**UNITED      STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

**QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**

**SECURITIES      EXCHANGE ACT OF 1934**

**TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**

**SECURITIES      EXCHANGE ACT OF 1934**

*Commission      file number 1-8142*

| **ENGELHARD                CORPORATION**(Exact                name of Registrant as specified in its charter)         |
|----------------------------------------------------------------------------------------------------------------------------|
| **DELAWARE**(State                or other jurisdiction ofincorporation                or organization)               | **22-1586002**(I.R.S.                Employer Identification No.) |
| **101                WOOD AVENUE, ISELIN, NEW JERSEY, 08830**(Address                of principal executive offices)  |
| **(732)                205-5000**(Registrant’s                telephone number, including area                code)  |

Nox

| Class                of Common Stock$1                par value | Outstanding                at April 28, 2006                              124,011,840 |
|-----------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PART      I - FINANCIAL INFORMATION**

| **Item              1.**  | **Financial                Statements** |
|--------------------------------|-----------------------------------------|

**ENGELHARD      CORPORATION**

**CONDENSED      CONSOLIDATED STATEMENTS OF EARNINGS**

**(Thousands,      except per-share data)**

**(Unaudited)**

|                                                            |   | **Three                Months Ended****March                31,** |      |
|-----------------------------------------------------------------|--------|-------------------------------------------------------------------|-----------|
|                                                            |   | **2006**                                                          |      | **2005** |   |
| Net                sales                                        |   | $                                                                 | 1,455,327 |   | $ | 1,018,711 |   |
| Cost                of sales                                    |   |                                                              | 1,244,551 |   |   | 849,990 |   |
| Gross                profit                                     |   |                                                              | 210,776   |   |   | 168,721 |   |
| Selling,                administrative and other expenses       |   |                                                              | 117,159   |   |   | 98,482 |   |
| Expenses                related to BASF offer                   |   |                                                              | 6,875     |   |   | - |   |
| Operating                earnings                               |   |                                                              | 86,742    |   |   | 70,239 |   |
| Equity                in earnings of affiliates                 |   |                                                              | 7,656     |   |   | 8,109 |   |
| (Loss)                gain on investment                        |   |                                                              | (32       | ) |   | 119 |   |
| Interest                income                                  |   |                                                              | 3,678     |   |   | 1,232 |   |
| Interest                expense                                 |   |                                                              | (10,093   | ) |   | (6,012 | ) |
| Earnings                before income taxes                     |   |                                                              | 87,951    |   |   | 73,687 |   |
| Income                tax expense                               |   |                                                              | 18,823    |   |   | 15,231 |   |
| Net                earnings from continuing operations          |   |                                                              | 69,128    |   |   | 58,456 |   |
|                                                            |   |                                                              |      |   |   |   |   |
| Loss                from discontinued operations, net of tax    |   |                                                              | (135      | ) |   | (504 | ) |
| Net                earnings                                     |   | $                                                                 | 68,993    |   | $ | 57,952 |   |
|                                                            |   |                                                              |      |   |   |   |   |
| Earnings                per share from continuing operations:   |   |                                                              |      |   |   |   |   |
| Basic                                                           |   | $                                                                 | 0.56      |   | $ | 0.48 |   |
| Diluted                                                         |   | $                                                                 | 0.55      |   | $ | 0.47 |   |
|                                                            |   |                                                              |      |   |   |   |   |
| Earnings                per share from discontinued operations: |   |                                                              |      |   |   |   |   |
| Basic                                                           |   | $                                                                 | (0.00     | ) | $ | (0.00 | ) |
| Diluted                                                         |   | $                                                                 | (0.00     | ) | $ | (0.00 | ) |
|                                                            |   |                                                              |      |   |   |   |   |
| Earnings                per share:                              |   |                                                              |      |   |   |   |   |
| Basic                                                           |   | $                                                                 | 0.56      |   | $ | 0.48 |   |
| Diluted                                                         |   | $                                                                 | 0.55      |   | $ | 0.47 |   |
|                                                            |   |                                                              |      |   |   |   |   |
| Cash                dividends per share                         |   | $                                                                 | 0.12      |   | $ | 0.12 |   |
| Average                number of shares outstanding - basic     |   |                                                              | 122,582   |   |   | 121,702 |   |
| Average                number of shares outstanding - diluted   |   |                                                              | 125,712   |   |   | 123,905 |   |

----

**ENGELHARD      CORPORATION**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

**(Thousands)**

**(Unaudited)**

|                                                              |   | **March                31,****2006** |      | **December                31,****2005** |   |
|-------------------------------------------------------------------|--------|--------------------------------------|-----------|-----------------------------------------|--------|
| Cash                and cash equivalents                          |   | $                                    | 64,573    |                                    | $      | 41,619 |   |
| Cash                in trust                                      |   |                                 | 112,377   |                                    |   | - |   |
| Receivables,                net                                   |   |                                 | 631,791   |                                    |   | 526,962 |   |
| Committed                metal positions                          |   |                                 | 1,004,646 |                                    |   | 904,953 |   |
| Inventories                                                       |   |                                 | 561,658   |                                    |   | 532,638 |   |
| Other                current assets                               |   |                                 | 137,941   |                                    |   | 145,392 |   |
| Total                current assets                               |   |                                 | 2,512,986 |                                    |   | 2,151,564 |   |
| Investments                                                       |   |                                 | 203,369   |                                    |   | 204,495 |   |
| Property,                plant and equipment, net                 |   |                                 | 909,612   |                                    |   | 936,193 |   |
| Goodwill                                                          |   |                                 | 406,252   |                                    |   | 400,719 |   |
| Other                intangible assets, net and noncurrent assets |   |                                 | 184,309   |                                    |   | 186,007 |   |
| Total                assets                                       |   | $                                    | 4,216,528 |                                    | $      | 3,878,978 |   |
|  Short-term                borrowings                        |   | $                                    | 167,876   |                                    | $      | 48,784 |   |
| Current                maturities of long-term debt               |   |                                 | 106,737   |                                    |   | 120,852 |   |
| Accounts                payable                                   |   |                                 | 799,773   |                                    |   | 561,955 |   |
| Hedged                metal obligations                           |   |                                 | 533,477   |                                    |   | 640,812 |   |
| Other                current liabilities                          |   |                                 | 246,928   |                                    |   | 265,359 |   |
| Total                current liabilities                          |   |                                 | 1,854,791 |                                    |   | 1,637,762 |   |
| Long-term                debt                                     |   |                                 | 432,247   |                                    |   | 430,500 |   |
| Other                noncurrent liabilities                       |   |                                 | 321,545   |                                    |   | 321,554 |   |
| Shareholders’                equity                         |   |                                 | 1,607,945 |                                    |   | 1,489,162 |   |
| Total                liabilities and shareholders’ equity   |   | $                                    | 4,216,528 |                                    | $      | 3,878,978 |   |

