnote disclosures normally
      included in annual financial statements prepared in accordance with accounting
      principles generally accepted in the United States of America have been
      condensed or omitted pursuant to such rules and regulations. Management of
      the
      Company believes that the disclosures are adequate to make the information
      presented not misleading when read in conjunction with the Company's audited
      consolidated financial statements and the notes included therein for the year
      ended December 31, 2007, as filed with the Securities and Exchange Commission
      by
      the Company in Form 10-K.





In
      management’s opinion, the unaudited interim condensed consolidated financial
      statements reflect all adjustments, which are of a normal and recurring nature,
      which are necessary for a fair presentation, in all material respects, of
      financial results for the interim periods presented. Operating results for
      the
      first three months of 2008 are not necessarily indicative of the results that
      may be expected for the year ending December 31, 2008.


2





CALGON
      CARBON CORPORATION


CONDENSED
      CONSOLIDATED STATEMENTS OF INCOME


(Dollars
      in Thousands Except Share and Per Share Data)


(Unaudited)


Three
                Months EndedMarch
                31,2008
            
            2007Net
                sales
            
            $
            87,420
            
            $
            81,046Net
                sales to related parties
            
            
            2,911
            
            
            1,984Total
            
            
            90,331
            
            
            83,030Cost
                of products sold (excluding depreciation)
            
            
            61,765
            
            
            58,424Depreciation
                and amortization
            
            
            3,926
            
            
            4,261Selling,
                general and administrative expenses
            
            
            15,200
            
            
            14,606Research
                and development expenses
            
            
            1,091
            
            
            828Gain
                on AST Settlement (See Note 7)
            
            
            (9,250
            )
            
            -72,732
            
            
            78,119Income
                from operations
            
            
            17,599
            
            
            4,911Interest
                income
            
            
            432
            
            
            302Interest
                expense
            
            
            (1,271
            )
            
            (1,450
            )Other
                expense – net
            
            
            (90
            )
            
            (403
            )Income
                from operations before income tax and equity in income from equity
                investments
            
            
            16,670
            
            
            3,360Income
                tax provision
            
            
            6,234
            
            
            2,380Income
                from operations before equity in income from equity
                investments
            
            
            10,436
            
            
            980Equity
                in income from equity investments
            
            
            438
            
            
            1,054Net
                income
            
            $
            10,874
            
            $
            2,034Net
                income per common shareBasic
            
            $
            0.27
            
            $
            .05Diluted
            
            $
            0.21
            
            $
            .05Weighted
                average shares outstandingBasic
            
            
            40,240,397
            
            
            40,224,585Diluted
            
            
            51,756,120
            
            
            42,660,625





The
      accompanying notes are an integral part of these unaudited condensed
      consolidated financial statements.




3


CALGON
      CARBON CORPORATION


CONDENSED
      CONSOLIDATED BALANCE SHEETS


(Dollars
      in Thousands)


(Unaudited)





March
                31,
            
            December
                31,2008
            
            2007ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            35,135
            
            $
            30,304Receivables
                (net of allowance of $2,856 and $2,834)
            
            
            56,285
            
            
            55,195Receivables
                from related parties
            
            
            2,239
            
            
            2,353Revenue
                recognized in excess of billings on uncompleted contracts
            
            
            6,547
            
            
            7,698Inventories
            
            
            83,761
            
            
            81,280Deferred
                income taxes – current
            
            
            9,194
            
            
            9,246Other
                current assets
            
            
            3,920
            
            
            3,602Total
                current assets
            
            
            197,081
            
            
            189,678Property,
                plant and equipment, net
            
            
            110,828
            
            
            105,512Equity
                investments
            
            
            8,970
            
            
            8,593Intangibles
            
            
            7,366
            
            
            7,760Goodwill
            
            
            27,784
            
            
            27,845Deferred
                income taxes – long-term
            
            
            5,779
            
            
            6,419Other
                assets
            
            
            2,593
            
            
            2,333Total
                assets
            
            $
            360,401
            
            $
            348,140LIABILITIES
                AND SHAREHOLDERS’ EQUITYCurrent
                liabilities:Accounts
                payable and accrued liabilities
            
            $
            37,135
            
            $
            39,436Billings
                in excess of revenue recognized on uncompleted contracts
            
            
            3,858
            
            
            3,727Accrued
                interest
            
            
            519
            
            
            1,461Payroll
                and benefits payable
            
            
            8,423
            
            
            9,182Accrued
                income taxes
            
            
            2,316
            
            
            1,944Short-term
                debt
            
            
            1,566
            
            
            1,504Current
                portion of long-term debt
            
            
            62,662
            
            
            62,507Total
                current liabilities
            
            
            116,479
            
            
            119,761Long-term
                debt
            
            
            12,925
            
            
            12,925Deferred
                income taxes – long-term
            
            
            952
            
            
            1,361Accrued
                pension and other liabilities
            
            
            41,175
            
            
            41,844Total
                liabilities
            
            
            171,531
            
            
            175,891Commitments
                and contingencies (Note 7)Shareholders’
                equity:Common
                shares, $.01 par value, 100,000,000 shares authorized, 43,330,051
                and
                43,044,318 shares issued
            
            
            433
            
            
            430Additional
                paid-in capital
            
            
            79,966
            
            
            77,299Retained
                earnings
            
            
            115,810
            
            
            104,936Accumulated
                other comprehensive income
            
            
            20,908
            
            
            17,008217,117
            
            
            199,673Treasury
                stock, at cost, 2,877,913 and 2,827,301 shares
            
            
            (28,247
            )
            
            (27,424
            )Total
                shareholders’ equity
            
            
            188,870
            
            
            172,249Total
                liabilities and shareholders’ equity
            
            $
            360,401
            
            $
            348,140





The
      accompanying notes are an integral part of these unaudited condensed
      consolidated financial statements.




4





CALGON
      CARBON CORPORATION


CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS


(Dollars
      in Thousands)


(Unaudited)





Three
                Months EndedMarch
                31,2008
            
            2007Cash
                flows from operating activitiesNet
                income
            
            $
            10,874
            
            $
            2,034Adjustments
                to reconcile net income to net cash provided by operating
                activities:Depreciation
                and amortization
            
            
            3,926
            
            
            4,261Equity
                in income from equity investments
            
            
            (438
            )
            
            (1,054
            )Employee
                benefit plan provisions
            
            
            515
            
            
            520Stock-based
                compensation
            
            
            823
            
            
            929Deferred
                income tax
            
            
            1,232
            
            
            301Changes
                in assets and liabilities:Decrease
                (increase) in receivables
            
            
            29
            
            
            (4,528
            )Increase
                in inventories
            
            
            (1,314
            )
            
            (2,818
            )Decrease
                in revenue in excess of billings on uncompleted contracts and other
                current assets
            
            
            1,321
            
            
            548(Decrease)
                increase in accounts payable, accrued liabilities, and accrued
                interest
            
            
            (5,523
            )
            
            1,901Increase
                in accrued income taxes
            
            
            2,117
            
            
            743Pension
                contributions
            
            
            (4,133
            )
            
            (515
            )Other
                items – net
            
            
            379
            
            
            1,101Net
                cash provided by operating activities
            
            
            9,808
            
            
            3,423Cash
                flows from investing activitiesProperty,
                plant and equipment expenditures
            
            
            (6,617
            )
            
            (1,965
            )Proceeds
                from disposals of property, plant and equipment
            
            
            -
            
            
            147Net
                cash used in investing activities
            
            
            (6,617
            )
            
            (1,818
            )Cash
                flows from financing activitiesProceeds
                from borrowings
            
            
            -
            
            
            5,144Repayments
                of borrowings
            
            
            -
            
            
            (4,095
            )Treasury
                stock purchased
            
            
            -
            
            
            (74
            )Common
                stock issued
            
            
            1,103
            
            
            -Excess
                tax benefit from stock-based compensation
            
            
            742
            
            
            -Net
                cash provided by financing activities
            
            
            1,845
            
            
            975Effect
                of exchange rate changes on cash
            
            
            (205
            )
            
            687Increase
                in cash and cash equivalents
            
            
            4,831
            
            
            3,267Cash
                and cash equivalents, beginning of period
            
            
            30,304
            
            
            5,631Cash
                and cash equivalents, end of period
            
            $
            35,135
            
            $
            8,898




The
      accompanying notes are an integral part of these unaudited
      condensed consolidated financial
      statements.




5


CALGON
      CARBON CORPORATION


NOTES
      TOCONDENSED
      CONSOLIDATED FINANCIAL STATEMENTS


(Dollars
      in Thousands)


(Unaudited)


1.
            Inventories:




March 31, 2008
            
            December 31, 2007Raw
                materials
            
            $
            23,681
            
            $
            22,321Finished
                goods
            
            
            60,080
            
            
            58,959$
            83,761
            
            $
            81,280





2.
            Supplemental
                Cash Flow Information:





Cash
      paid
      for interest during the three months ended March 31, 2008 and 2007 was $2.1
      million and $2.2 million, respectively. Income taxes paid, net of refunds,
      were
      $ 2.7 million and $0.2 million, for the three months ended March 31, 2008 and
      2007, respectively.





The
      non-cash impact of the January 1, 2007 adoption of FASB Interpretation No.
      48,
“Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement
      No. 109,” (“FIN 48”) was $4.3 million for the three months ended March 31,
      2007.





3.
            Dividends:





The
      Company’s Board of Directors did not declare or pay a dividend for the quarters
      ended March 31, 2008 and 2007.





4.
                Comprehensive
                    income:






Three
                Months Ended March 31,2008
            
            2007Net
                income
            
            $
            10,874
            
            $
            2,034Other
                comprehensive income, net of taxes
            
            
            3,900
            
            
            1,762Comprehensive
                income
            
            $
            14,774
            
            $
            3,796





The
      only
      matters contributing to the other comprehensive income during the three months
      ended March 31, 2008 was the foreign currency translation adjustment of $3.4
      million, the changes in employee benefit accounts of $0.1 million, and the
      change in the fair value of the derivative instruments of $0.4 million as
      described in Note 6. The only matters contributing to the other comprehensive
      income during the three months ended March 31, 2007 was the foreign currency
      translation adjustment of $1.2 million and the change in the fair value of
      the
      derivative instruments of $0.6 million as described in Note 6.





5.
            Segment
                Information:





The
      Company’s management has identified three segments based on product line and
      associated services. Those segments include Activated Carbon and Service,
      Equipment, and Consumer. The Company’s chief operating decision maker, its chief
      executive officer, receives and reviews financial information in this format.
      The Activated Carbon and Service segment manufactures granular activated carbon
      for use in applications to remove organic compounds from liquids, gases, water,
      and air. This segment also consists of services related to activated carbon
      including reactivation of spent carbon and the leasing, monitoring, and
      maintenance of carbon fills at customer sites. The service portion of this
      segment also includes services related to the Company’s ion exchange
      technologies for treatment of groundwater and process streams. The Equipment
      segment provides solutions to customers’ air and liquid process problems through
      the design, fabrication, and operation of systems that utilize the Company’s
      enabling technologies: carbon adsorption, ultraviolet light, and advanced ion
      exchange separation. The Consumer segment brings the Company’s purification
      technologies directly to the consumer in the form of products and services
      including carbon cloth and activated carbon for household odors. The following
      segment information represents the results of the Company’s continuing
      operations:




6





Three
                Months EndedMarch
                31,2008
            
            2007Net
                SalesActivated
                Carbon and Service
            
            $
            76,898
            
            $
            68,683Equipment
            
            
            9,697
            
            
            10,966Consumer
            
            
            3,736
            
            
            3,381$
            90,331
            
            $
            83,030Income
                (loss) from operations before depreciation and
                amortizationActivated
                Carbon and Service
            
            $
            17,376
            
            $
            8,473Equipment
            
            
            3,443
            
            
            (129
            )Consumer
            
            
            706
            
            
            82821,525
            
            
            9,172Depreciation
                and amortizationActivated
                Carbon and Service
            
            
            3,483
            
            
            3,888Equipment
            
            
            318
            
            
            240Consumer
            
            
            125
            
            
            1333,926
            
            
            4,261Income
                from operations
            
            $
            17,599
            
            $
            4,911Reconciling
                items:Interest
                income
            
            
            432
            
            
            302Interest
                expense
            
            
            (1,271
            )
            
            (1,450
            )Other
                expense – net
            
            
            (90
            )
            
            (403
            )Consolidated
                income from operationsbefore
                income tax and equity in income from equity investments
            
            $
            16,670
            
            $
            3,360




March 31, 2008
            
            December 31, 2007Total
                AssetsActivated
                Carbon and Service
            
            $
            306,712
            
            $
            302,432Equipment
            
            
            39,966
            
            
            32,046Consumer
            
            
            13,723
            
            
            13,662Consolidated
                total assets
            
            $
            360,401
            
            $
            348,140




7




6.
            Derivative
                Instruments





The
      Company accounts for its derivative instruments under Statement of Financial
      Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging
      Activities,” as amended (“SFAS No. 133”). This standard requires recognition of
      all derivatives as either assets or liabilities at fair value and may result
      in
      additional volatility in both current period earnings and other comprehensive
      income as a result of recording recognized and unrecognized gains and losses
      from changes in the fair value of derivative instruments.





