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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q/A



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(Mark One)

|x | Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2005

or



| ̈ | Transition report pursuant to section 13 or 15(d) of the Securities Exchange act of 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number 1-10776



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CALGON CARBON CORPORATION

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 25-0530110                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer 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 91
days.    Yes  x    No ̈

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of
1934).    Yes  x    No ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes ̈No  x

Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:

Indicate by check
mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.    Yes ̈No ̈

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 June 30,
2005
|Common Stock, $.01 par value |  | 39,618,725 shares           



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CALGON CARBON CORPORATION

FORM 10-Q/A

QUARTER ENDED JUNE 30, 2005

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-Q/A for Calgon Carbon Corporation, (the
Company) for the three and six month periods ended June 30, 2005 is being filed to amend and restate the item described below contained in the Companys Quarterly Report on Form 10-Q for such period originally filed with the
Securities and Exchange Commission on August 9, 2005. On March 21, 2006, management and the Audit Committee of the Company determined that the Unaudited Condensed Financial Statements for the fiscal quarter ended June 30, 2005 that
have been included in the Companys Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2005 contained errors and should not be relied upon.

The Company determined that it had failed to record invoices for professional services in a timely manner totaling $0.5 million and $1.2 million for the three and six
month periods ended June 30, 2005, respectively.

This Amendment No. 1 amends Part I, Item 1, Financial Statements; Item 2,
Managements Discussion and Analysis of Results of Operations and Financial Condition; and Item 4, Controls and Procedures as follows:



| |  |  | To amend Part I, Item 1, Financial Statements, to restate the Companys Unaudited Condensed Consolidated Financial Statements for the three and six month periods ended
June 30, 2005;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To amend Part I, Item 2, Managements Discussion and Analysis of Results of Operations and Financial Condition, to take into account the effects of the restatement; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To amend Part I, Item 4, Controls and Procedures, to discuss the effects of the restatement on managements evaluation of the effectiveness of the Companys internal
controls and procedures.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Pursuant to SEC Rule 12b-15, this Form 10-Q/A sets forth the complete text of each item of Form 10-Q listed above
as amended, and includes, as Exhibits 31 and 32, new certifications by the Chief Executive Officer and Chief Financial Officer.

In order to preserve the
nature and character of the disclosures set forth in such items as originally filed, this Amendment No. 1 does not reflect events occurring after the filing of the original Quarterly Report on Form 10-Q on August 9, 2005, or modify or
update the disclosures presented in the original Quarterly Report on Form 10-Q, except to reflect the revisions as described above. Accordingly, this Form 10-Q/A should be read in conjunction with our 2004 Form 10-K and our filings made subsequent
to the filing of the original Form 10-Q, including any amendments to those filings.

Additional detail regarding the restatement is included in Note 18 of
the Notes to the Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Amendment No. 1 on Form 10-Q/A.



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CALGON CARBON CORPORATION

FORM 10-Q/A

QUARTER ENDED June 30, 2005

The Quarterly Report on Form 10-Q/A contains historical information and forward-looking statements. Statements looking forward in time are included in this Form 10-Q/A 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. A specific example
of such uncertainties includes references to reductions in working capital. In the context of forward-looking information provided in this Form 10-Q/A 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



|                                                      |  |                                                                                                           |  |     
|----------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------- |  | ----
|                                                      |  |                                                                                                           |  | Page
|PART 1 
CONDENSED CONSOLIDATED FINANCIAL INFORMATION |  |                                                                                                          
|                                                      |  |                                                                                                          
|Item 1.                                               |  | Condensed Consolidated Financial Statements                                                               |  |     
|                                                      |  |                                                                                                          
|                                                      |  | Introduction to the Condensed Consolidated Financial Statements                                           |  | 3   
|                                                      |  |                                                                                                          
|                                                      |  | Condensed Consolidated Statements of Operations and Retained Earnings (Unaudited) (Restated, See Note 18) |  | 4   
|                                                      |  |                                                                                                          
|                                                      |  | Condensed Consolidated Balance Sheets (Unaudited) (Restated, See Note 18)                                 |  | 5   
|                                                      |  |                                                                                                          
|                                                      |  | Condensed Consolidated Statements of Cash Flows (Unaudited) (Restated, See Note 18)                       |  | 6   
|                                                      |  |                                                                                                          
|                                                      |  | Notes to Condensed Consolidated Financial Statements (Unaudited)                                          |  | 7   
|                                                      |  |                                                                                                          
|Item 2.                                               |  | Managements Discussion and Analysis of Results of Operations and Financial Condition                     |  | 19  
|                                                      |  |                                                                                                          
|Item 4.                                               |  | Controls and Procedures                                                                                   |  | 25  
|                                                      | 
|PART II -
OTHER INFORMATION                           |  |                                                                                                          
|                                                      |  |                                                                                                          
|Item 1.                                               |  | Legal Proceedings                                                                                         |  | 26  
|                                                      |  |                                                                                                          
|Item 4.                                               |  | Submission of Matters to a Vote of Security Holders                                                       |  | 26  
|                                                      |  |                                                                                                          
|Item 6.                                               |  | Exhibits and Reports on Form 8-K                                                                          |  | 26  
|                                                      | 
|SIGNATURES                                            |  | 28                                                                                                       
|                                                      | 
|CERTIFICATIONS                                        |  |                                                                                                          



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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, 2004, 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 six months of 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.



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CALGON CARBON CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

(Dollars in Thousands Except Share and Per Share Data)

(Unaudited)



|                                                                        |  |                                 |            |   |                           |   |            |                                 |  |   |            |   |  |   |            |  
|----------------------------------------------------------------------- |  | ------------------------------- | ---------- | - | ------------------------- | - | ---------- | ------------------------------- |  | - | ---------- | - |  | - | ---------- | -
|                                                                        |  | Three Months Ended June 30,     |            |   | Six Months Ended June 30, |  
|                                                                        |  | 2005 (As Restated, See Note
18) |            |   | 2004                      |   |            | 2005 (As Restated, See Note
18) |  |   | 2004       |  
|Net sales                                                               |  | $                               | 96,321     |   |                           | $ | 97,126     |                                 |  | $ | 179,727    |   |  | $ | 168,369    |  
|                                                                        |  |                                 |            |   |                           |   |            |                                 |  |   |            |   |  |   |            |  
|Cost of products sold (excluding depreciation)                          |  |                                 | 70,703     |   |                           |   | 69,377     |                                 |  |   | 131,316    |   |  |   | 119,389    |  
|Depreciation and amortization                                           |  |                                 | 5,691      |   |                           |   | 5,848      |                                 |  |   | 11,506     |   |  |   | 11,156     |  
|Selling, general and administrative expenses                            |  |                                 | 15,022     |   |                           |   | 14,754     |                                 |  |   | 31,658     |   |  |   | 29,691     |  
|Research and development expenses                                       |  |                                 | 1,169      |   |                           |   | 936        |                                 |  |   | 2,239      |   |  |   | 1,901      |  
|Gulf Coast Facility impairment charge (Note 2)                          |  |                                 |           |   |                           |   |           |                                 |  |   | 2,158      |   |  |   |           |  
|Restructuring charge                                                    |  |                                 | 106        |   |                           |   |           |                                 |  |   | 358        |   |  |   |           |  
|                                                                        |  |                                 |            |   |                           |   |            |                                 |  |   |            |   |  |   |            |  
|                                                                        |  |                                 | 92,691     |   |                           |   | 90,915     |                                 |  |   | 179,235    |   |  |   | 162,137    |  
|                                                                        |  |                                 |            |   |                           |   |            |                                 |  |   |            |   |  |   |            |  
|Income from operations                                                  |  |                                 | 3,630      |   |                           |   | 6,211      |                                 |  |   | 492        |   |  |   | 6,232      |  
|                                                                        |  |                                 |            |  
|Interest income                                                         |  |                                 | 212        |   |                           |   | 160        |                                 |  |   | 393        |   |  |   | 369        |  
|Interest expense                                                        |  |                                 | (1,238     | ) |                           |   | (822       | )                               |  |   | (2,330     | ) |  |   | (1,502     | )
|Other expensenet                                                       |  |                                 | (219       | ) |                           |   | (900       | )                               |  |   | (606       | ) |  |   | (1,688     | )
|                                                                        |  |                                 |            |   |                           |   |            |                                 |  |   |            |   |  |   |            |  
|Income (loss) before income taxes, equity income, and minority interest |  |                                 | 2,385      |   |                           |   | 4,649      |                                 |  |   | (2,051     | ) |  |   | 3,411      |  
|Provision (benefit) for income taxes                                    |  |                                 | 739        |   |                           |   | 807        |                                 |  |   | (15        | ) |  |   | 649        |  
|                                                                        |  |                                 |            |   |                           |   |            |                                 |  |   |            |   |  |   |            |  
|Income (loss) before equity income and minority interest                |  |                                 | 1,646      |   |                           |   | 3,842      |                                 |  |   | (2,036     | ) |  |   | 2,762      |  
|Equity in income from equity investments                                |  |                                 | 350        |   |                           |   | 397        |                                 |  |   | 623        |   |  |   | 917        |  
|Minority interest                                                       |  |                                 |           |   |                           |   | 10         |                                 |  |   |           |   |  |   | 21         |  
|                                                                        |  |                                 |            |   |                           |   |            |                                 |  |   |            |   |  |   |            |  
|Net income (loss)                                                       |  |                                 | 1,996      |   |                           |   | 4,249      |                                 |  |   | (1,413     | ) |  |   | 3,700      |  
|Common stock dividends                                                  |  |                                 | (1,188     | ) |                           |   | (1,171     | )                               |  |   | (2,365     | ) |  |   | (2,341     | )
|Retained earnings, beginning of period                                  |  |                                 | 108,218    |   |                           |   | 109,882    |                                 |  |   | 112,804    |   |  |   | 111,601    |  
|                                                                        |  |                                 |            |   |                           |   |            |                                 |  |   |            |   |  |   |            |  
|Retained earnings, end of period                                        |  | $                               | 109,026    |   |                           | $ | 112,960    |                                 |  | $ | 109,026    |   |  | $ | 112,960    |  
|                                                                        |  |                                 |            |   |                           |   |            |                                 |  |   |            |   |  |   |            |  
|Net income (loss) per common share                                      |  |                                 |            |   |                           |   |            |                                 |  |   |            |   |  |   |            |  
|Basic and diluted                                                       |  | $                               | .05        |   |                           | $ | .11        |                                 |  | $ | (.04       | ) |  | $ | .09        |  
|                                                                        |  |                                 |            |   |                           |   |            |                                 |  |   |            |   |  |   |            |  
|Weighted average shares outstanding                                     |  |                                 |            |   |                           |   |            |                                 |  |   |            |   |  |   |            |  
|Basic                                                                   |  |                                 | 39,484,674 |   |                           |   | 39,035,350 |                                 |  |   | 39,346,305 |   |  |   | 39,029,833 |  
|                                                                        |  |                                 |            |   |                           |   |            |                                 |  |   |            |   |  |   |            |  
|Diluted                                                                 |  |                                 | 40,093,882 |   |                           |   | 39,282,537 |                                 |  |   | 39,346,305 |   |  |   | 39,343,920 |  
|                                                                        |  |                                 |            |   |                           |   |            |                                 |  |   |            |   |  |   |            |  

