# UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

# FORM 10-Q

(Mark One)

# |X|  QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

For the quarterly
period ended June 30, 2004

OR

# |_|  TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

For the transition
period from ________ to _________

Commission file
number 1-8142

|ENGELHARD CORPORATION                                 
|------------------------------------------------------
|                                                      
|(Exact name of Registrant as specified in its charter)

| | DELAWARE                                                       |  | 22-1586002                           | 
| | -------------------------------------------------------------- |  | ------------------------------------ | 
| |                                                                |  |                                      | 
| | (State or other jurisdiction of
incorporation or organization) |  | (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)

Indicate by check mark whether the
Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required  to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.  Yes  |X| No |_|

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

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

| | Class of Common Stock |  | Outstanding at July 30, 2004 | 
| | --------------------- |  | ---------------------------- | 
| |                       |  |                              | 
| | $1 par value          |  | 124,378,914                  | 

1

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PART I - FINANCIAL
INFORMATION

Item
1. Financial Statements

|Engelhard CorporationCondensed
Consolidated Statements of Earnings(Thousands, except per-share data)(Unaudited)
|---------------------------------------------------------------------------------------------------------------

|                                                       | Three Months EndedJune 30, | Six Months EndedJune 30,
|------------------------------------------------------ | -------------------------- | ------------------------
|
|                                                       |                            |                         
|Net sales                                              |                            |                         
|Cost of sales                                          |                            |                         
|                                                       |                            |                         
|Gross profit                                           |                            |                         
|Selling, administrative and other expenses             |                            |                         
|Special charge/(credit), net                           |                            |                         
|                                                       |                            |                         
|Operating earnings                                     |                            |                         
|Equity in earnings of affiliates                       |                            |                         
|Interest income                                        |                            |                         
|Interest expense                                       |                            |                         
|                                                       |                            |                         
|Earnings before income taxes                           |                            |                         
|Income tax expense                                     |                            |                         
|                                                       |                            |                         
|Net earnings before cumulative effect of a change      |                            |                         
|in accounting principle, net of tax                    |                            |                         
|Cumulative effect of a change in accounting principle, |                            |                         
|net of tax of $1,390                                   |                            |                         
|                                                       |                            |                         
|Net earnings                                           |                            |                         
|                                                       |                            |                         
|Earnings per share - basic:                            |                            |                         
|Earnings before cumulative effect of a change in       |                            |                         
|accounting priniciple                                  |                            |                         
|Cumulative effect of a change in accounting principle, |                            |                         
|net of tax                                             |                            |                         
|                                                       |                            |                         
|Earnings per share - basic                             |                            |                         
|                                                       |                            |                         
|Earnings per share - diluted:                          |                            |                         
|Earnings before cumulative effect of a change in       |                            |                         
|accounting priniciple                                  |                            |                         
|Cumulative effect of a change in accounting principle, |                            |                         
|net of tax                                             |                            |                         
|                                                       |                            |                         
|Earnings per share - diluted                           |                            |                         
|                                                       |                            |                         
|Cash dividends paid per share                          |                            |                         
|                                                       |                            |                         
|Average number of shares outstanding - basic           |                            |                         
|                                                       |                            |                         
|Average number of shares outstanding - diluted         |                            |                         
|                                                       |                            |                         

See the Accompanying
Notes to the Unaudited Condensed Consolidated Financial Statements

2

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# 

# Engelhard Corporation
            Condensed Consolidated Balance Sheets(Thousands)(Unaudited)

|                                           | June 30, | December 31, 
|------------------------------------------ | -------- | -------------
|
|Cash                                       |          | $   140,598  
|Receivables, net                           |          | 431,861      
|Committed metal positions                  |          | 332,621      
|Inventories                                |          | 442,747      
|Other current assets                       |          | 127,258      
|                                           |          |              
|Total current assets                       |          | 1,475,085    
|Investments                                |          | 169,703      
|Property, plant and equipment, net         |          | 865,582      
|Goodwill                                   |          | 280,512      
|Other intangible and noncurrent assets     |          | 211,023      
|                                           |          |              
|Total assets                               |          | $3,001,905   
|                                           |          |              
|Short-term borrowings                      |          | $       9,701
|Accounts payable                           |          | 307,547      
|Hedged metal obligations                   |          | 302,001      
|Other current liabilities                  |          | 279,564      
|                                           |          |              
|Total current liabilities                  |          | 898,813      
|Long-term debt                             |          | 441,701      
|Other noncurrent liabilities               |          | 303,956      
|Shareholders' equity                       |          | 1,357,435    
|                                           |          |              
|Total liabilities and shareholders' equity |          | $3,001,905   
|                                           |          |              

See the Accompanying
Notes to the Unaudited Condensed Consolidated Financial Statements

3

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# Engelhard Corporation
          Condensed Consolidated Statements of Cash Flows(Thousands)(Unaudited)

|                                                                                    | Six Months EndedJune 30,
|----------------------------------------------------------------------------------- | ------------------------
|
|Cash flows from operating activities                                                |                         
|Net earnings                                                                        |                         
|Adjustments to reconcile net earnings to net cash provided by operating activities: |                         
|Depreciation and depletion                                                          |                         
|Amortization of intangible assets                                                   |                         
|Equity results, net of dividends                                                    |                         
|Net change in assets and liabilities:                                               |                         
|Materials Services related                                                          |                         
|All other                                                                           |                         
|                                                                                    |                         
|Net cash provided by operating activities                                           |                         
|                                                                                    |                         
|Cash flows from investing activities                                                |                         
|Capital expenditures                                                                |                         
|Proceeds from investments                                                           |                         
|Acquisitions and other investments                                                  |                         
|                                                                                    |                         
|Net cash used in investing activities                                               |                         
|                                                                                    |                         
|Cash flows from financing activities                                                |                         
|Repayment of short-term borrowings                                                  |                         
|Decrease in hedged metal obligations                                                |                         
|Proceeds from issuance of long-term debt                                            |                         
|Purchase of treasury stock                                                          |                         
|Cash from exercise of stock options                                                 |                         
|Dividends paid                                                                      |                         
|                                                                                    |                         
|Net cash used in financing activities                                               |                         
|Effect of exchange rate changes on cash                                             |                         
|                                                                                    |                         
|Net increase in cash                                                                |                         
|Cash at beginning of year                                                           |                         
|                                                                                    |                         
|Cash at end of period                                                               |                         
|                                                                                    |                         

See the Accompanying
Notes to the Unaudited Condensed Consolidated Financial Statements

4

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# Engelhard Corporation
Business Segment Information (Thousands) (Unaudited)

|                                                     | Three Months EndedJune 30, | Six Months EndedJune 30,
|---------------------------------------------------- | -------------------------- | ------------------------
|
|Net Sales                                            |                            |                         
|Environmental Technologies                           |                            |                         
|Process Technologies                                 |                            |                         
|Appearance and Performance Technologies              |                            |                         
|                                                     |                            |                         
|Technology segments                                  |                            |                         
|Materials Services                                   |                            |                         
|All Other                                            |                            |                         
|                                                     |                            |                         
|Total net sales                                      |                            |                         
|                                                     |                            |                         
|Operating Earnings                                   |                            |                         
|Environmental Technologies                           |                            |                         
|Process Technologies                                 |                            |                         
|Appearance and Performance Technologies              |                            |                         
|                                                     |                            |                         
|Technology segments                                  |                            |                         
|Materials Services                                   |                            |                         
|All Other                                            |                            |                         
|                                                     |                            |                         
|Total operating earnings                             |                            |                         
|Equity in earnings of affiliates                     |                            |                         
|Interest income                                      |                            |                         
|Interest expense                                     |                            |                         
|                                                     |                            |                         
|Earnings before income taxes                         |                            |                         
|Income tax expense                                   |                            |                         
|                                                     |                            |                         
|Net earnings before cumulative effect of a change in |                            |                         
|accounting principle, net of tax                     |                            |                         
|Cumulative effect of a change in accounting          |                            |                         
|principle, net of tax of $1,390                      |                            |                         
|                                                     |                            |                         
|Net earnings                                         |                            |                         
|                                                     |                            |                         

See the Accompanying
Notes to the Unaudited Condensed Consolidated Financial Statements

5

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Notes to the Unaudited
Condensed Consolidated Financial Statements

Note 1  Basis of
Presentation

The
unaudited condensed consolidated financial statements of Engelhard Corporation and
subsidiaries (the Company) contain all adjustments, consisting only of normal
recurring adjustments, which, in the opinion of management, are necessary for a fair
presentation of the results for the interim periods presented. The financial statement
results for interim periods are not necessarily indicative of financial results for the
full year. These financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Companys 2003 Form 10-K. The
unaudited condensed consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany transactions and balances have been
eliminated in consolidation.