The
      Company’s corporate and foreign subsidiaries use foreign currency forward
      exchange contracts and foreign currency option contracts to limit the exposure
      of exchange rate fluctuations on certain foreign currency receivables, payables,
      and other known and forecasted transactional exposures for periods consistent
      with the expected cash flow of the underlying transactions. The contracts
      generally mature within eighteen months and are designed to limit exposure
      to
      exchange rate fluctuations. The Company uses cash flow hedges to limit the
      exposure to changes in natural gas prices. The contracts generally mature within
      one to thirty-six months.





At
      March
      31, 2008, the Company had seventy-four derivative instruments outstanding of
      which one was a foreign currency swap, thirty were cash flow hedges utilizing
      foreign currency forward exchange contracts for forecasted product purchases,
      twenty-six were cash flow hedges utilizing foreign currency option contracts
      for
      forecasted product purchases, ten were foreign currency forward exchange
      contracts, and seven were cash flow hedges utilizing forward contracts for
      forecasted purchases of natural gas. The Company applied hedge accounting
      treatment for the thirty foreign currency forward exchange contracts, twenty-six
      foreign currency option contracts, the foreign currency swap and the seven
      cash
      flow hedges for forecasted natural gas purchases. The thirty foreign currency
      forward exchange contracts and twenty-six option contracts were treated as
      foreign cash flow hedges regarding payment for inventory purchases and will
      be
      released into operations during the year based on the timing of the sales of
      the
      underlying inventory. Accordingly, the change in fair value of these contracts
      of $(0.6) million was recorded in other comprehensive income (loss). The Company
      did not apply hedge accounting treatment for the remaining ten foreign currency
      forward exchange contracts and recorded an immaterial loss in other income.
      At
      March 31, 2007, the Company had thirty derivative instruments outstanding of
      which one was a foreign currency swap, twenty-six were foreign currency forward
      exchange contracts, and three were cash flow hedges for forecasted natural
      gas
      purchases. The Company applied hedge accounting treatment for the foreign
      currency swap and the three cash flow hedges for forecasted natural gas
      purchases. The Company did not apply hedge accounting treatment for the foreign
      currency forward exchange contracts and recorded an immaterial gain in other
      income.





On
      April
      26, 2004, the Company entered into a ten-year foreign currency swap agreement
      to
      fix the foreign exchange rate on a $6.5 million intercompany loan between the
      Company and its foreign subsidiary, Chemviron Carbon Ltd. Since its inception,
      the foreign currency swap has been treated as a foreign exchange cash flow
      hedge. Accordingly, the changes in the fair value of the effective hedge portion
      of the foreign currency swap of $0.1 million and $0.1 million, respectively,
      for
      the periods ended March 31, 2008 and 2007, was recorded in other comprehensive
      income (loss). The balance of the effective hedge portion of the foreign
      currency swap recorded in other long-term liabilities was $0.6 million and
      $0.9
      million, respectively, as of March 31, 2008 and 2007.




The
      change in fair value of the cash flow hedges for the aforementioned forecasted
      natural gas purchases recorded in other comprehensive income (loss) was $0.9
      million and $0.5 million, net of tax, respectively, as of March 31, 2008 and
      2007, respectively. The balance of the cash flow hedges for forecasted natural
      gas purchases recorded in other current assets and other assets was $1.0 million
      and $0.3 million, respectively as of March 31, 2008 and $0.2 million recorded
      in
      other long-term liabilities as of March 31, 2007.





No
      component of the derivative gains or losses has been excluded from the
      assessment of hedge effectiveness. For the periods ended March 31, 2008 and
      2007, the net gain or loss recognized due to the amount of hedge ineffectiveness
      was not material.


8




Management’s
      policy for managing foreign currency risk is to use derivatives to hedge up
      to
      75% of the forecasted intercompany sales to its European subsidiaries. The
      hedges involving foreign currency derivative instruments do not span a period
      greater than eighteen months from the contract inception date. Management uses
      various hedging instruments including, but not limited to foreign currency
      forward contracts, foreign currency option contracts and foreign currency swaps.
      Management’s policy for managing natural gas exposure is to use derivatives to
      hedge from 25% to 100% of the forecasted natural gas requirements. These cash
      flow hedges span up to thirty-six months from the contract inception date.
      Hedge
      effectiveness is measured on a quarterly basis and any portion of
      ineffectiveness is recorded directly to the Company’s earnings.




7.  Contingencies





The
      Company purchased the common stock of Advanced Separation Technologies
      Incorporated (“AST”) from Progress Capital Holdings, Inc. and Potomac Capital
      Investment Corporation on December 31, 1996. On January 12, 1998, the Company
      filed a claim for unspecified damages in the United States District Court for
      the Western District of Pennsylvania alleging among other things that Progress
      Capital Holdings and Potomac Capital Investment Corporation materially breached
      various AST financial and operational representations and warranties included
      in
      the Stock Purchase Agreement and had defrauded the Company. A jury returned
      a
      verdict in favor of the Company and against the defendants in the amount of
      $10.0 million on January 26, 2007. After the Court denied all post-trial
      motions, including the defendants’ motion for a new trial and the Company’s
      motion for the award of prejudgment interest, all parties appealed to the United
      States Circuit Court of Appeals for the Third Circuit. The parties settled
      the
      case in January 2008 when the defendants agreed to pay the Company $9.25
      million. This sum was received and recorded into operations during February
      2008. Of the settlement amount recorded into operations, approximately $5.3
      million was recorded in the Activated Carbon and Service segment and $4.0
      million was recorded in the Equipment segment.





In
      conjunction with the February 2004 purchase of substantially all of Waterlink’s
      operating assets and the stock of Waterlink’s U.K. subsidiary, several
      environmental studies were performed on Waterlink’s Columbus, Ohio property by
      environmental consulting firms which identified and characterized areas of
      contamination. In addition, these firms identified alternative methods of
      remediating the property, identified feasible alternatives and prepared cost
      evaluations of the various alternatives. The Company concluded from the
      information in the studies that a loss at this property is probable and recorded
      the liability as a component of noncurrent other liabilities in the Company’s
      consolidated balance sheet. At December 31, 2007, the balance recorded was
      $4.0
      million. Liability estimates are based on an evaluation of, among other factors,
      currently available facts, existing technology, presently enacted laws and
      regulations, and the remediation experience of other companies. The Company
      has
      not incurred any environmental remediation expense during the periods ended
      March 31, 2008 and 2007. It is reasonably possible that a change in the estimate
      of this obligation will occur as remediation preparation and remediation
      activity commences in the future. The ultimate remediation costs are dependent
      upon, among other things, the requirements of any state or federal environmental
      agencies, the remediation methods employed, the final scope of work being
      determined, and the extent and types of contamination which will not be fully
      determined until experience is gained through remediation and related
      activities. The accrued amounts are expected to be paid out over the course
      of
      several years once work has commenced. The Company has yet to make a
      determination that it will proceed with remediation efforts in
      2008.





In
      April
      2007, following protracted litigation in multiple jurisdictions, the U.S. Court
      of Appeals for the Federal Circuit held that the Company’s process patents for
      the use of ultraviolet light to prevent infection from Cryptosporidium and
      Giardia in drinking water (the “UV patents”) are invalid in the United States
      concluding the U.S. litigation relating to the UV patents. On March 3, 2008,
      the
      Supreme Court of Canada held that the Company’s Canadian UV patents are invalid
      concluding the Canadian UV patent litigation. In March 2007, the Company and
      Trojan Technologies, Inc. entered into a settlement whereby in exchange for
      a
      nominal cash payment and relief from legal fees, the Company granted Trojan
      Technologies, Inc. worldwide immunity from all current and future legal action
      related to the Company’s UV patents. In 2007, a German trial court found that a
      competitor infringed the Company’s UV patents with respect to medium pressure
      ultraviolet light, but did not infringe with respect to low pressure ultraviolet
      light. The Company appealed the decision relating to low pressure light. The
      competitor did not appeal. Oral argument is scheduled in this case for September
      2008. The validity of the German UV patents, as distinguished from issues of
      infringement which were decided in the trial court, is the subject of pending
      administrative proceedings in Germany. The outcome of these cases has impaired
      the Company’s ability to capitalize on substantial future revenues from the
      licensing of its UV patents.


9


In
      January 2007, the Company received a Notice of Violation (“NOV”) from the United
      States Environmental Protection Agency, Region 4 (“EPA”) alleging multiple
      violations of the Federal Resource Conservation and Recovery Act and
      corresponding EPA and Kentucky Department of Environmental Protection (“KYDEP”)
      hazardous waste management rules and regulations. The alleged violations are
      based on findings and information provided by the Company during and after
      a
      Multi Media Compliance Evaluation inspection of the Company’s Big Sandy Plant,
      located in Catlettsburg, Kentucky, conducted by the EPA and the KYDEP in
      September 2005, and concern the hazardous waste spent activated carbon
      regeneration facility located at the Big Sandy Plant. The Company submitted
      its
      initial written response to the NOV in June 2007. In August 2007, the EPA
      notified the Company that it believes there are significant RCRA violations
      that
      are unresolved by the information in the Company’s submittals. The Company met
      with the EPA in December 2007 to discuss alleged violations. The EPA requested
      additional information and indicated at the meeting that it would evaluate
      its
      enforcement options and expects to contact the Company by June 30, 2008 to
      explore a resolution. The EPA can take formal enforcement action to require
      the
      Company to remediate alleged violations which could involve the assessment
      of
      substantial civil penalties as well. The Company is awaiting further response
      from the EPA and cannot predict with any certainty the probable outcome of
      this
      matter or range of potential loss, if any.





In
      June
      2007, the Company received a Notice Letter from the New York State Department
      of
      Environmental Conservation (“NYSDEC”) stating that the NYSDEC has determined
      that the Company is a Potentially Responsible Party (“PRP”) at the Frontier
      Chemical Processing Royal Avenue Site in Niagara Falls, New York (the “Site”).
      The Notice Letter requests that the Company and other PRPs develop, implement
      and finance a remedial program for Operable Unit #1 at the Site. Operable Unit
      #1 consists of overburden soils and overburden and upper bedrock groundwater.
      The selected remedy is removal of above grade structures and contaminated soil
      source areas, installation of a cover system, and ground water control and
      treatment, estimated to cost between approximately $11 million and $14 million,
      which would be shared among the PRPs. The Company has not determined what
      portion of the costs associated with the remedial program it would be obligated
      to bear and the Company cannot predict with any certainty the outcome of this
      matter or range of potential loss. The Company has joined a PRP group formed
      to
      address this issue and the group is currently seeking a Consent Order with
      the
      NYSDEC on the clean up activity and approach. The Notice Letter also demands
      payment of all monies that the NYSDEC has already expended for investigation
      and
      remediation of the Site, but does not specify the amount that the NYSDEC has
      expended.





In
      July
      2007, the Company received an NOV from the KYDEP alleging that the Company
      has
      violated the KYDEP’s hazardous waste management regulations in connection with
      the Company’s hazardous waste spent activated carbon regeneration facility
      located at the Big Sandy Plant in Catlettsburg, Kentucky. The NOV alleges that
      the Company has failed to correct deficiencies identified by the KYDEP in the
      Company’s Part B hazardous waste management facility permit application and
      related documents and directs the Company to submit a complete and accurate
      Part
      B application and related documents and to respond to the KYDEP’s comments which
      are appended to the NOV. The Company submitted a response to the NOV and the
      KYDEP’s comments in December 2007. The KYDEP has not indicated whether or not it
      will take formal enforcement action, and has not specified a monetary amount
      of
      civil penalties it might pursue in any such action, if any. On October 18,
      2007,
      the Company received an NOV from the EPA related to this permit application
      and
      submitted a revised application to both the KYDEP and the EPA within the
      mandated timeframe. At this time the Company cannot predict with any certainty
      the outcome of this matter or range of loss, if any.


10


On
      February 17, 2006, Calgon Carbon Corporation, through its wholly owned
      subsidiary Chemviron Carbon GmbH, executed an agreement (the “Charcoal Sale
      Agreement”) with proFagus GmbH, proFagus Grundstuecksverwaltungs GmbH and
      proFagus Beteiligungen GmbH (as Guarantor) to sell, and sold, substantially
      all
      the assets, real estate, and specified liabilities of the Bodenfelde, Germany
      facility (the “Charcoal/Liquid business”). The aggregate sales price, based on
      an exchange rate of 1.19 Dollars per Euro, consisted of $20.4 million of cash,
      which included a final working capital adjustment of $1.3 million. The Company
      provided guarantees to the buyer related to pre-divestiture tax liabilities,
      future environmental remediation costs related to pre-divestiture activities
      and
      other contingencies. Management believes the ultimate cost of such guarantees
      is
      not material. An additional 4.25 million Euro could be received dependent upon
      the business meeting certain earnings targets over the next three years. In
      May
      2008, the Company reached a final agreement with proFagus GmbH, proFagus
      Grundstuecksverwaltungs GmbH and proFagus Beteiligungen GmbH (as Guarantor)
      regarding the aforementioned additional 4.25 million Euro contingent
      consideration fixing the amount to be paid to the Company at 2.8 million Euro.
      The Company expects to receive this payment by December 2011. The unpaid
      balance earns interest at 7% which is paid annually. The Company had presented
      the Charcoal/Liquid business as a discontinued operation for the periods that
      were impacted and will record the additional consideration as an additional
      gain
      on sale of the discontinued operation.