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



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CALGON CARBON CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands except share data)

(Unaudited)



|                                                                                                      |  |                                       |         |   |                  |   |         |  
|----------------------------------------------------------------------------------------------------- |  | ------------------------------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                      |  | June 30,2005(As Restated,See Note 18) |         |   | December 31,2004 |  
|ASSETS                                                                                                |  |                                       |         |   |                  |   |         |  
|Current assets:                                                                                       |  |                                       |         |   |                  |   |         |  
|Cash and cash equivalents                                                                             |  | $                                     | 7,601   |   |                  | $ | 8,780   |  
|Receivables (net of allowance of $2,964 and $3,033)                                                   |  |                                       | 70,513  |   |                  |   | 61,598  |  
|Revenue recognized in excess of billings on uncompleted contracts                                     |  |                                       | 7,502   |   |                  |   | 8,978   |  
|Inventories                                                                                           |  |                                       | 64,501  |   |                  |   | 64,843  |  
|Deferred income taxes  current                                                                       |  |                                       | 5,982   |   |                  |   | 7,939   |  
|Other current assets                                                                                  |  |                                       | 6,725   |   |                  |   | 6,957   |  
|                                                                                                      |  |                                       |         |   |                  |   |         |  
|Total current assets                                                                                  |  |                                       | 162,824 |   |                  |   | 159,095 |  
|                                                                                                      |  |                                      
|Property, plant and equipment, net                                                                    |  |                                       | 118,304 |   |                  |   | 129,285 |  
|Equity investments                                                                                    |  |                                       | 8,815   |   |                  |   | 8,135   |  
|Intangibles                                                                                           |  |                                       | 11,091  |   |                  |   | 12,237  |  
|Goodwill                                                                                              |  |                                       | 34,672  |   |                  |   | 35,071  |  
|Deferred income taxes  long-term                                                                     |  |                                       | 14,105  |   |                  |   | 16,578  |  
|Other assets                                                                                          |  |                                       | 3,440   |   |                  |   | 3,497   |  
|                                                                                                      |  |                                       |         |   |                  |   |         |  
|Total assets                                                                                          |  | $                                     | 353,251 |   |                  | $ | 363,898 |  
|                                                                                                      |  |                                       |         |   |                  |   |         |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                  |  |                                       |         |   |                  |   |         |  
|Current liabilities:                                                                                  |  |                                       |         |   |                  |   |         |  
|Accounts payable and accrued liabilities                                                              |  | $                                     | 35,066  |   |                  | $ | 36,871  |  
|Billings in excess of revenue recognized on uncompleted contracts                                     |  |                                       | 4,741   |   |                  |   | 3,686   |  
|Restructuring reserve                                                                                 |  |                                       | 539     |   |                  |   | 872     |  
|Payroll and benefits payable                                                                          |  |                                       | 7,027   |   |                  |   | 9,244   |  
|Accrued income taxes                                                                                  |  |                                       | 12,746  |   |                  |   | 12,736  |  
|                                                                                                      |  |                                       |         |   |                  |   |         |  
|Total current liabilities                                                                             |  |                                       | 60,119  |   |                  |   | 63,409  |  
|                                                                                                      |  |                                      
|Long-term debt                                                                                        |  |                                       | 86,500  |   |                  |   | 84,600  |  
|Deferred income taxes  long-term                                                                     |  |                                       | 4,226   |   |                  |   | 8,235   |  
|Other liabilities                                                                                     |  |                                       | 40,308  |   |                  |   | 39,783  |  
|                                                                                                      |  |                                       |         |   |                  |   |         |  
|Total liabilities                                                                                     |  |                                       | 191,153 |   |                  |   | 196,027 |  
|                                                                                                      |  |                                       |         |   |                  |   |         |  
|Commitments and contingencies                                                                         |  |                                       |         |   |                  |   |         |  
|                                                                                                      |  |                                      
|Shareholders equity:                                                                                 |  |                                       |         |   |                  |   |         |  
|Common shares, $.01 par value, 100,000,000 shares authorized, 42,405,983 and 41,958,933 shares issued |  |                                       | 424     |   |                  |   | 420     |  
|Additional paid-in capital                                                                            |  |                                       | 69,540  |   |                  |   | 65,523  |  
|Retained earnings                                                                                     |  |                                       | 109,026 |   |                  |   | 112,804 |  
|Accumulated other comprehensive income                                                                |  |                                       | 11,422  |   |                  |   | 16,253  |  
|Deferred compensation                                                                                 |  |                                       | (1,185  | ) |                  |   |        |  
|                                                                                                      |  |                                       |         |   |                  |   |         |  
|                                                                                                      |  |                                       | 189,227 |   |                  |   | 195,000 |  
|Treasury stock, at cost, 2,787,258 shares                                                             |  |                                       | (27,129 | ) |                  |   | (27,129 | )
|                                                                                                      |  |                                       |         |   |                  |   |         |  
|Total shareholders equity                                                                            |  |                                       | 162,098 |   |                  |   | 167,871 |  
|                                                                                                      |  |                                       |         |   |                  |   |         |  
|Total liabilities and shareholders equity                                                            |  | $                                     | 353,251 |   |                  | $ | 363,898 |  
|                                                                                                      |  |                                       |         |   |                  |   |         |  

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



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CALGON CARBON CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)



|                                                                                                                        |  |                               |         |   |      |   |         |  
|----------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                                                        |  | Six Months Ended June 30,     |        
|                                                                                                                        |  | 2005(As Restated,See Note 18) |         |   | 2004 |  
|Cash flows from operating activities                                                                                    |  |                               |         |   |      |   |         |  
|Net income (loss)                                                                                                       |  | $                             | (1,413  | ) |      | $ | 3,700   |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities:                                |  |                               |         |   |      |   |         |  
|Depreciation and amortization                                                                                           |  |                               | 11,506  |   |      |   | 11,156  |  
|Non-cash impairment and restructuring charges                                                                           |  |                               | 2,373   |   |      |   |        |  
|Equity in income from equity investments                                                                                |  |                               | (623    | ) |      |   | (917    | )
|Distributions received from Calgon Mitsubishi Chemical Corporation                                                      |  |                               | 254     |   |      |   |        |  
|Employee benefit plan provisions                                                                                        |  |                               | 2,191   |   |      |   | 1,823   |  
|Changes in assets and liabilities - net of effects from purchase of business and non-cash impairment and restructuring: |  |                               |         |   |      |   |         |  
|Increase in receivables                                                                                                 |  |                               | (11,638 | ) |      |   | (10,185 | )
|(Increase) decrease in inventories                                                                                      |  |                               | (1,885  | ) |      |   | 3,617   |  
|Decrease in revenue in excess of billings on uncompleted contracts and other current assets                             |  |                               | 3,353   |   |      |   | 1,138   |  
|Decrease in restructuring reserve                                                                                       |  |                               | (347    | ) |      |   | (298    | )
|Increase in accounts payable and accrued liabilities                                                                    |  |                               | 179     |   |      |   | 8,944   |  
|Decrease in long-term deferred income taxes                                                                             |  |                               | (4,848  | ) |      |   | (6,134  | )
|Other items  net                                                                                                       |  |                               | 1,993   |   |      |   | (490    | )
|                                                                                                                        |  |                               |         |   |      |   |         |  
|Net cash provided by operating activities                                                                               |  |                               | 1,095   |   |      |   | 12,354  |  
|                                                                                                                        |  |                               |         |   |      |   |         |  
|Cash flows from investing activities                                                                                    |  |                               |         |   |      |   |         |  
|Purchase of business - net of cash                                                                                      |  |                               | (856    | ) |      |   | (35,250 | )
|Purchase of intangible asset                                                                                            |  |                               |        |   |      |   | (665    | )
|Property, plant and equipment expenditures                                                                              |  |                               | (5,476  | ) |      |   | (6,991  | )
|Proceeds from disposals of property, plant and equipment                                                                |  |                               | 706     |   |      |   | 110     |  
|                                                                                                                        |  |                               |         |   |      |   |         |  
|Net cash used in investing activities                                                                                   |  |                               | (5,626  | ) |      |   | (42,796 | )
|                                                                                                                        |  |                               |         |   |      |   |         |  
|Cash flows from financing activities                                                                                    |  |                               |         |   |      |   |         |  
|Proceeds from borrowings                                                                                                |  |                               | 55,700  |   |      |   | 119,200 |  
|Repayments of borrowings                                                                                                |  |                               | (53,800 | ) |      |   | (86,857 | )
|Common stock dividends                                                                                                  |  |                               | (2,365  | ) |      |   | (2,341  | )
|Common stock issued through exercise of stock options                                                                   |  |                               | 2,688   |   |      |   | 192     |  
|                                                                                                                        |  |                               |         |   |      |   |         |  
|Net cash provided by financing activities                                                                               |  |                               | 2,223   |   |      |   | 30,194  |  
|                                                                                                                        |  |                               |         |   |      |   |         |  
|Effect of exchange rate changes on cash                                                                                 |  |                               | 1,129   |   |      |   | 200     |  
|                                                                                                                        |  |                               |         |   |      |   |         |  
|Decrease in cash and cash equivalents                                                                                   |  |                               | (1,179  | ) |      |   | (48     | )
|Cash and cash equivalents, beginning of period                                                                          |  |                               | 8,780   |   |      |   | 8,954   |  
|                                                                                                                        |  |                               |         |   |      |   |         |  
|Cash and cash equivalents, end of period                                                                                |  | $                             | 7,601   |   |      | $ | 8,906   |  
|                                                                                                                        |  |                               |         |   |      |   |         |  

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



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##### Table of Contents

CALGON CARBON CORPORATION

NOTES TO CONDENSED CONSOLIDTED FINANCIAL STATEMENTS

(Dollars in Thousands)

(Unaudited)



|1. | Acquisition
|-- | -----------

On February 18, 2004, the Company
acquired substantially all of the assets of Waterlink, Incorporateds (Waterlink) United States-based subsidiary Barnebey Sutcliffe Corporation, and 100% of the outstanding common shares of Waterlink (UK) Limited, a holding company
that owns 100% of the outstanding common shares of Waterlinks operating subsidiaries in the United Kingdom.

Known as Barnebey
Sutcliffe in the United States and Sutcliffe Speakman in the United Kingdom, Waterlink Specialty Products is a leading provider of products, equipment, systems and services related to activated carbon and its uses for water and air purification,
solvent recovery, odor control and chemical processing. The primary reasons for the Companys acquisition of Waterlink Specialty Products were to complement the Companys existing business in terms of (i) expanding its customer base;
(ii) diversifying its product mix; (iii) providing access to profitable, niche markets; and (iv) enhancing its profitability and cash flow.