Note 2  Special
Charges and Credits

In
the second quarter of 2003, the Company recorded a charge of $7.8 million ($4.8 million
after tax) for the fair value of the remaining lease costs of certain mineral-storage
facilities no longer needed because of productivity initiatives. As of June 30, 2003, the
Companys Appearance and Performance Technologies segment had ceased using these
facilities and, accordingly, a provision for the fair value of remaining lease costs was
reported in the Special charge/(credit), net line in the Condensed
Consolidated Statements of Earnings.

In
the first quarter of 2003, the Company entered into a settlement agreement, releasing a
claim the Company had brought against Research Corporation and Research Corporation
Technologies in exchange for payment of $38.0 million. Accordingly, the Company recorded a
gain of $28.4 million ($17.6 million after tax) in the first quarter of 2003, net of legal
fees and the portion of the settlement related to future royalties. This gain was included
in the Companys All Other category and in the Special
charge/(credit), net line in the Condensed Consolidated Statements of
Earnings. By way of background, on October 29, 2002, a jury in the New York County
Supreme Court awarded the Company $29.8 million in damages, plus interest, in a breach of
contract action the Company brought against Research Corporation and Research Corporation
Technologies in 1998. The jury found that the defendants did not share with the Company
all royalties to which the Company was entitled under a royalty-sharing agreement it
entered into with Research Corporation in 1979.

Also
in the first quarter of 2003, the Company recorded charges totaling $8.7 million ($5.6
million after tax) primarily related to a management consolidation and productivity
initiative in the Environmental and Process Technologies segments and within the All
Other category. The amounts of $5.3 million ($3.5 million after tax), $2.6 million
($1.6 million after tax) and $0.8 million ($0.5 million after tax) were reported in the
Environmental Technologies segment, the Process Technologies segment and the All
Other category, respectively. These charges are included in the Special
charge/(credit), net line in the Condensed Consolidated Statements of
Earnings.

In
the Environmental Technologies segment, the charge of $5.3 million primarily relates to
the closure of the segments Coleford, United Kingdom plant ($2.8 million) and
employee severance costs related to productivity initiatives ($2.5 million). The employee
severance charges included an actual reduction of 96 salaried and eight hourly employees.
As a result of closing this plant, the segment has outsourced the canning operations
associated with this business. The closure resulted in an impairment charge of $1.5
million to write down fixed assets and other exit-related costs of $1.3 million.

In
the Process Technologies segment, the charge of $2.6 million primarily relates to employee
severance and the termination of an agency agreement associated with sales to the
chemical-process market. The employee severance charges relate to the reduction of 13
salaried employees. Selling activities associated with the termination of the agency
agreement will be covered by the segments internal sales force.

In
the All Other category, the charge of $0.8 million was for employee severance
costs related to the actual reduction of six salaried employees.

The
actions undertaken by the Company in relation to these special charges are substantially
complete.

6

---

Note 3  Accounting
for Asset Retirement Obligations

The
Companys asset retirement obligations primarily relate to kaolin mining operations
of its Appearance and Performance Technologies segment. In order to provide kaolin-based
products to the Companys customers and the Process Technologies segment, the Company
engages in kaolin mining operations. The kaolin mining process includes exploration,
topsoil and overburden removal, extraction of kaolin and the subsequent reclamation of
mined areas. The Company has a legal obligation to reclaim mined areas under state
regulations. Prior to adoption of Statement of Financial Accounting Standards (SFAS) No.
143, Accounting for Asset Retirement Obligations, the Company expensed
reclamation costs as the mined areas were reclaimed.

At
January 1, 2003, the Company recognized transition amounts for existing asset retirement
obligation liabilities, associated capitalizable costs and accumulated depreciation. A
transition charge of $3.7 million ($2.3 million after tax or $0.02 per share on a diluted
basis) was recorded on January 1, 2003 as the cumulative effect of an accounting change.

The
following table represents the change in the Companys asset retirement obligation
liability (in millions):

|                                             | June 30, 2004 | June 30, 2003
|-------------------------------------------- | ------------- | -------------
|Balance at beginning of year                 |               |              
|Liability recognized in transition           |               |              
|Accretion expense                            |               |              
|Payments                                     |               |              
|                                             |               |              
|Asset retirement obligation at end of period |               |              
|                                             |               |              

Note 4  Inventories

Inventories
consist of the following (in millions):

|                  | June 30, 2004 |  | December 31, 2003 |      
|----------------- | ------------- |  | ----------------- | -----
|Raw materials     |               |  | $                 | 113.8
|Work in process   |               |  |                   | 51.5 
|Finished goods    |               |  |                   | 260.6
|Precious metals   |               |  |                   | 16.8 
|                  |               |  |                   |      
|Total inventories |               |  | $                 | 442.7
|                  |               |  |                   |      

The
majority of the Companys physical metal is carried in the committed metal positions
line on the balance sheet at fair value with the remainder carried in the inventory line
at historical cost. The inventory portion of precious metals is stated at LIFO cost. The
market value of the precious metals recorded at LIFO exceeded cost by $68.8 million and
$52.8 million at June 30, 2004 and December 31, 2003, respectively.

In
the normal course of business, certain customers and suppliers deposit significant
quantities of precious metals with the Company under a variety of arrangements. Equivalent
quantities of precious metals are returnable as product or in other forms. Metals held for
the accounts of customers and suppliers are not reflected in the Companys financial
statements.

7

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Note 5 
Comprehensive Income

Comprehensive
income is summarized as follows (in millions):

|                                            | Three Months EndedJune 30, | Six Months EndedJune 30,
|------------------------------------------- | -------------------------- | ------------------------
|
|Net earnings                                |                            |                         
|Other comprehensive income/(loss):          |                            |                         
|Foreign currency translation adjustment     |                            |                         
|Cash flow derivative adjustment, net of tax |                            |                         
|Investment adjustment, net of tax           |                            |                         
|                                            |                            |                         
|Comprehensive income                        |                            |                         
|                                            |                            |                         

The
foreign currency translation adjustments are not currently adjusted for income taxes as
they relate to permanent investments in non-U.S. entities.

Note 6  Earnings
Per Share

SFAS
No. 128 Earnings Per Share specifies the computation, presentation and
disclosure requirements for basic and diluted earnings per share (EPS). The following
table represents the computation of basic and diluted EPS as required by SFAS No. 128:

|                                                      | Three Months EndedJune 30, |  | Six Months EndedJune 30, |      
|----------------------------------------------------- | -------------------------- |  | ------------------------ | -----
|(in millions, except per-share data):                
|Basic EPS Computation                                 |                            |  |                          |      
|Net earnings applicable to common shares              |                            |  | $                        | 68.0 
|                                                      |                            |  |                          |      
|Average number of shares outstanding - basic          |                            |  |                          | 123.7
|                                                      |                            |  |                          |      
|Basic earnings per share                              |                            |  | $                        | 0.55 
|                                                      |                            |  |                          |      
|Diluted EPS Computation                               |                            | 
|Net earnings applicable to common shares              |                            |  | $                        | 68.0 
|                                                      |                            |  |                          |      
|Average number of shares outstanding - basic          |                            |  |                          | 123.7
|Effect of dilutive stock options and other incentives |                            |  |                          | 2.3  
|                                                      |                            |  |                          |      
|Average number of shares outstanding - diluted        |                            |  |                          | 126.0
|                                                      |                            |  |                          |      
|Diluted earnings per share                            |                            |  | $                        | 0.54 
|                                                      |                            |  |                          |      

Note 7  Derivatives
and Hedging

The
Company reports all derivative instruments on the balance sheet at their fair value.
Changes in the fair value of derivatives designated as cash flow hedges are initially
recorded in comprehensive income and are reclassified to earnings in the period the hedged
item is reflected in earnings. Changes in the fair value of derivatives that are not
designated as cash flow hedges are reported immediately in earnings.

In
order to manage in a manner consistent with historical processes, procedures and systems
and to achieve operating economies, certain economic hedge transactions are not designated
as hedges for accounting purposes. In those cases, which primarily relate to precious and
base metals, the Company will continue to mark-to-market both the hedge instrument and the
related position constituting the risk hedged, recognizing the net effect in current
earnings.

8

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The
Company documents all relationships between derivative hedging instruments and items
impacted by cash flow hedges at the time the hedges are initiated, as well as its
risk-management strategies for entering into various hedge transactions. For the three-
and six-month periods ended June 30, 2004 and 2003, there was no gain or loss recognized
in earnings resulting from hedge ineffectiveness.

Foreign Exchange Contracts

The
Company designates as cash flow hedges certain foreign currency derivative contracts
entered into as hedges against anticipated receivables or payables which will arise from
forecasted transactions that are denominated in currencies other than the functional
currency of the entity which holds those assets or liabilities. The ultimate maturities of
the contracts are timed to coincide with the expected occurrence of the underlying sale or
purchase transaction.

A
second group of forward contracts entered into to hedge the exposure to foreign currency
fluctuations associated with certain monetary assets and liabilities is not designated as
hedging instruments for accounting purposes. Changes in the fair value of these items are
recorded in earnings to offset the foreign exchange gains and losses arising from the
effect of changes in exchange rates used to measure related monetary assets and
liabilities.