The
      Company owns a 49% interest in a joint venture, Calgon Mitsubishi Chemical
      Corporation, which was formed on October 1, 2002. At March 31, 2008, Calgon
      Mitsubishi Chemical Corporation had $8.7 million in borrowings from an affiliate
      of the majority owner of the joint venture. The Company has agreed with the
      joint venture and the lender that, upon request by the lender, the Company
      will
      execute a guarantee for up to 49% of such borrowings. At March 31, 2008, the
      lender had not requested, and the Company has not provided, such guarantee.





In
      addition to the matters described above, the Company is involved in various
      other legal proceedings, lawsuits and claims, including employment, product
      warranty and environmental matters of a nature considered normal to its
      business. It is the Company’s policy to accrue for amounts related to these
      legal matters when it is probable that a liability has been incurred and the
      loss amount is reasonably estimable. Management believes that the ultimate
      liabilities, if any, resulting from such lawsuits and claims will not materially
      affect the consolidated financial position or liquidity of the Company, but
      an
      adverse outcome could be material to the results of operations in a particular
      period in which a liability is recognized.




8.  Goodwill
      & Intangible Assets





The
      Company has elected to do the annual impairment test of its goodwill, as
      required by SFAS No. 142, on December 31 of each year or earlier if a potential
      impairment indicator occurs. For purposes of the test, the Company has
      identified reporting units, as defined within SFAS No. 142, at a regional level
      for the Activated Carbon and Service segment and at the technology level for
      the
      Equipment segment and has allocated goodwill to these reporting units
      accordingly.


11





The
      changes in the carrying amounts of goodwill by segment for the three months
      ended March 31, 2008 are as follows:





Carbon &
              Service
              Segment
            
            Equipment
              Segment
            
            Consumer
              Segment
            
            TotalBalance
                as of January 1, 2008
            
            $
            21,112
            
            $
            6,673
            
            $
            60
            
            $
            27,845Foreign
                exchange
            
            
            9
            
            
            (70
            )
            
            -
            
            
            (61
            )Balance
                as of March 31, 2008
            
            $
            21,121
            
            $
            6,603
            
            $
            60
            
            $
            27,784








The
      following is a summary of the Company’s identifiable intangible assets as of
      March 31, 2008 and December 31, 2007 respectively:





March
                31, 2008Weighted Average
              Amortization Period
            
            Gross Carrying
              Amount
            
            Foreign
              Exchange
            
            Accumulated
              Amortization
            
            Net Carrying
              AmountAmortized
                Intangible Assets:Patents
            
            
            15.4
                Years
            
            $
            1,369
            
            $
            -
            
            $
            (898
            )
            $
            471Customer
                Relationships
            
            
            17.0
                Years
            
            
            9,323
            
            
            33
            
            
            (4,992
            )
            
            4,364License
                Agreement
            
            
            5.0
                Years
            
            
            500
            
            
            -
            
            
            (441
            )
            
            59Product
                Certification
            
            
            7.9
                Years
            
            
            1,682
            
            
            -
            
            
            (686
            )
            
            996Unpatented
                Technology
            
            
            20.0
                Years
            
            
            2,875
            
            
            -
            
            
            (1,399
            )
            
            1,476Total
            
            
            16.0
                Years
            
            $
            15,749
            
            $
            33
            
            $
            (8,416
            )
            $
            7,366





December
                31, 2007Weighted Average
              Amortization Period
            
            Gross Carrying
              Amount
            
            Foreign
              Exchange
            
            Accumulated
              Amortization
            
            Net Carrying
              AmountAmortized
                Intangible Assets:Patents
            
            
            15.4
                Years
            
            $
            1,369
            
            $
            -
            
            $
            (877
            )
            $
            492Customer
                Relationships
            
            
            17.0
                Years
            
            
            9,323
            
            
            30
            
            
            (4,743
            )
            
            4,610License
                Agreement
            
            
            5.0
                Years
            
            
            500
            
            
            -
            
            
            (416
            )
            
            84Product
                Certification
            
            
            7.9
                Years
            
            
            1,682
            
            
            -
            
            
            (625
            )
            
            1,057Unpatented
                Technology
            
            
            20.0
                Years
            
            
            2,875
            
            
            -
            
            
            (1,358
            )
            
            1,517Total
            
            
            16.0
                Years
            
            $
            15,749
            
            $
            30
            
            $
            (8,019
            )
            $
            7,760





For
      the
      three months ended March 31, 2008 and 2007, the Company recognized $0.4 million
      and $0.5 million, respectively, of amortization expense related to intangible
      assets. The Company estimates amortization expense to be recognized during
      the
      next five years as follows:





*(Thousands)*For
                the year ending December 31:2008
            
            $
            1,5712009
            
            
            1,2992010
            
            
            1,1552011
            
            
            8472012
            
            
            257


12


9.  Borrowing
      Arrangements





*5.00%
      Convertible Senior Notes due 2036*





On
      August
      18, 2006, the Company issued $75.0 million in aggregate principal amount of
      5.00% Notes due in 2036. The Notes accrue interest at the rate of 5.00% per
      annum which is payable in cash semi-annually in arrears on each February 15
      and
      August 15, which commenced February 15, 2007. The Notes will mature on August
      15, 2036.





The
      Notes
      can be converted under the following circumstances: (1) during any calendar
      quarter (and only during such calendar quarter) commencing after September
      30,
      2006, if the last reported sale price of the Company’s common stock is greater
      than or equal to 120% of the conversion price of the Notes for at least 20
      trading days in the period of 30 consecutive trading days ending on the last
      trading day of the preceding calendar quarter; (2) during the five business
      day
      period after any 10 consecutive trading-day period (the “measurement period”) in
      which the trading price per Note for each day in the measurement period was
      less
      than 103% of the product of the last reported sale price of the Company’s common
      stock and the conversion rate on such day; or (3) upon the occurrence of
      specified corporate transactions described in the Offering Memorandum. On or
      after June 15, 2011, holders may convert their Notes at any time prior to the
      maturity date. Upon conversion, the Company will pay cash and shares of its
      common stock, if any, based on a daily conversion value (as described herein)
      calculated on a proportionate basis for each day of the 25 trading-day
      observation period.





For
      the
      periods ended March 31, 2008 and December 31, 2007, the last reported sale
      price
      of the Company’s common stock was greater than 120% of the conversion price of
      the Notes for at least 20 trading days in the period of 30 consecutive trading
      days ended March 31, 2008 and December 31, 2007. As a result, as of March 31,
      2008 and December 31, 2007, the holders of the Notes have the right to convert
      the Notes into cash and shares of common stock. Although the Company does not
      anticipate that a significant amount of these Notes will be converted, if any,
      as of March 31, 2008, the Company is required to reclassify as a current
      liability, that portion of the Notes that can not be refinanced on a long-term
      basis under the Company’s Credit Facility as provided for by SFAS No. 6,
“Classification of Short-Term Obligations Expected to be Refinanced,” which was
      $65.0 million at March 31, 2008 and December 31, 2007.





The
      initial conversion rate is 196.0784 shares of the Company’s common stock per
      $1,000 principal amount of Notes, equivalent to an initial conversion price
      of
      approximately $5.10 per share of common stock. The conversion rate is subject
      to
      adjustment in some events, including the payment of a dividend on the Company’s
      common stock, but will not be adjusted for accrued interest, including any
      additional interest. In addition, following certain fundamental changes
      (principally related to changes in control) that occur prior to August 15,
      2011,
      the Company will increase the conversion rate for holders who elect to convert
      Notes in connection with such fundamental changes in certain circumstances.
      The
      Company considered EITF 00-27 issue 7 which indicates that if a reset of the
      conversion rate due to a contingent event occurs the Company would need to
      calculate if there is a beneficial conversion and record if applicable. Through
      March 31, 2008, no contingent events have occurred.





The
      Company may not redeem the Notes before August 20, 2011. On or after that date,
      the Company may redeem all or a portion of the Notes at any time. Any redemption
      of the Notes will be for cash at 100% of the principal amount of the Notes
      to be
      redeemed, plus accrued and unpaid interest, including any additional interest,
      to, but excluding, the redemption date.





Holders
      may require the Company to purchase all or a portion of their Notes on each
      of
      August 15, 2011, August 15, 2016, and August 15, 2026. In addition, if the
      Company experiences specified types of fundamental changes, holders may require
      it to purchase the Notes. Any repurchase of the Notes pursuant to these
      provisions will be for cash at a price equal to 100% of the principal amount
      of
      the Notes to be purchased plus any accrued and unpaid interest, including any
      additional interest, to, but excluding, the purchase date.




13


The
      Notes
      are the Company’s senior unsecured obligations, and rank equally in right of
      payment with all of its other existing and future senior indebtedness. The
      Notes
      are guaranteed by certain of the Company’s domestic subsidiaries on a senior
      unsecured basis. The subsidiary guarantees are general unsecured senior
      obligations of the subsidiary guarantors and rank equally in right of payment
      with all of the existing and future senior indebtedness of the subsidiary
      guarantors. If the Company fails to make payment on the Notes, the subsidiary
      guarantors must make them instead. The Notes are effectively subordinated to
      any
      indebtedness of the Company’s non-guarantor subsidiaries. The Notes are
      effectively junior to all of the Company’s existing and future secured
      indebtedness to the extent of the value of the assets securing such
      indebtedness.





The
      Company sold the Notes to the original purchaser at a discount of $3.3 million
      that is being amortized over a period of five years. As of the three months
      ended March 31, 2008, the Company recorded interest expense of $1.1 million,
      of
      which $0.9 million related to the Notes and $0.2 million related to the
      amortization of the discount. The Company incurred issuance costs of $1.5
      million which have been deferred and are being amortized over a five year
      period.





**Credit
      Facility**





The
      Credit Facility permits borrowings in an amount up to $55.0 million and includes
      a separate U.K. sub-facility and a separate Belgian sub-facility. The facility
      permits the total revolving credit commitment to be increased up to
      $75.0 million. The facility matures on May 15, 2011. Availability for
      domestic borrowings under the Credit Facility is based upon the value of
      eligible inventory, accounts receivable and property, plant and equipment,
      with
      separate borrowing bases to be established for foreign borrowings under a
      separate U.K. sub-facility and a separate Belgian sub-facility. Availability
      under the Credit Facility is conditioned upon various customary
      conditions.





The
      Credit Facility is secured by a first perfected security interest in
      substantially all of the Company’s assets, with limitations under certain
      circumstances in the case of capital stock of foreign subsidiaries. Certain
      of
      the Company’s domestic subsidiaries unconditionally guarantee all indebtedness
      and obligations related to domestic borrowings under the Credit Facility. The
      Company and certain of its domestic subsidiaries also unconditionally guarantee
      all indebtedness and obligations under the U.K. sub-facility.




As
      of
      March 31, 2008, the carrying amount of assets pledged as collateral was
      $50.8 million. The carrying amount as of March 31, 2008 for domestic,
      U.K., and Belgian borrowers were $40.1 million, $6.2 million, and
      $4.5 million, respectively. The Credit Facility contains a fixed charge
      coverage ratio covenant which becomes effective when total domestic availability
      falls below $11.0 million. As of March 31, 2008, total availability
      was $32.9 million. Availability as of March 31, 2008 for domestic,
      U.K., and Belgian borrowers was $29.0 million, $3.9 million, and zero,
      respectively. The Company can issue letters of credit up to $20 million of
      the available commitment amount under the Credit Facility. Sub-limits for
      letters of credit under the U.K. sub-facility and the Belgian sub-facility
      are
      $2.0 million and $6.0 million, respectively. Letters of credit
      outstanding at March 31, 2008 totaled $17.9 million.





The
      Credit Facility interest rate is based upon Euro-based (“LIBOR”) rates with
      other interest rate options available. The applicable Euro Dollar margin in
      effect when the Company is in compliance with the terms of the facility ranges
      from 1.25% to 2.25% and is based upon the Company’s overall availability under
      the Credit Facility. The unused commitment fee is equal to 0.375% per annum
      and
      is based upon the unused portion of the revolving commitment.