The aggregate purchase price, including direct acquisition costs, and net of cash acquired, was $35.3 million, plus the assumption of certain non-working capital liabilities amounting to $14.2 million. The Company
funded approximately $33.3 million of the purchase price through borrowings from its refinanced U.S. revolving credit facility (see Note 11).

The purchase price was allocated to the net assets acquired as follows:



|                                        |  |   |         |  
|--------------------------------------- |  | - | ------- | -
|(in thousands)                          |  |   |        
|Current assets                          |  | $ | 22,705  |  
|Non-current assets                      |  |   | 6,772   |  
|Intangible assets                       |  |   | 10,153  |  
|Goodwill                                |  |   | 16,137  |  
|Liabilities assumed                     |  |   | (19,377 | )
|                                        |  |   |         |  
|Total purchase price                    |  |   | 36,390  |  
|Less cash and cash equivalents acquired |  |   | (1,140  | )
|                                        |  |   |         |  
|Total purchase price (net of cash)      |  | $ | 35,250  |  
|                                        |  |   |         |  

The results of Waterlink have been included in the Companys consolidated financial
statements from the date of its acquisition by the Company. The following unaudited pro forma results of operations assume that Waterlink Specialty Products is included in the results of operations for the full period indicated. Such results are not
necessarily indicative of the actual results of operations that would have been achieved nor are they necessarily indicative of future results of operations. There are no material, nonrecurring items included in the reported pro forma results of
operations.



|                                     |  |                             |        |                           |   |        |  |   |         |   |  |   |        
|------------------------------------ |  | --------------------------- | ------ | ------------------------- | - | ------ |  | - | ------- | - |  | - | -------
|                                     |  | Three Months Ended June 30, |        | Six Months Ended June 30,
|(in thousands except per share data) |  | 2005                        |        | 2004                      |   | 2005   |  |   | 2004   
|Pro Forma:                           |  |                             |        |                           |   |        |  |   |         |   |  |   |        
|Revenues                             |  | $                           | 96,321 |                           | $ | 97,126 |  | $ | 179,727 |   |  | $ | 175,543
|Net income (loss)                    |  | $                           | 1,996  |                           | $ | 4,249  |  | $ | (1,413  | ) |  | $ | 3,652  
|Net income per common share          |  |                             |        |                           |   |        |  |   |         |   |  |   |        
|Basic and diluted                    |  | $                           | .05    |                           | $ | .11    |  | $ | (.04    | ) |  | $ | .09    



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##### Table of Contents

In December 2004, the Company acquired the additional 20% interest of the then 80% owned Datong Carbon
Corporation. The purchase resulted in the Company recording additional goodwill of $0.4 million related to the purchase. The purchase price was paid in the first quarter of 2005.

In May 2005, the Company formed a joint venture company with C. Gigantic Carbon to provide carbon reactivation services to the Thailand market. The joint
venture company was named Calgon Carbon (Thailand) Ltd. and is 20% owned by the Company after initial investment of $0.2 million which is accounted for in the Companys financial statements under the equity method.



|2. | Gulf Coast Facility Impairment Charge
|-- | -------------------------------------

In 2003, the
Company temporarily suspended construction of a new facility in the Gulf Coast region of the United States as it evaluated strategic alternatives. On March 22, 2005, the Company concluded, and the Board of Directors approved, that cancellation
of this project was warranted and that construction of such a facility should be suspended for the foreseeable future. Accordingly, the Company recorded an impairment charge of $2.2 million for the six month period ended June 30, 2005.



|3. | Inventories:
|-- | ------------



|               |  |               |        |                   |   |       
|-------------- |  | ------------- | ------ | ----------------- | - | ------
|               |  | June 30, 2005 |        | December 31, 2004
|Raw materials  |  | $             | 13,931 |                   | $ | 15,727
|Finished goods |  |               | 50,570 |                   |   | 49,116
|               |  |               |        |                   |   |       
|               |  | $             | 64,501 |                   | $ | 64,843
|               |  |               |        |                   |   |       



|4. | Supplemental Cash Flow Information:
|-- | -----------------------------------



|                                 |  |                           |       |      |   |      
|-------------------------------- |  | ------------------------- | ----- | ---- | - | -----
|                                 |  | Six Months Ended June 30,
|                                 |  | 2005                      |       | 2004
|Cash paid during the period for: |  |                           |       |      |   |      
|Interest                         |  | $                         | 2,557 |      | $ | 1,478
|                                 |  |                           |       |      |   |      
|Income taxes  net               |  | $                         | 240   |      | $ | 1,228
|                                 |  |                           |       |      |   |      



|5. | Dividends:
|-- | ----------

Common stock dividends of $.03 per common
share were declared and paid during the quarter ended June 30, 2005. Common stock dividends declared and paid during the quarter ended June 30, 2004 were $.03 per common share. Common stock dividends in the amount of $.03 per common share
were declared on July 26, 2005.



|6. | Comprehensive income (loss):
|-- | ----------------------------



|                                       |  |                             |        |   |                           |   |       |      |  |   |        |   |  |   |        |  
|-------------------------------------- |  | --------------------------- | ------ | - | ------------------------- | - | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                       |  | Three Months Ended June 30, |        |   | Six Months Ended June 30, |  
|                                       |  | 2005                        |        |   | 2004                      |   |       | 2005 |  |   | 2004   |  
|Net income (loss)                      |  | $                           | 1,996  |   |                           | $ | 4,249 |      |  | $ | (1,413 | ) |  | $ | 3,700  |  
|Other comprehensive loss, net of taxes |  |                             | (1,877 | ) |                           |   | (730  | )    |  |   | (4,831 | ) |  |   | (1,098 | )
|                                       |  |                             |        |   |                           |   |       |      |  |   |        |   |  |   |        |  
|Comprehensive income (loss)            |  | $                           | 119    |   |                           | $ | 3,519 |      |  | $ | (6,244 | ) |  | $ | 2,602  |  
|                                       |  |                             |        |   |                           |   |       |      |  |   |        |   |  |   |        |  

The only matters contributing to the other comprehensive loss during the three and six months
ended June 30, 2005 were the foreign currency translation adjustment of ($2.4) million and ($5.3) million, respectively, and the change in the fair value of the derivative instruments of $0.5 million and $0.5 million, respectively, as described
in Note 8. The only matters contributing to the other comprehensive loss during the three and six months ended June 30, 2004 was the foreign currency translation adjustment of ($0.8) million and ($1.2) million, respectively, and the change in
the fair value of the derivative instruments of $0.1 million and $0.1 million, respectively.



8



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##### Table of Contents

|7. | Segment Information:
|-- | --------------------

The 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 water 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 industrial purification technologies directly to the consumer in the form of products and services including carbon cloth, activated carbon for household odors, and
charcoal products.



|                                                                                               |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|---------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                                               |  | Three Months Ended June 30, |        |   | Six Months Ended June 30, |  
|                                                                                               |  | 2005                        |        |   | 2004                      |   |        | 2005 |  |   | 2004    |  
|Net Sales                                                                                      |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Carbon and Service                                                                             |  | $                           | 63,906 |   |                           | $ | 67,596 |      |  | $ | 123,233 |   |  | $ | 123,482 |  
|Equipment                                                                                      |  |                             | 15,608 |   |                           |   | 16,629 |      |  |   | 29,775  |   |  |   | 24,670  |  
|Consumer                                                                                       |  |                             | 16,807 |   |                           |   | 12,901 |      |  |   | 26,719  |   |  |   | 20,217  |  
|                                                                                               |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|                                                                                               |  | $                           | 96,321 |   |                           | $ | 97,126 |      |  | $ | 179,727 |   |  | $ | 168,369 |  
|                                                                                               |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Income (loss) from operations before depreciation, amortization, impairment, and restructuring |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Carbon and Service                                                                             |  | $                           | 6,582  |   |                           | $ | 10,028 |      |  | $ | 10,342  |   |  | $ | 16,678  |  
|Equipment                                                                                      |  |                             | 756    |   |                           |   | 726    |      |  |   | 557     |   |  |   | (1,233  | )
|Consumer                                                                                       |  |                             | 2,089  |   |                           |   | 1,305  |      |  |   | 3,615   |   |  |   | 1,943   |  
|                                                                                               |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|                                                                                               |  |                             | 9,427  |   |                           |   | 12,059 |      |  |   | 14,514  |   |  |   | 17,388  |  
|Depreciation and amortization                                                                  |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Carbon and Service                                                                             |  |                             | 5,091  |   |                           |   | 4,938  |      |  |   | 9,965   |   |  |   | 9,493   |  
|Equipment                                                                                      |  |                             | 270    |   |                           |   | 450    |      |  |   | 583     |   |  |   | 770     |  
|Consumer                                                                                       |  |                             | 330    |   |                           |   | 460    |      |  |   | 958     |   |  |   | 893     |  
|                                                                                               |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|                                                                                               |  |                             | 5,691  |   |                           |   | 5,848  |      |  |   | 11,506  |   |  |   | 11,156  |  
|                                                                                               |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Income from operations before impairment and restructuring                                     |  | $                           | 3,736  |   |                           | $ | 6,211  |      |  | $ | 3,008   |   |  | $ | 6,232   |  
|                                                                                               |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Reconciling items:                                                                             |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Gulf Coast Facility impairment charge                                                          |  |                             |       |   |                           |   |       |      |  |   | (2,158  | ) |  |   |        |  
|Restructuring charge                                                                           |  |                             | (106   | ) |                           |   |       |      |  |   | (358    | ) |  |   |        |  
|Interest income                                                                                |  |                             | 212    |   |                           |   | 160    |      |  |   | 393     |   |  |   | 369     |  
|Interest expense                                                                               |  |                             | (1,238 | ) |                           |   | (822   | )    |  |   | (2,330  | ) |  |   | (1,502  | )
|Other expense  net                                                                            |  |                             | (219   | ) |                           |   | (900   | )    |  |   | (606    | ) |  |   | (1,688  | )
|                                                                                               |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Consolidated income (loss) before income taxes, equity in income, and minority interest        |  | $                           | 2,385  |   |                           | $ | 4,649  |      |  | $ | (2,051  | ) |  | $ | 3,411   |  
|                                                                                               |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  



|                   |  |               |         |                   |   |        
|------------------ |  | ------------- | ------- | ----------------- | - | -------
|                   |  |              
|                   |  | June 30, 2005 |         | December 31, 2004
|Total Assets       |  |               |         |                   |   |        
|Carbon and Service |  | $             | 251,939 |                   | $ | 268,241
|Equipment          |  |               | 60,859  |                   |   | 63,424 
|Consumer           |  |               | 40,453  |                   |   | 32,233 
|                   |  |               |         |                   |   |        
|                   |  | $             | 353,251 |                   | $ | 363,898
|                   |  |               |         |                   |   |        



9



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##### Table of Contents

|8. | Derivative Instruments
|-- | ----------------------

The Company accounts for its
foreign exchange derivative instruments under Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. 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 had forty-one derivative instruments outstanding at June 30, 2005 of which
one was a foreign currency swap and forty were foreign currency forward exchange contracts. The Company applied hedge accounting treatment for twelve of the foreign currency forward exchange contracts and the foreign currency swap. The Company held
nineteen derivative instruments at June 30, 2004 of which eighteen were foreign currency forward exchange contracts and one foreign currency swap. The Company applied hedge accounting treatment for all of the foreign currency forward exchange
contracts and foreign currency swap outstanding at June 30, 2004.