Commodity Contracts

The
Company enters into contracts that are designated as cash flow hedges to protect a portion
of its exposure to movements in certain commodity prices. These contracts primarily relate
to derivatives designated as natural gas and nickel cash flow hedges. The ultimate
maturities of the contracts are timed to coincide with the expected usage of these
commodities.

Interest Rate Derivatives

The
Company uses interest rate derivatives that are designated as fair value hedges to help
achieve its fixed and floating rate debt objectives. The Company currently has two
interest rate swap agreements with a total notional value of $100 million maturing in
August 2006, three interest rate swap agreements with a total notional value of $150
million maturing in May 2013, and two additional interest rate swap agreements with a
total notional value of $120 million maturing in June 2028. These agreements effectively
change fixed-rate debt obligations into floating rate debt obligations. The total notional
values and maturity dates of these agreements are equal to the face values and maturity
dates of the related debt instruments. For these fair value hedges, there was no gain or
loss recognized from hedged firm commitments no longer qualifying as fair value hedges for
the three- and six-month periods ended June 30, 2004 and 2003.

In
March 2004, the Company entered into an additional interest rate derivative contract. This
derivative, referred to as a Forward-Rate Agreement (FRA), economically hedged our
interest rate exposure for the May 15, 2004 LIBOR rate reset under a pre-existing interest
rate swap agreement. This FRA is marked-to-market with the gain/loss being reflected in
earnings.

In
June 2004, the Company entered into two additional FRA contracts, which economically
hedged our interest rate exposure for the December 1, 2004 LIBOR rate reset under a
pre-existing interest rate swap agreement. This FRA is marked-to-market with the gain/loss
being reflected in earnings.

Net Investment Hedges

In
April 2004, the Company issued five-year term, 5.5 billion Japanese yen notes
(approximately $50 million) with a coupon rate of 1.1%. These notes are designated as an
effective net investment hedge of a portion of the Companys yen-denominated
investments. As such, any foreign currency gains and losses resulting from these notes are
accounted for as a component of other comprehensive income.

9

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Note 8  Guarantees
and Warranties

In
the normal course of business, the Company incurs obligations with regard to contract
completion and product performance. Under certain circumstances, these obligations are
supported through the issuance of letters of credit. At June 30, 2004, the aggregate
outstanding amount of letters of credit supporting such obligations amounted to $47.5
million, of which $43.2 million will expire in less than one year, $4.1 million will
expire in two to three years, $0.1 million will expire in four to five years and $0.1
million will expire after five years. In the opinion of management, such obligations will
not significantly affect the Companys financial position or results of operations as
the Company anticipates fulfilling its performance obligations.

The
Company accrues for anticipated product warranty expenses on certain products. Accruals
for anticipated warranty liabilities are recorded based upon a review of historical
warranty claims experience. Adjustments are made to accruals as claim data and historical
experience warrant. The Companys accrual comprises warranty liabilities within the
industrial business of the Environmental Technologies segment.

The
change in the Companys product warranty reserves is as follows (in millions):

|                             | June 30, 2004 | June 30, 2003
|---------------------------- | ------------- | -------------
|Balance at beginning of year |               |              
|Payments                     |               |              
|Provision                    |               |              
|                             |               |              
|Balance at end of period     |               |              
|                             |               |              

Note 9  Goodwill
and Other Intangible Assets

Identifiable
intangible assets, such as patents and trademarks, are amortized using the straight-line
method over their estimated useful lives. Goodwill and other intangible assets that have
indefinite useful lives are not amortized, but are tested for impairment based on the
specific guidance of SFAS No. 142, Goodwill and Other Intangible Assets.

The
following information relates to acquired amortizable intangible assets (in millions):

|                                       | As of June 30, 2004 | As of December 31, 2003
|-------------------------------------- | ------------------- | -----------------------
|
|Acquired Amortizable Intangible Assets |                     |                        
|Usage rights                           |                     |                        
|Supply agreements                      |                     |                        
|Technology licenses                    |                     |                        
|Other                                  |                     |                        
|                                       |                     |                        
|Total                                  |                     |                        
|                                       |                     |                        

10

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Total
accumulated amortization for goodwill and other intangible assets amounted to $82.0
million and $80.2 million at June 30, 2004 and December 31, 2003, respectively. As of June
30, 2004, the estimated aggregate amortization expense for each of the five succeeding
years is as follows (in millions):

|                                       |        
|-------------------------------------- | -------
|
|Estimated Annual Amortization Expense: |        
|2004                                   | $   3.7
|2005                                   | 3.7    
|2006                                   | 3.5    
|2007                                   | 3.5    
|2008                                   | 3.4    

The
following table represents the changes in the carrying amount of goodwill for the
six-month period ended June 30, 2004 (in millions):

|                                        | EnvironmentalTechnologies | ProcessTechnologies | Appearance &PerformanceTechnologies | All Other | Total |  
|--------------------------------------- | ------------------------- | ------------------- | ----------------------------------- | --------- | ----- | -
|
|Balance as of January 1, 2004           |                           |                     | $                                   | 13        | .7    | $
|Goodwill additions                      |                           |                     |                                     | 5         | .6    |  
|Foreign currency translation adjustment |                           |                     |                                     |           |      |  
|                                        |                           |                     |                                     |           |      
|Other                                   |                           |                     |                                     |           |      |  
|                                        |                           |                     |                                     |           |      
|Balance as of June 30, 2004             |                           |                     | $                                   | 19        | .3    | $
|                                        |                           |                     |                                     |           |      

Note 10  Committed
Metal Positions and Hedged Metal Obligations

Both
spot metal positions and derivative instruments are stated at fair value. Fair value is
based on relevant published market prices. The following table sets forth the
Companys unhedged metal positions included in the committed metal positions line on the
Companys Condensed Consolidated Balance Sheets:

Metal Positions
Information (in millions):

|                               | June 30, 2004 |       | December 31, 2003 |           | 
|------------------------------ | ------------- | ----- | ----------------- | --------- | 
|
|Platinum group metals          |               | Long  |                   | $     4.9 | 
|Gold                           |               | Short |                   | 0.7       | 
|Silver                         |               | Short |                   | 0.3       | 
|Base metals                    |               | Long  |                   | 10.0      | 
|                               |               |       |                   |           | 
|Total unhedged metal positions |               |       |                   | $   15.9  | 
|                               |               |       |                   |           | 

Committed
metal positions may include significant advances made for the purchase of precious metals
delivered to the Company, but for which final purchase price has not yet been determined.
As of June 30, 2004, all such contracts have been final priced and settled.

At June 30, 2004 and December 31, 2003, hedged metal obligations relating to 691,517 and 734,845 troy ounces of
gold, respectively, were outstanding.  These quantities were sold short on a spot basis
generating cash approximating $271 million and $275 million, respectively, for the
financing of trading operations.  These spot sales were hedged with forward purchases for
the same number of ounces at an average price of $391.47 at June 30, 2004 and $374.00 at
December 31, 2003.  Unless a forward counterparty failed to perform, there was no risk of
loss in the event prices rose.  All counterparties for such transactions are investment grade.

11

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Derivative
metal and foreign currency instruments are used to hedge metal positions and obligations.
As of June 30, 2004, 98.3% of these instruments have settlement terms of less than one
year, with the remaining instruments expected to settle within 37 months. These derivative
metal and foreign currency instruments consist of the following:

Metal Hedging Instruments
(in millions):

|                                                 | June 30, 2004 | December 31, 2003
|------------------------------------------------ | ------------- | -----------------
|
|Metal forwards/futures                           |               |                  
|Eurodollar futures                               |               |                  
|Swaps                                            |               |                  
|Options                                          |               |                  
|Foreign exchange forwards/futures - Japanese yen |               |                  
|Foreign exchange forwards/futures - Euro         |               |                  
|Foreign exchange forwards/futures - Other        |               |                  

Note 11  New
Accounting Pronouncements

In
December 2003, the FASB issued SFAS No. 132 (revised 2003), Employers
Disclosures about Pensions and Other Postretirement Benefits, an amendment of FASB
statements No. 87, 88 and 106. This Statement revises employers disclosures about
pension plans and other postretirement benefit plans. It does not change the measurement
and recognition of those plans required by FASB Statements No. 87, 88 and 106. This
Statement retains the disclosure requirements contained in the original Statement No. 132.
It requires additional disclosures about the assets, obligations, cash flows, and net
periodic benefit cost of defined benefit plans and other defined benefit postretirement
plans. This Statement is effective for financial statements with fiscal years ending after
December 15, 2003, except for the disclosure of estimated future benefit payments and
information about foreign plans which is effective for fiscal years ending after June 15,
2004. The interim-period disclosures required by this Statement are effective for interim
periods beginning after December 15, 2003. The Company adopted this Statement in December
2003 and has incorporated the required quarterly disclosure provisions that are effective
as of June 30, 2004 into these consolidated financial statements (see Note 13,
Benefits).