The
      Credit Facility contains a number of affirmative and negative covenants. For
      the
      quarter ended March 31, 2008, the last reported sale price of the Company’s
      common stock was greater than 120% of the conversion price of the Notes for
      at
      least 20 trading days in the period of 30 consecutive trading days ended March
      31, 2008. As a result, as of March 31, 2008, the holders of the Notes have
      the
      right to convert the Notes into cash and shares of common stock. Although
      currently not anticipated by the Company, the ability of holders of the Notes
      to
      convert is an event of default of the Credit Facility. Included in the Credit
      Facility, is a provision for up to $10.0 million where Notes can be converted
      up
      to that amount and classified as long-term debt as the Company has the ability
      and intent to refinance it under the Credit Facility. The Credit Facility also
      includes a provision for up to $3.0 million of letters of credit under the
      Company’s U.S., Belgium, and UK sub-limits that can be issued having expiration
      dates that are more than one year but not more than three years after the date
      of issuance.




14


The
      negative covenants provide for certain restrictions on possible acts by the
      Company related to matters such as additional indebtedness, certain liens,
      fundamental changes in the business, certain investments or loans, asset sales
      and other customary requirements. The Company was in compliance with all such
      negative covenants as of March 31, 2008.





**Industrial
      Revenue Bonds**


The
      Mississippi Industrial Revenue Bonds totaling $2.9 million at March 31, 2008
      bear interest at a variable rate and mature in May 2009. The interest rate
      as of
      March 31, 2008 was 2.28%. These bonds were issued to finance certain equipment
      acquisitions at the Company’s Pearlington, Mississippi plant.





**Belgian
      Credit Facility**


The
      Company maintains a Belgian credit facility totaling 4.0 million Euros
      which is secured by a U.S. letter of credit. There are no financial covenants,
      and the Company had no outstanding borrowings under the Belgian credit facility
      as of March 31, 2008. Bank guarantees of 0.9 million euros were issued
      as of March 31, 2008. The maturity date of this facility is
      December 15, 2008. Availability under this facility was 3.1 million
      euros at March 31, 2008.





**United
      Kingdom Credit Facilities**


The
      Company maintains a United Kingdom unsecured bonds, guarantees, and indemnities
      facility totaling 616,000 British Pound Sterling. The bank, in its sole
      discretion, may cancel at any time its commitment to provide this facility.
      Bank
      guarantees of 611,924 British Pound Sterling were issued as of March 31,
      2008.





**Chinese
      Credit Facility**


The
      Company maintains a Chinese credit facility totaling 11.0 million RMB or $1.6
      million which is secured by a U.S. letter of credit provided under the Credit
      Facility. There are no financial covenants. The maturity date of this facility
      is December 26, 2008. The facility was fully utilized at March 31,
      2008.





**Fair
      Value of Debt**


At
      March
      31, 2008, the Company had $75.0 million of fixed rate Senior Convertible Notes
      outstanding ($65.0 million classified as current). The fair value of these
      Notes
      at March 31, 2008 was $221.1 million. The increase in value is mainly due to
      the
      increase in the Company’s common stock price and its impact on the conversion
      features of the Notes. The remaining $2.9 million of long-term debt is based
      on
      the prime rates, and accordingly, the carrying value of this obligation
      approximates its fair value.





**Maturities
      of Debt**


The
      Company is obligated to make principal payments on debt outstanding at
      March 31, 2008 of $1.6 million in 2008, $2.9 million in 2009 and
      $75.0 million in 2011. See also the 5.00% Convertible Senior Notes due 2036
      section related to the holders’ optional conversion as of March 31, 2008 and
      December 31, 2007.


15


10.  Pensions





U.S.
      Plans :





For
      U.S.
      plans, the following table provides the components of net periodic pension
      costs
      of the plans for the periods ended March 31, 2008 and 2007:





Three Months Ended March 31Pension
                Benefits (in thousands)
            
            2008
            
            2007Service
                cost
            
            $
            256
            
            $
            322Interest
                cost
            
            
            1,172
            
            
            1,174Expected
                return on plan assets
            
            
            (1,354
            )
            
            (1,229
            )Amortization
                of prior service cost
            
            
            61
            
            
            61Net
                actuarial loss amortization
            
            
            74
            
            
            69Net
                periodic pension cost
            
            $
            209
            
            $
            397





The
      expected long-term rate of return on plan assets is 8.00% in 2008.





Employer
      Contributions





In
      its
      2007 financial statements, the Company disclosed that it expected to contribute
      $3.7 million to its U.S. pension plans in 2008. As of March 31, 2008, the
      Company has contributed $3.6 million. The Company expects to contribute the
      remaining $0.1 million over the remainder of the year.








European
      Plans :





For
      European plans, the following table provides the components of net periodic
      pension costs of the plans for the periods ended March 31, 2008 and
      2007:





Three Months Ended March 31Pension Benefits (in thousands)
            
            2008
            
            2007Service
                cost
            
            $
            203
            
            $
            181Interest
                cost
            
            
            514
            
            
            426Expected
                return on plan assets
            
            
            (387
            )
            
            (320
            )Amortization
                of net transition amount
            
            
            12
            
            
            11Net
                actuarial loss amortization
            
            
            8
            
            
            25Net
                periodic pension cost
            
            $
            350
            
            $
            323





The
      expected long-term rate of return on plan assets ranges from 5.00%  to
      6.90%
      in 2008.





Employer
      Contributions





In
      its
      2007 financial statements, the Company disclosed that it expected to contribute
      $2.5 million to its European pension plans in 2008. As of March 31, 2008, the
      Company contributed $0.5  million.
      The Company expects to contribute the remaining $2.0 million over the remainder
      of the year.





Defined
      Contribution Plans




The
      Company also sponsors a defined contribution pension plan for certain U.S.
      employees that permits employee contributions of up to 50% of eligible
      compensation in accordance with Internal Revenue Service guidance. Under this
      defined contribution plan, the Company makes a fixed contribution of 2% of
      eligible employee compensation on a quarterly basis and matches contributions
      made by each participant in an amount equal to 100% of the employee contribution
      up to a maximum of 2% of employee compensation. In addition, each of these
      employees is eligible for an additional Company contribution of up to 4% of
      employee compensation based upon annual Company performance at the discretion
      of
      the Company’s Board of Directors. Employer matching contributions for
      non-represented employees vest after two years of service. For bargaining unit
      employees at the Catlettsburg, Kentucky facility, the Company contributes a
      maximum of $25.00 per month to the plan. For bargaining unit employees at the
      Columbus, Ohio facility, the Company began making contributions to the USW
      401(k) Plan of $1.15 per actual hour worked for eligible employees when their
      former Barnebey Sutcliffe Employee USWA Local 23.08 401(k) Plan was discontinued
      and their defined benefit pension plan was frozen effective April 30, 2007.
      Employer matching contributions for bargaining unit employees vest immediately.
      Total expenses related to the defined contribution plans were $0.6 million
      and
      $0.5 million for the periods ended March 31, 2008 and 2007,
      respectively.


16


11.
      Earnings Per Share




Computation
      of basic and diluted net income per common share from operations is performed
      as
      follows:




Three Months Ended March 31,*(Dollars in thousands, except per share amounts)*
            
            2008
            
            2007Income
                from operations available to common shareholders
            
            $
            10,874
            
            $
            2,034Weighted
                Average Shares OutstandingBasic
            
            
            40,240,397
            
            
            40,224,585Effect
                of Dilutive Securities
            
            
            11,515,723
            
            
            2,436,040Diluted
            
            
            51,756,120
            
            
            42,660,625Net
                incomeBasic
            
            $
            0.27
            
            $
            0.05Diluted
            
            $
            0.21
            
            $
            0.05





For
      the
      three months ended March 31, 2008 and 2007, there were 80,625 and 1,457,468
      of
      stock options that were excluded from the dilutive calculations as the effect
      would have been antidilutive.





The
      Company’s obligation under its Notes is to settle the par value of the Notes in
      cash and to settle the amount in excess of par value in its common shares.
      Therefore, the Company is not required to include any shares underlying the
      Notes in its diluted weighted average shares outstanding until the average
      stock
      price per share for the quarter exceeds the $5.10 conversion price. At such
      time, only the number of shares that would be issuable (under the “treasury
      stock” method of accounting for share dilution) will be included, which is based
      upon the amount by which the average stock price exceeds the conversion price.
      For the first $0.50 per share that the Company’s average stock price exceeds the
      $5.10 conversion price of the Notes, it will include approximately 1,300,000
      additional shares in its diluted share count. For the second $0.50 per share
      that the Company’s average stock price exceeds the $5.10 conversion price, it
      will include approximately 1,100,000 additional shares, for a total of
      approximately 2,400,000 shares in its diluted share count, and so on, with
      the
      additional shares’ dilution decreasing for each $1 per share that the Company’s
      average stock price exceeds $5.10 if the stock price rises further above $5.10
      (see table below). As of March 31, 2008, the average stock price for the 90-day
      trading period was $15.90, which was higher than the conversion price of $5.10
      therefore 9,988,899 shares were included in the dilutive share calculation
      for
      the period of time the Notes were outstanding for the quarter ended March 31,
      2008.


17





**"Treasury
                Stock" Method of Accounting for Share Dilution****Conversion
                Price:**
            
            
            
            
            
            
            
            
            
            
            $
            5.10**Number
                of underlying shares:**
            
            
            
            
            
            
            
            
            
            
            
            14,705,880**Principal
                Amount:**
            
            
            
            
            
            
            
            
            
            
            $
            75,000,000**Formula:**Number
                of extra dilutive shares created****=((Stock
                Price * Underlying Shares) - Principal)/Stock
                Price**Condition:**Only
                applies when share price exceeds $5.10




Stock
                Price
              
              Conversion
                Price
              
              Price
                Difference
              
              Included
                  in
                Share
                Count
              
              Share
                  Dilution
                Per
                  $1.00 Share
                Price
                  Difference$
              5.10
              
              $
              5.10
              
              $
              0.00
              
              
              -
              
              
              -$
              5.60
              
              $
              5.10
              
              $
              0.50
              
              
              1,313,023
              
              
              2,626,046$
              6.10
              
              $
              5.10
              
              $
              1.00
              
              
              2,410,798
              
              
              2,410,798$
              7.10
              
              $
              5.10
              
              $
              2.00
              
              
              4,142,500
              
              
              2,071,250$
              8.10
              
              $
              5.10
              
              $
              3.00
              
              
              5,446,621
              
              
              1,815,540$
              9.10
              
              $
              5.10
              
              $
              4.00
              
              
              6,464,122
              
              
              1,616,031$
              10.10
              
              $
              5.10
              
              $
              5.00
              
              
              7,280,137
              
              
              1,456,027$
              11.10
              
              $
              5.10
              
              $
              6.00
              
              
              7,949,123
              
              
              1,324,854$
              12.10
              
              $
              5.10
              
              $
              7.00
              
              
              8,507,533
              
              
              1,215,362$
              13.10
              
              $
              5.10
              
              $
              8.00
              
              
              8,980,689
              
              
              1,122,586$
              14.10
              
              $
              5.10
              
              $
              9.00
              
              
              9,386,731
              
              
              1,042,970$
              15.10
              
              $
              5.10
              
              $
              10.00
              
              
              9,738,993
              
              
              973,899$
              16.10
              
              $
              5.10
              
              $
              11.00
              
              
              10,047,495
              
              
              913,409$
              17.10
              
              $
              5.10
              
              $
              12.00
              
              
              10,319,915
              
              
              859,993$
              18.10
              
              $
              5.10
              
              $
              13.00
              
              
              10,562,234
              
              
              812,480$
              19.10
              
              $
              5.10
              
              $
              14.00
              
              
              10,779,178
              
              
              769,941$
              20.10
              
              $
              5.10
              
              $
              15.00
              
              
              10,974,537
              
              
              731,636





12.
            Other
                Financial Information





As
      described in Note 9, the Company has issued $75.0 million in aggregate principal
      amount of 5.00% Convertible Senior Notes due in 2036. The Notes are fully and
      unconditionally guaranteed by certain of our domestic subsidiaries on a senior
      unsecured basis. All of the subsidiary guarantors are 100% owned by the parent
      company and the guarantees are joint and several. The Subsidiary Guarantees
      are
      general unsecured senior obligations of the Subsidiary Guarantors and rank
      equally in right of payment with all of the existing and future senior
      indebtedness of the Subsidiary Guarantors. If the Company fails to make payment
      on the Notes, the Subsidiary Guarantors must make them instead. The Notes are
      effectively subordinated to any indebtedness of the Company’s non-guarantor
      subsidiaries. The Notes are effectively junior to all of the Company’s existing
      and future secured indebtedness to the extent of the value of the assets
      securing such indebtedness.