At June 30, 2005 and 2004, the Company held twelve and eighteen
foreign currency forward exchange contracts, respectively, which are treated as foreign exchange cash flow hedges regarding payment for inventory purchases. The change in the fair market value of the effective hedge portion of the foreign currency
forward exchange contracts was ($0.3) million and ($0.5) million, respectively, for the three and six month periods ended June 30, 2005 and $0.1 million and $0.1 million, respectively, for the three and six month periods ended June 30,
2004 and was recorded in other comprehensive income (loss) (see Note 6). The other comprehensive income (loss) will be released into operations over the next 12 months based on the timing of the sales of the underlying inventory. The release to
operations will be reflected in cost of products sold. During the period ended June 30, 2005, the Company recorded an immaterial gain in other income for the remaining twenty-eight foreign currency forward exchange contracts that did not
qualify for hedge accounting treatment.

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 change in the fair value of the effective hedge portion of the foreign currency swap of $0.1 million and ($23) thousand, respectively, for the three and six month periods ended June 30, 2005 and $(0.1) million and $(0.1) million,
respectively, for the three and six month periods ended June 30, 2004 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 $0.4
million and $0.3 million, respectively, as of June 30, 2005 and 2004.

No component of the derivatives gains or losses has been
excluded from the assessment of hedge effectiveness. For the three and six month periods ended June 30, 2005 and 2004, the net gain or loss recognized due to the amount of hedge ineffectiveness was insignificant.



|9. | Contingencies
|-- | -------------

On December 31, 1996, the Company
purchased the common stock of Advanced Separation Technologies Incorporated (AST) from Progress Capital Holdings, Inc. and Potomac Capital Investment Corporation. On January 12, 1998, the Company filed a claim for unspecified damages in the
United States District Court in 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. Based upon information obtained since the acquisition and corroborated in the course of pre-trial discovery, the Company believes that it has a reasonable basis for this claim and intends to
vigorously pursue reimbursement for damages sustained. Neither the Company nor its counsel can predict with certainty the amount, if any, of recovery that will be obtained from the defendants in this matter.

The Company is also currently a party in three cases involving alleged infringement of its U.S. Patent No.



10



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##### Table of Contents

6,129,893 and U.S. Patent No. 6,565,803 B1 (U.S. Patents) or Canadian Patent
No. 2,331,525 (525 Patent) for the method of preventing cryptosporidium infection in drinking water. In the first case, Wedeco Ideal Horizons, Inc. filed suit against the Company seeking a declaratory judgment that it does not
infringe the Companys U.S. Patents and alleging unfair competition by the Company. This matter is currently pending in the United States District Court for the District of New Jersey. In the second case, the Company has pending litigation
against the Town of Ontario, New York, Trojan Technologies, Inc. (Trojan) and Robert Wykle, et al. in the United States District Court for the Western District of New York alleging that the defendant is practicing the method claimed
within the U.S. Patents without a license. In the third case, the Company has pending litigation against the City of North Bay, Ontario, Canada (North Bay) and Trojan in the Federal Court of Canada alleging infringement of the 525 Patent
by North Bay and inducement of infringement by Trojan. In June 2005, North Bay obtained a ruling that the 525 Patent is invalid in Canada. The Company is appealing this ruling. Neither the Company nor its counsel can predict with any certainty the
outcome of the three matters.

The Company is a party in a case filed by the City of DeQuincy, Louisiana (the City). The City
seeks to repurchase land sold to the Company by the City as a site for a regeneration facility to be constructed by the Company. The City claims a right to recover title to the land under the terms of the agreement of sale upon repayment of the
original purchase price of $20,000; the claim is predicated on its assertion that the Company has not timely commenced construction of the project. The Company believes that the Citys claim is without merit and that it will ultimately prevail
although there can be no assurance that an adverse outcome will not occur. No other liabilities are expected in the event that the Company reconveys the land.

The Company has received a demand from the Pennsylvania Department of Environmental Protection (PADEP) that the Company reimburse PADEP for response costs incurred by the agency to remediate a site owned by a third
party and located in Allegheny County, Pennsylvania (Site). The demand also included an unspecified amount for interest and for any future costs that might be incurred by PADEP at the Site. The Company understands that the response costs
incurred by the PADEP to date are approximately $1.4 million. Based on information provided by the PADEP, the Site is approximately 8 acres and was used from the 1950s until the 1960s as a disposal site for coke or carbon sweepings and
other industrial wastes. The Company has been in discussions with PADEP regarding the Companys position that it is not the entity that disposed of materials containing the contaminants identified by PADEP at the Site and that any materials
that may have been deposited by the Companys predecessor did not contain actionable levels of hazardous substances identified by PADEP. PADEP presented an offer to the Company to settle its alleged liability relating to the $965,000 balance of
unreimbursed response costs in return for a payment of $475,000. The Company believes PADEPs position is not meritorious, and the demand is unwarranted. The Company intends to continue to vigorously defend the matter.

In September 2004, a customer of one of the Companys distributors demanded payment by the Company of approximately $340,000 as reimbursement for
losses allegedly caused by activated carbon produced by the Company and sold by the distributor. The claimant contends that the activated carbon contained contamination which adversely impacted its production process. The Company is in the process
of evaluating the claim, and at this time, cannot predict with any certainty the outcome of this matter.

The Company is involved in various
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 if it is
probable that a liability has been incurred and an amount is reasonably estimable. Management believes, after consulting with counsel, that the ultimate liabilities, if any, resulting from such lawsuits and claims will not materially affect the
consolidated results of operations, cash flows, or financial position of the Company.

In conjunction with the 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 cost of the various alternatives. 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 concluded from the information in the studies



11



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##### Table of Contents

that a loss at this property is probable and has included an estimate of such loss of $5.6 million, which
was recorded as an undiscounted liability on the opening balance sheet at the date of the acquisition, which is presented as a component of noncurrent other liabilities in the Companys March 31, 2004 consolidated balance sheet. As of
June 30, 2005 and 2004, the Company had recorded an accrual of $5.3 million and $5.6 million, respectively. The change in the accrual is as a result of a decrease in estimate of $0.2 million, which reduced the acquisition price of Waterlink
Specialty Products, and the environmental remediation previously incurred of $0.1 million. A change in the estimate of this obligation may occur as additional investigative work is performed and the remediation activity commences. The ultimate
remediation costs are dependent upon the extent and types of contamination, which will not be fully determined until more detailed information is developed through upcoming investigations and experience gained through remediation activities. The
accrued amounts are expected to be paid out over the course of several years. The Company has not incurred any environmental remediation expense for the three and six months ended June 30, 2005.

The Company owns a 49% interest in a joint venture, Calgon Mitsubishi Chemical Corporation, which was formed on October 1, 2002. At June 30,
2005, Calgon Mitsubishi Chemical Corporation has $12.8 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 June 30, 2005, the lender has not requested, and the Company has not provided, such guarantee.



|10. | Goodwill & Intangible Assets
|--- | ----------------------------

The Company
accounts for goodwill and intangible assets in accordance with SFAS No. 142, Goodwill and Other Intangible Assets. This standard requires that goodwill and intangible assets with indefinite useful lives not be amortized but should
be tested for impairment at least annually. Management has elected to do the annual impairment test on December 31stof each year. As required by SFAS No. 142, management has allocated goodwill to the Companys reporting units. No such impairment existed based on the Companys most recent test at December 31, 2004.

The Company used a combination of methods to determine the fair value of the intangible assets of the acquired Waterlink Specialty Products, (see Note
1), including the cost approach, the market approach, and the income approach. The acquired intangible assets consist primarily of customer contracts, customer relationships, and large equipment contracts backlog and are recognized apart from
goodwill. The acquired intangible assets useful lives are based on the expected future cash flows the Company is expected to realize and the amortization will be recognized to match the expected cash flows.



12



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##### Table of Contents

The following is the categorization of the Companys intangible assets as of June 30, 2005 and
December 31, 2004 respectively:



|                             |  |                                     |                      |               |                 |  |                   |                         |   |  |                      |        |                 |  |   |                         |  |   |     |   |  |   |        |  
|---------------------------- |  | ----------------------------------- | -------------------- | ------------- | --------------- |  | ----------------- | ----------------------- | - |  | -------------------- | ------ | --------------- |  | - | ----------------------- |  | - | --- | - |  | - | ------ | -
|                             |  | Weighted AverageAmortization Period |                      | June 30, 2005 |                 |  | December 31, 2004 |                        
|                             |  |                                     | Gross CarryingAmount |               | ForeignExchange |  |                   | AccumulatedAmortization |   |  | Gross CarryingAmount |        | ForeignExchange |  |   | AccumulatedAmortization | 
|Amortized Intangible Assets: |  |                                     |                      |               |                 |  |                   |                         |   |  |                      |        |                 |  |   |                         |  |   |     |   |  |   |        |  
|Patents                      |  | 15.6 Years                          |                      | $             | 1,369           |  | $                 |                        |   |  | $                    | (670   | )               |  | $ | 1,369                   |  | $ |    |   |  | $ | (626   | )
|Customer Relationships       |  | 17.0 Years                          |                      |               | 9,323           |  |                   | (116                    | ) |  |                      | (1,703 | )               |  |   | 9,323                   |  |   | (21 | ) |  |   | (1,125 | )
|Customer Contracts           |  | 2.0 Years                           |                      |               | 664             |  |                   | (15                     | ) |  |                      | (458   | )               |  |   | 664                     |  |   | 3   |   |  |   | (322   | )
|Large Equipment              |  |                                     |                      |               |                 |  |                   |                         |   |  |                      |        |                 |  |   |                         |  |   |     |   |  |   |        |  
|Contracts Backlog            |  | 1.0 Years                           |                      |               | 166             |  |                   |                        |   |  |                      | (161   | )               |  |   | 166                     |  |   |    |   |  |   | (109   | )
|License Agreement            |  | 5.0 Years                           |                      |               | 500             |  |                   |                        |   |  |                      | (167   | )               |  |   | 500                     |  |   |    |   |  |   | (117   | )
|Other                        |  | 10.0 Years                          |                      |               | 665             |  |                   |                        |   |  |                      | (232   | )               |  |   | 665                     |  |   |    |   |  |   | (161   | )
|Unpatented Technology        |  | 20.0 Years                          |                      |               | 2,875           |  |                   |                        |   |  |                      | (949   | )               |  |   | 2,875                   |  |   |    |   |  |   | (865   | )
|                             |  |                                     |                      |               |                 |  |                   |                         |   |  |                      |        |                 |  |   |                         |  |   |     |   |  |   |        |  
|Total                        |  | 16.0 Years                          |                      | $             | 15,562          |  | $                 | (131                    | ) |  | $                    | (4,340 | )               |  | $ | 15,562                  |  | $ | (18 | ) |  | $ | (3,325 | )
|                             |  |                                     |                      |               |                 |  |                   |                         |   |  |                      |        |                 |  |   |                         |  |   |     |   |  |   |        |  