On
December 8, 2003, the President of the United States signed into law the Medicare
Prescription Drug, Improvement and Modernization Act of 2003 (the Act). This Act
introduces a prescription drug benefit under Medicare (Medicare Part D), as well as a
federal subsidy to sponsors of retiree health care benefit plans that provide a benefit
that is at least actuarially equivalent to Medicare Part D.

In
May of 2004, the FASB issued FASB Staff Position (FSP) No. 106-2, Accounting and
Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003. This FSP supersedes FSP No. 106-1, Accounting and
Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003. The Company had made a one-time election under FSP No.
106-1 to defer accounting for the effects of the Act until specific authoritative guidance
was issued on how to account for the federal subsidy. FSP No. 106-2 provides guidance on
the accounting for the effects of the Act, and requires employers that sponsor
postretirement prescription drug benefits to make certain disclosures regarding the effect
of the federal subsidy provided by the Act. Based on a review of our current plan design
and consultations with our actuaries, the Company believes that its postretirement
prescription drug benefits are actuarially equivalent to Medicare Part D and that it will
qualify for the federal subsidy. As a result, the Company has early adopted the provisions
of FSP No. 106-2 as of the quarter ended June 30, 2004 and has incorporated the required
disclosure provisions into these consolidated financial statements (see Note 13,
Benefits).

12

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Note 12  Stock
Option and Bonus Plans

The
Company has several long-term incentive compensation plans that allow for the granting of
stock options to employees. Had compensation cost for the Companys stock option
plans been determined based on the fair value at grant date consistent with the provisions
of SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS
No. 148, Accounting for Stock-Based Compensation  Transition and
Disclosure, the Companys net earnings and earnings per share would have been
as follows:

|                                                            | Three Months EndedJune 30, | Six Months EndedJune 30,
|----------------------------------------------------------- | -------------------------- | ------------------------
|Pro Forma Information (in millions, except per share-data):
|Net earnings - as reported                                  |                            |                         
|Deduct: Total stock-based employee compensation             |                            |                         
|expense determined under fair value based                   |                            |                         
|method for all awards, net of tax                           |                            |                         
|                                                            |                            |                         
|Net earnings - pro forma                                    |                            |                         
|                                                            |                            |                         
|                                                            |                            |                         
|Earnings Per Share:                                         |                            |                         
|Basic earnings per share - as reported                      |                            |                         
|Basic earnings per share - pro forma                        |                            |                         
|Diluted earnings per share - as reported                    |                            |                         
|Diluted earnings per share - pro forma                      |                            |                         

Note 13  Benefits

The
Company has domestic and foreign pension plans covering substantially all employees. The
Company also provides post-employment and postretirement benefits to certain eligible
employees. The components of net periodic benefit cost for the six-month periods ended
June 30, 2004 and 2003 are shown in the following table:

Net Periodic Benefit Cost
(in millions):

|                                   | Pension Benefits | Other Benefits
|---------------------------------- | ---------------- | --------------
|
|Service cost                       |                  |               
|Interest cost                      |                  |               
|Expected return on plan assets     |                  |               
|Amortization of prior service cost |                  |               
|Recognized actuarial loss          |                  |               
|                                   |                  |               
|Net periodic benefit cost          |                  |               
|                                   |                  |               

The
Company does not anticipate any changes to the pension contribution amounts previously
disclosed in the Companys 2003 Form 10-K.

In
accordance with FASB Staff Position (FSP) No. 106-2, Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act
of 2003, the Company revalued the benefit obligation and determined that the
reduction in the accumulated postretirement benefit obligation for the subsidy related to
benefits attributed to past service is $15 million. The Company now expects the full-year
net periodic postretirement benefit cost to be $11.3 million. This amount includes a
reduction of $1.6 million from prior estimates, as a result of accounting for the effect
of the subsidy, of which $0.6 million is reflected in the three-month period ended June
30, 2004.

13

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The
Company incurred benefit payments of $5.8 million for the six-month period ended June 30,
2004. Expected future benefit payments, including prescription drug benefits, are as
follows (in millions):

|                                 
|---------------------------------
|2004 (July 1 through December 31)
|2005                             
|2006                             
|2007                             
|2008                             
|2009 through 2013                

The
Company expects the following reimbursements under the subsidy portion of the Medicare
Prescription Drug, Improvement and Modernization Act of 2003 (in millions):

|                                 
|---------------------------------
|2004 (July 1 through December 31)
|2005                             
|2006                             
|2007                             
|2008                             
|2009 through 2013                

Note 14 
Supplemental Information

The
following table presents certain supplementary information to the Companys
Condensed Consolidated Statements of Cash Flows:

Supplementary Cash Flow
Information (in millions):

|                                                      | Six Months Ended June 30,
|----------------------------------------------------- | -------------------------
|
|Materials Services related:                           |                          
|Change in assets and liabilities - source/(use):      |                          
|Receivables                                           |                          
|Committed metal positions                             |                          
|Inventories                                           |                          
|Other current assets                                  |                          
|Accounts payable                                      |                          
|Other current liabilities                             |                          
|                                                      |                          
|Net cash flows from changes in assets and liabilities |                          
|                                                      |                          
|                                                      |                          
|All Other:                                            |                          
|Change in assets and liabilities - source/(use):      |                          
|Receivables                                           |                          
|Inventories                                           |                          
|Other current assets                                  |                          
|Other noncurrent assets                               |                          
|Accounts payable                                      |                          
|Other current liabilities                             |                          
|Noncurrent liabilities                                |                          
|                                                      |                          
|Net cash flows from changes in assets and liabilities |                          
|                                                      |                          

14

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Note 15  Other
Matters

The
Company is involved in a value-added tax dispute in Peru. Management believes the Company
was targeted by corrupt officials within a former Peruvian government. On December 2,
1999, Engelhard Peru, S.A., a wholly owned subsidiary, was denied refund claims of
approximately $28 million. The Peruvian tax authority also determined that Engelhard Peru,
S.A. is liable for approximately $63 million in refunds previously paid, fines and
interest as of December 31, 1999. Interest and fines continue to accrue at rates
established by Peruvian law. The Peruvian Tax Court ruled on February 11, 2003 that
Engelhard Peru, S.A. was liable for these amounts, overruling precedent to apply a
form over substance theory without any determination of fraudulent
participation by Engelhard Peru, S.A. As part of its efforts to vigorously contest this
determination, Engelhard Peru, S.A. filed a constitutional action against the Peruvian Tax
agency and Tax Court. On May 3, 2004, the judge in this action ruled that none of the
findings of the Peruvian tax authorities were properly applicable to Engelhard Peru, S.A.
based on several grounds, including improper use of a presumption of guilt with no actual
proof of irregularity in the transactions of Engelhard Peru, S.A. The government of Peru
has appealed this decision. Management believes, based on consultation with counsel, that
Engelhard Peru, S.A. is entitled to all refunds claimed and is not liable for any
additional taxes, fines or interest. In late October 2000, a criminal proceeding alleging
tax fraud and forgery related to this value-added tax dispute was initiated against two
Lima-based officials of Engelhard Peru, S.A. Although Engelhard Peru, S.A. is not a
defendant, it may be civilly liable in Peru if its representatives are found responsible
for criminal conduct. In its own investigation, and in detailed review of the materials
presented in Peru, management has not seen any evidence of tax fraud by these officials.
Accordingly, Engelhard Peru, S.A. is assisting in the vigorous defense of this proceeding.
Management believes the maximum economic exposure is limited to the aggregate value of all
assets of Engelhard Peru, S.A. That amount, which is approximately $30 million, including
unpaid refunds, has been fully provided for in the accounts of the Company.

Note 16  Income
Taxes

In
respect of recurring worldwide business operations, the Companys effective tax rate
(ETR) is estimated to be 22% based upon current tax laws. On occasion,
however, there are nonrecurring events that will impact the ETR. These one time events,
which can be either favorable or unfavorable, will be reflected in the quarter in which
the event occurs consistent with applicable accounting principles. During the quarter
ended June 30, 2004, the Company recorded a favorable impact ($8 million reduction of tax
expense) resulting from an agreement with the Internal Revenue Service (IRS)
relating to the audit of the Companys tax returns for 1998, 1999 and 2000.
Accordingly, the favorable adjustment relating to the agreement with the IRS will reduce
the Companys ETR below its normal level for the year. The Company is not aware of
any further material adjustments that would affect its ETR for the remainder of the year but it cannot
preclude the possibility that such an event may occur.

15

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

Results of Operations

Overview

The
Company develops, manufactures and markets value-adding technologies based on surface and
materials science for a wide spectrum of served markets. The Company also provides its
technology segments, their customers and others with precious and base metals and related
services. The Companys businesses are organized into four reportable segments that
are discussed individually below. Additional detailed descriptive material is included in
ITEM 1. BUSINESS and NOTE 19. BUSINESS SEGMENT AND GEOGRAPHIC AREA
DATA in the Companys 2003 Form 10-K. Comparative financial data is also given
in Note 19 of the Companys 2003 Form 10-K and on page 5 of this Form 10-Q.

