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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 10-Q/A(Amendment No.1)

|(Mark One)
|----------
|          
|x         
|          
|o         

Commission file number 1-10776

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

|Delaware                                                            |  | 25-0530110                             
|------------------------------------------------------------------- |  | ---------------------------------------
|                                                                    |  |                                        
|(State or   other jurisdiction of    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 90 days.

|Yes
o | No
x
|----- | ----

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

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

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

|Yes
o | No
x
|----- | ----

Applicable only to corporate issuers:

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

|Class                          |  | Outstanding at July 24, 2006
|------------------------------ |  | ----------------------------
|                               |  |                             
|Common   Stock, $.01 par value |  | 39,998,591   shares         
|                               |  |                             
|                              



CALGON CARBON CORPORATION FORM 10-Q/A QUARTER ENDED JUNE 30, 2006

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-Q/A for
Calgon Carbon Corporation, (the Company) for the quarter ended June 30, 2006
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, 2006.  On October
24, 2006, management and the Audit Committee of the Company determined that the
Unaudited Condensed Consolidated Financial Statements for the three and six
month periods ended June 30, 2006 that have been included in the Companys
Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission
on August 9, 2006 contained errors and should no longer be relied
upon.

The Company identified an error which resulted in an overstatement of the Companys benefit for income taxes for the three and six months ended June 30, 2006 for both continuing and discontinued operations.  The error was made in the calculation of the Companys tax provision for the quarters ended March 31 and June 30, 2006, respectively.

As a result, the accompanying Condensed
Consolidated Financial Statements for the three and six month periods ended June
30, 2006 have been restated from the amounts previously reported.  The
effect of the restatement for the three and six month periods ended June 30,
2006 is to decrease the benefit for income taxes and net income from continuing
operations by $1.5 million and decrease basic and diluted income per common
share from continuing operations by $0.04.  Income from discontinued
operations decreased by $9 thousand and $1.5 million for the three and six month
periods ended June 30, 2006, respectively.  Basic and diluted income per
common share from discontinued operations decreased by $0.03 for the six months
ended June 30, 2006.  Net income decreased by $1.5 million and $2.9 million
for the three and six month periods ended June 30, 2006, respectively, and basic
and diluted net income per common share decreased by $0.04 and $0.07 for the
three and six month periods ended June 30, 2006, 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, 2006;          
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                       
| |  | 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 disclosure   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, 2006, 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 2005 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.

1

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CALGON CARBON CORPORATION FORM 10-Q/A QUARTER ENDED June 30, 2006

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.  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                       | 24  
|                                                        |          |                                                                                                               |     
|                                                        | Item 4.  | Controls   and Procedures                                                                                     | 32  
|                                                        |          |                                                                                                               |     
|PART II -   OTHER INFORMATION                           |         
|                                                        |         
|                                                        | Item 1.  | Legal   Proceedings                                                                                           | 33  
|                                                        |          |                                                                                                               |     
|                                                        | Item 1a. | Risk   Factors                                                                                                | 33  
|                                                        |          |                                                                                                               |     
|                                                        | Item 3.  | Default   upon Senior Security                                                                                | 34  
|                                                        |          |                                                                                                               |     
|                                                        | Item 4.  | Submission   of Matters to a Vote of Security Holders                                                         | 35  
|                                                        |          |                                                                                                               |     
|                                                        | Item 6.  | Exhibits                                                                                                      | 35  
|                                                        |          |                                                                                                               |     
|SIGNATURES                                              | 36      
|                                                        |          |                                                                                                              
|CERTIFICATIONS                                          |         

2

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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 (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, 2005 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 2006 are not necessarily indicative of the results that may be expected for the year ending December 31, 2006.

3

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CALGON CARBON CORPORATIONCONDENSED 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, |  
|------------------------------------------------------------------------- |  | ----------------------------- | ---------- | --------------------------- | -
|                                                                          |  |                               |            |                             |  
|                                                                          |  | 2006                          |            | 2005                        |  
|                                                                          |  |                               |            |                             |  
|                                                                          |  | (As   Restated, See Note 18)  |            |                             |  
|Net sales                                                                 |  | $                             | 80,510     |                             | $
|                                                                          |  |                               |            |                             |  
|Cost of products sold (excluding   depreciation)                          |  |                               | 59,962     |                             |  
|Depreciation and   amortization                                           |  |                               | 4,794      |                             |  
|Selling, general and   administrative expenses                            |  |                               | 16,570     |                             |  
|Research and development   expenses                                       |  |                               | 1,041      |                             |  
|Gain on insurance settlement   (Note 2)                                   |  |                               | (4,899     | )                           |  
|Gulf Coast Facility   impairment charge (Note 4)                          |  |                               |           |                             |  
|Restructuring charge                                                      |  |                               | 1          |                             |  
|                                                                          |  |                               |            |                             |  
|                                                                          |  |                               | 77,469     |                             |  
|                                                                          |  |                               |            |                             |  
|Income (loss) from   operations                                           |  |                               | 3,041      |                             |  
|Interest income                                                           |  |                               | 234        |                             |  
|Interest expense                                                          |  |                               | (1,524     | )                           |  
|Other expensenet                                                         |  |                               | (514       | )                           |  
|                                                                          |  |                               |            |                             |  
|Income (loss) before income   taxes, equity income, and minority interest |  |                               | 1,237      |                             |  
|Benefit for income taxes   (Note 16)                                      |  |                               | (925       | )                           |  
|                                                                          |  |                               |            |                             |  
|Income (loss) before equity   income and minority interest                |  |                               | 2,162      |                             |  
|Equity in (loss) income from   equity investments                         |  |                               | (24        | )                           |  
|Minority interest                                                         |  |                               | 1          |                             |  
|                                                                          |  |                               |            |                             |  
|Income (loss) from   continuing operations                                |  |                               | 2,139      |                             |  
|Income from discontinued   operations                                     |  |                               | 297        |                             |  
|                                                                          |  |                               |            |                             |  
|Net income (loss)                                                         |  |                               | 2,436      |                             |  
|Common stock dividends                                                    |  |                               |           |                             |  
|Retained earnings, beginning   of period                                  |  |                               | 100,419    |                             |  
|                                                                          |  |                               |            |                             |  
|Retained earnings, end of   period                                        |  | $                             | 102,855    |                             | $
|                                                                          |  |                               |            |                             |  
|Net income (loss) per common   share                                      |  |                               |            |                             |  
|Basic:                                                                    |  |                               |            |                             |  
|Income   (loss) from continuing operations                                |  | $                             | .05        |                             | $
|Income   from discontinued operations                                     |  | $                             | .01        |                             | $
|                                                                          |  |                               |            |                             |  
|Net   income (loss)                                                       |  | $                             | .06        |                             | $
|Diluted:                                                                  |  |                               |            |                             |  
|Income   (loss) from continuing operations                                |  | $                             | .05        |                             | $
|Income   from discontinued operations                                     |  | $                             | .01        |                             | $
|                                                                          |  |                               |            |                             |  
|Net   income (loss)                                                       |  | $                             | .06        |                             | $
|Weighted average shares   outstanding                                     |  |                               |            |                             |  
|Basic                                                                     |  |                               | 39,875,505 |                             |  
|Diluted                                                                   |  |                               | 40,076,904 |                             |  

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

4

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CALGON CARBON CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(Dollars in Thousands except share data) (Unaudited)

|                                                                                                          |  | June 30,    2006             |         | December   31,    2005 |  
|--------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------- | ---------------------- | -
|                                                                                                          |  |                              |         |                        |  
|                                                                                                          |  | (As   Restated, See Note 18) |         |                        |  
|ASSETS                                                                                                    |  |                              |         |                        |  
|Current assets:                                                                                           |  |                              |         |                        |  
|Cash   and cash equivalents                                                                               |  | $                            | 4,484   |                        | $
|Receivables   (net of allowance of $2,120 and $2,172)                                                     |  |                              | 56,567  |                        |  
|Revenue   recognized in excess of billings on uncompleted contracts                                       |  |                              | 4,692   |                        |  
|Inventories                                                                                               |  |                              | 69,326  |                        |  
|Deferred   income taxes  current                                                                         |  |                              | 10,262  |                        |  
|Other   current assets                                                                                    |  |                              | 7,264   |                        |  
|Assets   held for sale                                                                                    |  |                              |        |                        |  
|                                                                                                          |  |                              |         |                        |  
|Total   current assets                                                                                    |  |                              | 152,595 |                        |  
|Property,   plant and equipment, net                                                                      |  |                              | 108,977 |                        |  
|Equity   investments                                                                                      |  |                              | 7,131   |                        |  
|Intangibles                                                                                               |  |                              | 9,260   |                        |  
|Goodwill                                                                                                  |  |                              | 34,478  |                        |  
|Deferred   income taxes  long-term                                                                       |  |                              | 17,151  |                        |  
|Other   assets                                                                                            |  |                              | 3,662   |                        |  
|                                                                                                          |  |                              |         |                        |  
|Total   assets                                                                                            |  | $                            | 333,254 |                        | $
|                                                                                                          |  |                              |         |                        |  
|LIABILITIES   AND SHAREHOLDERS EQUITY                                                                    |  |                              |         |                        |  
|Current liabilities:                                                                                      |  |                              |         |                        |  
|Short-term   debt                                                                                         |  | $                            | 67,112  |                        | $
|Accounts   payable and accrued liabilities                                                                |  |                              | 37,368  |                        |  
|Billings   in excess of revenue recognized on uncompleted contracts                                       |  |                              | 1,915   |                        |  
|Payroll   and benefits payable                                                                            |  |                              | 9,467   |                        |  
|Accrued   income taxes                                                                                    |  |                              | 12,399  |                        |  
|Liabilities   held for sale                                                                               |  |                              |        |                        |  
|                                                                                                          |  |                              |         |                        |  
|Total   current liabilities                                                                               |  |                              | 128,261 |                        |  
|Long-term   debt                                                                                          |  |                              | 2,925   |                        |  
|Deferred   income taxes  long-term                                                                       |  |                              | 1,189   |                        |  
|Accrued   pension and other liabilities                                                                   |  |                              | 45,148  |                        |  
|                                                                                                          |  |                              |         |                        |  
|Total   liabilities                                                                                       |  |                              | 177,523 |                        |  
|                                                                                                          |  |                              |         |                        |  
|Commitments   and contingencies                                                                           |  |                              |         |                        |  
|Shareholders   equity:                                                                                   |  |                              |         |                        |  
|Common   shares, $.01 par value, 100,000,000 shares authorized, 42,517,566 and   42,459,733 shares issued |  |                              | 425     |                        |  
|Additional   paid-in capital                                                                              |  |                              | 71,055  |                        |  
|Retained   earnings                                                                                       |  |                              | 102,855 |                        |  
|Accumulated   other comprehensive income                                                                  |  |                              | 10,185  |                        |  
|Deferred   compensation                                                                                   |  |                              | (1,552  | )                      |  
|                                                                                                          |  |                              |         |                        |  
|                                                                                                          |  |                              | 182,968 |                        |  
|Treasury   stock, at cost, 2,819,690 and 2,787,258 shares                                                 |  |                              | (27,237 | )                      |  
|                                                                                                          |  |                              |         |                        |  
|Total   shareholders equity                                                                              |  |                              | 155,731 |                        |  
|                                                                                                          |  |                              |         |                        |  
|Total   liabilities and shareholders equity                                                              |  | $                            | 333,254 |                        | $
|                                                                                                          |  |                              |         |                        |  