For the three and six months ended June 30, 2005, the Company recognized $0.5 million and
$1.0 million, respectively, of amortization expense. For the three and six months ended June 30, 2004, the Company recognized $0.7 million and $1.0 million, respectively, of amortization expense. The Company estimates amortization expense to be
recognized during the next five years as follows:



|                            |  |   |      
|--------------------------- |  | - | -----
|For the year ended 12/31/05 |  | $ | 1,963
|For the year ended 12/31/06 |  | $ | 1,763
|For the year ended 12/31/07 |  | $ | 1,530
|For the year ended 12/31/08 |  | $ | 1,330
|For the year ended 12/31/09 |  | $ | 1,057

The changes in the carrying amounts of goodwill by segment for the six months ended June 30,
2005 are as follows:



|                              |  |                        |        |   |                   |   |        |                 |  |       |    |  |   |        |  
|----------------------------- |  | ---------------------- | ------ | - | ----------------- | - | ------ | --------------- |  | ----- | -- |  | - | ------ | -
|                              |  | Carbon &ServiceSegment |        |   | Equipment Segment |   |        | ConsumerSegment |  | Total |   
|Balance as of January 1, 2005 |  | $                      | 20,983 |   |                   | $ | 14,028 |                 |  | $     | 60 |  | $ | 35,071 |  
|Foreign exchange              |  |                        | (259   | ) |                   |   | (140   | )               |  |       |   |  |   | (399   | )
|                              |  |                        |        |   |                   |   |        |                 |  |       |    |  |   |        |  
|Balance as of June 30, 2005   |  | $                      | 20,724 |   |                   | $ | 13,888 |                 |  | $     | 60 |  | $ | 34,672 |  
|                              |  |                        |        |   |                   |   |        |                 |  |       |    |  |   |        |  



|11. | Borrowing Arrangements
|--- | ----------------------

During the quarter ended
March 31, 2005, the Company amended its existing $125.0 million unsecured United States revolving Credit Facility that was due to expire in February 2007. The amendment extended the credit facility an additional year to February 2008 and
increased the ratio of debt to EBITDA covenant in the agreement. All other terms of the agreement remain the same. Included in the agreement is a letter of credit sub-facility that may not exceed $30.0 million. The interest rate is based upon Euro
based rates with other interest rate options available. The applicable Euro Dollar margin ranges from 0.80% to 1.85% and the annual facility fee ranges from 0.20% to 0.40% of the committed amount and is based upon the Companys ratio of debt to
earnings before interest, income tax, depreciation and amortization (EBITDA). The current applicable Euro Dollar margin was 1.53% in addition to a facility fee of 0.35%. At June 30, 2005, borrowings under the facility were being charged a
weighted average interest of 4.86%. The credit facilitys covenants impose financial restrictions on the Company, including maintaining certain ratios of debt to EBITDA, operating income to net interest expense and operating assets to debt and
net worth. In addition, the facility imposes gross spending restrictions on capital expenditures, dividends, treasury share repurchases, acquisitions and investments in non-controlled subsidiaries. The facility contains mandatory prepayment
provisions for proceeds in excess of pre-established amounts of certain events as defined within the loan agreement.



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##### Table of Contents

The Company was not in compliance with its interest coverage covenant for the quarter ended June 30,
2005 under its United States credit facility. As a result, the Company was required to obtain a waiver from its United States credit facility lenders. On August 8, 2005, the Company obtained a waiver and a prospective amendment of its financial
covenants from the lenders. The terms of the prospective amendment include the deletion of the interest coverage covenant and capital expenditures provisions and the addition of a fixed charge coverage ratio.



|12. | Stock-Based Compensation
|--- | ------------------------

The Company has various
stock-based compensation plans and applies Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. Accordingly, stock-based compensation cost on stock options granted is not
reflected in net income for stock options at the date of grant, unless stock options granted have an exercise price less than to the market value of the underlying common stock. Deferred compensation for restricted stock under the Companys
stock-based compensation plans is charged to equity when the restricted stock is granted and expensed over the vesting period as contingencies of the restricted stock grant are met. The following table illustrates the effect on net income (loss) and
net income (loss) per common share if the Company had applied the fair value recognition provisions of SFAS No. 123 Accounting for Stock-Based Compensation:



|                                                                                              |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|--------------------------------------------------------------------------------------------- |  | -------------------------- | ---------- | - | ------------------------ | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                                                              |  | Three Months Ended June 30 |            |   | Six Months Ended June 30 |  
|(Dollars in thousands except per share data)                                                  |  | 2005                       |            |   | 2004                     |   |            | 2005 |  |   | 2004       |  
|Net income (loss)                                                                             |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|As reported                                                                                   |  | $                          | 1,996      |   |                          | $ | 4,249      |      |  | $ | (1,413     | ) |  | $ | 3,700      |  
|Stock-based employee compensation expense included in reported net income, net of tax effects |  |                            | 90         |   |                          |   |           |      |  |   | 90         |   |  |   |           |  
|Stock-based compensation, net of tax effects                                                  |  |                            | (277       | ) |                          |   | (407       | )    |  |   | (404       | ) |  |   | (735       | )
|                                                                                              |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Pro forma                                                                                     |  | $                          | 1,809      |   |                          | $ | 3,842      |      |  | $ | (1,727     | ) |  | $ | 2,965      |  
|                                                                                              |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Weighted average shares outstanding                                                           |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Basic                                                                                         |  |                            | 39,484,674 |   |                          |   | 39,035,350 |      |  |   | 39,346,305 |   |  |   | 39,029,833 |  
|Effect of dilutive securities                                                                 |  |                            | 609,207    |   |                          |   | 247,187    |      |  |   |           |   |  |   | 314,087    |  
|                                                                                              |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Diluted                                                                                       |  |                            | 40,093,882 |   |                          |   | 39,282,537 |      |  |   | 39,346,305 |   |  |   | 39,343,920 |  
|                                                                                              |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Net income (loss) per common share                                                            |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Basic and Diluted                                                                             |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|As reported                                                                                   |  | $                          | .05        |   |                          | $ | .11        |      |  | $ | (.04       | ) |  | $ | .09        |  
|Pro forma                                                                                     |  | $                          | .05        |   |                          | $ | .10        |      |  | $ | (.04       | ) |  | $ | .08        |  



|13. | Integration Accrual for Acquired Business
|--- | -----------------------------------------

At the time of
the acquisition of substantially all of Waterlinks U.S. operating assets and the stock of Waterlinks U.K. subsidiary, the Company had begun to formulate a plan for eliminating redundant activities and reviewing substantially all
employment positions at the acquired companies. Subsequent to the acquisition, the preliminary plan was communicated to all affected employees and the Company began execution of the plan. Management has finalized the plan and substantially all of
the separations resulting from the Companys integration plan have been completed and benefits paid as of January 31, 2005 with the remainder to be paid by December 31, 2005.

The Company has currently estimated an obligation for termination and relocation benefits of $0.5 million related to sales, administrative, engineering
and production positions of the acquired companies which was recorded on the opening balance sheet as of the date of acquisition and is presented as a component of accounts payable and accrued liabilities in the Companys consolidated balance
sheet. For the three and six months ended June 30, 2005, the amounts that the Company has paid and charged against the termination and relocation reserve were $35 thousand and $92 thousand, respectively, and were insignificant for the three and
six month periods ended June 30, 2004.



14



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##### Table of Contents

No further significant changes to the current plan are expected.



|14. | Restructuring of Operations
|--- | ---------------------------

On February 4, 2005, the
Companys Board of Directors approved a re-engineering plan presented by the Company. The plan includes the closure of two small manufacturing facilities, the potential divestiture of two non-core businesses, and the elimination of
approximately 70 employees globally. The Company communicated the plan to certain employees on February 16, 2005 and plans to communicate the plan to the remaining affected employees during the third and fourth quarters of 2005. It is unlikely
that a significant change to the plan will be made or that the plan will be withdrawn.

The restructuring charge for the six months ended
June 30, 2005 was:



|                                    |  |   |    
|----------------------------------- |  | - | ---
|(in thousands)                      |  |  
|Pension curtailment charge          |  | $ | 215
|Closure of manufacturing facilities |  |   | 143
|                                    |  |   |    
|Total restructuring charge          |  | $ | 358
|                                    |  |   |    



|15. | Pensions
|--- | --------

U.S. Plans:

For U.S. plans, the following table provides the components of net periodic pension costs of the plans for the three and six months ended June 30,
2005 and 2004:



|                                   |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|---------------------------------- |  | -------------------------- | ------ | - | ------------------------ | - | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                   |  | Three Months Ended June 30 |        |   | Six Months Ended June 30 |  
|Pension Benefits (in thousands)    |  | 2005                       |        |   | 2004                     |   |       | 2005 |  |   | 2004   |  
|Service cost                       |  | $                          | 729    |   |                          | $ | 707   |      |  | $ | 1,497  |   |  | $ | 1,384  |  
|Interest cost                      |  |                            | 1,181  |   |                          |   | 1,110 |      |  |   | 2,353  |   |  |   | 2,200  |  
|Expected return on plan assets     |  |                            | (1,021 | ) |                          |   | (947  | )    |  |   | (2,065 | ) |  |   | (1,840 | )
|Amortization of prior service cost |  |                            | 114    |   |                          |   | 118   |      |  |   | 232    |   |  |   | 236    |  
|Net amortization                   |  |                            | 165    |   |                          |   | 80    |      |  |   | 304    |   |  |   | 193    |  
|Curtailment                        |  |                            | 22     |   |                          |   |      |      |  |   | 237    |   |  |   |       |  
|                                   |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Net periodic pension cost          |  | $                          | 1,190  |   |                          | $ | 1,068 |      |  | $ | 2,558  |   |  | $ | 2,173  |  
|                                   |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  

The expected long-term rate of return on plan assets is 8.50% in 2005.

Employer Contributions

In its 2004
financial statements, the Company disclosed that it expected to contribute $0.4 million to its U.S. pension plans in 2005. As of June 30, 2005, no contributions have been made. Based upon the Companys recently completed 2005 actuarial
valuation, consideration is being given to accelerating contributions to all of the Companys U.S. defined benefit plans in order to maintain certain funding levels and reduce the Companys ongoing expense. As a result, the Company may
contribute up to $4.3 million more than the legally required minimum of $0.4 million in the third quarter of 2005.