One
of the strengths of the Company is that its segments serve diverse markets, which is
important for assessing the variability of future cash flows. The following economic
comments also provide a useful context for evaluating the Companys performance: (1)
worldwide auto builds continue to be relatively flat, albeit at fairly high levels 
industry growth for auto-emission catalysts will benefit from tougher environmental
regulation throughout the world over the next 5-10 years as well as developing economies,
especially new Asian production; (2) more stringent diesel-emission regulations are being
phased in, affording the Company additional opportunities for catalyst solutions; (3)
worldwide petroleum refineries are operating close to capacity generating demand for the
extra yields provided by Engelhards advanced fluid cracking catalysts and
performance additives; (4) markets for effect pigments and colors in cosmetics, personal
care, auto finishes and coatings have remained positive during the recent economic
downturns and tend to be less cyclical; (5) although there are signs of recovery, there
has been little change in chemical industry customers continued ability to delay
large replacement catalyst orders and the related demand for platinum-group-metal refining
services; (6) the coated, free-sheet paper market is strengthening, but pricing continues
to negatively impact the Company; and (7) margins related to the supply of metal to
industrial customers are low because of changes in pricing and supply arrangements.

Comparison of the Second
Quarter of 2004with the Second Quarter of 2003

Net
earnings increased to $68.0 million in the second quarter of 2004 compared with $54.0
million in the same period of 2003. Operating earnings for the second quarter of 2004
increased 10% to $73.1 million from $66.7 million in the same period of 2003. Total
Company operating results were mixed as higher operating earnings from the Environmental
Technologies segment, Appearance and Performance Technologies segment and the All
Other category were partially offset by modestly lower operating earnings from the
Process Technologies segment and Materials Services segment. Also, operating earnings for
the second quarter of 2003 included a charge of $7.8 million ($4.8 million after tax) for
the fair value of the remaining lease costs of certain mineral-storage facilities that the
Company ceased to use.

During
the quarter ended June 30, 2004, the Internal Revenue Service (IRS) completed
its examination of the Companys 1998, 1999 and 2000 tax returns. The Company has
formally agreed to the adjustments proposed by the IRS. In light of this activity, the
Company has adjusted its tax reserves relating to these periods, resulting in a reduction
of $8 million of tax expense.

In
respect to another tax matter affecting the Company, The World Trade Organization has
ruled that the extraterritorial income (ETI) exclusion, which provides the
Company with a tax benefit based on export sales, is a prohibited export subsidy. As a
result, ETI rules are presently under reconsideration by Congress and the repeal of this
benefit in the near term is likely. In fiscal year 2003, export benefits reduced the
Companys effective tax rate by approximately three percentage points. It is not
possible to predict at this time the eventual outcome of this matter and the impact to the
Company. However, if ETI is repealed and legislation that would result in comparable

16

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benefits,
in whole or in part, is not enacted, the loss of the tax benefit to the Company could
adversely impact the Companys effective tax rate.

The
Companys share of equity earnings from affiliates was $8.4 million for the second
quarter of 2004 compared with $7.5 million for the same period in 2003. Higher equity
earnings from N.E. Chemcat were due to stronger results in the current period from
mobile-source environmental markets, absence of environmental remediation costs in 2003
and a loss on the sale of investment securities in 2003. These items were partially offset
by higher earnings in 2003 from the substantially liquidated Engelhard-CLAL joint venture.

Interest
expense for the current quarter compared with the same quarter last year was unchanged at
$5.9 million, as lower debt balances were offset by higher average interest rates.

Net
sales increased 19% to $1,107.8 million in the second quarter of 2004 from $929.4 million
for the same period in 2003. Sales increases were reported in all segments. Higher prices
and volumes of platinum-group-metal sales from the Materials Services segment were the
largest contributors to the increase. Sales from the Materials Services segment include
significant precious metal values, which are also included in cost of goods sold. As a
result, gross margins on these sales tend to be low in relation to the gross margins
generated by sales from the Companys technology segments.

Environmental Technologies

Operating
earnings increased 4% to $32.8 million in the second quarter of 2004 from $31.5 million in
the same period of 2003. Net sales for the second quarter of 2004 increased 7% to $224.2
million from $209.2 million in the same period of 2003.

The
majority of this segments sales are derived from technologies to control pollution
from mobile sources, including gasoline- and diesel-powered passenger cars, sport-utility
vehicles, trucks, buses, motorcycles and off-road vehicles. This segments customers
are generally driven by increasingly stringent environmental regulations. The remainder of
this segments sales are derived from products sold into a variety of industrial
markets including aerospace, power generation, process industries, and utility engine
manufacturers.

Sales
to mobile-source environmental markets increased $11.4 million in the second quarter of
2004 compared with the same period a year ago. Higher pass-through substrate costs and
foreign currency exchange rate differences accounted for the entire increase in sales. The
mobile-source diesel market is expected to be this segments primary growth area.
Market acceptance of catalytic solutions to meet environmental regulations is key to the
Company achieving its growth objectives.

Operating
earnings from mobile-source environmental markets were down 2% in the second quarter of
2004 versus the same quarter in 2003 due to the changing composition of the mix of
products sold. The Company serves a wide base of customers within these markets. As
changes in the mix of customers and their vehicles occur, operating earnings may be
affected. For example, the composition of the catalytic solutions required will vary
depending on vehicle and engine size. Profitability will be impacted by the mix of vehicle
platforms as well as by the ultimate sales of particular vehicles for which the Company
provides catalyst. In the mix for the current quarter, profitability from the
mobile-source diesel markets increased while other mobile-source markets decreased.
Additionally, improved manufacturing costs of approximately $3 million were partially
offset by increased R&D and technical-support costs and increased information
technology costs. Increasingly stringent environmental regulations are expected to
positively impact mobile-source markets commencing in 2006. Until then, the segment will
be negatively impacted by the ability of auto manufacturers to reduce the amount of
catalyst employed on certain platforms and still comply with current environmental
regulations, as well as the mix of vehicles produced.

Sales
derived from products sold to industrial markets increased $3.7 million in the second
quarter of 2004 compared with the same period last year, as decreases in sales to the
power-generation market were more than offset by increased sales to other served markets.
Operating earnings from these markets improved due to an increase in gross profit from
higher revenues and absence of a provision for bad debts in the prior year period of $1.2
million. The Company anticipated a decline in demand for products sold to the
power-generation markets and reduced costs accordingly. The Company does not expect
improved demand from the power-generation market in the near term,

17

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but has maintained the technical ability and
capacity to serve this market when demand returns and will continue to manage costs accordingly.

Process Technologies

Operating
earnings decreased 6% to $23.1 million in the second quarter of 2004 from $24.6 million in
the same period of 2003. Net sales for the second quarter of 2004 increased 14% to $159.2
million from $139.8 million in the same period of 2003.

Sales
of catalyst and additives to the petroleum-refining market increased $13.0 million in the
second quarter of 2004 compared with the second quarter of 2003, as the Companys
Distributed Matrix Structure (DMS) technology platform continues to displace older product
offerings, providing refiners with significant value through yield improvement at a
premium price. Sales of refining additives significantly increased over the year-ago
quarter, but represent a small portion of the segments revenues. Operating earnings
from the petroleum-refining market were higher versus the year-ago quarter, albeit at a
lower rate than the revenue increase. As demand for the Companys DMS technology
increased, the segment incurred higher costs in the quarter of approximately $2 million,
reflecting higher transportation costs, and higher costs associated with production
scheduling and asset utilization. Productivity initiatives focused on debottlenecking and
converting capacity for displaced product offerings to DMS technology production have
commenced and are expected to be completed near the end of 2004.

Sales
of catalyst to the chemical-process markets increased $6.4 million in the second quarter
of 2004 compared with the same period in 2003. This increase was due to higher volumes,
primarily of Lynxcatalyst, and the impact of a stronger euro compared to the dollar,
partially offset by decreased selling prices of older product offerings to the polyolefins
market. Shipments to certain chemical catalyst markets tend to be large and infrequent
relative to the overall operations, and, therefore the timing of shipments can cause
fluctuations in revenues and operating earnings from period to period. Operating earnings
in the quarter were lower versus the same period last year due to decreased prices of
older product offerings to the polyolefins market of $1.6 million; higher costs for nickel
of $1.2 million; and higher operating, pension and information technology expenses of
approximately $2 million, partially offset by a favorable foreign exchange impact and
increased Lynxvolumes totaling $1.5 million. Expansion of the segments Tarragona,
Spain facility has been completed, and the plant has begun shipping Lynxproduct. There
are indications that the chemical-process markets are improving. So far, however, this has not
translated into significantly increased orders for catalyst.

Appearance and
Performance Technologies

Operating
earnings increased 28% to $23.8 million in the second quarter of 2004 from $18.6 million
in the same period of 2003. The year-ago quarter included a provision of $7.8 million for
the fair value of the remaining lease costs of certain mineral-storage facilities the
Company ceased to use. Net sales increased 6% to $185.2 million for the second quarter of
2004 from $175.2 million in the same period of 2003.