----

**ENGELHARD      CORPORATION**

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Thousands)**

**(Unaudited)**

|                                                                                                              |   | **Three                Months Ended****March                31,** |     |
|-------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|----------|
|                                                                                                              |   | **2006**                                                          |     | **2005** |   |
| Cash                flows from operating activities                                                               |   |                                                              |     |   |   |   |   |
| Net                earnings                                                                                       |   | $                                                                 | 68,993   |   | $ | 57,952 |   |
| Adjustments                to reconcile net earnings to net cash provided by operating                activities: |   |                                                              |     |   |   |   |   |
| Depreciation                and depletion                                                                         |   |                                                              | 33,154   |   |   | 31,368 |   |
| Amortization                of intangible assets                                                                  |   |                                                              | 1,594    |   |   | 1,117 |   |
| Loss                (gain) on investment                                                                          |   |                                                              | 32       |   |   | (119 | ) |
| Equity                results, net of dividends                                                                   |   |                                                              | (5,855   | ) |   | (5,050 | ) |
| Net                change in assets and liabilities:                                                              |   |                                                              |     |   |   |   |   |
| Materials                Services related                                                                         |   |                                                              | (23,899  | ) |   | (14,662 | ) |
| Funding                of retirement trust                                                                        |   |                                                              | (112,377 | ) |   | - |   |
| Excess                tax benefits from share-based arrangements                                                  |   |                                                              | (15,527  | ) |   | - |   |
| All                other                                                                                          |   |                                                              | (65,948  | ) |   | (28,982 | ) |
| Net                cash (used in) provided by operating activities                                                |   |                                                              | (119,833 | ) |   | 41,624 |   |
| Cash                flows from investing activities                                                               |   |                                                              |     |   |   |   |   |
| Capital                expenditures                                                                               |   |                                                              | (32,918  | ) |   | (24,967 | ) |
| Acquisitions                and other investments, net of cash acquired                                           |   |                                                              | -        |   |   | (55,084 | ) |
| Net                cash used in investing activities                                                              |   |                                                              | (32,918  | ) |   | (80,051 | ) |
| Cash                flows from financing activities                                                               |   |                                                              |     |   |   |   |   |
| Increase                in short-term borrowings                                                                  |   |                                                              | 118,805  |   |   | 20,532 |   |
| (Decrease)                increase in long-term debt                                                              |   |                                                              | (8,993   | ) |   | 69 |   |
| Purchase                of treasury stock                                                                         |   |                                                              | -        |   |   | (46,016 | ) |
| Cash                from exercise of stock options                                                                |   |                                                              | 66,732   |   |   | 2,709 |   |
| Excess                tax benefits from share-based arrangements                                                  |   |                                                              | 15,527   |   |   | - |   |
| Dividends                paid                                                                                     |   |                                                              | (14,859  | ) |   | (14,636 | ) |
| Net                cash provided by (used in) financing activities                                                |   |                                                              | 177,212  |   |   | (37,342 | ) |
| Effect                of exchange rate changes on cash and cash equivalents                                       |   |                                                              | (1,507   | ) |   | 2,202 |   |
| Net                increase (decrease) in cash and cash equivalents                                               |   |                                                              | 22,954   |   |   | (73,567 | ) |
| Cash                and cash equivalents at beginning of year                                                     |   |                                                              | 41,619   |   |   | 126,229 |   |
| Cash                and cash equivalents at end of period                                                         |   | $                                                                 | 64,573   |   | $ | 52,662 |   |

----

**ENGELHARD      CORPORATION**

**BUSINESS      SEGMENT INFORMATION**

**(Thousands)**

**(Unaudited)**

|                                                           |   | **Three                Months Ended****March                31,** |      |
|----------------------------------------------------------------|--------|-------------------------------------------------------------------|-----------|
|                                                           |   | **2006**                                                          |      | **2005** |   |
| Net                Sales                                       |   |                                                              |      |   |   |
| Environmental                Technologies                      |   | $                                                                 | 320,222   |   | $ | 237,458 |   |
| Process                Technologies                            |   |                                                              | 171,048   |   |   | 147,981 |   |
| Appearance                and Performance Technologies         |   |                                                              | 206,332   |   |   | 173,875 |   |
| Technology                segments                             |   |                                                              | 697,602   |   |   | 559,314 |   |
| Materials                Services                              |   |                                                              | 727,788   |   |   | 446,424 |   |
| All                Other                                       |   |                                                              | 29,937    |   |   | 12,973 |   |
| Total                net sales                                 |   | $                                                                 | 1,455,327 |   | $ | 1,018,711 |   |
| Operating                Earnings                              |   |                                                              |      |   |   |   |   |
| Environmental                Technologies                      |   | $                                                                 | 41,530    |   | $ | 36,981 |   |
| Process                Technologies                            |   |                                                              | 26,263    |   |   | 19,057 |   |
| Appearance                and Performance Technologies         |   |                                                              | 21,512    |   |   | 18,063 |   |
| Technology                segments                             |   |                                                              | 89,305    |   |   | 74,101 |   |
| Materials                Services                              |   |                                                              | 17,205    |   |   | 4,725 |   |
| All                Other                                       |   |                                                              | (19,768   | ) |   | (8,587 | ) |
| Total                operating earnings                        |   |                                                              | 86,742    |   |   | 70,239 |   |
| Equity                in earnings of affiliates                |   |                                                              | 7,656     |   |   | 8,109 |   |
| (Loss)                gain on investments                      |   |                                                              | (32       | ) |   | 119 |   |
| Interest                income                                 |   |                                                              | 3,678     |   |   | 1,232 |   |
| Interest                expense                                |   |                                                              | (10,093   | ) |   | (6,012 | ) |
| Earnings                before income taxes                    |   |                                                              | 87,951    |   |   | 73,687 |   |
| Income                tax expense                              |   |                                                              | 18,823    |   |   | 15,231 |   |
| Net                earnings from continuing operations         |   |                                                              | 69,128    |   |   | 58,456 |   |
| Loss                from discontinued operations, net of taxes |   |                                                              | (135      | ) |   | (504 | ) |
| Net                earnings                                    |   | $                                                                 | 68,993    |   | $ | 57,952 |   |