15



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##### Table of Contents

European Plans:

For European plans, the following table provides the components of net periodic pension costs of the plans for the three and six months ended June 30, 2005 and 2004:



|                                   |  |                            |      |   |                          |   |      |      |  |   |      |   |  |   |      |  
|---------------------------------- |  | -------------------------- | ---- | - | ------------------------ | - | ---- | ---- |  | - | ---- | - |  | - | ---- | -
|                                   |  | Three Months Ended June 30 |      |   | Six Months Ended June 30 |  
|Pension Benefits (in thousands)    |  | 2005                       |      |   | 2004                     |   |      | 2005 |  |   | 2004 |  
|Service cost                       |  | $                          | 241  |   |                          | $ | 173  |      |  | $ | 482  |   |  | $ | 361  |  
|Interest cost                      |  |                            | 430  |   |                          |   | 340  |      |  |   | 860  |   |  |   | 682  |  
|Expected return on plan assets     |  |                            | (302 | ) |                          |   | (216 | )    |  |   | (604 | ) |  |   | (431 | )
|Amortization of prior service cost |  |                            | 14   |   |                          |   | 12   |      |  |   | 28   |   |  |   | 25   |  
|Net amortization                   |  |                            | 23   |   |                          |   | 7    |      |  |   | 46   |   |  |   | 13   |  
|                                   |  |                            |      |   |                          |   |      |      |  |   |      |   |  |   |      |  
|Net periodic pension cost          |  | $                          | 406  |   |                          | $ | 315  |      |  | $ | 812  |   |  | $ | 649  |  
|                                   |  |                            |      |   |                          |   |      |      |  |   |      |   |  |   |      |  

The expected long-term rate of return on plan assets ranges from 5.00% to 8.00 % in 2005.

Employer Contributions

In its 2004 financial statements, the Company disclosed that it expected to contribute $1.5 million to its European pension plans in 2005. As of June 30, 2005, the Company has contributed $0.9 million. The Company expects to contribute
the remaining $0.6 million as well as an additional $0.7 million over the remainder of the year.

Defined Contribution Plans

The Company makes matching contributions on behalf of each participant in an amount equal to 25% of the employee contribution up to a
maximum of 4% of employee compensation. Employer contributions vest immediately. Total expenses related to this defined contribution plan for the three months ended June 30, 2005 and 2004 were $41 thousand and $37 thousand, respectively, and
$0.1 million and $0.1 million, respectively, for the six months ended June 30, 2005 and 2004.



|16. | New Accounting Pronouncements
|--- | -----------------------------

In November 2004, the FASB
issued SFAS No. 151, Inventory Costs  an amendment of ARB No. 43, Chapter 4, which requires the recognition of costs of idle facilities, excessive spoilage, double freight and rehandling costs as a component of
current-period expenses. The provisions of SFAS No. 151 are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Management has evaluated the impact of the adoption of SFAS No. 151 on the
Companys financial statements and expects it to be immaterial. The Company plans to adopt SFAS No. 151 effective January 1, 2006 as required.

In December 2004, the FASB issued SFAS No. 123R, Share-Based Payment, which establishes the accounting for transactions in which an entity exchanges its equity instruments or certain liabilities based
upon an entitys equity instruments for goods or services. SFAS No. 123R generally requires that publicly traded companies measure the cost of employee services received in exchange for an award of equity instruments based on the fair
value of the award at the grant date. That cost will be recognized over the period during which an employee is required to provide service in exchange for the award which is usually the vesting period. Management expects to adopt SFAS No. 123R
on January 1, 2006 as required. Management has not yet evaluated the impact of the adoption of SFAS No. 123R.



|17. | Reclassification
|--- | ----------------

The Company has reclassified its 2004
equity in income from equity investments from above loss before income taxes to below loss before income taxes to conform with the Companys presentation for the year ended December 31, 2004 and the period ended June 30, 2005.



16



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##### Table of Contents

|18. | Restatement
|--- | -----------

Subsequent to the issuance of the
Companys Condensed Consolidated Financial Statements for the three and six months ended June 30, 2005, management of the Company determined that certain invoices for professional services totaling $0.5 million and $1.2 million, during the
three and six months ended June 30, 2005, respectively, had not been recorded during the periods in which the liabilities were incurred.

As a result, the accompanying Condensed Consolidated Financial Statements for the three and six month periods ended June 30, 2005 have been restated from the amounts previously reported. The restatement adjustment for the six months
ended June 30, 2005 includes $371,000, which was recorded in the first quarter and relates to 2004, which the Company determined to be immaterial in relation to its Financial Statements for the current and prior periods.

The effect of the restatement for the three and six month periods ended June 30, 2005 is to increase selling, general and administrative expenses by
$0.5 million and $1.2 million, respectively; increase income tax expense $0.1 million and $0.1 million, respectively; decrease net income by $0.6 million and $1.2 million, respectively; and decrease net income per common share by $0.02 and $0.04,
respectively.

A summary of the significant effects of the restatement is as follows:



|                                                                        |  |                                               |        |                                |   |                        |  |   |             |   |  |   |        |  
|----------------------------------------------------------------------- |  | --------------------------------------------- | ------ | ------------------------------ | - | ---------------------- |  | - | ----------- | - |  | - | ------ | -
|                                                                        |  | Three Months EndedJune 30, 2005               |        | Six Months Ended June 30, 2005 |  
|                                                                        |  | As Previously Reported                        |        | As Restated                    |   | As Previously Reported |  |   | As Restated |  
|                                                                        |  | (Dollars in Thousands, Except Per Share Data) |       
|                                                                        |  | (Unaudited)                                   |       
|Selling, general and administrative expenses                            |  | $                                             | 14,480 |                                | $ | 15,022                 |  | $ | 30,500      |   |  | $ | 31,658 |  
|Income from operations                                                  |  |                                               | 4,172  |                                |   | 3,630                  |  |   | 1,650       |   |  |   | 492    |  
|Income (loss) before income taxes, equity income, and minority interest |  |                                               | 2,927  |                                |   | 2,385                  |  |   | (893        | ) |  |   | (2,051 | )
|Net income (loss)                                                       |  |                                               | 2,628  |                                |   | 1,996                  |  |   | (193        | ) |  |   | (1,413 | )
|Net income (loss) per common share Basic and diluted                    |  |                                               | .07    |                                |   | .05                    |  |   |            |   |  |   | (.04   | )



17



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##### Table of Contents

|                                         |  |                        |         |             |   |        
|---------------------------------------- |  | ---------------------- | ------- | ----------- | - | -------
|                                         |  | As of June 30, 2005   
|                                         |  | As PreviouslyReported  |         | As Restated
|                                         |  | (Dollars in Thousands)
|                                         |  | (Unaudited)           
|Deferred income tax asset  long-term    |  | $                      | 14,167  |             | $ | 14,105 
|Total assets                             |  |                        | 353,313 |             |   | 353,251
|Accounts payable and accrued liabilities |  |                        | 33,908  |             |   | 35,066 
|Total current liabilities                |  |                        | 58,961  |             |   | 60,119 
|Total liabilities                        |  |                        | 189,995 |             |   | 190,731
|Retained earnings                        |  |                        | 110,246 |             |   | 109,026
|Total shareholders equity               |  |                        | 163,318 |             |   | 162,098



18



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##### Table of Contents

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 and gives effect to the restatement discussed in Note 18 to the
Unaudited Condensed Consolidated Financial Statements.

Results of Operations

Consolidated net sales decreased by $0.8 million or 0.8% and increased by $11.4 million or 6.7% for the quarter and year-to-date periods ended June 30, 2005,
respectively, versus the quarter and year-to-date periods ended June 30, 2004. The total positive impact of foreign currency translation on consolidated sales for the quarter and year-to-date periods ended June 30, 2005 was $1.6 million
and $3.0 million, respectively, and $2.6 million and $5.7 million, respectively, for the quarter and year-to-date periods ended June 30, 2004.

Net
sales for the Carbon and Service segment decreased by $3.7 million or 5.5% versus the quarter ended June 30, 2004 and were comparable to the year-to-date period ended June 30, 2004. Sales for the quarter and year-to-date periods were
adversely affected by the postponement of awarded contracts for activated carbon for drinking water treatment in Europe and the U.S, delays in sales for specialty carbons, and a decline in the demand for resin service sales for the removal of
perchlorate from drinking waters sources. Partially offsetting the year-to-date decline was the strong demand for activated carbon in the European potable water market during the first quarter 2005. Foreign currency translation had a positive impact
of $0.9 million and $1.7 million, respectively, versus the quarter and year-to-date periods ended June 30, 2004.

Net sales for the Equipment segment
decreased $1.0 million or 6.1% versus the quarter ended June 30, 2004 and increased $5.1 million or 20.7% versus the year-to-date period ended June 30, 2004. The decrease for the quarter was primarily due to the completion of two ISEP®
projects in Asia which contributed $3.5 million in sales during the similar quarter in 2004. Partially offsetting this decrease was stronger demand for the Companys traditional carbon adsorption systems in the U.S. For the year-to-date period,
the increase was primarily related to stronger demand for solvent recovery equipment and ISEP® systems for food applications during the first quarter 2005 as well as the aforementioned increase in demand for traditional carbon adsorption equipment. Partially offsetting this
increase were the non-repeat ISEP® projects in
Asia. Foreign currency translation had a positive impact of $0.1 million and $0.2 million, respectively, versus the quarter and year-to-date periods ended June 30, 2004.

Net sales for the Consumer segment increased $3.9 million or 30.3% versus the quarter ended June 30, 2004 and $6.5 million or 32.2% versus the year-to-date period ended June 30, 2004. The increase in both
periods was primarily due to stronger demand for charcoal in Europe. Stronger sales in activated carbon cloth and PreZerve® products also contributed to the year-to-date increase versus the comparable 2004 period. Foreign currency translation had a positive impact of $0.7
million and $1.1 million, respectively, versus the quarter and year-to-date periods ended June 30, 2004.

Net sales less cost of products sold, as a
percentage of net sales was 26.6% for the quarter ended June 30, 2005 compared to 28.6% for the similar 2004 period, a 2.0 percentage point decrease. This decrease was primarily the result of higher raw material, energy, and transportation
costs versus the similar 2004 quarter of approximately 1.9 percentage points. Increased sales of lower margin Equipment and Consumer products as a percent of the Companys sales mix adversely impacted the quarter results by approximately 0.4
percentage points. Partially offsetting this was the lower cost of U.S. sourced carbon products shipped to the Companys Belgian branch as a result of the strengthening of the Euro in 2005 of $0.4 million or 0.4 percentage points versus the
comparable 2004 period. For the year-to-date period, net sales less cost of products sold, as a percentage of net sales was 26.9% as compared to 29.1% for the similar 2004 period, a 2.2 percentage point decrease. The aforementioned higher raw
material, energy, and transportation costs, as well as increased sales of lower margin products, contributed to the decline by approximately 2.2 and 0.5 percentage points, respectively. Partially offsetting this decrease was the lower cost of U.S.
sourced carbon products shipped to the Companys Belgian branch as a result of the strengthening of the Euro in 2005 of $0.8 million or 0.5 percentage points versus the comparable 2004 period.