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

5

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CALGON CARBON CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Dollars in Thousands) (Unaudited)

|                                                                                                                         |  | Six Months   Ended    June 30, |        
|------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------ | -------
|                                                                                                                         |  |                                |        
|                                                                                                                         |  | 2006                           |        
|                                                                                                                         |  |                                |        
|                                                                                                                         |  | (As Restated,   See Note 18)   |        
|Cash flows from operating   activities                                                                                   |  |                                |        
|Net income (loss)                                                                                                        |  | $                              | 1,022  
|Adjustments to reconcile   net income (loss) to net cash provided by operating activities:                               |  |                                |        
|Gain on insurance   settlement                                                                                           |  |                                | (4,899 
|Gain from divestitures                                                                                                   |  |                                | (6,719 
|Depreciation and   amortization                                                                                          |  |                                | 9,594  
|Equity income from equity   investments                                                                                  |  |                                | (180   
|Employee benefit plan   provisions                                                                                       |  |                                | 2,220  
|Distributions received from   Calgon Mitsubishi Chemical Corporation                                                     |  |                                |       
|Non-cash impairment and   restructuring charges                                                                          |  |                                |       
|Changes   in assets and liabilities - net of effects from purchase of business,   non-cash impairment and restructuring: |  |                                |        
|Increase   in receivables                                                                                                |  |                                | (1,993 
|Increase   in inventories                                                                                                |  |                                | (1,232 
|(Increase)   decrease in revenue in excess of billings on uncompleted contracts and other   current assets               |  |                                | (1,780 
|Increase   (decrease) in accounts payable, accrued liabilities, and billings in excess   of revenue                      |  |                                | (4,368 
|Increase   (decrease) in long-term deferred income taxes                                                                 |  |                                | 1,496  
|Other   items  net                                                                                                      |  |                                | 1,725  
|                                                                                                                         |  |                                |        
|Net   cash (used in) provided by operating activities                                                                    |  |                                | (5,114 
|                                                                                                                         |  |                                |        
|Cash flows from investing   activities                                                                                   |  |                                |        
|Purchase of business - net   of cash                                                                                     |  |                                |       
|Proceeds from divestitures                                                                                               |  |                                | 21,213 
|Property, plant and   equipment expenditures                                                                             |  |                                | (7,302 
|Proceeds from insurance   settlement for plant and equipment                                                             |  |                                | 4,595  
|Proceeds from disposals of   property, plant and equipment                                                               |  |                                | 416    
|                                                                                                                         |  |                                |        
|Net cash provided by (used   in) investing activities                                                                    |  |                                | 18,922 
|                                                                                                                         |  |                                |        
|Cash flows from financing   activities                                                                                   |  |                                |        
|Proceeds   from borrowings                                                                                               |  |                                | 61,039 
|Repayments   of borrowings                                                                                               |  |                                | (74,927
|Treasury   stock purchases                                                                                               |  |                                | (108   
|Common   stock issued through exercise of stock options                                                                  |  |                                | 466    
|Common   stock dividends                                                                                                 |  |                                |       
|                                                                                                                         |  |                                |        
|Net   cash (used in) provided by financing activities                                                                    |  |                                | (13,530
|                                                                                                                         |  |                                |        
|Effect of exchange rate   changes on cash                                                                                |  |                                | (1,240 
|                                                                                                                         |  |                                |        
|Decrease in cash and cash   equivalents                                                                                  |  |                                | (962   
|Cash and cash equivalents,   beginning of period                                                                         |  |                                | 5,446  
|                                                                                                                         |  |                                |        
|Cash and cash equivalents,   end of period                                                                               |  | $                              | 4,484  
|                                                                                                                         |  |                                |        

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

6

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CALGON CARBON CORPORATIONNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in Thousands) (Unaudited)

|1. | Acquisition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | In December   2004, the Company increased its equity ownership in Datong Carbon Corporation   from 80% to 100% for a purchase price of $0.7 million, which was paid in the   three months ended March 31, 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 an initial   investment of $0.2 million and exchange of technology.  It is accounted for in the Companys   financial statements under the equity method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2. | Gain on   Insurance Settlement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | In August   2005, the Companys plant located in Pearlington, Mississippi was damaged by   Hurricane Katrina.  In accordance with   FIN 30, Accounting for Involuntary   Conversions of Non-Monetary Assets to Monetary Assets, the Company   has written off the net book value of the destroyed inventory and property   totaling $1.8 million. The replacement value of the inventory and property   exceeded its net book value by approximately $4.9 million, which was recorded   as a gain on insurance settlement. As of June 30, 2006, the Company has   collected $8.8 million of insurance proceeds.  The Company is still in process of settling its business   interruption insurance claim with its insurance company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3. | Discontinued   Operations and Assets and Liabilities Held for Sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The   Companys financial statements for all periods presented were significantly   impacted by activities relating to the divestiture of two of the Companys   businesses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The Company   reclassified the following businesses from continuing operations to   discontinued operations and assets held for sale for all periods presented:   Charcoal/Liquid in Bodenfelde, Germany and Solvent Recovery in Columbus,   Ohio; Vero Beach, Florida; and Ashton, United Kingdom.  The Charcoal/Liquid and Solvent Recovery   businesses were reported in the Companys Consumer and Equipment segments,   respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On February   17, 2006, Calgon Carbon Corporation, through its wholly owned subsidiary   Chemviron Carbon GmbH, executed an agreement (the Charcoal Sale Agreement)   with proFagus GmbH, proFagus Grundstuecksverwaltungs GmbH and proFagus   Beteiligungen GmbH (as Guarantor) to sell, and sold, substantially all the   assets, real estate, and specified liabilities of the Bodenfelde, Germany   facility (the Charcoal/Liquid business).    The facility includes the production of charcoal for consumer use and   liquids that are recovered during charcoal production.  The products are sold to retail and   industrial markets.  The aggregate   sales price, based on an exchange rate of 1.19 dollars per Euro,consisted   of $20.4 million of cash which includes a final working capital adjustment of   $1.3 million.  The Company provided   guarantees to the buyer related to pre-divestiture tax liabilities, future   environmental remediation
costs related to pre-divestiture activities and   other contingencies.  Management   believes the ultimate cost of such guarantees is not material.  An additional $5.0 million could be paid   contingent upon the business meeting certain earnings targets over the next   three years.  As of June 30, 2006, the   Company has recorded a pre-tax gain of $4.9 million or $1.9 million, net of   tax, on the sale of the Charcoal/Liquid divestiture.

7

---



| | On April 24,   2006, the Company completed the sale of the assets of its Solvent Recovery   business to MEGTEC Systems, Inc. (MEGTEC), a subsidiary of Sequa   Corporation.  The Solvent Recovery   unit provides turnkey on-site regenerable solvent recovery systems,   distillation systems, on-site regenerable volatile organic compound   concentrators, vapor-phase biological oxidation systems, and related services   on a worldwide basis.  The purchase   price of $1.8 million included cash proceeds of approximately $0.8 million   and $0.7 million of assumed liabilities, primarily accounts payable.  The transaction was also subject to a   working capital adjustment which is currently estimated at $0.3 million,   which management expects to finalize in the third quarter of 2006.  As of June 30, 2006, the Company recorded   a pre-tax gain of $0.4 million or $0.3 million, net of tax, on the sale of   the Solvent Recovery business.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | The following table details selected
financial information for the businesses included within the discontinued
operations in the Condensed Consolidated Statements of Operations and Retained
Earnings:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|                                      |  | Charcoal/Liquid                |     | Solvent   Recovery         |  
|------------------------------------- |  | ------------------------------ | --- | -------------------------- | -
|                                      |  |                                |     |                            |  
|                                      |  | Three   Months   Ended June 30 |     | Six Months   Ended June 30 |  
|                                      |  |                                |     |                            |  
|(Dollars in thousands)                |  | 2006                           |     | 2005                       |  
|                                      |  |                                |     |                            |  
|Net sales                             |  | $                              |    |                            | $
|                                      |  |                                |     |                            |  
|Income (loss) from   operations       |  |                                |    |                            |  
|Other income (expense)-net            |  |                                | 173 |                            |  
|                                      |  |                                |     |                            |  
|Income (loss) before income   taxes   |  |                                | 173 |                            |  
|Income tax expense   (benefit)        |  |                                | 51  |                            |  
|                                      |  |                                |     |                            |  
|Income from discontinued   operations |  | $                              | 122 |                            | $
|                                      |  |                                |     |                            |  

The major classes of assets and liabilities of operations held for sale in the Condensed Consolidated Balance Sheets are as follows:

|                                           |  | Charcoal/Liquid |   | Solvent   Recovery    |  
|------------------------------------------ |  | --------------- | - | --------------------- | -
|                                           |  |                 |   |                       |  
|(Dollars in thousands)                     |  | June 30,   2006 |   | December   31,   2005 |  
|                                           |  |                 |   |                       |  
|Assets:                                    |  |                 |   |                       |  
|Receivables                                |  | $               |  |                       | $
|Inventories                                |  |                 |  |                       |  
|Property,   plant and equipment, net       |  |                 |  |                       |  
|Goodwill                                   |  |                 |  |                       |  
|Other   assets                             |  |                 |  |                       |  
|                                           |  |                 |   |                       |  
|Total assets held for sale                 |  | $               |  |                       | $
|                                           |  |                 |   |                       |  
|Liabilities                                |  |                 |   |                       |  
|Accounts   payable and accrued liabilities |  |                 |  |                       |  
|Other   liabilities                        |  |                 |  |                       |  
|                                           |  |                 |   |                       |  
|Total liabilities held for   sale          |  | $               |  |                       | $
|                                           |  |                 |   |                       |  

8

---



|4. | 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 in 2005.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|5. | Inventories:                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|               |  | June 30,   2006 |        | December   31, 2005 |  
|-------------- |  | --------------- | ------ | ------------------- | -
|               |  |                 |        |                     |  
|Raw materials  |  | $               | 16,520 |                     | $
|Finished goods |  |                 | 52,806 |                     |  
|               |  |                 |        |                     |  
|               |  | $               | 69,326 |                     | $
|               |  |                 |        |                     |  

|6. | Supplemental   Cash Flow Information:
|-- | -------------------------------------

|                                   |  | Six Months   Ended June 30, |       
|---------------------------------- |  | --------------------------- | ------
|                                   |  |                             |       
|                                   |  | 2006                        |       
|                                   |  |                             |       
|Cash paid during the period   for: |  |                             |       
|Interest                           |  | $                           | (3,094
|                                   |  |                             |       
|Income taxes paid  net            |  | $                           | (480  
|                                   |  |                             |       

|7. | Dividends:                                                                                                                                                                                                                       
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                  
|   | The Companys Board of Directors did not declare or pay a dividend for the
quarter or six months ended June 30, 2006. Common stock dividends declared and
paid during the quarter ended June 30, 2005 were $.03 per common
share.
|   |                                                                                                                                                                                                                                  
|8. | Comprehensive income   (loss):                                                                                                                                                                                                   

|                                                  |  | Three   Months Ended June 30, |       | Six Months   Ended June 30, |  
|------------------------------------------------- |  | ----------------------------- | ----- | --------------------------- | -
|                                                  |  |                               |       |                             |  
|                                                  |  | 2006                          |       | 2005                        |  
|                                                  |  |                               |       |                             |  
|Net income (loss)                                 |  | $                             | 2,436 |                             | $
|Other   comprehensive income (loss), net of taxes |  |                               | 2,885 |                             |  
|                                                  |  |                               |       |                             |  
|Comprehensive income (loss)                       |  | $                             | 5,321 |                             | $
|                                                  |  |                               |       |                             |  

| | The only matter   contributing to the other comprehensive income during the three and six   months ended June 30, 2006 was the foreign currency translation adjustment of   $2.8 million and $3.6 million, respectively, and the change in the fair value   of the derivative instruments of ($15) thousand and ($0.1) million as   described in Note 10.  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.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