----

**Notes      to the Unaudited Condensed Consolidated Financial      Statements**

**Note      1 - Basis of Presentation**

**Note      2 - Acquisitions**

**Note      3 - Accounting for Asset Retirement Obligations**

|                                                        |   | **March                31,****2006** |   | **March                31,****2005** |   |
|-------------------------------------------------------------|--------|--------------------------------------|--------|--------------------------------------|--------|
| Balance                at beginning of year                 |   | $                                    | 10.0   |                                 | $      | 10.8 |   |
| Accretion                expense                            |   |                                 | 0.3    |                                 |   | 0.2 |   |
| Payments                                                    |   |                                 | (0.3   | )                                    |   | (0.3 | ) |
| Asset                retirement obligation at end of period |   | $                                    | 10.0   |                                 | $      | 10.7 |   |

----

**Note      4 - Inventories**

|                             |   | **March                31,****2006** |   | **December                31, 2005** |   |
|----------------------------------|--------|--------------------------------------|--------|--------------------------------------|--------|
| Raw                materials     |   | $                                    | 171.3  |                                 | $      | 174.4 |   |
| Work                in process   |   |                                 | 60.3   |                                 |   | 54.6 |   |
| Finished                goods    |   |                                 | 313.9  |                                 |   | 287.7 |   |
| Precious                metals   |   |                                 | 16.2   |                                 |   | 15.9 |   |
| Total                inventories |   | $                                    | 561.7  |                                 | $      | 532.6 |   |

**Note      5 - Comprehensive Income**

|                                                            |   | **Three                Months Ended****March                31,** |    |
|-----------------------------------------------------------------|--------|-------------------------------------------------------------------|---------|
|                                                            |   | **2006**                                                          |    | **2005** |   |
| Net                earnings                                     |   | $                                                                 | 69.0    |   | $ | 58.0 |   |
| Other                comprehensive income (loss):               |   |                                                              |    |   |   |   |   |
| Foreign                currency translation adjustment          |   |                                                              | 9.6     |   |   | (1.4 | ) |
| Cash                flow derivative adjustment, net of tax      |   |                                                              | (9.5    | ) |   | 8.5 |   |
| Minimum                pension liability adjustment, net of tax |   |                                                              | (0.1    | ) |   | 0.2 |   |
| Other                                                           |   |                                                              | — |   |   | 1.7 |   |
| Comprehensive                income                             |   | $                                                                 | 69.0    |   | $ | 67.0 |   |

----

**Note      6 - Earnings Per Share**

|                                                                  |   | **Three                Months Ended****March                31,** |   |
|-----------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|
| (in                millions, except per-share data):                  |   | **2006**                                                          |   | **2005** |   |
| Basic                EPS Computation                                  |   |                                                              |   |   |   |   |   |
| Income                from continuing operations                      |   | $                                                                 | 69.1   |   | $ | 58.5 |   |
| Loss                from discontinued operations, net of tax          |   |                                                              | (0.1   | ) |   | (0.5 | ) |
| Net                earnings applicable to common shares               |   | $                                                                 | 69.0   |   | $ | 58.0 |   |
| Average                number of shares outstanding - basic           |   |                                                              | 122.6  |   |   | 121.7 |   |
| Basic                earnings per share from continuingoperations     |   | $                                                                 | 0.56   |   | $ | 0.48 |   |
| Basic                earnings per share from discontinuedoperations   |   |                                                              | (0.00  | ) |   | (0.00 | ) |
| Basic                earnings per share                               |   | $                                                                 | 0.56   |   | $ | 0.48 |   |
|                                                                  |   |                                                              |   |   |   |   |   |
|                                                                  |   |                                                              |   |   |   |   |   |
| Diluted                EPS Computation                                |   |                                                              |   |   |   |   |   |
| Income                from continuing operations                      |   | $                                                                 | 69.1   |   | $ | 58.5 |   |
| Loss                from discontinued operations, net of tax          |   |                                                              | (0.1   | ) |   | (0.5 | ) |
| Net                earnings applicable to common shares               |   | $                                                                 | 69.0   |   | $ | 58.0 |   |
| Average                number of shares outstanding - basic           |   |                                                              | 122.6  |   |   | 121.7 |   |
| Effect                of dilutive stock options and other incentives  |   |                                                              | 3.1    |   |   | 2.2 |   |
| Average                number of shares outstanding - diluted         |   |                                                              | 125.7  |   |   | 123.9 |   |
| Diluted                earnings per share from continuingoperations   |   | $                                                                 | 0.55   |   | $ | 0.47 |   |
| Diluted                earnings per share from discontinuedoperations |   |                                                              | (0.00  | ) |   | (0.00 | ) |
| Diluted                earnings per share                             |   | $                                                                 | 0.55   |   | $ | 0.47 |   |

**Note      7 - Derivatives and Hedging**

----

----

----

**Note      8 - Guarantees and Warranties**

|                                        |   | **March                31, 2006** |    | **March                31, 2005** |   |
|---------------------------------------------|--------|-----------------------------------|---------|-----------------------------------|--------|
| Balance                at beginning of year |   | $                                 | 4.2     |                              | $      | 8.7 |   |
| Payments                                    |   |                              | (0.2    | )                                 |   | (0.1 | ) |
| Provision                                   |   |                              | 0.1     |                              |   | 0.1 |   |
| Reversal                of reserve          |   |                              | — |                              |   | (0.2 | ) |
| Balance                at end of period     |   | $                                 | 4.1     |                              | $      | 8.5 |   |

**Note      9 - Goodwill and Other Intangible Assets**

|                                                  |   | **As                of March 31, 2006**     |   | **As                of December 31, 2005** |   |
|-------------------------------------------------------|--------|---------------------------------------------|--------|--------------------------------------------|--------|
|                                                  |   | **Gross                Carrying****Amount** |   | **Accumulated****Amortization**            |   | **Gross                Carrying****Amount** |   | **Accumulated****Amortization** |   |
| Acquired                Amortizable Intangible Assets |   |                                        |   |                                       |   |   |   |   |   |   |   |   |   |
| Usage                rights                           |   | $                                           | 19.9   |                                       | $      | 7.3 |   | $ | 19.4 |   | $ | 6.8 |   |
| Supply                agreements                      |   |                                        | 18.5   |                                       |   | 7.8 |   |   | 18.1 |   |   | 7.3 |   |
| Technology                licenses                    |   |                                        | 18.3   |                                       |   | 5.7 |   |   | 11.5 |   |   | 4.8 |   |
| Other                                                 |   |                                        | 25.4   |                                       |   | 4.1 |   |   | 23.6 |   |   | 4.0 |   |
| Total                                                 |   | $                                           | 82.1   |                                       | $      | 24.9 |   | $ | 72.6 |   | $ | 22.9 |   |