Sales
of products from the Companys mineral-based operations decreased 2% in the second
quarter of 2004 compared with the same period of 2003. The decrease in sales is due to
lower volumes of kaolin-based products to the paper market, partially offset by improved
sales of kaolin-based products to specialty markets. Operating earnings from the mineral
operations were up $5.6 million in the current quarter compared with the year-ago period,
due to absence of the provision of $7.8 million for the fair value of the remaining lease
costs of mineral-storage facilities the Company ceased to use, offset by the
aforementioned impact of kaolin-based product sales. Energy costs in the current quarter
were relatively flat compared with the year-ago period due to favorable hedging activity,
but higher energy costs are expected for the future. The segment continues to suffer from
decreased sales volumes to the paper market, primarily as a result of competitive pricing
pressure. While the kaolin operations remain profitable and generate significant cash
flow, the Company continues to evaluate expected cash flows from its kaolin operations in
respect of the carrying value of its long-lived assets.

Sales
of non-mineral-based products to the cosmetics/personal care markets and coating markets
increased 15% in the second quarter of 2004 versus the same period in 2003. These volume
increases improved operating earnings approximately $4 million, which was fully offset by
higher manufacturing costs in the coating markets, higher information technology costs,
and the cost of productivity initiatives commenced in the quarter.  The Company has
identified areas of potential growth within these markets, and expects to continue to
invest in

18

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and
broaden its product offering.  Toward that end, on July 30, 2004, the Company
strengthened its position in the cosmetic and personal care markets by acquiring The
Collaborative Group, Ltd., including its wholly owned subsidiary Collaborative
Laboratories, Inc.

Materials Services

Operating
earnings decreased 9% to $2.8 million in the second quarter of 2004 from $3.0 million in
the same period of 2003. Net sales increased 33% to $525.2 million in the second quarter
of 2004 from $394.5 million in the same period of 2003.

The
increase in sales is primarily due to increased volumes and market prices of platinum
group metals. However, operating earnings were down, primarily due to absence of a $9.3
million contractual benefit in the prior year, partially offset by higher profits from
metal-sourcing operations, better profitability from refining operations, and lower
administrative costs. The segment is continuing to experience the change that has been
going on in material-sourcing markets, which involves different pricing formulas that
have reduced current margins compared with historical margins.  Volumes of recycled
materials remain at recessionary levels.

Comparison of the First
Six Months of 2004with the First Six Months of 2003

Net
earnings increased to $118.3 million in the first six months of 2004 compared with $110.7
million in the same period of 2003. Operating earnings for the first six months of 2004
decreased 4% to $137.7 million from $143.9 million in the same period of 2003. Higher
operating earnings were achieved in all technology segments, offset by lower operating
earnings in the Materials Services segment and the "All Other" category. Operating earnings for the
first half of 2003 included a charge of $7.8 million ($4.8 million after tax) for the fair
value of the remaining lease costs of certain mineral-storage facilities the Company
ceased to use, restructuring charges totaling $8.7 million ($5.6 million after tax), and a
royalty settlement gain of $28.4 million ($17.6 million after tax). In the first half of
2003, the Company recorded an after-tax transition charge of $2.3 million as a cumulative
effect of an accounting change associated with the adoption of SFAS No. 143,
Accounting for Asset Retirement Obligations.

During
the quarter ended June 30, 2004, the Internal Revenue Service (IRS) completed
its examination of the Companys 1998, 1999 and 2000 tax returns. The Company has
formally agreed to the adjustments proposed by the IRS.  In light of this activity, the
Company has adjusted its tax reserves relating to these periods, resulting in a reduction
of $8 million of tax expense.

The
Companys share of equity earnings from affiliates was $13.3 million for the first
half of 2004 compared with $13.2 million for the same period in 2003. Higher equity
earnings from N.E. Chemcat were due to stronger results in the current period from
mobile-source environmental markets, absence of environmental remediation costs in 2003
and a loss on the sale of investment securities in 2003. These items were offset by
absence of earnings from the substantially liquidated Engelhard-CLAL joint venture and
modestly lower Heesung results due to higher operating costs.

Interest
expense for the first half of 2004 decreased 2% to $11.8 million from $12.0 million in the
same period of 2003, as higher interest rates were more than offset by lower debt
balances.

Net
sales increased 22% to $2,147.8 million in the first half of 2004 from $1,759.8 million
for the same period in 2003. Sales increases were reported in all segments. Higher prices
and volumes of platinum-group-metal sales from the Materials Services segment were the
largest contributors to the increase.

Environmental Technologies

Operating
earnings increased 24% to $69.7 million in the first six months of 2004 compared with the
same period in 2003. The year-ago period included a $5.3 million charge related to
productivity initiatives. Sales for the first six months of 2004 increased 9% to $462.6
million compared with the same period in 2003.

Sales
to mobile-source environmental markets increased approximately $43 million for the first
six months of 2004 compared with the same period last year. Higher pass-through substrate
and other costs and foreign

19

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currency
exchange rate differences accounted for approximately $38 million of the increase.
Operating earnings from these markets improved 16% for the first six months of this year
compared with the same period of last year. This improvement is primarily due to absence
of the charges related to productivity initiatives mentioned previously and the favorable
impact of a change in the mix of products sold in the first quarter of 2004.

Sales
derived from products sold to industrial markets decreased $3 million in the first half of
2004 compared with the first half of last year, as decreases in sales to the power-generation
market more than offset sales increases to other served markets. Operating
earnings from these markets improved due to an increase in gross profit from higher
revenues in certain markets, absence of a provision for bad debts in the prior-year period
of $1.2 million, and absence of a provision for obsolete inventory of $2.2 million.

Process Technologies

Operating
earnings increased 3% to $39.4 million in the first six months of 2004 compared with the
same period in 2003. The year ago-period included a $2.6 million charge related to
productivity initiatives. Sales increased 13% to $291.4 million in the first six months of
2004 compared with the same period in 2003.

Sales
of catalyst to the petroleum-refining market increased 23% in the first half of the year
compared with the first half of 2003 due to continued success of the Companys DMS
technology platform. Operating earnings from sales of catalyst to the petroleum-refining
market increased, but were negatively impacted by approximately $2 million in higher costs
to meet demand. Sales and operating earnings of additives to this market doubled compared
with last year, but represent a small portion of this segments sales.

Sales
of catalyst to the chemical-process markets were modestly higher for the first half of
2004 compared with the first half of last year. Operating earnings were lower due to the
$3.2 million impact of decreased prices of older product offerings to the polyolefins
market; $2.3 million of higher costs associated with the start-up of the Lynxcapacity
expansion in Tarragona, Spain; higher costs for nickel; and higher operating, pension and
information technology expenses; partially offset by a $1.7 million favorable impact of foreign
exchange; absence of the previously mentioned charge related to productivity initiatives in 2003;
and increased Lynxvolumes.

Appearance and
Performance Technologies

Operating
earnings increased 4% to $38.9 million in the first six months of 2004 compared with the
first six months of 2003. The year-ago period included a provision of $7.8 million for the
fair value of the remaining lease costs of certain mineral-storage facilities the Company
ceased to use. Sales increased 5% to $351.5 million in the first six months of 2004
compared with the first six months of 2003.

Sales
of products from mineral-based operations decreased in the first half of 2004 compared
with the first half of 2003, as lower volumes of kaolin-based products to the paper market
were partially offset by improved sales of kaolin-based products to specialty markets.
Operating earnings in the mineral-based operations improved due to absence of the
previously mentioned $7.8 million charge concerning mineral-storage facilities partially
offset by reduced profitability due to the decline in sales of kaolin-based products to
the paper market.

Sales
to the cosmetics, coatings and automotive markets increased 14% in the first half of 2004
compared with the first half of 2003 primarily due to higher volumes. While gross profit
for these operations increased due to these higher volumes, operating earnings declined
modestly due to higher product development and commercialization costs, higher information
technology costs of $1.2 million, and the cost of certain productivity initiatives.

Materials Services

Operating
earnings decreased 18% to $6.1 million in the first six months of 2004 from $7.5 million
in the same period of 2003. Net sales increased 40% to $1,016.3 million in the first six
months of 2004 from $723.4 million in the same period of 2003.

The
increase in sales is primarily due to increased volumes and market prices of platinum
group metals. However, operating earnings were down, as absence of a $9.3 million benefit
from a contractual settlement was

20

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offset
by higher profits from metal-sourcing operations, better profitability from refining
operations, and lower administrative costs. The segment is continuing to experience the
change that has been going on in material-sourcing markets, which involves different
pricing formulas that have reduced current margins compared with historical margins.
Volumes of recycled materials remain at recessionary levels.