---



|9. | Segment Information:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The   Companys management has identified three segments based on product line and   associated services.  Those segments   include Activated Carbon and Service, Equipment, and Consumer.  The Companys chief operating decision   maker, its chief executive officer John S. Stanik, receives and reviews   financial information in this format.    The Activated Carbon and Service segment manufactures granular   activated carbon for use in applications to remove organic compounds from   liquids, gases, water, and air.  This   segment also consists of services related to activated carbon including   reactivation of spent carbon and the leasing, monitoring, and maintenance of   carbon fills at customer sites.  The   service portion of this segment also includes services related to the   Companys ion exchange technologies for treatment of groundwater and process   streams.  The Equipment segment   provides solutions to
customers air and 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   purification technologies directly to the consumer in the form of products   and services including carbon cloth and activated carbon for tarnish   prevention and household odors. The following segment information represents   the results of the Companys continuing operations.

|                                                                                                                 |  | Three   Months Ended   June 30, |        | Six Months   Ended   June 30, |  
|---------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------ | ----------------------------- | -
|                                                                                                                 |  |                                 |        |                               |  
|                                                                                                                 |  | 2006                            |        | 2005                          |  
|                                                                                                                 |  |                                 |        |                               |  
|Net Sales                                                                                                        |  |                                 |        |                               |  
|Carbon   and Service                                                                                             |  | $                               | 67,435 |                               | $
|Equipment                                                                                                        |  |                                 | 9,446  |                               |  
|Consumer                                                                                                         |  |                                 | 3,629  |                               |  
|                                                                                                                 |  |                                 |        |                               |  
|                                                                                                                 |  | $                               | 80,510 |                               | $
|                                                                                                                 |  |                                 |        |                               |  
|Income (loss) from   operations before depreciation, amortization, impairment, restructuring, and   income taxes |  |                                 |        |                               |  
|Carbon   and Service                                                                                             |  | $                               | 9,061  |                               | $
|Equipment                                                                                                        |  |                                 | (2,013 | )                             |  
|Consumer                                                                                                         |  |                                 | 788    |                               |  
|                                                                                                                 |  |                                 |        |                               |  
|                                                                                                                 |  |                                 | 7,836  |                               |  
|Depreciation and   amortization                                                                                  |  |                                 |        |                               |  
|Carbon   and Service                                                                                             |  |                                 | 4,451  |                               |  
|Equipment                                                                                                        |  |                                 | 208    |                               |  
|Consumer                                                                                                         |  |                                 | 135    |                               |  
|                                                                                                                 |  |                                 |        |                               |  
|                                                                                                                 |  |                                 | 4,794  |                               |  
|                                                                                                                 |  |                                 |        |                               |  
|Income (loss) from   operations before impairment, restructuring, and income taxes                               |  | $                               | 3,042  |                               | $
|                                                                                                                 |  |                                 |        |                               |  
|Reconciling items:                                                                                               |  |                                 |        |                               |  
|Gulf   Coast Facility impairment charge                                                                          |  |                                 |       |                               |  
|Restructuring   charge                                                                                           |  |                                 | (1     | )                             |  
|Interest   income                                                                                                |  |                                 | 234    |                               |  
|Interest   expense                                                                                               |  |                                 | (1,524 | )                             |  
|Other   expense  net                                                                                            |  |                                 | (514   | )                             |  
|                                                                                                                 |  |                                 |        |                               |  
|Consolidated income (loss)   before income taxes, equity in income, and minority interest                        |  | $                               | 1,237  |                               | $
|                                                                                                                 |  |                                 |        |                               |  

|                                          |  | June 30,   2006 |         | December   31, 2005 |  
|----------------------------------------- |  | --------------- | ------- | ------------------- | -
|                                          |  |                 |         |                     |  
|Total Assets                              |  |                 |         |                     |  
|Carbon   and Service                      |  | $               | 276,884 |                     | $
|Equipment                                 |  |                 | 43,355  |                     |  
|Consumer                                  |  |                 | 13,015  |                     |  
|                                          |  |                 |         |                     |  
|Total assets from continuing   operations |  | $               | 333,254 |                     | $
|Assets   held for sale                    |  |                 |        |                     |  
|                                          |  |                 |         |                     |  
|Consolidated   total assets               |  | $               | 333,254 |                     | $
|                                          |  |                 |         |                     |  

10

---



|10. | 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 nineteen foreign currency forward exchange contracts outstanding at June   30, 2006 and none of these contracts qualified for hedge accounting   treatment.  The Company held forty   foreign currency forward exchange contracts and one foreign currency swap at   June 30, 2005, of which twelve qualified and were 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 was recorded in other comprehensive   (income) loss (see Note 8).  It was   released into operations over 12 months based on the timing of the sales of   the underlying inventory.  The release   to operations was reflected in cost of products sold.  During the periods ended June 30, 2006 and
2005, the Company recorded an immaterial gain in other income for the   nineteen and 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 ($15) thousand and ($0.1) million,   respectively, for the three and six month periods ended June 30, 2006 and   $0.1 million and ($23) thousand, respectively, for the three and six month   periods ended June 30, 2005 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 $0.7 million and $0.4 million, respectively, as of June 30,   2006 and 2005.                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | No component of the   derivatives gains or losses has been excluded from the assessment of hedge   effectiveness.  For the periods ended   June 30, 2006 and 2005, the net gain or loss recognized due to the amount of   hedge ineffectiveness was insignificant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|11. | Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | In August 2005, the   Companys Pearl River plant was impacted by Hurricane Katrina.  In June 2006, the Company settled its   property damage claim with its insurance carrier for approximately $8.8   million, resulting in a gain of $4.9 million.  The Company has filed a preliminary claim for business   interruption related to this event and is in the process of finalizing it   with its insurance carrier.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | 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.                                                                                                                                                        

11

---



| | The Company is a party in   three cases involving challenges to the validity of its U.S. Patent No.   6,129,893 and U.S. Patent No. 6,565,803 B1 (U.S. Patents) and its Canadian   Patent No. 2,331,525 (525 Patent) for the method of preventing infection   from cryptosporidium found in drinking water.  In the first case, Wedeco Ideal Horizons, Inc. filed suit   against the Company in the United States District Court for the District of   New Jersey seeking a declaratory judgment that it does not infringe the   Companys U.S. Patents on the grounds that they are invalid and alleging   unfair competition by the Company.  On   June 30, 2006, the Court granted Wedecos motion for summary judgment on   validity of the U.S. Patents, denied the Companys motion for summary   judgment on infringement on the grounds that there can be no infringement   where there is no valid patent and granted the Companys motion for
summary   judgment on Wedecos claim of unfair competition.  The Company has appealed the Courts decision against it to the   Federal Circuit Court of Appeals and expects a decision will be rendered by   the Court in eighteen to twenty-four months.    In the second case, the Company filed suit 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.  The   District Court has staged this action pending the outcome of the Companys   appeal in the Wedeco case.  In the   third case, the Company filed suit 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.  A bench trial
was conducted   and completed in April 2006 and a decision is expected sometime before   November 2006.  The Company cannot   predict the outcome of the three matters.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | The Company has received a demand from the Pennsylvania Department of
Environmental Protection (PADEP) that the Company reimburse PADEP for response
costs the agency alleges have been taken at a site owned by a third party and
located in Allegheny County, Pennsylvania (Site). The letter 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 are approximately $1.3 million. Based on information provided by PADEP,
the Site is approximately 8 acres and was used from the 1950s until the 1960s 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.  The
Company and the PADEP have agreed to a settlement of the matter, subject to
written documentation, requiring the Company to pay $515,000 in two installments
to resolve the matter.  This amount has been charged to earnings for the
second quarter ended June 30, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | 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 evaluating   the claim, and at this time, cannot predict the outcome of this matter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | The Company is involved in   various other legal proceedings, lawsuits and claims, including employment,   product warranty and environmental matters of a nature considered normal to   its business.  It is the Companys   policy to accrue for amounts related to these legal matters 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   February 2004 purchase of substantially all of Waterlinks operating assets and the stock   of Waterlinks U.K. subsidiary, several environmental studies were performed   on the Columbus, Ohio property by environmental consulting firms which   identified and characterized areas of contamination.  In addition, these firms identified   alternative methods of remediating the property, identified feasible   alternatives and prepared cost evaluations of the various alternatives.  The Company concluded from the information   in the studies that a loss at this property is probable and recorded the   liability as a component of noncurrent other liabilities in the Companys   consolidated balance sheet.  At   December 31, 2005, the balance recorded was $5.3 million.  Liability estimates are based on an   evaluation of, among other factors, currently available facts, existing   technology, presently enacted laws and
regulations, and the remediation experience   of other companies.  During the first   four months of 2006, the Company undertook a process of evaluating   contractors and securing bids to perform the remediation work on the   Columbus, Ohio property.  As a result   of the evaluation of the additional information gathered during that process,   the Company reduced its estimate of its liability by $1.3 million to $4.0   million as of March 31, 2006. The reduction of the liability was recorded as   a reduction of selling, general and administrative expenses on the Companys   condensed consolidated statement of operations and retained earnings for the   three months ended March 31, 2006.    The Company has not incurred any environmental remediation expense for   the six months ended June 30, 2006 and has incurred a total of $0.2 million   of environmental remediation expense to date.                                                                                                                                                                                                                 