Condensed
      consolidating unaudited financial information for Calgon Carbon Corporation
      (issuer); Calgon Carbon Investments Inc., Chemviron Carbon Ltd., Waterlink
      (UK)
      Holdings Ltd., Sutcliffe Speakman Ltd., Lakeland Processing Ltd., Charcoal
      Cloth
      (International) Ltd., BSC Columbus LLC, and CCC Columbus LLC (guarantor
      subsidiaries); and the non-guarantor subsidiaries are as
      follows:


18






Condensed
                Consolidating Statements of Operations
              Three
                months ended March 31, 2008Issuer
            
            Guarantor Subsidiaries
            
            Non-Guarantor
              Subsidiaries
            
            Consolidating
              and Eliminating Entries
            
            ConsolidatedNet
                sales
            
            $
            80,559
            
            $
            11,294
            
            $
            10,968
            
            $
            (12,490
            )
            $
            90,331Cost
                of products sold
            
            
            56,457
            
            
            8,337
            
            
            9,461
            
            
            (12,490
            )
            
            61,765Depreciation
                and amortization
            
            
            3,404
            
            
            341
            
            
            181
            
            
            -
            
            
            3,926Selling,
                general and administrative expenses
            
            
            12,920
            
            
            1,238
            
            
            1,042
            
            
            -
            
            
            15,200Research
                and development expense
            
            
            992
            
            
            99
            
            
            -
            
            
            -
            
            
            1,091Gain
                on AST Settlement
            
            
            (9,250
            )
            
            -
            
            
            -
            
            
            -
            
            
            (9,250
            )Results
                of affiliates’ operations
            
            
            5,146
            
            
            555
            
            
            -
            
            
            (5,701
            )
            
            -Interest
                (income) expense -net
            
            
            4,537
            
            
            (3,505
            )
            
            (193
            )
            
            -
            
            
            839Other
                (income) expense - net
            
            
            (114
            )
            
            195
            
            
            9
            
            
            -
            
            
            90Provision
                for income taxes
            
            
            5,885
            
            
            276
            
            
            73
            
            
            -
            
            
            6,234Equity
                in income from equity investments
            
            
            -
            
            
            -
            
            
            436
            
            
            2
            
            
            438Net
                income (loss)
            
            $
            10,874
            
            $
            4,868
            
            $
            831
            
            $
            (
                5,699
            )
            $
            10,874




Condensed
                Consolidating Statements of OperationsThree
                months ended March 31, 2007Issuer
            
            Guarantor
              Subsidiaries
            
            Non-Guarantor
              Subsidiaries
            
            Consolidating and
              Eliminating Entries
            
            ConsolidatedNet
                sales
            
            $
            71,860
            
            $
            11,887
            
            $
            12,313
            
            $
            (13,030
            )
            $
            83,030Cost
                of products sold
            
            
            52,715
            
            
            9,695
            
            
            9,044
            
            
            (13,030
            )
            
            58,424Depreciation
                and amortization
            
            
            3,427
            
            
            277
            
            
            557
            
            
            -
            
            
            4,261Selling,
                general and administrative expenses
            
            
            12,592
            
            
            1,305
            
            
            709
            
            
            -
            
            
            14,606Research
                and development expense
            
            
            736
            
            
            92
            
            
            -
            
            
            -
            
            
            828Interest
                (income) expense - net
            
            
            5,276
            
            
            (3,896
            )
            
            (232
            )
            
            -
            
            
            1,148Other
                (income) expense - net
            
            
            330
            
            
            235
            
            
            (162
            )
            
            -
            
            
            403Provision
                for income taxes
            
            
            1,609
            
            
            69
            
            
            702
            
            
            -
            
            
            2,380Results
                of affiliates’ operations
            
            
            6,859
            
            
            903
            
            
            -
            
            
            (7,762
            )
            
            -Equity
                in income from equity investments
            
            
            -
            
            
            -
            
            
            1,049
            
            
            5
            
            
            1,054Net
                income (loss)
            
            $
            2,034
            
            $
            5,013
            
            $
            2,744
            
            $
            (7,757
            )
            $
            2,034




19




Condensed
                Consolidating Balance Sheets
              March
                31, 2008Issuer
            
            Guarantor Subsidiaries
            
            Non-Guarantor
              Subsidiaries
            
            Consolidating and
              Eliminating
              Entries
            
            ConsolidatedCash
                and cash equivalents
            
            $
            22,741
            
            $
            4,141
            
            $
            8,253
            
            $
            -
            
            $
            35,135Receivables
            
            
            47,661
            
            
            14,246
            
            
            4,823
            
            
            (8,206
            )
            
            58,524Inventories
            
            
            69,453
            
            
            7,576
            
            
            6,699
            
            
            33
            
            
            83,761Other
                current assets
            
            
            17,073
            
            
            1,390
            
            
            1,198
            
            
            -
            
            
            19,661Total
                current assets
            
            
            156,928
            
            
            27,353
            
            
            20,973
            
            
            (8,173
            )
            
            197,081Intercompany
                accounts receivable
            
            
            53,657
            
            
            181,671
            
            
            4,088
            
            
            (239,416
            )
            
            -Property,
                plant and equipment, net
            
            
            95,792
            
            
            7,229
            
            
            7,807
            
            
            -
            
            
            110,828Intangibles
            
            
            4,312
            
            
            3,054
            
            
            -
            
            
            -
            
            
            7,366Goodwill
            
            
            16,674
            
            
            8,346
            
            
            2,764
            
            
            -
            
            
            27,784Equity
                investments
            
            
            252,964
            
            
            102,723
            
            
            9,523
            
            
            (356,240
            )
            
            8,970Other
                assets
            
            
            4,308
            
            
            1,345
            
            
            2,719
            
            
            -
            
            
            8,372Total
                assets
            
            $
            584,635
            
            $
            331,721
            
            $
            47,874
            
            $
            (603,829
            )
            $
            360,401Short-term
                debt
            
            $
            -
            
            $
            -
            
            $
            1,566
            
            $
            -
            
            $
            1,566Current
                portion of long-term debt
            
            
            62,662
            
            
            -
            
            
            -
            
            
            -
            
            
            62,662Accounts
                payable
            
            
            32,026
            
            
            18,832
            
            
            3,712
            
            
            (13,577
            )
            
            40,993Other
                current liabilities
            
            
            26,503
            
            
            427
            
            
            (13,849
            )
            
            (1,823
            )
            
            11,258Total
                current liabilities
            
            
            121,191
            
            
            19,259
            
            
            (8,571
            )
            
            (15,400
            )
            
            116,479Intercompany
                accounts payable
            
            
            172,452
            
            
            49,678
            
            
            10,208
            
            
            (232,338
            )
            
            -Long-term
                debt
            
            
            12,925
            
            
            -
            
            
            -
            
            
            -
            
            
            12,925Other
                non-current liabilities
            
            
            89,197
            
            
            8,798
            
            
            12,380
            
            
            (68,248
            )
            
            42,127Shareholders'
                equity
            
            
            188,870
            
            
            253,986
            
            
            33,857
            
            
            (287,843
            )
            
            188,870Total
                liabilities and shareholders' equity
            
            $
            584,635
            
            $
            331,721
            
            $
            47,874
            
            $
            (603,829
            )
            $
            360,401


20




Condensed
                Consolidating Balance Sheets
              December
                31, 2007Issuer
            
            Guarantor Subsidiaries
            
            Non-Guarantor
              Subsidiaries
            
            Consolidating and
              Eliminating
              Entries
            
            ConsolidatedCash
                and Cash Equivalents
            
            $
            20,802
            
            $
            3,683
            
            $
            25,930
            
            $
            (20,111
            )
            $
            30,304Receivables
            
            
            47,184
            
            
            15,259
            
            
            5,004
            
            
            (9,899
            )
            
            57,548Inventories
            
            
            67,501
            
            
            8,221
            
            
            5,525
            
            
            33
            
            
            81,280Other
                current assets
            
            
            18,015
            
            
            1,334
            
            
            1,197
            
            
            -
            
            
            20,546Total
                current assets
            
            
            153,502
            
            
            28,497
            
            
            37,656
            
            
            (29,977
            )
            
            189,678Intercompany
                accounts receivable
            
            
            57,071
            
            
            175,462
            
            
            2,138
            
            
            (234,671
            )
            
            -Property,
                plant, and equipment, net
            
            
            90,435
            
            
            7,263
            
            
            7,814
            
            
            -
            
            
            105,512Intangibles
            
            
            4,586
            
            
            3,174
            
            
            -
            
            
            -
            
            
            7,760Goodwill
            
            
            16,674
            
            
            8,337
            
            
            2,834
            
            
            -
            
            
            27,845Equity
                investments
            
            
            246,633
            
            
            102,187
            
            
            9,151
            
            
            (349,378
            )
            
            8,593Other
                assets
            
            
            4,908
            
            
            1,313
            
            
            2,531
            
            
            -
            
            
            8,752Total
                assets
            
            $
            573,809
            
            $
            326,233
            
            $
            62,124
            
            $
            (614,026
            )
            $
            348,140Short-term
                debt
            
            $
            -
            
            $
            -
            
            $
            1,504
            
            $
            -
            
            $
            1,504Current
                portion of long-term debt
            
            
            62,507
            
            
            -
            
            
            -
            
            
            -
            
            
            62,507Accounts
                payable
            
            
            33,424
            
            
            19,914
            
            
            3,417
            
            
            (13,592
            )
            
            43,163Other
                current liabilities
            
            
            33,219
            
            
            299
            
            
            2,592
            
            
            (23,523
            )
            
            12,587Total
                current liabilities
            
            
            129,150
            
            
            20,213
            
            
            7,513
            
            
            (37,115
            )
            
            119,761Intercompany
                accounts payable
            
            
            168,342
            
            
            48,144
            
            
            11,079
            
            
            (227,565
            )
            
            -Long-term
                debt
            
            
            12,925
            
            
            -
            
            
            -
            
            
            -
            
            
            12,925Other
                non-current liabilities
            
            
            91,143
            
            
            8,782
            
            
            11,350
            
            
            (68,070
            )
            
            43,205Shareholders'
                equity
            
            
            172,249
            
            
            249,094
            
            
            32,182
            
            
            (281,276
            )
            
            172,249Total
                liabilities and shareholders' equity
            
            $
            573,809
            
            $
            326,233
            
            $
            62,124
            
            $
            (614,026
            )
            $
            348,140


21




Condensed
                Consolidating Statements of Cash FlowsThree
                months ended March 31, 2008Issuer
            
            Guarantor Subsidiaries
            
            Non-Guarantor
              Subsidiaries
            
            Consolidating and
              Eliminating
              Entries
            
            ConsolidatedNet
                cash provided by (used in) operating activities
            
            $
            4,561
            
            $
            5,578
            
            $
            (1,859
            )
            $
            1,528
            
            $
            9,808Investing
                activities:Property,
                plant and equipment expenditures
            
            
            (6,400
            )
            
            (163
            )
            
            (54
            )
            
            -
            
            
            (6,617
            )Investment
                from (in) affiliates
            
            
            -
            
            
            (22
            )
            
            22
            
            
            -
            
            
            -Other
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                cash used in investing activities
            
            
            (6,400
            )
            
            (185
            )
            
            (32
            )
            
            -
            
            
            (6,617
            )Financing
                activities:Net
                borrowings (repayments)
            
            
            (5,602
            )
            
            -
            
            
            (14,509
            )
            
            20,111
            
            
            -Intercompany
                and equity transactions
            
            
            7,506
            
            
            (4,675
            )
            
            (2,831
            )
            
            -
            
            
            -Other
            
            
            1,103
            
            
            -
            
            
            -
            
            
            -
            
            
            1,103Excess
                Tax benefit for stock-based compensation
            
            
            742
            
            
            -
            
            
            -
            
            
            -
            
            
            742Net
                cash provided by (used in) financing activities
            
            
            3,749
            
            
            (4,675
            )
            
            (17,340
            )
            
            20,111
            
            
            1,845Effect
                of exchange rate changes on cash and cash equivalents
            
            
            28
            
            
            (259
            )
            
            1,554
            
            
            (1,528
            )
            
            (205
            )Increase
                (decrease) in cash and cash equivalents
            
            
            1,938
            
            
            459
            
            
            (17,677
            )
            
            20,111
            
            
            4,831Cash
                and cash equivalents, beginning of period
            
            
            20,803
            
            
            3,682
            
            
            25,930
            
            
            (20,111
            )
            
            30,304Cash
                and cash equivalents, end of period
            
            $
            22,741
            
            $
            4,141
            
            $
            8,253
            
            $
            -
            
            $
            35,135




Condensed
                Consolidating Statements of Cash FlowsThree
                months ended March 31, 2007Issuer
            
            Guarantor Subsidiaries
            
            Non-Guarantor Subsidiaries
            
            Consolidating and Eliminating Entries
            
            ConsolidatedNet
                cash (used in) provided by operating activities
            
            $
            (4,087
            )
            $
            3,491
            
            $
            2,967
            
            $
            1,052
            
            $
            3,423Investing
                activities:Property,
                plant and equipment expenditures
            
            
            (1,656
            )
            
            (128
            )
            
            (181
            )
            
            -
            
            
            (1,965
            )Investment
                from (in) affiliates
            
            
            -
            
            
            (60
            )
            
            61
            
            
            (1
            )
            
            -Other
            
            
            147
            
            
            -
            
            
            -
            
            
            -
            
            
            147Net
                cash used in investing activities
            
            
            (1,509
            )
            
            (188
            )
            
            (120
            )
            
            (1
            )
            
            (1,818
            )Financing
                activities:Net
                borrowings (repayments)
            
            
            4,871
            
            
            -
            
            
            931
            
            
            (4,753
            )
            
            1,049Intercompany
                and equity transactions
            
            
            4,687
            
            
            (3,739
            )
            
            (1,837
            )
            
            889
            
            
            -Other
            
            
            (74
            )
            
            (1
            )
            
            -
            
            
            1
            
            
            (74
            )Net
                cash provided by (used in) financing activities
            
            
            9,484
            
            
            (3,740
            )
            
            (906
            )
            
            (3,863
            )
            
            975Effect
                of exchange rate changes on cash and cash equivalents
            
            
            1,508
            
            
            44
            
            
            182
            
            
            (1,047
            )
            
            687Increase
                (decrease) in cash and cash equivalents
            
            
            5,396
            
            
            (393
            )
            
            2,123
            
            
            (3,859
            )
            
            3,267Cash
                and cash equivalents, beginning of period
            
            
            -
            
            
            2,507
            
            
            19,556
            
            
            (16,432
            )
            
            5,631Cash
                and cash equivalents, end of period
            
            $
            5,396
            
            $
            2,114
            
            $
            21,679
            
            $
            (20,291
            )
            $
            8,898




22





13.
      Related Party Transactions





Net
      sales
      to related parties and receivables from related parties primarily reflect sales
      of activated carbon products to equity investees. Generally, transactions are
      conducted under long-term contractual arrangements. Related party sales
      transactions were $2.9 million and $2.0 million for the three months ended
      March
      31, 2008 and 2007, respectively. Receivables from equity investees amounted
      to
      $2.2 million and $2.4 million at March 31, 2008 and December 31, 2007,
      respectively. The Company’s equity investees are included in the Activated
      Carbon and Service segment.