----

| Estimated                  Annual Amortization Expense: |   |   |   |   |
|---------------------------------------------------------|--------|--------|--------|--------|
| 2006                                                    |   | $      | 6.5    |   |
| 2007                                                    |   |   | 6.5    |   |
| 2008                                                    |   |   | 6.4    |   |
| 2009                                                    |   |   | 6.0    |   |
| 2010                                                    |   |   | 5.5    |   |
|                                                    |   |   |   |   |

|                                                   |   | **Environmental                Technologies** |   | **Process                Technologies** |   | **Appearance                & Performance Technologies** |   | **All                Other** |   | **Total** |   |
|--------------------------------------------------------|--------|-----------------------------------------------|--------|-----------------------------------------|--------|--------------------------------------------------------------|--------|------------------------------|--------|-----------|--------|
| Balance                as of January 1, 2006           |   | $                                             | 17.4   |                                    | $      | 109.6                                                        |   | $                            | 243.5  |      | $      | 30.2 |   | $ | 400.7 |   |
| Goodwill                additions (a)                  |   |                                          | 4.5    |                                    |   | -                                                            |   |                         | -      |      |   | - |   |   | 4.5 |   |
| Purchase                accounting adjustments (b)     |   |                                          | -      |                                    |   | -                                                            |   |                         | (1.1   | )         |   | (0.1 | ) |   | (1.2 | ) |
| Foreign                currency translation adjustment |   |                                          | 0.3    |                                    |   | 0.1                                                          |   |                         | 1.9    |      |   | - |   |   | 2.3 |   |
| Balance                as of March 31, 2006            |   | $                                             | 22.2   |                                    | $      | 109.7                                                        |   | $                            | 244.3  |      | $      | 30.1 |   | $ | 406.3 |   |

| (a)   | Goodwill                additions amount of $4.5 million is related to the Company’s acquisition                of 30% minority interest of Engelhard Environmental (India) Private                Limited during the first quarter. This amount represents the excess                of the                purchase price paid over the minority interest acquired, in accordance                with SFAS No. 141, “Business                Combinations.” |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Purchase                accounting adjustments include $1.1 million and $0.1 million related                to a                revision of the allocation of the purchase price of Coletica, S.A.                and                Almatis AC, Inc., respectively. All adjustments were made in accordance                with SFAS No. 141, “Business                Combinations.” |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Note      10 - Committed Metal Positions and Hedged Metal      Obligations**

|                                                                                                                                |   | **March                  31, 2006** |    | **December                  31, 2005** |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|---------|----------------------------------------|--------|
| Committed                  Metal Positions were comprised of the following (in                  millions):                          |   |                                |    |                                   |   |   |   |
| Metals                  in a net spot long position economically hedged with derivatives                  (primarily forward sales) |   | $                                   | 892.7   |                                   | $      | 572.2 |   |
| Fair                  value of hedging derivatives in a “gain” position                                                 |   |                                | 16.4    |                                   |   | 8.8 |   |
| Unhedged                  metal positions, net (see analysis below)                                                                 |   |                                | 83.8    |                                   |   | 72.1 |   |
| Fair                  value of metals received with prices to be determined, net                  of                                |   |                                |    |                                   |   |   |   |
| hedged                  spot sales.                                                                                                 |   |                                | 11.7    |                                   |   | 251.9 |   |
|                    Total committed metal positions                                                                             |   | $                                   | 1,004.6 |                                   | $      | 905.0 |   |

----

|                                            |   | **March                  31, 2006** |   | **December                  31, 2005** |   |
|-------------------------------------------------|--------|-------------------------------------|--------|----------------------------------------|--------|
|                                            |   | **Net****Position**                 |   | **Value**                              |   | **Net****Position** |   | **Value** |   |
| Platinum                  group metals          |   |                                | Long   |                                   | $      | 70.1 |   |   | Long |   | $ | 66.3 |   |
| Gold                                            |   |                                | Long   |                                   |   | 0.8 |   |   | Long |   |   | 3.8 |   |
| Silver                                          |   |                                | Long   |                                   |   | 0.4 |   |   | Short |   |   | (1.8 | ) |
| Base                  metals                    |   |                                | Long   |                                   |   | 12.5 |   |   | Long |   |   | 3.8 |   |
| Total                  unhedged metal positions |   |                                |   |                                   | $      | 83.8 |   |   |   |   | $ | 72.1 |   |

|                                                                                                                                                                                                                                     |   | **March                31, 2006** |   | **December                31, 2005** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|--------------------------------------|--------|
| Hedged                Metal Obligations were comprised of the following (in                millions):                                                                                                                                    |   |                              |   |                                 |   |   |   |
| Metals                in a net spot short position economically hedged with derivatives                (primarily forward purchases) - represents a payable for the return                of                spot metal to counterparties |   | $                                 | 474.4  |                                 | $      | 611.5 |   |
| Fair                value of hedging derivatives in a “loss” position                                                                                                                                                        |   |                              | 59.1   |                                 |   | 29.3 |   |
| Total                hedged metal obligations                                                                                                                                                                                            |   | $                                 | 533.5  |                                 | $      | 640.8 |   |

|                                                            |   | **March                31, 2006** |    | **December                31, 2005** |   |
|-----------------------------------------------------------------|--------|-----------------------------------|---------|--------------------------------------|--------|
|                                                            |   | **Buy**                           |    | **Sell**                             |   | **Buy** |   | **Sell** |   |
| Metal                forwards/futures                           |   | $                                 | 1,156.1 |                                 | $      | 984.5 |   | $ | 1,022.6 |   | $ | 791.4 |   |
| Eurodollar                futures                               |   |                              | 333.2   |                                 |   | 94.7 |   |   | 89.2 |   |   | 95.9 |   |
| Swaps                                                           |   |                              | 55.6    |                                 |   | 25.1 |   |   | 37.5 |   |   | 18.8 |   |
| Options                                                         |   |                              | 0.3     |                                 |   | - |   |   | 10.0 |   |   | 7.5 |   |
| Foreign                exchange forwards/futures - Japanese yen |   |                              | -       |                                 |   | 98.7 |   |   | - |   |   | 70.2 |   |
| Foreign                exchange forwards/futures - Euro         |   |                              | -       |                                 |   | 49.5 |   |   | - |   |   | 39.0 |   |
| Foreign                exchange forwards/futures - Other        |   |                              | 6.5     |                                 |   | - |   |   | 4.5 |   |   | - |   |