Depreciation and amortization decreased $0.2 million during the quarter ended June 30, 2005 versus the quarter ended June 30, 2004 primarily due to decreased
intangible amortization. For the year-to-date period, depreciation and amortization increased $0.4 million primarily due to increased depreciation associated with the capacity expansion at the Companys Catlettsburg, Kentucky facility.



19



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##### Table of Contents

Selling, general, and administrative expenses for the quarter ended June 30, 2005 increased $0.3 million versus the
comparable 2004 period. The increase was primarily for legal expenses due to the receipt in 2004 of $0.5 million related to the settlement of an ion exchange related claim and increased activity in 2005 in the Companys UV patent litigation as
well as $0.3 million of expenses pertaining to the Companys re-engineering plan. Partially offsetting this increase was $0.4 million of non-repeat acquisition integration expenses that occurred in 2004. For the year-to-date period, selling,
general, and administrative expenses increased $2.0 million versus the comparable 2004 period. The increase was primarily related to the aforementioned re-engineering costs of $1.5 million and increased litigation expenses which were partially
offset by the non-repeat acquisition integration expense of $0.6 million that occurred in 2004.

Research and development expenses increased $0.2 million
and $0.3 million, respectively, versus the quarter and year-to-date periods ended June 30, 2004. The increase for both periods is primarily related to an increase in laboratory services and supplies.

The impairment charge of $2.2 million for the year-to-date period ended June 30, 2005 was as a result of the Companys decision to cancel the construction of a
reactivation facility on the U.S. Gulf Coast and to suspend the construction of such a facility for the foreseeable future.

The restructuring charge of
$0.1 million for the quarter ended June 30, 2005 was related to the closure of two small manufacturing facilities and the year-to-date charge of $0.3 million was primarily related to pension curtailment charges as a result of the above
mentioned employee separations.

Other expense for the quarter ended June 30, 2005 decreased $0.7 million primarily due to the sale of property of
$0.2 million and a $0.3 million foreign exchange loss that occurred in 2004 which related to an intercompany loan between the Company and its subsidiary, Chemviron Carbon Ltd., for the purchase of 100% of the outstanding common shares of Waterlink
(UK) Limited. For the year-to-date period, other expense decreased $1.1 million primarily due to the 2004 foreign exchange loss on the aforementioned intercompany loan of $0.6 million and sale of property of $0.2 million.

Interest expense, net of interest income, increased $0.4 million and $0.8 million, respectively, for the quarter and year-to-date periods ended June 30, 2005. The
increase was primarily the result of increased interest rates and the increased debt from the 2004 acquisition.

The effective tax rate for the period
ended June 30, 2005 was 0.7% compared to 19.0% for the period ended June 30, 2004. The period ended June 30, 2005 tax rate was lower than the Federal Income Tax Rate due to certain benefits, principally the exclusion provided under
United States income tax laws with respect to the Extraterritorial Income Exclusion Benefit, recognition of foreign tax credit benefits, and recognition of state income tax benefits. The June 30, 2005 tax provision included a discrete item
relating to a tax law change that prompted a change in estimate of the valuation reserves for the state net operating loss carryforwards and increased tax expense by $25 thousand. The American Jobs Creation Act of 2004 repealed the Extraterritorial
Income Exclusion (ETI) subject to certain transition rules. The ETI benefit is being replaced with a Manufacturing Activity deduction under Internal Revenue Code Section 199, with a phase out of ETI benefits in 2005 and 2006. The Companys
ETI benefit for 2005 reflects the 80% allowable benefit. The Company has not recorded a benefit for Section 199 in 2005 due to the limited taxable income.

The period ended June 30, 2004 tax rate was lower than the Federal Income Tax Rate due to the Extraterritorial Income Exclusion Benefit, recognition of foreign tax credit benefits, recognition of state income tax benefits and change in
estimate of prior year accruals. The primary items that contributed to the change in the effective tax rate between the period ended June 30, 2005 and the similar period for 2004 were the Extraterritorial Income Exclusion Benefit, change in
estimate of prior year accruals and the equity income from equity investments which was reclassified from loss before income taxes to loss after income taxes (see Note 17).

No income tax expense (benefit) has been recorded for the earnings of the Companys non-United States subsidiaries as management believes these earnings will be reinvested for an indefinite period of time. An
estimate



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of the amount of unrecognized deferred tax liability is currently not practicable. The Company is also evaluating the
implications of the new repatriation provision of the American Jobs Creation Act of 2004, which reduces the Federal income tax rate to 5.25 percent on earnings distributed from non-United States based subsidiaries for a one-year period. The Company
expects to complete this evaluation during 2005.

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. The Company does not believe that resolution of existing
unresolved tax matters will have a material impact on the consolidated financial condition of the Company, although a resolution could have a material impact on the Companys consolidated statement of income and comprehensive income for a
particular future period and on the Companys effective tax rate.

Equity income from equity investments for the quarter ended June 30, 2005 was
comparable to the quarter ended June 30, 2004. For the year-to-date period, equity income from equity investments decreased $0.3 million versus the comparable 2004 period. The decrease is primarily related to a large municipal fill that
occurred in the first quarter of 2004 which was not repeated in 2005.

Financial Condition

Working Capital and Liquidity

Cash flows generated
from operations were $1.1 million for the period ended June 30, 2005 compared to cash generated from operations of $12.5 million for the comparable 2004 period. The $11.4 million decrease represents a combination of decreased earnings of $5.1
million and an increase in operating working capital (exclusive of debt). The increase in operating working capital was primarily due to the net change in inventories of $5.5 million and accounts payable and accruals of $8.8 million versus the
comparable 2004 period. The comparable 2004 period included a $6.4 million reclassification of long-term deferred income tax liabilities to current accrued income tax liabilities. The Company had previously disclosed this reclassification in Note 1
of its 2004 Annual Report to Shareholders. Partially offsetting this decrease was $2.4 million of non-cash impairment and restructuring charges related to the first quarter 2005 Gulf Coast impairment and pension curtailment charges. Also offsetting
this decline was a decrease in long-term deferred income taxes and other current assets of $3.8 million and $2.2 million, respectively.

Common stock
dividends paid during the quarter ended June 30, 2005 represented $.03 per common share which was consistent with the quarter ended June 30, 2004.

Total debt at June 30, 2005 was $86.5 million, an increase of $1.9 million from December 31, 2004. The additional borrowings were used to finance operations.

The Company expects that current cash from operating activities plus cash balances and available external financing will be sufficient to meet its operating requirements for the next twelve months and the foreseeable
future.

During the quarter ended March 31, 2005, the Company amended its existing $125.0 million unsecured revolving United States Credit Facility
that was due to expire in February 2007. The amendment extended the credit facility an additional year to February 2008 and increased the ratio of debt to EBITDA covenant in the agreement. All other terms of the agreement remain the same. Included
in the agreement is a letter of credit sub-facility that may not exceed $30.0 million. The interest rate is based upon Euro based rates with other interest rate options available. The applicable Euro Dollar margin ranges from 0.80% to 1.85% and the
annual facility fee ranges from 0.20% to 0.40% of the committed amount and is based upon the Companys ratio of debt to earnings before interest, income tax, depreciation and amortization (EBITDA). The current applicable Euro Dollar margin was
1.53% in addition to a facility fee of 0.35%. At June 30, 2005, borrowings under the facility were being charged a weighted average interest of 4.86%. The credit facilitys covenants impose financial restrictions on the Company, including



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maintaining certain ratios of debt to EBITDA, operating income to net interest expense and operating assets to debt and
net worth. In addition, the facility imposes gross spending restrictions on capital expenditures, dividends, treasury share repurchases, acquisitions and investments in non-controlled subsidiaries. The facility contains mandatory prepayment
provisions for proceeds in excess of pre-established amounts of certain events as defined within the loan agreement.

The Company was not in compliance
with its interest coverage covenant for the quarter ended June 30, 2005 under its United States credit facility. As a result, the Company was required to obtain a waiver from its United States credit facility lenders. On August 8, 2005,
the Company obtained a waiver and a prospective amendment of its financial covenants from the lenders. The terms of the prospective amendment include the deletion of the interest coverage covenant and capital expenditures provisions and the addition
of a fixed charge coverage ratio.

The Company is obligated to make future payments under various contracts such as debt agreements, lease agreements, and
unconditional purchase obligations. As of June 30, 2005, there have been no changes in the payment terms of long-term debt since December 31, 2004. The expectation for the Companys commitments on operating leases increased as a
result of the lease extensions of certain office space. As of June 30, 2005, the Company expects future minimum requirements under the terms of operating leases to be $8.2 million in 2005, $5.0 million in 2006, $3.8 million in 2007, $3.0
million in 2008, $2.7 million in 2009, $2.5 million in 2010, and $12.2 million thereafter. The Companys expectations on future minimum purchase requirements for raw and other materials increased since December 31, 2004 as a result of two
additional purchase contracts. The Company expects its purchases of raw and other materials to be $26.1 million in 2005, $23.0 million in 2006, $17.9 million in 2007, $13.1 million in 2008, $5.7 million in 2009, $5.7 million in 2010, and $5.7
million thereafter.

Capital Expenditures and Investments

Capital expenditures for property, plant and equipment totaled $5.5 million for the six months ended June 30, 2005 compared to expenditures of $7.0 million for the
same period in 2004. The expenditures for the period ended June 30, 2005 consisted primarily of improvements to the Companys manufacturing facilities of $4.8 million and customer capital of $0.3 million. The comparable 2004 expenditures
included capacity expansion at the Companys Catlettsburg, Kentucky facility of $2.3 million, customer capital of $2.1 million, and $1.7 million of other improvements to manufacturing facilities. Capital expenditures for 2005 are projected to
be approximately $13.6 million.

The June 30, 2005 purchase of business cash outflow of $0.9 million, as shown on the statement of cash flows,
represents the Companys increased equity ownership in Datong Carbon Corporation from 80% to 100% for a purchase price of $0.7 million and the May 2005 formation of a joint venture company with C. Gigantic Carbon. The joint venture company was
named Calgon Carbon (Thailand) Ltd. and is 20% owned by the Company after initial investment of $0.2 million. The increased ownership in Datong Carbon Corporation was initiated in December 2004 and the Company recorded additional goodwill of $0.4
million at that time. The 2004 purchase of business cash out flow of $35.4 million, as shown on the statement of cash flows, represents the Companys February 18, 2004 acquisition of Waterlink Specialty Products. The purchase resulted in
the Company recording additional goodwill of $16.1 million.