14.  Income
      Taxes





On
      January 1, 2007, the Company adopted the provisions of Financial Accounting
      Standards Board ("FASB") Interpretation No. 48 ("FIN 48"), "Accounting for
      Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109,
      Accounting for Income Taxes". FIN 48 clarifies the accounting for uncertainty
      in
      income taxes recognized in an enterprise’s financial statements and prescribes a
      recognition threshold and measurement attribute for the financial statement
      recognition and measurement of a tax position taken or expected to be taken
      in a
      tax return. As a result of the adoption of FIN 48 and recognition of the
      cumulative effect of adoption of a new accounting principle, the Company
      recorded a $5.7 million increase in the gross unrecognized income tax benefits
      and a decrease in retained earnings of $4.3 million. In conjunction with the
      adoption of FIN 48, the Company has classified uncertain tax positions as
      non-current income tax liabilities unless the amount is expected to be paid
      within one year.





As
      of
      March 31, 2008 and December 31, 2007, the Company’s gross unrecognized income
      tax benefits were $12.8 million and $12.0 million, respectively. If recognized,
      $10.3 million and $10.0 million of the gross unrecognized tax benefits would
      affect the effective tax rate at March 31, 2008 and December 31, 2007,
      respectively.





15.
      Fair
      Value Measurements





Effective
      January 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements,”
for all financial instruments accounted for at fair value on a recurring and
      non-recurring basis. In February 2008, the FASB issued FASB Staff Position
      No.
      157-2 providing for a one year deferral of the provisions of SFAS No. 157 for
      non-financial assets and liabilities which are recognized or disclosed at fair
      value in the consolidated financial statements on a non-recurring basis. The
      Company is currently evaluating the impact of the provisions of SFAS No. 157
      on
      its non-financial assets and liabilities. SFAS No.157 defines fair value,
      establishes a framework for measuring fair value, and expands disclosures about
      fair value measurements. The fair value hierarchy for disclosure of fair value
      measurements under SFAS No. 157 is as follows:





·
            **Level
                1 -**Quoted
                prices (unadjusted) in active markets for identical assets or
                liabilities;


·
            **Level
                2**-Inputs,
                other than the quoted prices in active markets, that are observable
                either
                directly or indirectly; and


·
            **Level
                3**-Unobservable
                inputs that reflect the reporting entity’s own
                assumptions.





The
      following table summarizes assets and liabilities measured at fair value on
      a
      recurring basis at March 31, 2008, as required by SFAS No. 157:




(Thousands)
            
            Level
                1
            
            Level
                2
            
            Level
                3**Assets**Natural
                gas derivatives
            
            $
            -
            
            $
            1,220
            
            $
            -**Liabilities**Derivatives
            
            $
            -
            
            $
            615
            
            $
            -




23





The
      Company’s corporate and foreign subsidiaries use foreign currency forward
      exchange contracts, foreign currency option contracts, and a foreign currency
      swap to limit the exposure of exchange rate fluctuations on certain foreign
      currency receivables, payables, and other known and forecasted transactional
      exposures for periods consistent with the expected cash flow of the underlying
      transactions. The contracts generally mature within eighteen months and are
      designed to limit exposure to exchange rate fluctuations. The Company uses
      cash
      flow hedges to limit the exposure to changes in natural gas prices. The
      contracts generally mature within one to thirty-six months.





16.  New
      Accounting Pronouncements





In
      December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
      Combinations” (“SFAS No.141(R)”), which replaces SFAS No. 141, “Business
      Combinations.” SFAS No. 141(R) retains the underlying concepts of SFAS
      No. 141 in that all business combinations are still required to be
      accounted for at fair value under the acquisition method of accounting, but
      SFAS
      No. 141(R) changes the method of applying the acquisition method in a
      number of significant aspects. Acquisition costs will generally be expensed
      as
      incurred; noncontrolling interests will be valued at fair value at the
      acquisition date; in-process research and development will be recorded at fair
      value as an indefinite-lived intangible asset at the acquisition date;
      restructuring costs associated with a business combination will generally be
      expensed subsequent to the acquisition date; and changes in deferred tax asset
      valuation allowances and income tax uncertainties after the acquisition date
      generally will affect income tax expense. SFAS No. 141(R) is effective on a
      prospective basis for all business combinations for which the acquisition date
      is on or after the beginning of the first annual period subsequent to
      December 15, 2008, with an exception related to the accounting for
      valuation allowances on deferred taxes and acquired contingencies related to
      acquisitions completed before the effective date. SFAS No. 141(R) amends
      SFAS No. 109 to require adjustments, made after the effective date of this
      statement, to valuation allowances for acquired deferred tax assets and income
      tax positions to be recognized as income tax expense. Beginning January 1,
      2009,
      the Company will apply the provisions of SFAS No. 141(R) to its accounting
      for
      applicable business combinations.





In
      December 2007, the FASB issued SFAS No. 160 (“SFAS No. 160”),
“Noncontrolling Interests in Consolidated Financial Statements.” SFAS No. 160
      changes the classification of noncontrolling (minority) interests on the
      balance sheet and the accounting for and reporting of transactions between
      the
      reporting entity and holders of such noncontrolling interests. Under the new
      standard, noncontrolling interests are considered equity and are to be reported
      as an element of stockholders’ equity rather than outside of equity in the
      balance sheet. In addition, the current practice of reporting minority interest
      expense or benefit also will change. Under the new standard, net income will
      encompass the total income before minority interest expense. The income
      statement will include separate disclosure of the attribution of income between
      the controlling and noncontrolling interests. Increases and decreases in the
      noncontrolling ownership interest amount are accounted for as equity
      transactions. SFAS No. 160 is effective for fiscal years beginning after
      December 15, 2008 and earlier application is prohibited. Upon adoption, the
      balance sheet and the income statement should be recast retrospectively for
      the
      presentation of noncontrolling interests. The other accounting provisions of
      the
      statement are required to be adopted prospectively. The Company will adopt
      SFAS
      No. 160 as required and expects that the adoption will not have a material
      impact on its financial position or results of operations.





In
      March
      2008, the FASB issue SFAS No. 161, “Disclosures about Derivative Instruments and
      Hedging Activities,” which changes the disclosure requirements for derivative
      instruments and hedging activities. SFAS No. 161 requires enhanced disclosures
      about (a) how and why an entity uses derivative instruments, (b) how derivative
      instruments and related hedging items are accounted for under SFAS No. 133,
      “Accounting for Derivative Instruments and Hedging Activities” and its related
      interpretations, and (c) how derivative instruments and related hedged items
      affect an entity’s financial position, financial performance, and cash flows.
      This statement’s disclosure requirements are effective for fiscal years and
      interim periods beginning after November 15, 2008. The Company is currently
      evaluating the effects that SFAS No. 161 may have on its consolidated financial
      statement disclosures.


24


Item
      2 .  Management’s
      Discussion and Analysis of Results of


Operations
      and Financial Condition





This
      discussion should be read in connection with the information contained in the
      Unaudited Condensed Consolidated Financial Statements and Notes to the Unaudited
      Condensed Financial Statements.





Results
      of Operations





Consolidated
      net sales increased by $7.3 million or 8.8% for the quarter ended March 31,
      2008
      versus the quarter ended March 31, 2007.  Net
      sales
      for the quarter ended March 31, 2008 for the Activated Carbon and Service
      segment increased $8.2 million or 12.0% versus the similar 2007
      period.  The
      increase was primarily due to higher demand and price in the food, environmental
      water treatment, and specialty carbon markets of $3.4 million, $2.8 million,
      and
      $2.1 million, respectively. Higher demand in the environmental air treatment
      and
      metals recovery markets also contributed to the increase. Foreign currency
      translation had a positive impact of $2.5 million. Net sales for the Equipment
      segment decreased $1.3 million or 11.6% in the first quarter 2008 versus the
      comparable 2007 period.  The
      decrease was primarily due to lower demand for ion exchange systems, which
      was
      partially offset by an increase in demand for ultra violet light systems.
      Foreign currency translation also had a positive impact of $0.1 million. Net
      sales for the quarter ended March 31, 2008 for the Consumer segment increased
      by
      $0.4 million or 10.5% versus the quarter ended March 31, 2007.  The
      increase was primarily attributable to higher demand for PreZerve® products and
      activated carbon cloth as well as the positive impact of foreign currency
      translation of $0.1 million. The total positive impact of foreign currency
      translation on consolidated net sales for the quarter ended March 31, 2008
      was
      $2.7 million.





Net
      sales
      less cost of products sold, as a percentage of net sales, was 31.6% for the
      quarter ended March 31, 2008 compared to 29.6% for the similar 2007 period,
      a
      2.0% increase. The increase was in the Activated Carbon and Service segment
      which was primarily related to volume and higher prices for certain activated
      carbon and service products. Both the Equipment and Consumer segments were
      comparable for the quarter ended March 31, 2008 versus the similar 2007 period.
      The Company’s cost of products sold excludes depreciation; therefore it may not
      be comparable to that of other companies.





The
      depreciation and amortization decrease of $0.3 million during the quarter ended
      March 31, 2008 versus the quarter ended March 31, 2007  was
      primarily due to decreased depreciation due to an increase in fully depreciated
      fixed assets.




Selling,
      general and administrative expenses increased $0.6 million for the quarter
      ended
      March 31, 2008 versus the comparable 2007 quarter. The increase was primarily
      due to the positive effect of the settlement with Trojan Technologies regarding
      the Company’s Canadian UV patent that occurred in the 2007 period partially
      offset by a decrease in bad debt expense.





Research
      and development expenses for the quarter ended March 31, 2008 increased $0.3
      million versus the similar 2007 period primarily due to an increase in
      laboratory testing services.





The
      $9.3
      million gain on AST settlement for the quarter ended March 31, 2008 relates
      to
      the resolution of a lawsuit involving the Company’s purchase of the common stock
      of Advanced Separation Technologies Inc. (“AST”) in 1996 (See Note 7). Of the
      settlement amount, approximately $5.3 million was recorded in the Activated
      Carbon and Service segment and $4.0 million was recorded in the Equipment
      segment.





Other
      expense for the quarter ended March 31, 2008 decreased $0.3 million as compared
      to March 31, 2007. The decrease is primarily due to the favorable impact of
      foreign exchange on unhedged positions.




Interest
      expense, net of interest income, for the quarter ended March 31, 2008 decreased
      $0.3 million versus the quarter ended March 31, 2007. The decrease is primarily
      a result of the effect of capitalized interest for the 2008 period due to
      increased capital spending as well as the penalty interest related to the
      Company’s Senior Convertible Notes that occurred in the 2007
      period.





The
      income tax provision increased $3.9 million for the quarter ended March 31,
      2008
      versus the quarter ended March 31, 2007. The increase was primarily due to an
      increase in income from operations before income tax and equity in income from
      equity investments of $13.3 million.


25





The
      effective tax rate for the quarter ended March 31, 2008 was 37.4% compared
      to
      70.8% for the quarter ended March 31, 2007. The quarter ended March 31, 2008
      tax
      rate was higher than the statutory Federal income tax rate mainly due to
      permanent items and state income taxes. The effective tax rate for the quarter
      ended March 31, 2007 was adversely impacted by several factors including income
      in certain foreign jurisdictions whose statutory tax rates exceeded the United
      States statutory rate, the absence of a full benefit from foreign tax credits
      in
      the United States due to an overall foreign loss as well as income generated
      by
      the Company’s Japanese joint venture.