----

** **
**Note          11 - New Accounting Pronouncements**

*Servicing          of Financial Assets*

*Certain      Hybrid Financial Instruments*

*Stripping      Costs*

*Stock      Option Expense*

----

**Note      12 - Stock Option and Bonus Plans**

| (in                millions, except per-share data)          |   | **Three                Months Ended****March                31,** |   |
|--------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|
|                                                         |   | **2006**                                                          |   | **2005** |   |
| Net                earnings — as reported              |   | $                                                                 | 69.0   |   | $ | 58.0 |   |
|                                                         |   |                                                              |   |   |   |   |   |
| Basic                earnings per share, as reported         |   |                                                              | 0.56   |   |   | 0.48 |   |
| Diluted                earnings per share, as reported  |   |                                                              | 0.55   |   |   | 0.47 |   |
|                                                         |   |                                                              |   |   |   |   |   |
| Stock                option expense included in net earnings |   |                                                              | 0.6    |   |   | - |   |
| Total                stock option expense                    |   |                                                              | 0.6    |   |   | 2.3 |   |
| **Pro-forma                effects**                    |   |                                                              |   |   |   |   |   |
| Net                earnings — pro forma                |   |                                                              |   |   |   | 55.7 |   |
|                                                         |   |                                                              |   |   |   |   |   |
| Basic                earnings per share — pro forma    |   |                                                              |   |   |   | 0.46 |   |
| Diluted                earnings per share — pro forma  |   |                                                              |   |   |   | 0.45 |   |

----

|                                   |   | **Three                Months Ended****March                31, 2005** |   |
|----------------------------------------|--------|------------------------------------------------------------------------|--------|
| Dividend                yield          |   |                                                                   | 1.46   | % |
| Expected                volatility     |   |                                                                   | 32.30  | % |
| Risk-free                interest rate |   |                                                                   | 3.94   | % |
| Expected                life (years)   |   |                                                                   | 6.75   |   |

|                                            |   | **Number                  of Shares** |       | **Weighted-Average                  Exercise Price Per Share** |   | **Weighted-Average                  Remaining Contractual Term****(in                  Years)** |   | **Aggregate                  Intrinsic Value** |   |
|-------------------------------------------------|--------|---------------------------------------|------------|----------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                            |   |                                  |       |                                                           |   |                                                                                            |   |                                           |   |
| Outstanding                  at January 1, 2006 |   |                                  | 10,678,061 |                                                           | $      | 23.04                                                                                           |   |                                           |   |   |   |   |   |
| Granted                                         |   |                                  | -          |                                                           | $      | -                                                                                               |   |                                           |   |   |   |   |   |
| Exercised                                       |   |                                  | (3,158,901 | )                                                              | $      | 21.15                                                                                           |   |                                           |   |   |   |   |   |
| Forfeited                                       |   |                                  | (772       | )                                                              | $      | 29.24                                                                                           |   |                                           |   |   |   |   |   |
| Expired                                         |   |                                  | (1,376     | )                                                              | $      | 23.88                                                                                           |   |                                           |   |   |   |   |   |
| Outstanding                  at March 31, 2006  |   |                                  | 7,517,012  |                                                           | $      | 23.83                                                                                           |   |                                           | 5.7    |   | $ | 118,585,724 |   |
| Exercisable                  at March 31, 2006  |   |                                  | 5,267,269  |                                                           | $      | 21.89                                                                                           |   |                                           | 4.6    |   | $ | 93,339,464 |   |

----

|                                         |   | **Number                  of Shares** |     | **Weighted-Average                  Price Per Share** |   | **Weighted-Average                  Remaining Contractual Term****(in                  Years)** |   | **Aggregate                  Intrinsic Value** |   |
|----------------------------------------------|--------|---------------------------------------|----------|-------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                         |   |                                  |     |                                                  |   |                                                                                            |   |                                           |   |
| Unvested                  at January 1, 2006 |   |                                  | 415,255  |                                                  | $      | 26.42                                                                                           |   |                                           |   |   |   |   |   |
| Granted                                      |   |                                  | 173,500  |                                                  | $      | 40.69                                                                                           |   |                                           |   |   |   |   |   |
| Vested                                       |   |                                  | (157,480 | )                                                     | $      | 40.30                                                                                           |   |                                           |   |   |   |   |   |
| Forfeited                                    |   |                                  | (591     | )                                                     | $      | 29.40                                                                                           |   |                                           |   |   |   |   |   |
| Unvested                  at March 31, 2006  |   |                                  | 430,684  |                                                  | $      | 32.72                                                                                           |   |                                           | 2.3    |   | $ | 17,059,393 |   |

**Note      13 - Benefits**

|                                              |   | **Pension                Benefits** |   | **Other                Benefits** |   |
|---------------------------------------------------|--------|-------------------------------------|--------|-----------------------------------|--------|
|                                              |   | **2006**                            |   | **2005**                          |   | **2006** |   | **2005** |   |
| Service                cost                       |   | $                                   | 6.6    |                              | $      | 6.0 |   | $ | 1.0 |   | $ | 1.0 |   |
| Interest                cost                      |   |                                | 10.5   |                              |   | 10.2 |   |   | 1.9 |   |   | 2.0 |   |
| Expected                return on plan assets     |   |                                | (13.0  | )                                 |   | (12.3 | ) |   | - |   |   | - |   |
| Amortization                of prior service cost |   |                                | 0.5    |                              |   | 0.6 |   |   | (0.2 | ) |   | (0.6 | ) |
| Recognized                actuarial loss          |   |                                | 5.4    |                              |   | 3.6 |   |   | 0.3 |   |   | 0.2 |   |
| Net                periodic benefit cost          |   | $                                   | 10.0   |                              | $      | 8.1 |   | $ | 3.0 |   | $ | 2.6 |   |

----

| Year                                                |   |   |   |
|-----------------------------------------------------|--------|--------|--------|
| 2006                  (April 1 through December 31) |   | $      | 10.0   |   |
| 2007                                                |   |   | 13.4   |   |
| 2008                                                |   |   | 13.8   |   |
| 2009                                                |   |   | 14.0   |   |
| 2010                                                |   |   | 14.3   |   |
| 2011                  through 2015                  |   |   | 76.4   |   |

| Year                                              |   |   |   |
|---------------------------------------------------|--------|--------|--------|
| 2006                (April 1 through December 31) |   | $      | 2.0    |   |
| 2007                                              |   |   | 2.2    |   |
| 2008                                              |   |   | 2.3    |   |
| 2009                                              |   |   | 2.4    |   |
| 2010                                              |   |   | 2.5    |   |
| 2011                through 2015                  |   |   | 12.8   |   |