12

---



|    | It is reasonably possible   that a change in the estimate of this obligation will occur as remediation   preparation and remediation activity commences over the upcoming months.  The ultimate remediation costs are   dependent upon, among other things, the requirements of any state or federal   environmental agencies, the remediation methods employed, the final scope of   work being determined, and the extent and types of contamination which will   not be fully determined until experience is gained through remediation and   related activities.  The accrued   amounts are expected to be paid out over the course of several years once   work has commenced.  The Company has   yet to make a determination that it will proceed with remediation efforts in   2006.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Company owns a 49%   interest in a joint venture, Calgon Mitsubishi Chemical Corporation, which   was formed on October 1, 2002.  At   June 30, 2006, Calgon Mitsubishi Chemical Corporation had $6.5 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, 2006, the   lender had not requested, and the Company has not provided, such guarantee.                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|12. | Goodwill & Intangible   Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Company accounts for   goodwill and intangible assets in accordance with Statement of Financial   Accounting Standard (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 31 of 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,   2005.                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The following is the   categorization of the Companys intangible assets as of June 30, 2006 and   December 31, 2005 respectively:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|                             |  | Weighted   Average   Amortization   Period |                           | June 30,   2006 |                    | December   31, 2005 |                           
|---------------------------- |  | ------------------------------------------ | ------------------------- | --------------- | ------------------ | ------------------- | --------------------------
|                             |  |                                            |                           |                 |                    |                    
|                             |  |                                            | Gross   Carrying   Amount |                 | Foreign   Exchange |                     | Accumulated   Amortization
|                             |  |                                            |                           |                 |                    |                     |                           
|Amortized Intangible Assets: |  |                                            |                           |                 |                    |                     |                           
|Patents                      |  |                                            | 15.4   Years              |                 | $                  | 1,369               |                           
|Customer   Relationships     |  |                                            | 17.0   Years              |                 |                    | 9,323               |                           
|Customer   Contracts         |  |                                            | 2.8   Years               |                 |                    | 664                 |                           
|License   Agreement          |  |                                            | 5.0   Years               |                 |                    | 500                 |                           
|Unpatented   Technology      |  |                                            | 20.0   Years              |                 |                    | 2,875               |                           
|Product   Certification      |  |                                            | 7.9   Years               |                 |                    | 665                 |                           
|                             |  |                                            |                           |                 |                    |                     |                           
|Total                        |  |                                            | 16.0   Years              |                 | $                  | 15,396              |                           
|                             |  |                                            |                           |                 |                    |                     |                           

| | For the three and six   months ended June 30, 2006, the Company recognized $0.4 million and $0.9   million, respectively, of amortization expense.  For the three and six months ended June 30, 2005, the Company   recognized $0.5 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 ending December 31: |  |   |       | 
|-------------------------------- |  | - | ----- | 
|                                 |  |   |       | 
|2006                             |  | $ | 1,763 | 
|2007                             |  | $ | 1,530 | 
|2008                             |  | $ | 1,330 | 
|2009                             |  | $ | 1,057 | 
|2010                             |  | $ | 914   | 

13

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| | The changes in the carrying   amounts of goodwill by segment for the six months ended June 30, 2006 are as   follows:
| | ---------------------------------------------------------------------------------------------------------------------

|                                |  | Carbon   &   Service   Segment |        | Equipment   Segment |   | Consumer   Segment |  | Total |   
|------------------------------- |  | ------------------------------ | ------ | ------------------- | - | ------------------ |  | ----- | --
|                                |  |                                |        |                     |   |                    |  |       |   
|Balance as of January 1,   2006 |  | $                              | 20,534 |                     | $ | 13,280             |  | $     | 60
|Foreign exchange                |  |                                | 280    |                     |   | 324                |  |       |  
|                                |  |                                |        |                     |   |                    |  |       |   
|Balance as of June 30, 2006     |  | $                              | 20,814 |                     | $ | 13,604             |  | $     | 60
|                                |  |                                |        |                     |   |                    |  |       |   

|13. | Borrowing   Arrangements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | On January   30, 2006, the Company amended and restated its existing $125.0 million   unsecured United States revolving credit facility.  The amended $118.0 million facility consists of a $100.0   million revolving loan and an $18.0 million term loan.  Current commitments from the lenders under   the new agreement total $105.0 million with an additional $13.0 million   available from the existing or new lenders.    The amended and restated facility is secured by a blanket security   interest in favor of the lenders and a pledge agreement in favor of the   lenders with respect to the stock of certain subsidiaries.  Borrowings under this facility were being   charged a weighted average interest rate of 8.39% at June 30, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Included in   the credit facility is a letter of credit sub-facility that cannot exceed   $30.0 million.  The interest rate is   based upon Euro-based (LIBOR) rates with other interest rate options   available. The applicable Euro Dollar margin in effect when the Company is in   compliance with the terms of the facility ranges from 1.25% to 2.50%, and an   unused commitment fee that ranges from 0.25% to 0.50% and is based upon the   Company's ratio of debt to earnings before interest, income tax, depreciation   and amortization (EBITDA).  During   periods of default the lenders have the option of increasing both the Euro   Dollar margin and the unused commitment fee by up to as much as 2.00%.  At June 30, 2006, the default premium was   set at 0.5%.  The credit facilitys   covenants impose financial restrictions on the Company, including maintaining   certain ratios of debt to EBITDA, EBITDA to cash outlays (cash outlays as defined   by
the agreement include payments for income tax, interest, debt principal,   dividends, and capital expenses) and operating assets to debt and minimum 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 also   contains mandatory prepayment provisions for the term loan and proceeds in   excess of pre-established amounts of certain events as defined within the   loan agreement.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | On February   23, 2006, the Company, as required by the amended credit facility, repaid the   $18.0 million term loan with the proceeds from the sale of the Companys   Charcoal/Liquid business.  The   remaining $100.0 million revolving loan has $87.0 million of funding   commitments from the Companys lenders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | In March   2006, the Company amended its U.S. credit facility to clarify elements of   certain covenants and to finalize an amount used for one of the add-back   provisions of the covenants that were required to be met as of December 31,   2005 as conditions to the closing of the facility.  The Company was in compliance with these covenants as of   December 31, 2005, as amended.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

14

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|    | As of March   31, 2006 the Company was not in compliance with the Fixed Charge covenant   ratio, which is based upon the Companys trailing twelve months EBITDA as   compared to the sum of the Companys trailing twelve months payments for   interest, taxes, dividends, and capital expenditures.  Since that time the Company has continued   to have access to the facility while working with its lenders to review   options for either restructuring the terms of the current facility or   replacing the facility with an alternative credit structure.  In addition, the Company has discussed   various financing alternatives with other lenders outside of its existing   bank syndicate in the interest of executing a financing structure that is   both flexible and sustainable.    Options that have been reviewed and considered either singularly or in   some combination are a waiver and amendment of the current revolving credit   facility, an asset-based
revolving credit facility, fixed asset term loan,   second-tier term loan, institutional term loan, private equity investment,   and a private or public convertible debt offering.  Evaluation of the various structures is continuing and as such   the current revolving credit facility remains in place as of this   filing.  As of June 30, 2006, the   Company remained out of compliance with the Fixed Charge covenant ratio and   also was out of compliance with its Leverage Covenant ratio, which is based   upon the Companys Total Funded Debt as compared to the Companys trailing   twelve months EBITDA.  The Company continues   to classify all borrowings under this facility as short term as of June 30,   2006.  The Company is restricted from   paying dividends since it is in default under the aforementioned facility.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The existing lenders have   reserved their rights to call the debt without further notice at any   time during the period of violation.    Should the lenders elect to exercise their rights and call the debt,   the Company would be unable to satisfy the obligation without securing an   alternative financing arrangement or arrangements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|14. | Stock Compensation Plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Company has two   stock-based compensation plans which are more fully described in Note 12 of   the Companys 2005 Annual Report on Form 10-K.  Prior to January 1, 2006, the Company accounted for awards   granted under those plans following the recognition and measurement   principles of Accounting Principles Board Opinion No. 25, Accounting for   Stock Issued to Employees, (APB No. 25) and related interpretations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Company adopted SFAS   No. 123(R), Share-based Payments, on January 1, 2006 using the modified   prospective application method.  Under   this transition method, compensation cost recognized in the quarter and   year-to-date ended June 30, 2006 includes the applicable amounts of   compensation cost of all stock-based payments granted prior to, but not yet   vested as of January 1, 2006 (based on the grant-date fair value estimated in   accordance with the original provisions of SFAS No. 123 and previously   presented in the pro forma footnote disclosures).  Compensation cost in the future will also include stock-based   payments granted subsequent to January 1, 2006 (based on the grant-date fair   value estimated in accordance with the new provisions of SFAS No.   123(R)).  Results for prior periods   have not been restated.  Prior to the   adoption of SFAS No. 123(R), no compensation cost was reflected in net income   for stock

options or stock appreciation rights (SARS) as all options and SARS   granted had an exercise price equal to the market value of the underlying   common stock on the date of grant.  In   accordance with SFAS No. 123(R), compensation expense for stock options and   SARS is now recorded over the vesting period using the fair value on the date   of grant, as calculated by the Company using the Black-Scholes model.  The nonvested restricted stock grant date   fair value, which is the market price of the underlying common stock, is   expensed over the vesting period.                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Stock-based   compensation expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The   following table summarizes the total compensation expense recognized for   stock-based compensation awards:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|                                                   |  | Three   Months   Ended June 30 |      | Six Months   Ended June 30 |  
|-------------------------------------------------- |  | ------------------------------ | ---- | -------------------------- | -
|                                                   |  |                                |      |                            |  
|(Dollars in thousands except per share data)       |  | 2006                           |      | 2006                       |  
|                                                   |  |                                |      |                            |  
|Stock-based compensation   expense recognized:     |  |                                |      |                            |  
|Selling,   general and administrative expenses     |  | $                              | 300  |                            | $
|                                                   |  |                                |      |                            |  
|Total                                              |  |                                | 300  |                            |  
|                                                   |  |                                |      |                            |  
|Tax   effect                                       |  |                                | 118  |                            |  
|                                                   |  |                                |      |                            |  
|Increase in net loss                               |  | $                              | 182  |                            |  
|                                                   |  |                                |      |                            |  
|Decrease in basic and   diluted earnings per share |  | $                              | 0.00 |                            | $
|                                                   |  |                                |      |                            |  

15

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Prior period pro forma presentations

The following pro forma information is provided for comparative purposes and illustrates the pro forma effect on net income and earnings per share as if the fair value recognition provision of SFAS No. 123 had been applied to stock-based compensation prior to January 1, 2006:

|                                                                                               |  | Three Months   Ended June 30 |            | Six Months   Ended June 30 |  
|---------------------------------------------------------------------------------------------- |  | ---------------------------- | ---------- | -------------------------- | -
|                                                                                               |  |                              |            |                            |  
|(Dollars   in thousands except per share data)                                                 |  | 2005                         |            | 2005                       |  
|                                                                                               |  |                              |            |                            |  
|Net income (loss)                                                                              |  |                              |            |                            |  
|As reported                                                                                    |  | $                            | 1,996      |                            | $
|Stock-based employee   compensation Expense included in reported net income, net of tax effect |  |                              | 90         |                            |  
|Stock-based compensation at   fair value, net of tax effects                                   |  |                              | (277       | )                          |  
|                                                                                               |  |                              |            |                            |  
|Pro forma                                                                                      |  | $                            | 1,809      |                            | $
|                                                                                               |  |                              |            |                            |  
|Weighted average shares outstanding                                                            |  |                              |            |                            |  
|Basic                                                                                          |  |                              | 39,484,674 |                            |  
|Effect of dilutive   securities                                                                |  |                              | 609,208    |                            |  
|                                                                                               |  |                              |            |                            |  
|Diluted                                                                                        |  |                              | 40,093,882 |                            |  
|                                                                                               |  |                              |            |                            |  
|Net income (loss) per common share                                                             |  |                              |            |                            |  
|Basic and Diluted                                                                              |  |                              |            |                            |  
|As reported                                                                                    |  | $                            | .05        |                            | $
|Pro forma                                                                                      |  | $                            | .05        |                            | $
|                                                                                               |  |                              |            |                            |  

The above disclosures of the effect of stock-based compensation expense for the three and six months ended June 30, 2006 and the pro forma effect as if SFAS No. 123 had been applied to the three and six months ended June 30, 2005, are based on the fair value of stock option awards estimated on the date of grant using the Black-Scholes option valuation model with the assumptions listed below:

|                                                                           |  | Six Months Ended June 30 |           
|-------------------------------------------------------------------------- |  | ------------------------ | ----------
|                                                                           |  |                          |           
|                                                                           |  | 2006                     |           
|                                                                           |  |                          |           
|Average grant date exercise price per share of stock appreciation   rights |  | $                        | 6.19      
|Average grant date exercise price per share of unvested awards    options |  | $                        | 7.93      
|Dividend yield                                                             |  |                          | .00-.70   
|Expected volatility                                                        |  |                          | 34-37     
|Risk-free interest rates                                                   |  |                          | 3.62%-5.20
|Expected lives of options                                                  |  |                          | 5 -6 years
|Average grant date fair value per share of stock appreciation rights       |  | $                        | 2.71      
|Average grant date fair value per share of unvested option awards          |  | $                        | 3.23      
|                                                                           |  |                          |           

The Dividend yield is based on the latest annualized dividend rate and the current market price of the underlying common stock at the date of grant.