# Liquidity and Capital
Resources

Working
capital was $576.3 million at June 30, 2004 compared with $445.5 million at December 31,
2003. The current ratio was 1.6 at June 30, 2004 and 1.5 at December 31, 2003. The
percentage of total debt to total capitalization was 25.0% at June 30, 2004 compared with
26.3% at December 31, 2003.

Operating
activities provided net cash of $173.4 million in the first half of 2004 compared with
$438.6 million in the first half of 2003.  The variance in cash flows from operating
activities is primarily due to changes in metal positions used to facilitate requirements
of the Company, its customers and suppliers.  (See Note 14, Supplemental Information, for
detail regarding Materials Services related cash flows.)  Materials Services routinely
enters into a variety of arrangements for the sourcing of metals.  Generally,
transactions are hedged on a daily basis.  Hedging is accomplished primarily through
forward, future and option contracts. However, in closely monitored situations for which
exposure levels have been set by senior management, the Company, from time to time, holds
large unhedged industrial commodity positions that are subject to future market price
fluctuations.  (See Note 10, Committed Metal Positions and Hedged Metal Obligations.)
These positions are included in committed metal positions along with hedged metal
holdings.  The bulk of hedged metal obligations represent spot short positions.  These
spot sales generate cash to finance the trading/supply of other metals and are fully
hedged through forward purchases with investment grade counterparties.  Unless a forward
counterparty fails to perform, there is no price risk.  (See Note 10, Committed Metal
Positions and Hedged Metal Obligations for the quantities and prices involved.)  In
addition, the aggregate fair value of derivatives in a loss position is reported in
hedged metal obligations (derivatives in a gain position are included in committed metal
positions).  Materials Services works to ensure that the Company and its customers have
an uninterrupted source of metals, primarily platinum group metals, utilizing supply
contracts and commodities markets around the world.  Committed metal positions may
include significant advances made for the purchase of precious metals delivered to the
Company, but for which final purchase price has not yet been determined.  As of June 30,
2004, all such contracts have been final priced and settled.

Net
cash used in investing activities increased to $48.8 million in the first half of 2004
compared with $32.9 million in the first half of 2003. The increase in cash flows used in
investing activities is primarily related to liquidating distributions received in 2003
related to unwinding the Companys Engelhard-CLAL joint venture, higher capital
spending in the first half of 2004 compared with the same period in the prior year, and
$6.2 million in 2004 for the acquisition of an operation that expanded the capacity and
global customer base of an existing product line.

Net
cash used in financing activities in the first half of 2004 was $70.5 million compared
with $369.5 million of net cash used in financing activities in the first half of 2003.
The decrease in net cash used in financing activities was impacted by less cash used to
reduce hedged metal obligations in 2004 than 2003, a greater decrease in net borrowings in
2003 than 2004, and decreased stock repurchase activity in 2004 compared with 2003.
Dividends paid were higher in 2004 compared with 2003, due to an increase in the quarterly
per-share dividend of one cent.

In
the first half of 2004, the Company increased its existing $150 million shelf registration
to $450 million in order to increase the Companys ability to raise cash for general
corporate purposes. In the first half of 2004, the Company issued five-year term, 5.5
billion Japanese yen notes (approximately $50 million) with a coupon rate of 1.1%. These
notes are accounted for as an effective net investment hedge of a portion of the
Companys yen-denominated investments. Also in the first half of 2004, the Company
renewed its 364-day committed credit facility, extending the maturity to May 5, 2005 and
increasing the amount available to $450 million.

On
August 4, 2004, the Company issued a second tranche of five-year term, 5.5 billion Japanese
yen notes (approximately $50 million) with a coupon rate of 1.1%. These notes will be
accounted for as an effective net

21

---

investment
hedge of a portion of the Companys yen-denominated investments, in addition to the
yen notes issued in the first half of 2004.

The
Company has consistently derived considerable cash flow from operations, which has been
used, along with both short- and long-term debt, to pay for capital expenditures,
acquisitions, treasury stock purchases, dividends and other corporate requirements. The
continuation of these levels of cash flow is expected, but is subject to risk factors
disclosed in the Companys 2003 Form 10-K and in the Forward-Looking Statements
section of this Form 10-Q. In addition, the Company has always maintained investment-grade
credit ratings that it considers important for cost-effective and ready access to credit
markets. Management fully expects to be able to obtain future funding from both short- and
long-term debt for cash requirements in excess of those from operations. In the event that
any of these sources prove to be below expectations, the Company has access to committed
lines of credit aggregating $850 million, including the $450 million credit facility
mentioned above. The remaining $400 million credit facility expires in May 2006.

# Forward-Looking
Statements

This
document contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements relate to analyses and other information
that are based on forecasts of future results and estimates of amounts not yet
determinable. These statements also relate to the future prospects, developments and
business strategies. These forward-looking statements are identified by their use of terms
and phrases such as anticipate, believe, could,
estimate, expect, intend, may,
plan, predict, project, will and similar
terms and phrases, including references to assumptions. These forward-looking statements
involve risks and uncertainties that may cause the Companys actual future activities
and results of operations to be materially different from those suggested or described in
this document.

Among
the risks and uncertainties that could cause actual results to differ materially are the
following:

| |   |                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | competitive pricing or product development activities that could affect the demand for our
products, particularly competing catalyst and kaolin producers                   
| |  | the Company's ability to achieve and execute internal business plans                                                                                                        
| |  | worldwide political instability as the Company operates primarily in the United States,
the European community, Asia, the Russian Federation, South Africa and South America
| |  | alliances and geographic expansions developing differently than anticipated                                                                                                 
| |  | fluctuations in the supply and prices of precious and base metals and fluctuations in the
relationships between forward prices to spot prices                               
| |  | government legislation and/or regulation (particularly on environmental issues), including tax obligations                                                                  
| |  | the impact of the anticipated repeal of the current U.S. export sales tax incentive                                                                                         
| |  | technology, manufacturing and legal issues                                                                                                                                  
| |  | the impact of any economic downturns and inflation                                                                                                                          
| |  | interest rate risk, foreign
currency exchange rate risk, commodity price risk and credit risk                                                                               
| |  | the impact of higher energy and raw material costs, and the availability of natural gas and rare earth
elements                                                             

22

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| |  | the success of research and development activities and the speed with which regulatory authorizations and
product launches may be achieved
| | - | ------------------------------------------------------------------------------------------------------------------------------------------
| |  | the impact of increased employee benefit costs and/or the resultant impact on employee relations                                          
| |  | contingencies related to actual or alleged environmental contamination to which the Company may be a party                                
| |  | the impact of acquisitions, divestitures and restructurings                                                                               
| |  | overall demand for the Company's products, including demand from the worldwide automotive and
chemical-process markets                    
| |  | product quality/performance issues                                                                                                        
| |  | exposure to product liability and other types of lawsuits                                                                                 
| |  | the impact of physical inventory losses, particularly with regard to precious and base metals                                             
| |  | the loss of business from property and casualty exposure                                                                                  

Investors
are cautioned not to place undue reliance upon these forward-looking statements, which
speak only as of their dates. The Company disclaims any obligation to update or revise any
forward-looking statements, whether as a result of new information, future events or
otherwise.

23

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Item 3.  Quantitative
and Qualitative Disclosures about Market Risk

# Market Risk Sensitive
Transactions

The
Company is exposed to market risks arising from adverse changes in interest rates, foreign
currency exchange rates and commodity prices. In the normal course of business, the
Company uses a variety of techniques and instruments, including derivatives, as part of
its overall risk-management strategy. The Company enters into derivative agreements with a
diverse group of major financial and other institutions with individually determined
credit limits to reduce exposure to the risk of nonperformance by counterparties.

A
discussion and analysis of the Companys market risk is included in the
Companys 2003 Form 10-K. There have been no significant changes to these market
risks as of June 30, 2004.

Item 4. Controls and
Procedures

The
Company carried out an evaluation, under the supervision and with the participation of the
Companys management, including the Companys Chief Executive Officer and Chief
Financial Officer, as of June 30, 2004, of the effectiveness of the design and operation
of the Companys disclosure controls and procedures pursuant to Exchange Act Rule
13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the Companys disclosure controls and procedures as of June
30, 2004 were effective to provide reasonable assurance that material information related
to the Company (including its consolidated subsidiaries) required to be included in the
Companys periodic SEC filings would be communicated to them on a timely basis. There
was no change in the Companys internal control over financial reporting during the
Companys second fiscal quarter of 2004 that has materially affected, or is
reasonably likely to materially affect, the Companys internal control over financial
reporting.

The
Companys management, including the Chief Executive Officer and Chief Financial
Officer, do not expect that disclosure controls or our internal control over financial
reporting will prevent all errors and all fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control system must
reflect the fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the Company have been detected. These inherent
limitations include the reality that judgments and estimates can be faulty and that
breakdowns can occur because of simple error or mistake. Additionally, controls can be
circumvented by the individual acts of some persons or by collusion of two or more people.
The design of any system of controls also is based, in part, upon certain assumptions
about the likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions. Because of
the inherent limitations in a cost-effective control system, misstatements due to error or
fraud may occur and not be detected. Accordingly, the Companys disclosure controls
and procedures are designed to provide reasonable, not absolute, assurance that the
objectives of our disclosure control system are met and, as set forth above, the
Companys Chief Executive Officer and Chief Financial Officer have concluded, based
on their evaluation as of June 30, 2004, that our disclosure controls and procedures were
effective to provide reasonable assurance that the objectives of our disclosure control
system were met.