**Note      14 - Supplemental Information**

|                                                                 |   | **Three                Months Ended March 31,** |   |
|----------------------------------------------------------------------|--------|-------------------------------------------------|--------|
|                                                                 |   | **2006**                                        |   | **2005** |   |
| Materials                Services related:                           |   |                                            |   |   |   |   |   |
| Change                in assets and liabilities - source (use):      |   |                                            |   |   |   |   |   |
| Receivables                                                          |   | $                                               | (28.2  | ) | $ | (6.6 | ) |
| Committed                metal positions                             |   |                                            | (197.1 | ) |   | 54.2 |   |
| Inventories                                                          |   |                                            | (0.1   | ) |   | 0.4 |   |
| Other                current assets                                  |   |                                            | 1.1    |   |   | (0.4 | ) |
| Accounts                payable                                      |   |                                            | 342.7  |   |   | (63.6 | ) |
| Hedged                metal obligations                              |   |                                            | (137.1 | ) |   | 3.7 |   |
| Other                current liabilities                             |   |                                            | (5.2   | ) |   | (2.4 | ) |
| Net                cash flows from changes in assets and liabilities |   | $                                               | (23.9  | ) | $ | (14.7 | ) |

----

|                                                                   |   | **Three                  Months Ended March 31,** |   |
|------------------------------------------------------------------------|--------|---------------------------------------------------|--------|
|                                                                   |   | **2006**                                          |   | **2005** |   |
| All                  Other:                                            |   |                                              |   |   |   |   |   |
| Change                  in assets and liabilities - source (use):      |   |                                              |   |   |   |   |   |
| Receivables                                                            |   | $                                                 | (69.4  | ) | $ | (38.3 | ) |
| Inventories                                                            |   |                                              | (24.1  | ) |   | (13.5 | ) |
| Other                  current assets                                  |   |                                              | 6.6    |   |   | (6.7 | ) |
| Other                  noncurrent assets                               |   |                                              | 6.6    |   |   | 5.7 |   |
| Accounts                  payable                                      |   |                                              | 18.8   |   |   | 23.3 |   |
| Other                  current liabilities                             |   |                                              | 13.0   |   |   | 19.4 |   |
| Noncurrent                  liabilities                                |   |                                              | (17.4  | ) |   | (18.9 | ) |
| Net                  cash flows from changes in assets and liabilities |   | $                                                 | (65.9  | ) | $ | (29.0 | ) |

**Note      15 - Legal and Environmental Matters**

----

*In re: Engelhard Corporation Shareholders Litigation*

*In      re: Engelhard Corporation Shareholders Litigation,*

----

**Note      16 - Income Taxes**

**Note      17 - Other Matters**

----

**Item      2.**
**Management’s      Discussion and Analysis of Financial Condition and Results of      Operations**

**Overview**

**Results      of Operations**

**Comparison      of the First Quarter of 2006 with the First Quarter of      2005**

----

**Environmental      Technologies**

**Results      of Operations**
*(in      millions)*

|                              |   | Q1                2006 |   | Q1                2005 |   | %                change |   |
|-----------------------------------|--------|------------------------|--------|------------------------|--------|-------------------------|--------|
| Sales                             |   | $                      | 320.2  |                   | $      | 237.5                   |   |   | 34.8 | % |
| Operating                earnings |   |                   | 41.5   |                   |   | 37.0                    |   |   | 12.2 | % |

*Discussion*

----

**Process      Technologies**

**Results      of Operations**
*      (in      millions)*

|                                |   | Q1                  2006 |   | Q1                  2005 |   | %                  change |   |
|-------------------------------------|--------|--------------------------|--------|--------------------------|--------|---------------------------|--------|
| Sales                               |   | $                        | 171.0  |                     | $      | 148.0                     |   |   | 15.5 | % |
| Operating                  earnings |   |                     | 26.3   |                     |   | 19.1                      |   |   | 37.7 | % |

*Discussion*

----

*Lynx      1000, *

**Appearance      and Performance Technologies**

**Results      of Operations**
*(in      millions)*

|                              |   | Q1                2006 |   | Q1                2005 |   | %                change |   |
|-----------------------------------|--------|------------------------|--------|------------------------|--------|-------------------------|--------|
| Sales                             |   | $                      | 206.3  |                   | $      | 173.9                   |   |   | 18.6 | % |
| Operating                earnings |   |                   | 21.5   |                   |   | 18.1                    |   |   | 18.8 | % |

*Discussion*

----

**Materials      Services**

**Results      of Operations**
*(in      millions)*

|                              |   | Q1                2006 |   | Q1                2005 |   | %                change |   |
|-----------------------------------|--------|------------------------|--------|------------------------|--------|-------------------------|--------|
| Sales                             |   | $                      | 727.8  |                   | $      | 446.4                   |   |   | 63.0 | % |
| Operating                earnings |   |                   | 17.2   |                   |   | 4.7                     |   |   | 264.0 | % |