Expected volatility is based on the historical volatility of the Companys stock and the implied volatility calculated from traded options on the Companys stock.

The Risk-free interest rates are based on the U.S. Treasury strip rate for the expected life of the option.

The Expected lives of options are determined from primarily historical stock option exercise data.  The Company applied the simplified method in accordance with Staff Accounting Bulletin No. 107 for all plain-vanilla options.

16

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Stock Appreciation Rights

Stock appreciation rights (SARS) granted to employees are valued at the grant date fair value which is the market price of common stock on the date of grant.  The grants vest over a service period of three years and are payable in cash.  The following table shows a summary of the status and activity of stock appreciation rights for the six months ended June 30, 2006:

|                                 |  | Shares |        | Weighted-   Average   Exercise   Price |   | Weighted   Average   Remaining   Contractual   Term   (in years) |  | Aggregate   Intrinsic   Value   (in thousands) |     
|-------------------------------- |  | ------ | ------ | -------------------------------------- | - | ---------------------------------------------------------------- |  | ---------------------------------------------- | ----
|                                 |  |        |        |                                        |   |                                                                  |  |                                                |     
|Outstanding at beginning of year |  |        |       |                                        | $ |                                                                 |  |                                                |     
|Granted                          |  |        | 37,000 |                                        |   | 6.19                                                             |  |                                                |     
|Exercised                        |  |        |       |                                        |   |                                                                 |  |                                                |     
|Canceled                         |  |        |       |                                        |   |                                                                 |  |                                                |     
|                                 |  |        |        |                                        |   |                                                                  |  |                                                |     
|Outstanding at June 30, 2006     |  |        | 37,000 |                                        | $ | 6.19                                                             |  |                                                | 3.00
|                                 |  |        |        |                                        |   |                                                                  |  |                                                |     
|Exercisable at June 30, 2006     |  |        |       |                                        | $ |                                                                 |  |                                                |    
|                                 |  |        |        |                                        |   |                                                                  |  |                                                |     

The weighted-average grant-date fair value of employee stock appreciation rights granted during the six months ended June 30, 2006 was $2.71 per share or $0.1 million.

Stock option activity

The following tables show a summary of the status and activity of stock options for the six months ended June 30, 2006:

Employee Stock Option Plan:

|                                 |  | Shares |           | Weighted-   Average   Exercise   Price |   | Weighted   Average   Remaining   Contractual   Term   (in years) |  | Aggregate   Intrinsic   Value   (in thousands) |     
|-------------------------------- |  | ------ | --------- | -------------------------------------- | - | ---------------------------------------------------------------- |  | ---------------------------------------------- | ----
|                                 |  |        |           |                                        |   |                                                                  |  |                                                |     
|Outstanding at beginning of year |  |        | 2,138,900 |                                        | $ | 6.67                                                             |  |                                                |     
|Granted                          |  |        | 88,700    |                                        |   | 7.96                                                             |  |                                                |     
|Exercised                        |  |        | (5,250    | )                                      |   | 5.07                                                             |  |                                                |     
|Canceled                         |  |        | (166,200  | )                                      |   | 6.81                                                             |  |                                                |     
|                                 |  |        |           |                                        |   |                                                                  |  |                                                |     
|Outstanding at June 30, 2006     |  |        | 2,056,150 |                                        | $ | 6.72                                                             |  |                                                | 6.30
|                                 |  |        |           |                                        |   |                                                                  |  |                                                |     
|Exercisable at June 30, 2006     |  |        | 1,919,150 |                                        | $ | 6.61                                                             |  |                                                | 5.82
|                                 |  |        |           |                                        |   |                                                                  |  |                                                |     

The weighted-average grant-date fair value of employee stock options granted during the six months ended June 30, 2006 was $3.23 per share or $0.3 million.  The total fair value of options vested during the six months ended June 30, 2006 was $2.70 per share or $0.7 million.

17

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Non-Employee Directors Stock Option Plan:

|                                   |  | Shares |         | Weighted- Average    Exercise    Price |   | Weighted- Average    Remaining    Contractual    Term    (in years) |  | Aggregate   Intrinsic   Value    (in thousands) |     
|---------------------------------- |  | ------ | ------- | -------------------------------------- | - | ------------------------------------------------------------------- |  | ----------------------------------------------- | ----
|                                   |  |        |         |                                        |   |                                                                     |  |                                                 |     
|Outstanding at beginning of   year |  |        | 450,737 |                                        | $ | 7.14                                                                |  |                                                 |     
|Granted                            |  |        | 59,520  |                                        |   | 7.28                                                                |  |                                                 |     
|Exercised                          |  |        |        |                                        |   |                                                                    |  |                                                 |     
|Canceled                           |  |        |        |                                        |   |                                                                    |  |                                                 |     
|                                   |  |        |         |                                        |   |                                                                     |  |                                                 |     
|Outstanding at June 30,   2006     |  |        | 510,257 |                                        | $ | 7.16                                                                |  |                                                 | 6.38
|                                   |  |        |         |                                        |   |                                                                     |  |                                                 |     
|Exercisable at June 30,   2006     |  |        | 450,737 |                                        | $ | 7.14                                                                |  |                                                 | 5.93
|                                   |  |        |         |                                        |   |                                                                     |  |                                                 |     

The weighted-average grant-date fair value of non-employee director stock options granted during the six months ended June 30, 2006 was $3.23 per share or $0.2 million.  The total fair value of options vested during the six months ended June 30, 2006 was $2.06 per share or $11 thousand.

During the six months ended June 30, 2006, the total intrinsic value of stock options exercised (i.e., the difference between the market price at exercise and the price paid by the employee to exercise the option) was $11 thousand.  The total amount of cash received from the exercise of options was $27 thousand, and the related net tax benefit realized from the exercise of these options was immaterial.

Nonvested Restricted stock activity

Nonvested restricted stock granted to employees with a zero exercise price under the Companys Employee Stock Option Plan is valued at the grant date fair value, which is the market price of the underlying common stock, and vest over service periods that range from one to three years.

The following table shows a summary of the status and activity of nonvested restricted stock grants for the six months ended June 30, 2006:

|                             |  | Shares |         | Weighted- Average    Grant-Date    Fair-Value    (per share) |  
|---------------------------- |  | ------ | ------- | ------------------------------------------------------------ | -
|                             |  |        |         |                                                              |  
|Nonvested at January 1, 2006 |  |        | 240,800 |                                                              | $
|Granted                      |  |        | 188,100 |                                                              |  
|Vested                       |  |        | (49,903 | )                                                            |  
|Cancelled                    |  |        | (32,724 | )                                                            |  
|                             |  |        |         |                                                              |  
|Nonvested at June 30, 2006   |  |        | 346,273 |                                                              | $
|                             |  |        |         |                                                              |  

Compensation expense related to nonvested restricted stock totaled $0.3 million for the six month period ended June 30, 2006.  The related net tax benefit related to restricted awards was immaterial for the six month period ended June 30, 2006.

As of June 30, 2006, there was $2.0 million of total future compensation cost related to nonvested share-based compensation arrangements and the weighted-average period over which this cost is expected to be recognized is approximately three years.

18

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Total Shareholder Return (TSR) performance stock awards

Performance stock awards vest, subject to the satisfaction of performance goals, at the end of a three-year performance period.  The number of performance stock awards that are scheduled to vest is a function of Total Shareholder Return (TSR) performance. Under the terms of the TSR performance stock award, the Companys actual TSR for the performance period is compared to the results of its peer companies for the same period with the Companys relative position in the group determined by percentile rank.  The actual award payout is determined by multiplying the target award by the performance factor percentage provided for the Companys percentile ranking and can vest at between zero and 200 percent of the target award.  The value of the TSR performance stock is determined using a Monte Carlo simulation model.  The following significant assumptions were used:  dividend rate of 0%, volatility of 45.6%, risk-free interest rate


of 4.69%, and a term of three years.  The Monte Carlo value is expensed on a straight-line basis over the three-year performance period.

The following table shows a summary of the TSR performance stock awards granted during the six months ended June 30, 2006 and outstanding as of June 30, 2006:

|Performance Period |  | Fair Value (in thousands) |     | Unrecognized      Compensation    Expense (in thousands) |   | Minimum    Shares |  | Target    Shares |   | Maximum    Shares | 
|------------------ |  | ------------------------- | --- | -------------------------------------------------------- | - | ----------------- |  | ---------------- | - | ----------------- | 
|                   |  |                           |     |                                                          |   |                   |  |                  |   |                   | 
|2006-2008          |  | $                         | 798 |                                                          | $ | 798               |  |                  |  |                   | 
|                   |  |                           |     |                                                          |   |                   |  |                  |   |                   | 

|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, 2006 and 2005:

|                                     |  | Three   Months Ended June 30 |        | Six Months   Ended June 30 |  
|------------------------------------ |  | ---------------------------- | ------ | -------------------------- | -
|                                     |  |                              |        |                            |  
|Pension Benefits (in thousands)      |  | 2006                         |        | 2005                       |  
|                                     |  |                              |        |                            |  
|Service cost                         |  | $                            | 609    |                            | $
|Interest cost                        |  |                              | 1,201  |                            |  
|Expected return on plan   assets     |  |                              | (1,066 | )                          |  
|Amortization of prior   service cost |  |                              | 56     |                            |  
|Net amortization                     |  |                              | 203    |                            |  
|Curtailment                          |  |                              |       |                            |  
|                                     |  |                              |        |                            |  
|Net periodic pension cost            |  | $                            | 1,003  |                            | $
|                                     |  |                              |        |                            |  

| | The expected long-term rate   of return on plan assets is 8.25% in 2006.                                                                                                                                                                                                                                    
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                             
| | Employer Contributions                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                             
| | In its 2005 financial   statements, the Company disclosed that it expected to contribute $4.4 million   to its U.S. pension plans in 2006.  As   of June 30, 2006, the company has contributed $0.6 million.  The Company expects to contribute the   remaining $3.8 million over the remainder of the year.