During
      the preparation of its effective tax rate, the Company uses an annualized
      estimate of pre-tax earnings. Throughout the year this annualized estimate
      may
      change based on actual results and annual earnings estimate revisions. Because
      the Company’s permanent tax benefits are relatively constant, changes in the
      annualized estimate may have a significant impact on the effective tax rate
      in
      future periods.





The
      Company provides an estimate for income taxes based on an evaluation of the
      underlying accounts, its tax filing positions and interpretations of existing
      law. Changes in estimates are reflected in the year of settlement or expiration
      of the statute of limitations. Under FIN 48, the Company must recognize the
      tax
      benefit from an uncertain tax position only if it is more likely than not that
      the tax position will be sustained on examination by the taxing authorities,
      based on the technical merits of the position. The tax benefits recognized
      in
      the financial statements from such a position are measured based on the largest
      benefit that has a greater than fifty percent likelihood of being realized
      upon
      ultimate resolution.





Equity
      in
      income from equity investments for the quarter ended March 31, 2008 decreased
      $0.6 million versus the similar 2007 period. The decrease was primarily due
      to
      higher product costs realized in 2008.





Financial
      Condition





Working
      Capital and Liquidity





Cash
      flows provided by operating activities were $9.8 million for the period ended
      March 31, 2008 compared to $3.4 million for the comparable 2007 period. The
      $6.4
      million increase is primarily due to improved earnings of $8.8 million ($5.7
      million, net of tax, from the AST settlement (See Note 7)) and favorable
      operating working capital (exclusive of debt) partially offset by increased
      pension contributions.





Common
      stock dividends were not paid during the quarters ended March 31, 2008 and
      2007,
      respectively.




Total
      debt at March 31, 2008 was $77.2 million, an increase of $0.2 million from
      December 31, 2007. The increase was primarily the result of the effect of
      foreign exchange related to the Company’s short-term debt as well as the
      decrease in the debt discount related to the Senior Convertible Notes.





*5.00%
      Convertible Senior Notes due 2036*





On
      August
      18, 2006, the Company issued $75.0 million in aggregate principal amount of
      5.00% Notes due in 2036. The Notes accrue interest at the rate of 5.00% per
      annum which is payable in cash semi-annually in arrears on each February 15
      and
      August 15, which commenced February 15, 2007. The Notes will mature on August
      15, 2036.





The
      Notes
      can be converted under the following circumstances: (1) during any calendar
      quarter (and only during such calendar quarter) commencing after September
      30,
      2006, if the last reported sale price of the Company’s common stock is greater
      than or equal to 120% of the conversion price of the Notes for at least 20
      trading days in the period of 30 consecutive trading days ending on the last
      trading day of the preceding calendar quarter; (2) during the five business
      day
      period after any 10 consecutive trading-day period (the “measurement period”) in
      which the trading price per Note for each day in the measurement period was
      less
      than 103% of the product of the last reported sale price of the Company’s common
      stock and the conversion rate on such day; or (3) upon the occurrence of
      specified corporate transactions described in the Offering Memorandum. On or
      after June 15, 2011, holders may convert their Notes at any time prior to the
      maturity date. Upon conversion, the Company will pay cash and shares of its
      common stock, if any, based on a daily conversion value (as described herein)
      calculated on a proportionate basis for each day of the 25 trading-day
      observation period.


26





For
      the
      periods ended March 31, 2008 and December 31, 2007, the last reported sale
      price
      of the Company’s common stock was greater than 120% of the conversion price of
      the Notes for at least 20 trading days in the period of 30 consecutive trading
      days ended March 31, 2008 and December 31, 2007. As a result, as of March 31,
      2008 and December 31, 2007, the holders of the Notes have the right to convert
      the Notes into cash and shares of common stock. Although the Company does not
      anticipate that a significant amount of these Notes will be converted, if any,
      as of March 31, 2008, the Company is required to reclassify as a current
      liability, that portion of the Notes that can not be refinanced on a long-term
      basis under the Company’s Credit Facility as provided for by SFAS No. 6,
“Classification of Short-Term Obligations Expected to be Refinanced,” which was
      $65.0 million at March 31, 2008 and December 31, 2007.





The
      initial conversion rate is 196.0784 shares of the Company’s common stock per
      $1,000 principal amount of Notes, equivalent to an initial conversion price
      of
      approximately $5.10 per share of common stock. The conversion rate is subject
      to
      adjustment in some events, including the payment of a dividend on the Company’s
      common stock, but will not be adjusted for accrued interest, including any
      additional interest. In addition, following certain fundamental changes
      (principally related to changes in control) that occur prior to August 15,
      2011,
      the Company will increase the conversion rate for holders who elect to convert
      Notes in connection with such fundamental changes in certain circumstances.
      The
      Company considered EITF 00-27 issue 7 which indicates that if a reset of the
      conversion rate due to a contingent event occurs the Company would need to
      calculate if there is a beneficial conversion and record if applicable. Through
      March 31, 2008, no contingent events have occurred.





The
      Company may not redeem the Notes before August 20, 2011. On or after that date,
      the Company may redeem all or a portion of the Notes at any time. Any redemption
      of the Notes will be for cash at 100% of the principal amount of the Notes
      to be
      redeemed, plus accrued and unpaid interest, including any additional interest,
      to, but excluding, the redemption date.





Holders
      may require the Company to purchase all or a portion of their Notes on each
      of
      August 15, 2011, August 15, 2016, and August 15, 2026. In addition, if the
      Company experiences specified types of fundamental changes, holders may require
      it to purchase the Notes. Any repurchase of the Notes pursuant to these
      provisions will be for cash at a price equal to 100% of the principal amount
      of
      the Notes to be purchased plus any accrued and unpaid interest, including any
      additional interest, to, but excluding, the purchase date.





The
      Notes
      are the Company’s senior unsecured obligations, and rank equally in right of
      payment with all of its other existing and future senior indebtedness. The
      Notes
      are guaranteed by certain of the Company’s domestic subsidiaries on a senior
      unsecured basis. The subsidiary guarantees are general unsecured senior
      obligations of the subsidiary guarantors and rank equally in right of payment
      with all of the existing and future senior indebtedness of the subsidiary
      guarantors. If the Company fails to make payment on the Notes, the subsidiary
      guarantors must make them instead. The Notes are effectively subordinated to
      any
      indebtedness of the Company’s non-guarantor subsidiaries. The Notes are
      effectively junior to all of the Company’s existing and future secured
      indebtedness to the extent of the value of the assets securing such
      indebtedness.





The
      Company sold the Notes to the original purchaser at a discount of $3.3 million
      that is being amortized over a period of five years. As of the three months
      ended March 31, 2008, the Company recorded interest expense of $1.1 million,
      of
      which $0.9 million related to the Notes and $0.2 million related to the
      amortization of the discount. The Company incurred issuance costs of $1.5
      million which have been deferred and are being amortized over a five year
      period.




27




**Credit
      Facility**





The
      Credit Facility permits borrowings in an amount up to $55.0 million and includes
      a separate U.K. sub-facility and a separate Belgian sub-facility. The facility
      permits the total revolving credit commitment to be increased up to
      $75.0 million. The facility matures on May 15, 2011. Availability for
      domestic borrowings under the Credit Facility is based upon the value of
      eligible inventory, accounts receivable and property, plant and equipment,
      with
      separate borrowing bases to be established for foreign borrowings under a
      separate U.K. sub-facility and a separate Belgian sub-facility. Availability
      under the Credit Facility is conditioned upon various customary
      conditions.





The
      Credit Facility is secured by a first perfected security interest in
      substantially all of the Company’s assets, with limitations under certain
      circumstances in the case of capital stock of foreign subsidiaries. Certain
      of
      the Company’s domestic subsidiaries unconditionally guarantee all indebtedness
      and obligations related to domestic borrowings under the Credit Facility. The
      Company and certain of its domestic subsidiaries also unconditionally guarantee
      all indebtedness and obligations under the U.K. sub-facility.





As
      of
      March 31, 2008, the carrying amount of assets pledged as collateral was
      $50.8 million. The carrying amount as of March 31, 2008 for domestic,
      U.K., and Belgian borrowers were $40.1 million, $6.2 million, and
      $4.5 million, respectively. The Credit Facility contains a fixed charge
      coverage ratio covenant which becomes effective when total domestic availability
      falls below $11.0 million. As of March 31, 2008, total availability
      was $32.9 million. Availability as of March 31, 2008 for domestic,
      U.K., and Belgian borrowers was $29.0 million, $3.9 million, and zero,
      respectively. The Company can issue letters of credit up to $20 million of
      the available commitment amount under the Credit Facility. Sub-limits for
      letters of credit under the U.K. sub-facility and the Belgian sub-facility
      are
      $2.0 million and $6.0 million, respectively. Letters of credit
      outstanding at March 31, 2008 totaled $17.9 million.





The
      Credit Facility interest rate is based upon Euro-based (“LIBOR”) rates with
      other interest rate options available. The applicable Euro Dollar margin in
      effect when the Company is in compliance with the terms of the facility ranges
      from 1.25% to 2.25% and is based upon the Company’s overall availability under
      the Credit Facility. The unused commitment fee is equal to 0.375% per annum
      and
      is based upon the unused portion of the revolving commitment.





The
      Credit Facility contains a number of affirmative and negative covenants. For
      the
      quarter ended March 31, 2008, the last reported sale price of the Company’s
      common stock was greater than 120% of the conversion price of the Notes for
      at
      least 20 trading days in the period of 30 consecutive trading days ended March
      31, 2008. As a result, as of March 31, 2008, the holders of the Notes have
      the
      right to convert the Notes into cash and shares of common stock. Although
      currently not anticipated by the Company, the ability of holders of the Notes
      to
      convert is an event of default of the Credit Facility. Included in the Credit
      Facility, is a provision for up to $10.0 million where Notes can be converted
      up
      to that amount and classified as long-term debt as the Company has the ability
      and intent to refinance it under the Credit Facility. The Credit Facility also
      includes a provision for up to $3.0 million of letters of credit under the
      Company’s U.S., Belgium, and UK sub-limits that can be issued having expiration
      dates that are more than one year but not more than three years after the date
      of issuance.





The
      negative covenants provide for certain restrictions on possible acts by the
      Company related to matters such as additional indebtedness, certain liens,
      fundamental changes in the business, certain investments or loans, asset sales
      and other customary requirements. The Company was in compliance with all such
      negative covenants as of March 31, 2008.





**Contractual
      Obligations**





The
      Company is obligated to make future payments under various contracts such as
      debt agreements, lease agreements, and unconditional purchase obligations.
      As of
      March 31, 2008, there have been no changes in the payment terms of debt, lease
      agreements, and unconditional purchase obligations since December 31, 2007.





The
      cash
      needs of each of the Company’s reporting segments are principally covered by the
      segment’s operating cash flow on a stand alone basis. Any additional needs will
      be funded by cash on hand or borrowings under the Company’s credit facility.
      Specifically, the Equipment and Consumer segments historically have not required
      extensive capital expenditures; therefore, the Company believes that cash on
      hand and borrowings will adequately support each of the segments cash
      needs.


28






Capital
      Expenditures and Investments





Capital
      expenditures for property, plant and equipment totaled $6.6 million for the
      three months ended March 31, 2008 compared to expenditures of $2.0 million
      for
      the same period in 2007. The expenditures for the period ended March 31, 2008
      consisted primarily of improvements to the Company’s manufacturing facilities of
      $5.0 million, of which $3.5 million was directly related to the planned re-start
      of a previously idled production line at the Company’s Catlettsburg, Kentucky
      facility, $0.7 million related to improvements to information systems, and
      $0.8
      million for customer capital. The comparable 2007 expenditures consisted
      primarily of improvements to the Company’s manufacturing facilities of $1.8
      million and customer capital of $0.1 million. Capital expenditures for 2008
      are
      projected to be approximately $45.0 million  which
      includes approximately $14.5 million related to the aforementioned production
      line at the Catlettsburg, Kentucky facility. These capital expenditures are
      expected to be funded by operating cash flows, cash on hand, and
      borrowings.





In
      January 2006, the Company announced the temporary idling of its reactivation
      facility in Blue Lake, California in an effort to reduce operating costs and
      to
      more efficiently utilize the capacity at its other existing locations. The
      Company conducted an impairment review, in accordance with SFAS No. 144, of
      the
      plant’s assets having a net book value of $1.4 million in connection with the
      temporary idling of the facility and concluded that the assets were not
      impaired. It is management’s intention to resume operation of the plant in the
      future as market conditions warrant it. If management should determine not
      to
      re-start the plant, operating results would be adversely affected by impairment
      charges.





Regulatory
      Matters





Each
      of
      the Company’s U.S. production facilities has permits and licenses regulating air
      emissions and water discharges. All of the Company’s U.S. production facilities
      are controlled under permits issued by local, state and federal air pollution
      control entities. The Company is presently in compliance with these permits.
      Continued compliance will require administrative control and will be subject
      to
      any new or additional standards. In May 2003, the Company partially discontinued
      operation of one of its three activated carbon lines at its Catlettsburg,
      Kentucky facility known as B-line. The Company will need to install pollution
      abatement equipment in order to remain in compliance with state requirements
      regulating air emissions before resuming full operation of this line. On January
      25, 2008, the Company announced its intention to re-start B-line. The Company
      estimates it will invest approximately $20.0 million in this line and that
      the
      project is estimated to be completed in early 2009.