*Discussion*

----

**Ventures**

**Liquidity      and Capital Resources**

**Liquidity**

----

**Capital      Resources**

----

**FORWARD**

**-LOOKING      STATEMENTS**

----

**Risk      Factors**

| ·   | *The                Company’s ability to achieve and execute internal business plans.*The                Company is engaged in growth and productivity initiatives in all                technology segments. Specifically, the Company has major growth                initiatives in businesses                serving the personal care, energy materials, polyethylene, diesel                emissions and gas-to-liquids markets.                These initiatives are subject                to greater risk than the Company’s traditional markets. Additionally,                failure to commercialize proprietary                and other technologies or to acquire businesses or licensing agreements                to                serve targeted markets could                negatively impact the Company’s business, financial condition and results                of operations. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *The                success**of**research                and development activities and the speed with which regulatory                authorizations and**product                launches may be achieved*.                The                Company’s business depends upon the creation, acquisition and commercialization                of new technologies to replace obsolete technologies. The Company                cannot                give any assurance that it will be able to replace obsolete technologies                successfully or at all and the failure to do so could negatively                impact                the Company’s business, financial condition and results of                operations. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Manufacturing                difficulties, property loss, or casualty loss.*Although                the Company maintains business interruption insurance, the Company                is                dependent upon the operating success of its manufacturing facilities,                and                does not maintain redundant capacity. Failure of these manufacturing                facilities could cause profitability losses and could damage customer                relations in the long term. Any significant loss of customers associated                with such manufacturing difficulties could negatively impact the                Company’s                business, financial condition and results of                operations. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Capacity                constraints.*Some                of the Company’s businesses operate near current capacity levels, notably                operations serving the petroleum refining operations. Should demand                for                certain products increase, the Company could experience difficulty                meeting                the increased demand, hindering growth                opportunities. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Product                quality deficiencies.*The                Company’s products are generally sold based upon specifications agreed                upon with our customers. Failure to meet these specifications could                negatively impact the Company’s                business. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *The                impact**of**physical                inventory losses, particularly with regard to precious and base metals.*Although                the Company                maintains property and casualty insurance, the Company holds large                physical quantities of precious and                base metals, often for the account of third parties. These quantities                are                subject to loss by theft and manufacturing                inefficiency. Significant loss of physical inventories, particularly                the                loss of the Company’s precious and base metals,                could negatively impact the Company’s business, financial condition and                results of operations. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Litigation                and legal claims.*The                Company is currently engaged in various legal disputes, including                litigation related                to the BASF tender offer. Unfavorable resolution of these disputes                would                negatively impact the                Company’s business, financial condition and results of                operations.                Unidentified                future legal claims could have a similar negative                impact. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Contingencies                related to actual or alleged environmental contamination to which                the                Company may be a party* (see                Note 22, “Environmental Costs” to the Company’s financial statements                included with the Company’s Annual Report on Form 10-K for the fiscal year                ended December 31, 2005). |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·    | *Exposure                    to product liability lawsuits.*As                    a manufacturer, the Company is subject to end-user product liability                    litigation                    associated with the Company’s products. Unfavorable resolution of these                    disputes would negatively impact the Company’s business, financial                    condition and results of operations. Unidentified future legal                    claims                    could have a similar negative                    impact. |
|--------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Future                divestitures and restructurings.*The                Company may experience changes in market conditions that cause                the                Company to consider divesting or restructuring operations, which                could                impact future earnings. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Competitive                pricing or product development activities affecting demand**for                our products.*The                Company operates                in a number of markets where overcapacity, low-priced foreign competitors,                and                other factors create a situation                where competitors compete for business by reducing their prices,                notably                in the                kaolin to paper market, some                effect pigments markets, the colorant market, certain chemical process                markets                and certain components of the                mobile-source environmental markets. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Overall                demand**.**for                the Company’s products, which is dependent on the demand for our                customers’ products.*As                a supplier of materials to other manufacturers, the Company is dependent                upon the markets for its customers’ products. Notably, some North American                automobile producers have recently experienced                financial difficulties                and decreased product demand. Additionally, technological advances                by                direct and not-in-kind competitors                could render the Company’s current products unattractive or                obsolete. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Changes                in the solvency and liquidity of**our                customers.*Although                the Company believes it has adequate credit policies,                the creditworthiness of customers could change. Certain customers                of the                Company who supply parts to                the North American automobile producers have recently experienced                financial difficulties,                including bankruptcy.                Bankruptcy of other customers remains a threat. These customers represent                a                substantial portion of the                Environmental Technologies segment’s                business. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Fluctuations                in the supply and prices**of**precious                and base metals and fluctuations in the relationships between**forward                prices to spot prices.*The                Company depends upon a reliable source of precious metals, used in                the                manufacture                of its products, for itself and its customers. These precious metals                are                sourced from a limited number                of suppliers. A decrease in the availability of these precious metals                could negatively impact                the Company.                In closely monitored situations, for which exposure levels and transaction                size                limits have been set by                senior management, the Company holds unhedged metal positions that                are                subject to future                market fluctuations.                Such positions may include varying levels of derivative instruments.                At                times, these positions can be                significant. Significant changes in market prices could negatively                impact                the                Company’s business, financial condition and results of                operations. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *The                availability and price**of                rare earth compounds.*The                Company uses certain rare earth compounds in manufacturing its products,                produced in                limited locations worldwide. Decreased availability of these compounds                or                an increase in the price of these materials could negatively impact                the                Company’s business, financial condition and results of                operations. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *The                availability of**substrates.*In                the Company’s Environmental Technologies segment, the Company purchases                large quantities                of catalyst substrates from a limited number of suppliers. These                substrates                are specifically designed and manufactured to requirements established                by                the Company’s customers. An inability to                obtain substrates in sufficient                volumes to meet customer demand could negatively impact the                Company’s business, financial condition and results of                operations. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *The                availability**and**price**of**other                raw materials.*The                Company’s products contain a broad array of raw materials                for which increases in price or decreases in availability could negatively                impact                the                Company’s business, financial condition and results of                operations. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | *A                  decrease*in                  the *availability                  or an increase*in                  *the                  cost**of**energy,                  notably natural gas.*The                  Company consumes more than 11 million MMBTUs of natural gas annually.                  Compared with other sources of                  energy, natural gas is subject to volatility in availability and                  price,                  due to transportation, processing and storage requirements. A                  prolonged                  continuation of higher prices, absent the ability to recover these                  costs                  through price increases or energy                  surcharges, could negatively impact the                  Company’s business, financial condition and results of                  operations.                  Changes could include customer and                  product rationalization,                  plant closures and asset impairments, particularly in certain minerals                  operations serving the paper                  market. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *The                impact**of                increased employee benefit**costs**and/or**the                resultant impact on employee relations and human**resources.*The                Company employs over 7,000 employees worldwide and has been experiencing                increases                in                benefit costs, notably pension and medical benefits. Continued increases                in such costs could negatively impact the                Company’s business, financial condition and results of                operations. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Higher**interest                rates.*A                portion of the Company’s debt is exposed to short term                interest rate fluctuations. An increase in long-term debt rates would                impact the Company when the current long-term debt                instruments mature. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Changes                in foreign currency**exchange**rates.*The                Company regularly enters into transactions denominated in foreign                currencies and, accordingly, is exposed to changes in foreign currency                exchange rates.                The Company’s policy                is to hedge the risks associated with monetary assets and liabilities                resulting from                these transactions. Additionally,                the Company has significant foreign currency investments and earnings,                which are subject to changes                in foreign currency exchange rates upon translation into United States                dollars. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Geographic**expansions                may**not                develop as anticipated.*The                Company expects markets in Asia to fuel growth for many                served markets. China’s expected growth exceeds that of most developed                countries, and failure of that growth                to materialize as expected could negatively impact the Company’s business,                financial condition and results of                operations. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Economic                downturns and inflation.*The                diversity of the Company’s markets has substantially insulated the                Company’s                profitability from economic downturns in recent years. The Company                is                exposed to overall economic                conditions. Recent inflationary pressures have resulted in higher                material                costs.                The inability of the Company                to pass these higher costs to customers through price increases and                surcharges would have                a negative impact                on the                Company’s business, financial condition and results of                operations. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Increased                levels of worldwide political instability, as**the**Company**operates                primarily**in                the United States, the**European**community,                Asia, the**Russian* *Federation,                South Africa and Brazil.*Much                of the Company’s identified growth                prospects are foreign markets. As such, the Company expects continued                foreign investment and, therefore,                increased exposure to foreign political instability. Additionally,                the                worldwide threat of terrorism can directly and indirectly impact                the                Company’s foreign and domestic                profitability. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Government                legislation and/or regulation particularly on environmental and taxation                matters.*The                Company maintains                manufacturing facilities and, as a result, is subject to environmental                laws                and regulations. The Company will be impacted by changes in these                laws and                regulations. The Company operates in                tax jurisdictions throughout                the world, and, as a result, is subject to changes in tax law in                various                countries. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *A                slowdown in the expected rate of environmental regulations.*The                Company’s Environmental Technologies segment’s customers, and to a lesser                extent, the Process Technologies segment’s customers, are generally driven                by increasingly stringent environmental regulations. A slowdown or                repeal                of regulations could negatively impact                the Company. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | *The                  impact of natural disasters.*Natural                  disasters causing damage to the Company and our customers and suppliers                  could negatively impact the                  Company. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Uncertainty                  regarding the outcome of**the                  BASF Offer may affect the Company’s stock price and**future**business.*The                  uncertainty as to the outcome of the BASF Offer may have an adverse                  effect                  on employee retention and recruitment, and may negatively impact                  supplier                  and customer relationships. A significant loss of employees or                  the                  inability to attract new employees could negatively impact the                  Company’s business, financial condition and results of                  operations. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Increased                indebtedness and a greater ratio of indebtedness to stockholders’ equity.*The                Company will enter into new financing arrangements to finance the                Company’s tender offer and, as a result, indebtedness and interest expense                will increase. Such increased levels of indebtedness and higher interest                expenses may make it difficult for the Company to incur future                indebtedness at attractive terms or at all. In addition, the Company’s                indebtedness will be more substantial in relation to stockholders’ equity. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Changes                in the Company’s credit ratings.*                The Company expects its credit ratings will be downgraded by each                of the                principal rating agencies as a result of the announcement of the                Company’s                tender offer, but that the Company will maintain an investment grade                rating. Should the Company’s rating drop below investment grade, the                Company would experience higher interest expenses and may incur difficulty                in procuring metals. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Conditions                to the Offer.*                The Company’s ability to repurchase shares in the Company’s tender offer                will be subject to a number of conditions, including obtaining financing.                The commitment letter received to provide a one year bridge facility                of                $1.5 billion to fund the repurchase and related costs and expenses                is                subject to a number of conditions, including there being no material                adverse change in the Company since December 31, 2005 and there being                no                material disruption of or material adverse change in financial, banking                or                capital markets since April 25, 2006. In addition, we have to amend                our                existing credit facilities to permit the increased level of                indebtedness. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Ability                to refinance the bridge facility*.                The expected benefits of the recapitalization plan rely in part on                our                ability to refinance our bridge facility and the terms of the financing                obtained. The expected terms used herein are based on current market                conditions. The terms of any permanent financing will depend on market                conditions at the time we incur the indebtedness, and are likely                to be                different. In addition, a portion of the permanent financing is expected                to have a floating rate of interest, which may increase over                time. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Item      3.**
**Quantitative      and Qualitative Disclosures about Market Risk**