19

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| | 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, 2006 and 2005:

|                                     |  | Three   Months Ended June 30 |      | Six Months   Ended June 30 |  
|------------------------------------ |  | ---------------------------- | ---- | -------------------------- | -
|                                     |  |                              |      |                            |  
|Pension Benefits (in thousands)      |  | 2006                         |      | 2005                       |  
|                                     |  |                              |      |                            |  
|Service cost                         |  | $                            | 249  |                            | $
|Interest cost                        |  |                              | 389  |                            |  
|Expected return on plan   assets     |  |                              | (272 | )                          |  
|Amortization of prior   service cost |  |                              | 12   |                            |  
|Net amortization                     |  |                              | 44   |                            |  
|                                     |  |                              |      |                            |  
|Net periodic pension cost            |  | $                            | 422  |                            | $
|                                     |  |                              |      |                            |  

|    | The expected long-term rate   of return on plan assets ranges from 5.00% to 7.10% in 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Employer Contributions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | In its 2005 financial   statements, the Company disclosed that it expected to contribute $2.0 million   to its European pension plans in 2006.    As of June 30, 2006, the Company contributed $0.9 million.  The Company expects to contribute the   remaining $1.1 million as well as an additional $0.1 million over the   remainder of the year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Defined Contribution Plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Company also sponsors a   defined contribution pension plan for certain U.S. employees that permits   employee contributions of up to 50% of eligible compensation in accordance   with Internal Revenue Service guidance.    As of January 1, 2006, for all U.S. salaried employees that elected to   freeze their benefits under the Companys defined benefit plans, the   Company makes a fixed contribution of 2% of employee eligible compensation   and matches contributions made by each participant in an amount equal to 100%   of the employee contribution up to a maximum of 2% of employee   compensation.  In addition, each of   these employees is eligible for an additional Company contribution of up to   4% of employee compensation based upon annual Company performance at the   discretion of the Companys Board of Directors.  For all other U.S. salaried employees, 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 eligible   compensation.  Employer matching   contributions vest immediately. Total expenses related to this defined   contribution plan for the three months ended June 30, 2006 and 2005 were $72   thousand and $41 thousand, respectively, and for the six months ended June   30, 2006 and 2005 were $0.2 million and $0.1 million, respectively.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|16. | Taxation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The effective tax rate for the six month
period ended June 30, 2006 was a 55.2% benefit compared to a 23.6% benefit for
the six month period ended June 30, 2005.  The period ended June 30, 2006
tax rate was higher than the statutory Federal Income Tax Rate due to the
Companys lower than expected profit for the quarter and the estimated full year
and certain benefits, principally the exclusion provided under United States
income tax laws with respect to the Extraterritorial Income Exclusion Benefit
and recognition of state income tax benefits.  The six month period ended
June 30, 2005 tax rate was lower than the statutory Federal Income Tax Rate due
to the Extraterritorial Income Exclusion Benefit, recognition of foreign tax
credit benefits, and recognition of state income tax benefits. The primary item
that contributed to the change in the effective tax rate between the six month
period ended June 30, 2006 and the similar period for 200



5 was   the
reduction in estimate of the Companys full year 2006 pre-tax earnings   and its impact on the tax effect of the aforementioned permanent items.                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

20

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|    | 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.                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|17. | New   Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | In November 2004, the Financial Accounting
Standards Board (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 re-handling
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.  The Company adopted SFAS No. 151 effective January 1,
2006 as required.  Such adoption had no material impact on the accompanying
financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | In May 2005, the FASB   issued SFAS No. 154, Accounting Changes and Error Corrections, which changes   the requirements for the accounting for and reporting of a change in   accounting principle.  SFAS No. 154   applies to all voluntary changes in accounting principle.  It also applies to changes required by an   accounting pronouncement in the unusual instance that the pronouncement does   not include specific transition provisions.    When a pronouncement includes specific transition provisions, those   provisions should be followed.  The   Company adopted SFAS No. 154 effective January 1, 2006 as required.  Such adoption had no material impact on   the accompanying financial statements.                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | 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 adopted   SFAS No. 123R beginning January 1, 2006 as required and the related costs are   reflected in the accompanying financial statements as discussed in Note 14.                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | In June 2006, the FASB   issued FASB Interpretation no. 48 (FIN No. 48), Accounting for Uncertainty   in Income Taxes  an Interpretation of FASB Standard No. 109.  FIN No. 48 prescribes a recognition   threshold and measurement attribute for financial statement recognition and   measurement of a tax position taken or expected to be taken in a tax return,   and also provides guidance on derecognition, classification, interest and   penalties, accounting in interim periods, disclosure and transition.  FIN No. 48 is effective for fiscal years   beginning after December 15, 2006.    The Company is in the process of evaluating the financial impact of   adopting FIN No. 48.                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|18. | Restatement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | Subsequent to the issuance   of the Companys Condensed Consolidated Financial Statements for the three   and six months ended June 30, 2006, the Company identified an error which   resulted in an overstatement of the Companys benefit for income taxes for the three and   six months ended June 30, 2006 for both continuing and discontinued operations.  The   error was made in the calculation of the Companys tax provision for the   three and six months ended June 30, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | As a result, the   accompanying Condensed Consolidated Financial Statements for the three and   six month periods ended June 30, 2006 have been restated from the amounts   previously reported.  The effect of   the restatement for the three and six month periods ended June 30, 2006 is to   decrease the benefit for income taxes and net income from continuing   operations by $1.5 million and decrease basic and diluted income per common   share from continuing operations by $0.04.    Income from discontinued operations decreased by $9 thousand and $1.5   million for the three and six month periods ended June 30,   2006, respectively.  Basic and diluted income per   common share from discontinued operations decreased by $0.03 for the six   months ended June 30, 2006.  Net   income decreased by $1.5 million and $2.9 million for the three and six month   periods ended June 30, 2006, respectively, and  basic and diluted net income per common
share decreased by   $0.04 and $0.07 for the three and six month periods ended June 30, 2006,   respectively.

21

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

|                                               |  | Three   Months Ended June 30, 2006                            |       | Six Months   Ended June 30, 2006 |  
|---------------------------------------------- |  | ------------------------------------------------------------- | ----- | -------------------------------- | -
|                                               |  |                                                               |       |                                  |  
|                                               |  | As   Previously    Reported                                   |       | As   Restated                    |  
|                                               |  |                                                               |       |                                  |  
|                                               |  | (Dollars   in Thousands, Except Per Share Data)   (Unaudited) |      
|Statement of Operations:                       |  |                                                               |       |                                  |  
|Benefit for income taxes                       |  | $                                                             | 2,446 |                                  | $
|Net income (loss) from   continuing operations |  |                                                               | 3,660 |                                  |  
|Income from discontinued   operations          |  |                                                               | 306   |                                  |  
|Net income                                     |  |                                                               | 3,966 |                                  |  
|Net income per common share                    |  |                                                               |       |                                  |  
|Basic   and Diluted:                           |  |                                                               |       |                                  |  
|Income   (loss) from continuing operations     |  |                                                               | .09   |                                  |  
|Income   from discontinued operations          |  |                                                               | .01   |                                  |  
|Net   income                                   |  |                                                               | .10   |                                  |  

|                                         |  | As of June   30, 2006                  |        
|---------------------------------------- |  | -------------------------------------- | -------
|                                         |  |                                        |        
|                                         |  | As   Previously    Reported            |        
|                                         |  |                                        |        
|                                         |  | (Dollars   in Thousands)   (Unaudited) |        
|Balance Sheet:                           |  |                                        |        
|Deferred income tax asset    current    |  | $                                      | 10,916 
|Total current assets                     |  |                                        | 153,249
|Deferred income tax asset    long-term  |  |                                        | 18,817 
|Total assets                             |  |                                        | 335,575
|Accrued income taxes                     |  |                                        | 12,049 
|Deferred income tax   liability          |  |                                        | 1,650  
|Total current liabilities                |  |                                        | 127,911
|Total liabilities                        |  |                                        | 177,634
|Retained earnings                        |  |                                        | 105,797
|Accumulated other comprehensive   income |  |                                        | 9,453  
|Total shareholders equity               |  |                                        | 157,941

22

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|                                                                                              |  | As of June   30, 2006                  |       
|--------------------------------------------------------------------------------------------- |  | -------------------------------------- | ------
|                                                                                              |  |                                        |       
|                                                                                              |  | As   Previously Reported               |       
|                                                                                              |  |                                        |       
|                                                                                              |  | (Dollars   in Thousands)   (Unaudited) |       
|Statement of Cash Flows:                                                                      |  |                                        |       
|Net income (loss)                                                                             |  | $                                      | 3,964 
|Increase in revenue in   excess of billings on uncompleted contracts and other current assets |  |                                        | (2,434
|Decrease in accounts   payable, accrued liabilities, and billings in excess of revenue        |  |                                        | (4,699
|Increase in long-term deferred   income taxes                                                 |  |                                        | 1,556 
|Other items - net                                                                             |  |                                        | (292  

23

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|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

Continuing Operations:

Consolidated net sales increased by $2.9 million or 3.7% and $6.4 million or 4.2% for the quarter and year-to-date period ended June 30, 2006, respectively, versus the quarter and year-to-date periods ended June 30, 2005.  Net sales for the quarter and year-to-date periods ended June 30, 2006 for the Carbon and Service segment increased $3.5 million or 5.5% and $9.4 million or 7.6%, respectively, versus the similar 2005 period.  The increase was primarily due to stronger sales in all geographical regions including increased sales of activated carbon in Japan to the Companys joint venture company, Calgon Mitsubishi Chemical Corporation, as well as price increases.  Adding to the quarter results were positive foreign currency translation of $0.1 million, however, for the year-to-date period foreign currency translation had a negative impact of $1.6 million.  Net sales for the Equipment segment decreased $1.7 million or 15.4% and $3.5
million or 16.3% for the quarter and year-to-date periods, respectively, versus the comparable 2005 period.  The decrease was primarily due to non-repeat sales of equipment for perchlorate removal from ground water and odor removal equipment. Foreign currency translation had a negligible impact on the quarter and year-to-date periods ended June 30, 2006 versus the similar 2005 period.  Net sales for the quarter and year-to-date periods ended June 30, 2006 for the Consumer segment increased by $1.0 million or 40.4% and $0.5 million or 7.6% versus the similar period of 2005.  The increase was attributable to higher demand for activated carbon cloth and PreZerve products.  While foreign currency translation had a negligible impact on the quarter, it had a negative impact on year-to-date sales of $0.1 million.  The total impact of foreign currency translation on consolidated net sales for the quarter ended June 30, 2006 was favorable $0.1 million, however, it had a negative impact


on net sales for the year-to-date period of $1.7 million.

Net sales less cost of products sold (excluding depreciation), as a percentage of net sales, was 25.5% and 25.3% for the quarter and year-to-date periods ended June 30, 2006, respectively, compared to 27.8% and 27.7% for the similar 2005 periods, a 2.3 and 2.4 percentage point decrease.  The decline in the periods was primarily due to higher raw material, energy, and transportation costs, as well as inefficiencies at the Companys production facilities brought about by dealing with the after effects of Hurricane Katrina.  These costs were partially offset by price increases of carbon products and services.  The Companys cost of products sold excludes depreciation, therefore it may not be comparable to that of other companies.