In 2003, the Company temporarily suspended construction of a new facility in the Gulf Coast
region of the United States as it evaluated strategic alternatives. On March 22, 2005, the Company concluded, and the Board of Directors approved, that cancellation of this project was warranted and that construction of such a facility should
be suspended for the foreseeable future. Accordingly, the Company recorded an impairment charge of $2.2 million for the six month period ended June 30, 2005.

Regulatory Matters

The
Companys production facilities are subject to a variety of environmental laws and regulations in the jurisdictions in which they operate or maintain properties. Costs may be incurred in complying with such laws and regulations if environmental
remediation measures are required. The Company provides for such costs when remediation is deemed probable and the costs can be reliably estimated.

Each of the Companys domestic production facilities has permits and licenses regulating air emissions and water



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discharges. All of the Companys domestic 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. The Company will need to install pollution abatement equipment estimated at approximately $7.0 million in order to remain in
compliance with state requirements regulating air emissions before resuming full operation of this line. Management has not determined its plan of action for compliance related to this activated carbon line; however, if it is determined that a
shutdown of the full operation of the activated carbon line for other than a temporary period is warranted, the impact to current operating results would be insignificant.

New Accounting Pronouncements

See Note 16 for a discussion of new accounting pronouncements.

Critical Accounting
Policies

Management of the Company has evaluated the accounting policies used in the preparation of the financial statements and related footnotes and
believes the policies to be reasonable and appropriate. The preparation of the financial statements in accordance with accounting principles generally accepted in the United States requires management to make judgments, estimates, and assumptions
regarding uncertainties that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Management uses historical experience and all available
information to make these judgments and estimates, and actual results will inevitably differ from those estimates and assumptions that are used to prepare the Companys financial statements at any given time. Despite these inherent limitations,
management believes that Managements Discussion and Analysis (MD&A) and the financial statements and related footnotes provide a meaningful and fair perspective of the Company.

The following are the critical accounting policies impacted by managements judgments, assumptions, and estimates. Management believes that the application of these policies on a consistent basis enables the
Company to provide the users of the financial statements with useful and reliable information about the Companys operating results and financial condition.

Revenue Recognition

The Company recognizes revenue and related costs when goods are shipped or services are rendered to customers provided
that ownership and risk of loss have passed to the customer.

Revenue for major equipment projects is recognized under the percentage of completion method
by comparing actual costs incurred to total estimated costs to complete the respective projects.

Allowance for Doubtful Accounts

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The amount of
allowance recorded is based upon a quarterly review of specific customer transactions that remain outstanding at least three months beyond their respective due dates. If the financial condition of the Companys customers were to deteriorate
resulting in an impairment of their ability to make payments, additional allowances may be required.

Inventories

The Companys inventories are carried at the lower of cost or market and adjusted to net realizable value by recording a reserve for inventory obsolescence. The
inventory obsolescence reserve is adjusted quarterly based upon a review of specific products that have remained unsold for a prescribed period of time. If the market demand for various products softens, an additional reserve may be required.

Goodwill and Other Intangible Assets

The Company
tests goodwill for impairment at least annually by initially comparing the fair value of the Companys reporting units to their related carrying values. If the fair value of a reporting unit were less than its carrying value, additional steps
would be necessary to determine the amount, if any, of goodwill impairment. Fair values are estimated using discounted cash flow and other valuation methodologies that are based on projections of the amounts and timing of future revenues and cash
flows.



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Pensions

Accounting
for pensions involves estimating the cost of benefits to be provided well into the future and attributing that cost over the time period each employee works. To accomplish this, extensive use is made of assumptions about inflation, investment
returns, mortality, turnover and discount rates. These assumptions are reviewed annually. In determining the expected return on plan asset assumption, the Company evaluates long-term actual return information, the mix of investments that comprise
plan assets and future estimates of long-term investment returns.

Income Taxes

During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Significant judgment is required in determining the Companys annual tax
rate and in evaluating tax positions. The Company establishes reserves when, despite managements belief that the Companys tax return positions are fully supportable, it believes that certain positions are probable to be challenged upon
review by tax authorities. Changes in estimates are reflected in the year of settlement or expiration of the statute of limitations. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter,
the Company believes that its reserves reflect the probable outcome of known tax contingencies. The resolution of tax matters will not have a material impact on the consolidated financial condition of the Company, although a resolution could have a
material impact on the Companys consolidated statements of income and comprehensive income for a particular future period and on the Companys effective tax rate.

The Company is subject to varying statutory tax rates in the countries where it conducts business. Fluctuations in the mix of the Companys income between countries result in changes to the Companys overall
effective tax rate.

Litigation

The Company is
involved in various asserted and unasserted legal claims. An estimate is made to accrue for a loss contingency relating to any of these legal claims if it is probable that a liability was incurred at the date of the financial statements and the
amount of loss can be reasonably estimated. Because of the subjective nature inherent in assessing the outcome of legal claims and because the potential that an adverse outcome in a legal claim could have material impact on the Companys legal
position or results of operations, such estimates are considered to be critical accounting estimates. After review, it was determined at June 30, 2005, that for each of the various unresolved legal claims in which the Company is involved, the
conditions mentioned above were not met. As such, no accrual was recorded. The Company will continue to evaluate all legal matters as additional information becomes available. Reference is made to Note 9 of the Condensed Consolidated Financial
Statements for a discussion of litigation and contingencies.

Long-Lived Assets

The Company evaluates long-lived assets under the provisions of Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which
addresses financial accounting and reporting for the impairment of long-lived assets, and for long-lived assets to be disposed of. For assets to be held and used, the Company groups a long-lived asset or assets with other assets and liabilities at
the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. An impairment loss for an asset group reduces only the carrying amounts of a long-lived asset or assets of the group being
evaluated. The loss is allocated to the long-lived assets of the group on a pro-rata basis using the relative carrying amounts of those assets, except that the loss allocated to an individual long-lived asset of the group does not reduce the
carrying amount of that asset below its fair value whenever that fair value is determinable without undue cost and effort. Estimates of future cash flows used to test the recoverability of a long-lived asset group include only the future cash flows
that are associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset group. The future cash flow estimates used by the Company exclude interest charges.



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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 its originally filed Quarterly Report on Form 10-Q (the
Evaluation Date). Based upon that evaluation, the principal executive officer and principal financial officer concluded, as of the Evaluation Date, that the Companys disclosure controls and procedures were 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 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.

On March 21, 2006, management and the Audit Committee of the Company determined that the Unaudited Financial
Statements for the fiscal quarter ended June 30, 2005 contained errors and should not be relied upon. These errors consisted of the failure to record invoices for professional services in a timely manner. Pursuant to the Public Company
Accounting Oversight Board Standard No. 2, paragraph 140, this restatement reflects a material weakness in internal controls over financial reporting.

In connection with this restatement, management re-evaluated the effectiveness of our disclosure controls and procedures. Solely as a result of this material weakness, our principal executive officer and principal financial officer have
concluded that our disclosure controls and procedures were not effective as of the end of the fiscal quarter ended June 30, 2005.

Changes in Internal Control:

There have not been any other changes in the Companys internal controls over
financial reporting that occurred during the period ended June 30, 2005 that have significantly affected, or are reasonably likely to significantly affect, the Companys internal controls over financial reporting.

Remediation Activities:

Subsequent
to the filing of the original Form 10-Q, and in connection with the preparation of this Form 10-Q/A, we have re-evaluated the internal controls relative to this area and have implemented additional internal controls so that, as of the date hereof,
we believe that we have remediated this material weakness. The additional controls we have implemented, as of the filing date of this Form 10-Q/A, to ensure proper recording of invoices for professional services in a timely manner are as follows:



| |  |  | Centralized the collection and recordkeeping of invoices for professional services.
| | - |  | -----------------------------------------------------------------------------------



| |  |  | Established balance sheet reconciliation review meetings with the business process owners.
| | - |  | ------------------------------------------------------------------------------------------



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PART II  OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

See Note 9 to the unaudited
interim Condensed Consolidated Financial Statements contained herein.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

The annual meeting of stockholders was held April 20, 2005. In connection with the meeting, proxies were solicited pursuant to the Securities Exchange Act. The following are the voting results on the proposals considered and voted upon
at the meeting and described in the proxy statement.

Election of directors:



|                  |  |            |  |               
|----------------- |  | ---------- |  | --------------
|                  |  | Votes For  |  | Votes Withheld
|Class of 2008     |  |            |  |               
|Seth E. Schofield |  | 26,015,417 |  | 10,211,302    
|John P. Surma     |  | 25,952,039 |  | 10,274,680    

Amendment and restatement of the Companys Stock Option Plan:



|           |  |               |  |               
|---------- |  | ------------- |  | --------------
|Votes For  |  | Votes Against |  | Votes Withheld
|18,876,806 |  | 5,724,933     |  | 1,000,894     

Amendment and restatement of the Companys 1993 Non-Employee Directors Stock Option
Plan:



|           |  |               |  |               
|---------- |  | ------------- |  | --------------
|Votes For  |  | Votes Against |  | Votes Withheld
|18,014,573 |  | 6,571,853     |  | 1,016,206     

Ratification of Deloitte & Touche LLP as Independent Registered Public Accounting Firm
for 2005:



|           |  |               |  |               
|---------- |  | ------------- |  | --------------
|Votes For  |  | Votes Against |  | Votes Withheld
|35,614,712 |  | 453,433       |  | 158,572       



|Item 6. | Exhibits and Reports on Form 8-K
|------- | --------------------------------





|(c) | Exhibits
|--- | --------

Exhibit 10.1 Calgon Carbon Senior Credit
Facility, as amended incorporated by reference by the Companys Form 10-Q as originally filed with the Securities and Exchange Commission on August 9, 2005.

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.



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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.



|(d) | Reports on Form 8-K
|--- | -------------------

A report on Form 8-K, dated
June 15, 2005 which furnished information filed under Item 8.01 Other Events announcing the formation of a joint venture company with C. Gigantic Carbon.

A report on Form 8-K, dated June 20, 2005 which furnished information filed under Item 8.01 Other Events announcing UV patent developments.

A report on Form 8-K, dated June 28, 2005 which furnished information filed under Item 8.01 Other Events announcing the award of a service
contract in China.

A report on Form 8-K, dated July 14, 2005 which furnished information filed under Item 2.02 Results of
Operations and Financial Condition previewing the Companys second quarter earnings.

A report on Form 8-K, dated July 26, 2005
which furnished information filed under Item 2.02 Results of Operations and Financial Condition announcing the Companys second quarter earnings.

A report on Form 8-K, dated July 26, 2005 which furnished information filed under Item 8.01 Other Events announcing the quarterly dividend.



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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: March 27, 2006 |  | /s/ Leroy M. Ball        
|                     |  | Leroy M. Ball            
|                     |  | Vice President,          
|                     |  | Chief Financial Officer  



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