**Market      Risk Sensitive Transactions**

| **Item              4.**  | **Controls                and Procedures** |
|--------------------------------|--------------------------------------------|

----

**PART        II - OTHER INFORMATION**

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

|   | Please                see Note 15, “Legal and Environmental Matters” for an update on legal                proceedings. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|

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

|   | Additional                risk factors to those disclosed in the Company’s 2005 Form 10-K include                items relating to the BASF tender offer and the Company’s proposed                recapitalization plan. Please see p.30 for a discussion of the Company’s                risk factors. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Item              2.**  | **Unregistered                Sales of Equity Securities and Use of                Proceeds** |
|--------------------------------|-----------------------------------------------------------------------------------------------|

| (e) | The                Company has Board authorized programs for the repurchase of the Company’s                stock. The following table represents repurchases under these programs                for                each of the three months of the quarter ended March 31,                2006: |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Period**                      |   |   **Total                Number of Shares Purchased** |                | **Average                Price Paid per Share** |   | **Total                Number of Shares Purchased as Part of Publicly Announced Plans or                Programs** |   | **Maximum                Number of Shares that May Yet Be Purchased Under the Plans or Programs                (a)** |   |
|---------------------------------|--------|-----------------------------------------------------------------|---------------------|-------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|--------|
| 1/1/06                - 1/31/06 |   |                                                            | -                (b | )                                               | $      | -                                                                                                                  |   |                                                                                                                 | -      |   |   | 5,741,532 |   |
| 2/1/06                - 2/28/06 |   |                                                            | -                (c | )                                               |   | -                                                                                                                  |   |                                                                                                                 | -      |   |   | 5,741,532 |   |
| 3/1/06                - 3/31/06 |   |                                                            | -                (c | )                                               |   | -                                                                                                                  |   |                                                                                                                 | -      |   |   | 5,741,532 |   |
| Total                           |   |                                                            | -                   |                                            | $      | -                                                                                                                  |   |                                                                                                                 | -      |   |   |   |   |

| (a)   | Share                repurchase program of 6 million shares authorized in May                2005. |
|-----------------|----------------------------------------------------------------------------------------------------|

| (b)   | Excludes                265 shares obtained through dividend reinvestment by the Rabbi Trust                under                the Deferred Compensation Plan for Key Employees of Engelhard                Corporation. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Excludes                a total of 32,923 shares received into treasury stock under the Key                Employee Stock Bonus Plan of Engelhard Corporation, representing                the net                shares received by the Company from employees to cover supplemental                withholding taxes on the vesting of stock award                shares. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Item              6.**  | **Exhibits**                                                            Pages |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**SIGNATURES**

| Date:  | May                9, 2006 |   | /s/                Barry W. Perry Barry                W. PerryChairman                and ChiefExecutive                Officer                 |
|--------|----------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                       |   |                                                                                                                                             |
| Date:  | May                9, 2006 |   | /s/                Michael A. Sperduto Michael                A. SperdutoVice                President and ChiefFinancial                Officer |
|   |                       |   |                                                                                                                                             |
| Date:  | May                9, 2006 |   | /s/                Alan J. Shaw Alan                J. ShawController                                                                            |

----