The depreciation and amortization decrease of $0.6 million and $1.4 million during the quarter and year-to-date periods ended June 30, 2006 versus the periods ended June 30, 2005 was primarily due to decreased depreciation due to an increase in fully depreciated fixed assets.

Selling, general and administrative expenses for the quarter and year-to-date periods ended June 30, 2006 increased versus the comparable 2005 periods by $2.6 million and $1.1 million, respectively.  The increase for the quarter ended June 30, 2006 period versus the similar 2005 period was primarily due to an increase in litigation expense of $2.0 million.  The increase for the year-to-date periods is also attributable to an increase in legal expenditures of approximately $2.7 million.  However, partially offsetting this increase was a decrease due to the change in the estimate of the Companys environmental liabilities assumed in the Waterlink acquisition of approximately $1.3 million.

Research and development expenses for the quarter and year-to-date periods ended June 30, 2006 were comparable to the similar 2005 period.

24

---



The gain from insurance settlement is due to Hurricane Katrina as discussed in Note 2.

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 on March 22, 2005 to cancel the construction of a reactivation facility on the U.S. Gulf Coast and to suspend the construction of such facility for the foreseeable future.

Restructuring charges for the quarter and year-to-date periods ended June 30, 2006 decreased $0.1 million and $0.4 million versus the comparable 2005 periods.  The restructuring charges for the quarter ended June 30, 2005 were attributable to the Companys closure of two small manufacturing facilities.  The 2005 year-to-date period also includes pension curtailment charges as a result of employee separations from the Companys 2005 re-engineering plan.

Other expense increased $0.3 million and $0.7 million for the quarter and year-to-date periods ended June 30, 2006, respectively, as compared to June 30, 2005.  The quarter increased due to a gain on sale of asset of $0.2 million, which occurred in the quarter ended June 30, 2005 for which there was no similar activity in the quarter ended June 30, 2006.  The year-to-date increase also includes the write-off in 2006 of approximately $0.4 million of deferred financing fees associated with the Companys previous credit facility.

Interest expense, net of interest income, increased $0.3 million and $0.8 million for the quarter and year-to-date periods ended June 30, 2006 versus the similar 2005 periods.  The increase is the result of higher interest rates paid on the Companys borrowings both as a result of the increase in LIBOR rates from last years second quarter and year-to-date periods to this years similar periods, and the Company paying higher interest spreads on its borrowings as a result of a lower trailing twelve months EBITDA as of the end of the second quarter and year-to-date periods of 2006 versus the same periods for 2005.

The effective tax rate for the six month period ended June 30, 2006 was a 55.2% benefit compared to a 23.6% benefit for the period ended June 30, 2005.  The period ended June 30, 2006 tax rate was higher than the statutory Federal Income Tax Rate due to our lower than expected profit for the quarter and the estimated full year and certain benefits, principally the exclusion provided under United States income tax laws with respect to the Extraterritorial Income Exclusion Benefit and recognition of state income tax benefits.  The six month period ended June 30, 2005 tax rate was lower than the statutory Federal Income Tax Rate due to the Extraterritorial Income Exclusion Benefit, recognition of foreign tax credit benefits, and recognition of state income tax benefits. The primary item that contributed to the change in the effective tax rate between the six month period ended June 30, 2006 and the similar period for 2005 was the reduction in estimate of
the Companys full year 2006 pre-tax earnings and its impact on the tax effect of the aforementioned permanent items.

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 in income from equity investments decreased $0.4 million and $0.5 million for the quarter and year-to-date periods ended June 30, 2006 versus the similar 2005 periods.  The decrease was due to reduced margins as a result of increased inventory costs related to the former carbon production facility in Japan that was shutdown in December 2005.

25

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Discontinued Operations:

Income from discontinued operations decreased $1.5 million and $0.9 million, respectively, for the quarter and year-to-date periods ended June 30, 2006.  The decrease for the quarter is a result of the divestiture of the Companys Solvent Recovery business in the second quarter of 2006.  The Company recognized a gain of $0.3 million in the second quarter related to the aforementioned divestiture.  The year-to-date decrease is primarily due to lower income for the first six months of 2006 due to the divestiture of both the Charcoal/Liquid and Solvent Recovery businesses in the first and second quarter of 2006, respectively.

Financial Condition

Working Capital and Liquidity

The cash flows discussed for the quarter and year-to-date periods ended June 30, 2006 and 2005 include discontinued operations.  Cash flows used in operations were ($5.1) million for the period ended June 30, 2006 compared to cash flows provided from operations of $1.1 million for the comparable 2005 period.

The $6.2 million decrease was due to the inclusion of the cash generated from the divested businesses in 2005 for the full six months, where in 2006 the cash flows from the divested businesses were only included pre-divestiture.  Also contributing to the decrease was the gain from insurance settlement of $4.9 million related to Hurricane Katrina.  Operating working capital (exclusive of debt) was comparable for the year-to-date 2006 and 2005 periods.  The divestitures are expected to decrease cash flows from operations by approximately $3.0 million on an annual, on-going basis.

Common stock dividends were not paid during the quarter or six months ended June 30, 2006 as compared to dividends that were paid during the quarter ended June 30, 2005 which represented $.03 per common share.

Total debt at June 30, 2006 was $70.0 million, a decrease of $13.9 million from December 31, 2005.  The decrease was as a result of the repayment of the Companys $18.0 million term loan and the additional borrowings of $4.1 million that were used in financing normal working capital and capital expenditure activities.

On January 30, 2006, the Company amended and restated its existing $125.0 million unsecured United States revolving credit facility.  The amended $118.0 million facility consists of a $100.0 million revolving loan and an $18.0 million term loan.  Current commitments from the lenders under the new agreement total $105.0 million with an additional $13.0 million available to the existing or new lenders.  The amended and restated facility is secured by a blanket security interest in favor of the lenders and a pledge agreement in favor of the lenders with respect to the stock of certain subsidiaries.  Borrowings under this facility were being charged a weighted average interest rate of 8.39% at June 30, 2006.

Included in the credit facility is a letter of credit sub-facility that cannot exceed $30.0 million.  The interest rate is based upon Euro-based (LIBOR) rates with other interest rate options available. The applicable Euro Dollar margin in effect when the Company is in compliance with the terms of the facility ranges from 1.25% to 2.50%, and an unused commitment fee that ranges from 0.25% to 0.50% and is based upon the Companys ratio of debt to earnings before interest, income tax, depreciation and amortization (EBITDA).  During periods of default the lenders have the option of increasing both the Euro Dollar margin and the unused commitment fee by up to as much as 2.00%.  At June 30, 2006, the default premium was set at 0.5%.  The credit facilitys covenants impose financial restrictions on the Company, including maintaining certain ratios of debt to EBITDA, EBITDA to cash outlays (cash outlays as defined by the agreement include


payments for income tax, interest, debt principal, dividends, and capital expenses) and operating assets to debt and minimum 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 also contains mandatory prepayment provisions for the term loan and proceeds in excess of pre-established amounts of certain events as defined within the loan agreement.

26

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On February 23, 2006, the Company, as required by the amended credit facility, repaid the $18.0 million term loan with the proceeds from the sale of the Companys Charcoal/Liquid business.  The remaining $100.0 million revolving loan has $87.0 million of funding commitments from the Companys lenders.

In March 2006, the Company amended its U.S. credit facility to clarify elements of certain covenants and to finalize an amount used for one of the add-back provisions of the covenants that were required to be met as of December 31, 2005 as conditions to the closing of the facility.  The Company was in compliance with these covenants as of December 31, 2005, as amended.

As of March 31, 2006 the Company was not in compliance with the Fixed Charge covenant ratio, which is based upon the Companys trailing twelve months EBITDA as compared to the sum of the Companys trailing twelve months payments for interest, taxes, dividends, and capital expenditures.  Since that time the Company has continued to have access to the facility while working with its lenders to review options for either restructuring the terms of the current facility or replacing the facility with an alternative credit structure.  In addition, the Company has discussed various financing alternatives with other lenders outside of its bank syndicate in the interest of executing a financing structure that is both flexible and sustainable.  Options that have been reviewed and considered either singularly or in some combination are a waiver and amendment of the current revolving credit facility, an asset-based revolving credit facility, fixed
asset term loan, second-tier term loan, institutional term loan, private equity investment, and a private or public convertible debt offering.  Evaluation of the various structures is continuing and as such the current revolving credit facility remains in place as of this filing.  As of June 30, 2006, the Company remained out of compliance with the Fixed Charge covenant ratio and also was out of compliance with its Leverage Covenant ratio, which is based upon the Companys Total Funded Debt as compared to the Companys trailing twelve months EBITDA.  The Company continues to classify all borrowings under this facility as short term as of June 30, 2006.  The Company is restricted from paying dividends since it is in default under the aforementioned facility.

The existing lenders have reserved their rights to call the debt without further notice at any time during the period of violation.  Should the lenders elect to exercise their rights and call the debt, the Company would be unable to satisfy the obligation without securing an alternative financing arrangement or arrangements.

The Company expects that current cash from operating activities plus cash balances and current access to available external financing (see conditions to access discussed above) under the above mentioned financing alternatives will be sufficient to meet its operating requirements for the next twelve months and the foreseeable future.

In its 2005 financial statements, the Company disclosed that it expected to contribute $6.4 million to its U.S. and European pension plans in 2006.  As of June 30, 2006, the Company has contributed $1.5 million.  The Company expects to contribute the remaining $4.9 million as well as an additional $0.1 million over the remainder of the year.

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, 2006, with the exception of the debt covenant violation noted above, there have been no changes in the payment terms of long-term debt, lease agreements, and unconditional purchase obligations since December 31, 2005.  The following table represents the significant cash contractual obligations and other commercial commitments.

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|                                      |  | Due in |        |      |   |       
|------------------------------------- |  | ------ | ------ | ---- | - | ------
|                                      |  |        |        |      |   |       
|(Thousands)                           |  | 2006   |        | 2007 |   | 2008  
|                                      |  |        |        |      |   |       
|Debt                                  |  | $      | 67,112 |      | $ |      
|Operating leases                      |  |        | 5,019  |      |   | 3,781 
|Unconditional purchase   obligations* |  |        | 26,755 |      |   | 21,626
|                                      |  |        |        |      |   |       
|Total contractual cash Obligations    |  | $      | 98,886 |      | $ | 25,407
|                                      |  |        |        |      |   |       

|                                                                                                                                                                                                                         
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*Primarily for the purchase   of raw materials, transportation, and information systems services.                                                                                                                        
|Note:  Interest is not included in the above   schedule.  As of June 30, 2006 the   Companys interest rate was 8.39% and the Company projects interest payments   of $5.6 million for the year ending December 31, 2006.