In
      conjunction with the February 2004 purchase of substantially all of Waterlink’s
      operating assets and the stock of Waterlink’s U.K. subsidiary, several
      environmental studies were performed on the Columbus, Ohio property by
      environmental consulting firms which identified and characterized areas of
      contamination. In addition, these firms identified alternative methods of
      remediating the property, identified feasible alternatives and prepared cost
      evaluations of the various alternatives. The Company concluded from the
      information in the studies that a loss at this property is probable and recorded
      the liability as a component of noncurrent other liabilities in the Company’s
      consolidated balance sheet. At December 31, 2007, the balance recorded was
      $4.0
      million. Liability estimates are based on an evaluation of, among other factors,
      currently available facts, existing technology, presently enacted laws and
      regulations, and the remediation experience of other companies. The Company
      has
      not incurred any environmental remediation expense during the periods ended
      March 31, 2008 and 2007. It is reasonably possible that a change in the estimate
      of this obligation will occur as remediation preparation and remediation
      activity commences. The ultimate remediation costs are dependent upon among
      other things, the requirements of any state or federal environmental agencies,
      the remediation methods employed, the final scope of work being determined,
      and
      the extent and types of contamination which will not be fully determined until
      experience is gained through remediation and related activities. The accrued
      amounts are expected to be paid out over the course of several years once work
      has commenced. The Company has not yet determined when it will proceed with
      remediation efforts.


29





In
      January 2007, the Company received a Notice of Violation (“NOV”) from the United
      States Environmental Protection Agency, Region 4 (“EPA”) alleging multiple
      violations of the Federal Resource Conservation and Recovery Act and
      corresponding EPA and Kentucky Department of Environmental Protection (“KYDEP”)
      hazardous waste management rules and regulations. The alleged violations are
      based on findings and information provided by the Company during and after
      a
      Multi Media Compliance Evaluation inspection of the Company’s Big Sandy Plant,
      located in Catlettsburg, Kentucky, conducted by the EPA and the KYDEP in
      September 2005, and concern the hazardous waste spent activated carbon
      regeneration facility located at the Big Sandy Plant. The Company submitted
      its
      initial written response to the NOV in June 2007. In August 2007, the EPA
      notified the Company that it believes there are significant RCRA violations
      that
      are unresolved by the information in the Company’s submittals. The Company met
      with the EPA in December 2007 to discuss alleged violations. The EPA requested
      additional information and indicated at the meeting that it would evaluate
      its
      enforcement options and expects to contact the Company by June 30, 2008 to
      explore a resolution. The EPA can take formal enforcement action to require
      the
      Company to remediate alleged violations, which could involve the assessment
      of
      substantial civil penalties as well. The Company is awaiting further response
      from the EPA and cannot predict with any certainty the probable outcome of
      this
      matter or range of potential loss, if any.





In
      June
      2007, the Company received a Notice Letter from the New York State Department
      of
      Environmental Conservation (“NYSDEC”) stating that the NYSDEC has determined
      that the Company is a Potentially Responsible Party (“PRP”) at the Frontier
      Chemical Processing Royal Avenue Site in Niagara Falls, New York (the “Site”).
      The Notice Letter requests that the Company and other PRPs develop, implement
      and finance a remedial program for Operable Unit #1 at the Site. Operable Unit
      #1 consists of overburden soils and overburden and upper bedrock groundwater.
      The selected remedy is removal of above grade structures and contaminated soil
      source areas, installation of a cover system, and ground water control and
      treatment, estimated to cost between approximately $11 million and $14 million,
      which would be shared among the PRPs. The Company has not determined what
      portion of the costs associated with the remedial program it would be obligated
      to bear, therefore the Company cannot predict with any certainty the outcome
      of
      this matter or range of potential loss. The Company has joined a PRP group
      formed to address this issue and the group is currently seeking a Consent Order
      with NYSDEC on the clean up activity and approach. In accordance
      with  the
      Notice Letter this will also cover payment of all monies that the NYSDEC has
      already expended for investigation and remediation of the Site.





In
      July
      2007, the Company received an NOV from the KYDEP alleging that the Company
      has
      violated the KYDEP’s hazardous waste management regulations in connection with
      the Company’s hazardous waste spent activated carbon regeneration facility
      located at the Big Sandy Plant in Catlettsburg, Kentucky. The NOV alleges that
      the Company has failed to correct deficiencies identified by the KYDEP in the
      Company’s Part B hazardous waste management facility permit application and
      related documents and directs the Company to submit a complete and accurate
      Part
      B application and related documents and to respond to the KYDEP’s comments which
      are appended to the NOV. The Company submitted a revised Part B application
      and
      responded to the KYDEP’s comments in December 2007 as required by the NOV. The
      KYDEP has not indicated whether or not it will take formal enforcement action,
      and has not specified a monetary amount of civil penalties it might pursue
      in
      any such action, if any. On October 18, 2007, the Company received an NOV from
      the EPA related to specific sections of this permit application and submitted
      a
      revised application to the EPA within the mandated timeframe. At this time
      the
      Company cannot predict with any certainty the outcome of this matter or range
      of
      loss, if any.





The
      Company is also subject to various environmental health and safety laws and
      regulations at its facilities in Belgium, and the United Kingdom. These
      laws and regulations address substantially the same issues as those applicable
      to the Company in the United States. The Company believes it is presently in
      substantial compliance with these laws and regulations.


30





New
      Accounting Pronouncements





In
      December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
      Combinations” (“SFAS No.141(R)”), which replaces SFAS No. 141, “Business
      Combinations.” SFAS No. 141(R) retains the underlying concepts of SFAS
      No. 141 in that all business combinations are still required to be
      accounted for at fair value under the acquisition method of accounting, but
      SFAS
      No. 141(R) changes the method of applying the acquisition method in a
      number of significant aspects. Acquisition costs will generally be expensed
      as
      incurred; noncontrolling interests will be valued at fair value at the
      acquisition date; in-process research and development will be recorded at fair
      value as an indefinite-lived intangible asset at the acquisition date;
      restructuring costs associated with a business combination will generally be
      expensed subsequent to the acquisition date; and changes in deferred tax asset
      valuation allowances and income tax uncertainties after the acquisition date
      generally will affect income tax expense. SFAS No. 141(R) is effective on a
      prospective basis for all business combinations for which the acquisition date
      is on or after the beginning of the first annual period subsequent to
      December 15, 2008, with an exception related to the accounting for
      valuation allowances on deferred taxes and acquired contingencies related to
      acquisitions completed before the effective date. SFAS No. 141(R) amends
      SFAS No. 109 to require adjustments, made after the effective date of this
      statement, to valuation allowances for acquired deferred tax assets and income
      tax positions to be recognized as income tax expense. Beginning January 1,
      2009,
      the Company will apply the provisions of SFAS No. 141(R) to its accounting
      for
      applicable business combinations.





In
      December 2007, the FASB issued SFAS No. 160 (“SFAS No. 160”),
“Noncontrolling Interests in Consolidated Financial Statements.” SFAS No. 160
      changes the classification of noncontrolling (minority) interests on the
      balance sheet and the accounting for and reporting of transactions between
      the
      reporting entity and holders of such noncontrolling interests. Under the new
      standard, noncontrolling interests are considered equity and are to be reported
      as an element of stockholders’ equity rather than outside of equity in the
      balance sheet. In addition, the current practice of reporting minority interest
      expense or benefit also will change. Under the new standard, net income will
      encompass the total income before minority interest expense. The income
      statement will include separate disclosure of the attribution of income between
      the controlling and noncontrolling interests. Increases and decreases in the
      noncontrolling ownership interest amount are accounted for as equity
      transactions. SFAS No. 160 is effective for fiscal years beginning after
      December 15, 2008 and earlier application is prohibited. Upon adoption, the
      balance sheet and the income statement should be recast retrospectively for
      the
      presentation of noncontrolling interests. The other accounting provisions of
      the
      statement are required to be adopted prospectively. The Company will adopt
      SFAS
      No. 160 as required and expects that the adoption will not have a material
      impact on its financial position or results of operations.





In
      March
      2008, the FASB issue SFAS No. 161, “Disclosures about Derivative Instruments and
      Hedging Activities,” which changes the disclosure requirements for derivative
      instruments and hedging activities. SFAS No. 161 requires enhanced disclosures
      about (a) how and why an entity uses derivative instruments, (b) how derivative
      instruments and related hedging items are accounted for under SFAS No. 133,
      “Accounting for Derivative Instruments and Hedging Activities” and its related
      interpretations, and (c) how derivative instruments and related hedged items
      affect an entity’s financial position, financial performance, and cash flows.
      This statement’s disclosure requirements are effective for fiscal years and
      interim periods beginning after November 15, 2008. The Company is currently
      evaluating the effects that SFAS No. 161 may have on its consolidated financial
      statement disclosures.





Item
      3 .  Quantitative
      and Qualitative Disclosures about Market Risk





There
      were no material changes in the Company’s exposure to market risk from
      December 31, 2007.




31




Item
      4.  Controls
      and Procedures





Disclosure
      Controls and Procedures:





The
      Company’s principal executive officer and principal financial officer have
      evaluated the effectiveness of the Company’s “disclosure controls and
      procedures,” as such term is defined in Rule 13a-15(e) of the Securities
      Exchange Act of 1934, as amended (the “Exchange Act”), at the end of the period
      covered by this Quarterly Report on Form 10-Q. Based upon their evaluation,
      the
      principal executive officer and principal financial officer concluded that
      the
      Company’s disclosure controls and procedures are effective to ensure that
      information required to be disclosed by the Company in the reports filed or
      submitted by it under the Exchange Act is recorded, processed, summarized and
      reported within the time periods specified in the SEC’s rules and forms, and
      include controls and procedures designed to provide reasonable assurance that
      information required to be disclosed by the Company in such reports is
      accumulated and communicated to the Company’s management, including its
      principal executive officer and principal financial officer, as appropriate
      to
      allow timely decisions regarding required disclosure.





Changes
      in Internal Control:





There
      have not been any changes in the Company’s internal controls over financial
      reporting that occurred during the period ended March 31, 2008, that have
      significantly affected, or are reasonably likely to significantly affect, the
      Company’s internal controls over financial reporting.


32





PART
      II – OTHER INFORMATION




Item
              1.
            Legal
                Proceedings





See
      Note
      7  to
      the
      unaudited interim Condensed Consolidated Financial Statements contained
      herein.





Item
              1a.
            Risk
                Factors





There
      were no material changes in the Company’s risk factors from the risks disclosed
      in the Company’s Form 10-K for the year ended December 31, 2007.




Item
              2c.
            Unregistered
                Sales of Equity Securities and Use of
                Proceeds





**Period**
            
            **Total**
              **Number**
              **of Shares**
              **Purchased (a)**
            
            **Average**
              **Price Paid**
              **Per Share (b)**
            
            **Total Number of**
              **Shares Purchased**
              **as Part of Publicly**
              **Announced**
              **Repurchase Plans**
              **or Programs (c)**
            
            **Maximum Number**
              **(or Approximate**
              **Dollar Value)**
              **of Shares that May**
              **Yet be Purchased**
              **Under the Plans or**
              **Programs (d)**January
                1 - January 31, 2008
            
            
            —
            
            
            —
            
            
            —
            
            
            —February
                1 - February 29, 2008
              March
                1 - March 31, 2008
            
            
            10,666
              39,946
            
            $
              $
            16.94
              16.09
            
            
            —
              —
            
            
            —
              —





(a)
      This
      column includes purchases under Calgon Carbon’s Stock Option Plan which
      represented withholding taxes due from employees relating to the restricted
      share awards issued on February 9, 2008; March 1, 2008; March 27, 2008; and
      March 31, 2008. Future purchases under this plan will be dependent upon employee
      elections and forfeitures.




Item
              6.
            Exhibits





Exhibit
      31.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to
      Section 302 of the Sarbanes-Oxley Act of 2002.





Exhibit
      31.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to
      Section 302 of the Sarbanes-Oxley Act of 2002.





Exhibit
      32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to
      Section 906 of the Sarbanes-Oxley Act of 2002.





Exhibit
      32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to
      Section 906 of the Sarbanes-Oxley Act of 2002.




33





SIGNATURES





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.





CALGON
                CARBON CORPORATION(REGISTRANT)Date:
                May 8, 2008
            /s/Leroy
                M. BallLeroy
                M. BallSenior Vice President,Chief
                Financial Officer




34


EXHIBIT
      INDEX





Exhibit
              No.
            
            Description
            
            Method
                of Filing31.1
            
            Certification
                Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 2002
            
            Filed
                herewith31.2
            
            Certification
                Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 2002
            
            Filed
                herewith32.1
            
            Certification
                Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002
            
            Filed
                herewith32.2
            
            Certification
                Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002
            
            Filed
                herewith