Capital Expenditures and Investments

Capital expenditures for property, plant and equipment totaled $7.3 million for the six months ended June 30, 2006 compared to expenditures of $5.5 million for the same period in 2005.  The expenditures for the period ended June 30, 2006 consisted primarily of improvements to the Companys manufacturing facilities of $3.9 million, $2.3 million related to the repair of the Companys Pearl River plant as a result of Hurricane Katrina, and additional customer capital of $0.9 million.  The comparable 2005 expenditures consisted primarily of $4.8 million for improvements to manufacturing facilities and $0.3 million for customer capital.  Capital expenditures for 2006 are projected to be approximately $16.0 million.

The June 30, 2005 purchase of business cash out flow of $0.9 million, as shown on the statement of cash flows, primarily represents the Companys increased equity ownership in Datong Carbon Corporation from 80% to 100% for a purchase price of $0.7 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 period ended June 30, 2005.

In January 2006, the Company announced the temporary idling of its reactivation facility in Blue Lake, California in an effort to reduce operating costs and to more efficiently utilize the capacity at its other existing locations.  The Company conducted an impairment review of the plants assets having a net book value of $1.7 million in connection with the temporary idling of the facility and concluded that the assets were not impaired.  It is managements intention to resume operation of the plant in 2007.  If management should conclude that the idling of the plant beyond 2007 is warranted, operating results may be adversely affected by impairment charges.

Regulatory Matters

Each of the Companys domestic production facilities has permits and licenses regulating air emissions and water 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 is warranted, the impact to current operating results would be insignificant.

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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 re-handling 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.  The Company adopted SFAS No. 151 effective January 1, 2006 as required.  Such adoption had no material impact on the accompanying financial statements.

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
adopted SFAS No. 123R beginning January 1, 2006 as required and the related
costs are reflected in the accompanying financial statements as discussed in Note 14.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error
Corrections, which changes the requirements for the accounting for and
reporting of a change in accounting principle.  SFAS No. 154 applies to all
voluntary changes in accounting principle.  It also applies to changes
required by an accounting pronouncement in the unusual instance that the
pronouncement does not include specific transition provisions.  When a
pronouncement includes specific transition provisions, those provisions should
be followed.  The Company adopted SFAS No. 154 effective January 1, 2006 as
required.  Such adoption had no material impact on the accompanying
financial statements.

In June 2006, the FASB issued FASB Interpretation no. 48 (FIN No. 48), Accounting for Uncertainty in Income Taxes  an Interpretation of FASB Standard No. 109.  FIN 48 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.  FIN 48 is effective for fiscal years beginning after December 15, 2006.  The Company is in the process of evaluating the financial impact of adopting FIN 48.

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s financial condition and results of operations.

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.

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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.  The inventory obsolescence adjustment is recorded quarterly based upon a review of specific products that have remained unsold for a prescribed period of time.

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.

Environmental Costs

Liabilities for environmental costs are recorded when it is probable that obligations have been incurred and the amounts can be reasonably estimated.  These liabilities are not reduced by possible recoveries from third parties, and projected cash expenditures are not discounted.

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 or changes in facts and circumstances.  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 operations and comprehensive income for a particular future period and on the Companys effective tax rate.

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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, 2006, 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.

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.  The Company performs an impairment assessment whenever events or changes indicate a long-lived assets carrying value might not be recoverable.  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 previously 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 October 30, 2006, management and the Audit Committee of the Company determined that the Unaudited Condensed Consolidated Financial Statements for the fiscal quarters ended March 31, and June 30, 2006 contained errors and should no longer be relied upon.  The errors were as a result of an error made in the calculation of the Companys interim tax provision for the quarters ended March 31 and June 30, 2006.  Our interim preparation and review controls surrounding income taxation failed to fully consider the impact of the disposition that occured in the period.

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, 2006.

Changes in Internal Control:

There have not been any  changes in the Companys internal controls over financial reporting that occurred during the period ended June 30, 2006 that have significantly affected, or are reasonably likely to significantly affect, the Companys internal controls over financial reporting.

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PART II  OTHER INFORMATION

|Item 1. | Legal Proceedings                                                                                     
|------- | ------------------------------------------------------------------------------------------------------
|        |                                                                                                       
|        | See Note 11 to the   unaudited interim Condensed Consolidated Financial Statements contained   herein.

|Item 1a. | Risk Factors
|-------- | ------------

During the second quarter of 2006, there was one material change to the risk factors that were disclosed in Item 1A of Calgon Carbons Annual Report on Form 10-K for the year ended December 31, 2005.  The risk is as follows:

We face risks in connection with the material weaknesses described in our Sarbanes-Oxley Section 404 Management Report and any other remedial measures that we may undertake.

In connection with the preparation of our Annual Report on Form 10-K for the fiscal year ended December 31, 2005, we concluded that our internal controls were ineffective as of December 31, 2005 as a result of the failure to record invoices for professional services in a timely manner.  We remediated the identified material weakness by centralizing the collection and record keeping of invoices for professional services and establishing balance sheet reconciliation review meetings with the business process owners.  We also have identified a significant deficiency related to a lack of segregation of duties with respect to our information systems and are in the process of implementing changes to remediate this significant deficiency.  Subsequent to our Annual Report, we concluded that our internal controls were ineffective as a result of an error made in the calculation of the Companys interim tax provision for the quarters ended March 31 and
June 30, 2006, respectively.  We continue to evaluate the effectiveness of our disclosure controls and procedures and internal control over financial reporting on an ongoing basis, taking additional remedial action as appropriate.

If we are unable to effectively remediate this material weakness and any other material weaknesses or significant deficiencies in internal control over financial reporting that are identified in the future and to assert that disclosure controls and procedures including internal control over financial reporting are effective in any future period, we could lose investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on our stock price and potentially subject us to litigation.  In addition, we may be required to incur additional costs including but not limited to the potential for hiring additional personnel to improve our existing internal control system.

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|Item 3. | Defaults upon Senior   Security                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | On January 30, 2006, the   Company amended and restated its existing $125.0 million unsecured United   States revolving credit facility.  The   amended $118.0 million facility consists of a $100.0 million revolving loan   and an $18.0 million term loan.    Current commitments from the lenders under the new agreement total   $105.0 million with an additional $13.0 million available to the existing or   new lenders.  The amended and restated   facility is secured by a blanket security interest in favor of the lenders   and a pledge agreement in favor of the lenders with respect to the stock of   certain subsidiaries.  Borrowings   under this facility were being charged a weighted average interest rate of   8.39% at June 30, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | Included in the credit   facility is a letter of credit sub-facility that cannot exceed $30.0   million.  The interest rate is based   upon Euro-based (LIBOR) rates with other interest rate options available. The   applicable Euro Dollar margin in effect when the Company is in compliance   with the terms of the facility ranges from 1.25% to 2.50%, and an unused commitment   fee that ranges from 0.25% to 0.50% and is based upon the Companys ratio of   debt to earnings before interest, income tax, depreciation and amortization   (EBITDA).  During periods of default   the lenders have the option of increasing both the Euro Dollar margin and the   unused commitment fee by up to as much as 2.00%.  At June 30, 2006, the default premium was set at 0.5%.  The credit facilitys covenants impose   financial restrictions on the Company, including maintaining certain ratios   of debt to EBITDA, EBITDA to cash outlays (cash outlays as defined by
the   agreement include payments for income tax, interest, debt principal,   dividends, and capital expenses) and operating assets to debt and minimum 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 also   contains mandatory prepayment provisions for the term loan and proceeds in   excess of pre-established amounts of certain events as defined within the   loan agreement.                                                                                                                                                                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | On February 23, 2006, the   Company, as required by the amended credit facility, repaid the $18.0 million   term loan with the proceeds from the sale of the Companys Charcoal/Liquid business.  The remaining $100.0 million revolving   loan has $87.0 million of funding commitments from the Companys lenders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | In March 2006, the Company   amended its U.S. credit facility to clarify elements of certain covenants and   to finalize an amount used for one of the add-back provisions of the   covenants that were required to be met as of December 31, 2005 as conditions   to the closing of the facility.  The   Company was in compliance with these covenants as of December 31, 2005, as   amended.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | As of March 31, 2006, the   Company was not in compliance with the Fixed Charge covenant ratio, which is   based upon the Companys trailing twelve months EBITDA as compared to the sum   of the Companys trailing twelve months payments for interest, taxes,   dividends, and capital expenditures.    Since that time the Company has continued to have access to the   facility while working with its lenders to review options for either   restructuring the terms of the current facility or replacing the facility   with an alternative credit structure.    In addition, the Company has discussed various financing alternatives   with other lenders outside of its bank syndicate in the interest of executing   a financing structure that is both flexible and sustainable.  Options that have been reviewed and   considered either singularly or in some combination are a waiver and   amendment of the current revolving credit facility, an asset-based revolving

 credit facility, fixed asset term loan, second-tier term loan, institutional   term loan, private equity investment, and a private or public convertible   debt offering.  Evaluation of the   various structures is continuing and as such the current revolving credit   facility remains in place as of this filing.    As of June 30, 2006, the Company remained out of compliance with the   Fixed Charge covenant ratio and also was out of compliance with its Leverage   Covenant ratio, which is based upon the Companys Total Funded Debt as   compared to the Companys trailing twelve months EBITDA.  The Company continues to classify all   borrowings under this facility as short term as of June 30, 2006.  The Company is restricted from paying   dividends since it is in default under the aforementioned facility.

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|        | The existing lenders have   reserved their rights to call the debt without further notice at any time   during the period of violation.    Should the lenders elect to exercise their rights and call the debt,   the Company would be unable to satisfy the obligation without securing an   alternative financing arrangement or arrangements.
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                 
|Item 4. | Submission of Matters to a   Vote of Security Holders                                                                                                                                                                                                                                                                                           
|        |                                                                                                                                                                                                                                                                                                                                                 
|        | Information called for by   this item with respect to the annual meeting of Calgon Carbon Corporation   shareholders held on April 19, 2006, is contained in Part II    Item 4 of Calgon Carbon Corporations Quarterly Report on Form 10-Q for   the quarter ended March 31, 2006.                                                            
|        |                                                                                                                                                                                                                                                                                                                                                 
|Item 6. | Exhibits                                                                                                                                                                                                                                                                                                                                        

| | Exhibit 31.1 Certification   pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the   Sarbanes-Oxley Act of 2002.
| | ----------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                         
| | Exhibit 31.2 Certification   pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the   Sarbanes-Oxley Act of 2002.
| |                                                                                                                                         
| | Exhibit 32.1 Certification   pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the   Sarbanes-Oxley Act of 2002.
| |                                                                                                                                         
| | Exhibit 32.2 Certification   pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the   Sarbanes-Oxley Act of 2002.

35

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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:  November 28, 2006 | /s/ Leroy M. Ball        
|                         |                          
|                         | Leroy M. Ball            
|                         | Senior Vice President,   
|                         | Chief Financial Officer  

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EXHIBIT INDEX

|Exhibit No. |  | Description                                                                                                            |  | Method of   Filing
|----------- |  | ---------------------------------------------------------------------------------------------------------------------- |  | ------------------
|            |  |                                                                                                                        |  |                   
|31.1        |  | Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 |  | Filed herewith    
|31.2        |  | Certification Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 |  | Filed herewith    
|32.1        |  | Certification Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 |  | Filed herewith    
|32.2        |  | Certification Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 |  | Filed herewith    

37

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