24

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PART II  OTHER
INFORMATION

Item 2. Changes in
Securities, Use of Proceeds and Issuer Purchases of Equity Securities

|(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 June 30, 2004: | 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

ISSUER
PURCHASES OF EQUITY SECURITIES:

|Period            | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased As Part of Publicily Announced Plans or Programs |  | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (a)
|----------------- | -------------------------------- | ---------------------------- | --------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------
|4/1/044/30/04(b) |                                 | $                           |                                                                                  |  | 5,494,132                                                                         
|5/1/045/31/04    | 353,600                          | 28.67                        | 353,600                                                                           |  | 5,140,532                                                                         
|6/1/046/30/04    | 42,700                           | 30.58                        | 42,700                                                                            |  | 5,097,832                                                                         
|                  |                                  |                              |                                                                                   |  |                                                                                   
|Total             | 396,300                          | $        28.87               | 396,300                                                                          
|                  |                                  |                              |                                                                                   |  |                                                                                   

| | (a) | Share repurchase program of 6 million shares authorized in October 2003.
| | --- | ------------------------------------------------------------------------

| | (b) | Excludes 346 shares obtained by the Rabbi Trust under the Deferred Compensation
Plan for Key Employees of Engelhard Corporation.
| | --- | --------------------------------------------------------------------------------------------------------------------------------

|Item 6. Exhibits and Reports on Form 8-K | Pages  
|---------------------------------------- | -------
|(a)                                      | (10)   
|                                         |        
|                                         |        
|                                         |        
|                                         | (31)(a)
|                                         | (31)(b)
|                                         | (32)   

25

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|(b) |  | In a report on Form 8-K furnished to the Securities and Exchange Commission
(SEC) on April 22, 2004, the Company reported that it furnished its earnings
release with the SEC for the first quarter ended March 31, 2004. | 
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

* This certification
accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and
shall not be deemed filed by the Company for purposes of Section 18 or any other
provision of the Securities Exchange Act of 1934, as amended.

26

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# SIGNATURES

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

| |  | ENGELHARD CORPORATION
| |  | ---------------------
| |  |                      
| |  | (Registrant)         

|Date: | August 6, 2004 |  | /s/ Barry W. Perry                                           
|----- | -------------- |  | -------------------------------------------------------------
|      |                |  |                                                              
|      |                |  | Barry W. Perry
     Chairman and Chief
     Executive Officer

|Date: | August 6, 2004 |  | /s/ Michael A. Sperduto                                                 
|----- | -------------- |  | ------------------------------------------------------------------------
|      |                |  |                                                                         
|      |                |  | Michael A. Sperduto
     Vice President and Chief
     Financial Officer

|Date: | August 6, 2004 |  | /s/ Alan J. Shaw            
|----- | -------------- |  | ----------------------------
|      |                |  |                             
|      |                |  | Alan J. Shaw
     Controller

27

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EXHIBIT (10)(a)

Form of Stock Option
Agreement

used pursuant to the Engelhard
Corporation

Stock Option Plan of
1999 for Certain Key Employees

28

---

STOCK OPTION AGREEMENT
ENGELHARD CORPORATION

Name of Optionee: 
Number of Shares Under Non-Qualified Stock Option:
Date of Agreement:
Option Price:

WITNESSETH:

WHEREAS, pursuant to the Engelhard
Corporation Stock Option Plan of 1999 for Certain Key Employees (the Plan),
the Optionee has been granted a stock option pursuant to the Plan, by all appropriate
action by the Stock Option and Stock Bonus Committee (the Committee) and the
Board of Directors of Engelhard Corporation (the Company); and

WHEREAS,
it is desired to set forth herein the terms and conditions of such option;

NOW,
THEREFORE, the parties hereto agree as follows:

1.       
          The Company hereby confirms that it has granted to the Optionee on the Date of
          Agreement set forth above, and on the terms set forth herein, an option to
          purchase, pursuant to the Plan, the number of shares of Common Stock, $1 par
          value, of the Company (the Stock) set forth above. The option
          granted hereby is not intended to be an incentive stock option for purposes of
          Section 422 of the Internal Revenue Code of 1986, as amended, (the
          Code).

2.       
          The price at which each share of stock subject to this option may be purchased
          (the Option Price) is set forth above and is not less than the fair
          market value of such shares on the Date of Agreement.

3.       
          Subject to the terms and conditions set forth in the Plan and herein, this
          option may be exercised to purchase shares of Stock covered hereby only in
          accordance with the following schedule:

| | Period of Exercise                           | Cumulative Percentage of TotalShares Which May be Purchased | 
| | -------------------------------------------- | ----------------------------------------------------------- | 
| | Within 1st Year from the Date of Agreement   | None                                                        | 
| | Beginning 1 years from the Date of Agreement | 25%                                                         | 
| | Beginning 2 years from the Date of Agreement | 50%                                                         | 
| | Beginning 3 years from the Date of Agreement | 75%                                                         | 
| | Beginning 4 years from the Date of Agreement | 100%                                                        | 

less, in the case of each period, the
number of shares, if any, previously purchased hereunder. This option shall terminate and
no shares may be purchased hereunder after ten (10) years from the Date of Agreement.

4.       
          Except as provided in Section 8 hereof or in the Plan, this option may not be
          exercised unless the Optionee is in the employ of the Company or one of its
          subsidiary corporations at the time of such exercise and shall have been
          continuously so employed since the Date of Agreement.

5.       
          Subject to the terms and conditions set forth herein, this option may be
          exercised at any time as to all or any of the shares then purchasable in
          accordance with Section 3 hereof by giving notice to the Company specifying the
          number of whole shares to be purchased and accompanied by payment in full of the
          aggregate Option Price of such shares together with any amount which the Company
          may be required to withhold upon such exercise with respect to applicable income
          taxes, or, if so elected, the Optionees direction that the Company
          withhold shares of Stock otherwise issuable upon such exercise in order to
          satisfy such withholding obligation; provided that this option may not be
          exercised for less than 10 shares or the number of shares remaining subject to
          option, whichever is smaller. The amount of tax withholding to be satisfied by
          withholding shares of Stock from the option exercise shall be limited to the
          minimum amount of taxes, including employment taxes, required to be withheld
          under applicable Federal, state and local law. The Optionee may pay the Option
          Price of

29

---

such shares
in whole or in part with shares of Stock having a fair           market value on the
exercise date equal to the cash value for which such shares           are substituted;
provided that in no event may any portion of the Option Price           be paid with
Stock acquired upon exercise of an option granted under the Plan           unless such
Stock was acquired more than six months before the date of exercise           hereunder.
No holder of this option shall be entitled to any rights of a           stockholder of
the Company in respect of any shares covered by this option until           such shares
shall have been paid for in full and issued to the holder of this           option.

6.       
          As soon as practicable after receipt by the Company of payment in full for any
          shares being purchased upon exercise of this option, a certificate or
          certificates representing the fully paid and nonassessable shares so purchased
          will be delivered to the option holder.

7.       
          This option is personal to the Optionee and during the Optionees lifetime
          may be exercised only by the Optionee. This option shall not be transferable
          other than by will or the laws of descent and distribution.

8.       
          Except as otherwise provided in the Plan, if the Optionees employment
          terminates or the Optionee dies under any of the circumstances set forth below
          but prior to the time this option has been fully exercised, this option shall be
          exercisable, as to any remaining shares subject thereto, only in accordance with
          the following provisions; provided that this option in no event shall be
          exercisable more than ten (10) years from the Date of Agreement:

(i)       
          If the Optionees employment terminates by reason of disability or
          retirement, at normal, deferred or early retirement age, under any retirement
          plan maintained by the Company, its parent, if any, or any of its subsidiaries,
          or for any other reason specifically approved in advance by the Board of
          Directors, this option may be exercised in full by the Optionee within ten (10)
          years from the Date of Agreement;

(ii)       
          If the Optionees employment is terminated by action of the employer other
          than as provided in (i) above and other than by reason of willful violation of
          the rules of the Company or instructions of superior(s), this option shall
          continue to become exercisable at the times set forth in Section 3 hereof
          notwithstanding such termination of employment and this option may be exercised
          during the period ending on the later of three months following the date the
          option becomes exercisable in full or such termination of employment;

(iii)       
          In the event of the death of the Optionee after termination of employment
          covered by (i) or (ii) above, the person or persons to whom the Optionees
          rights are transferred by will or the laws of descent and distribution may
          exercise this option to the extent to which the Optionee could have exercised
          this option had the Optionee survived for the remainder of the period under (i)
          or (ii) above during which the Optionee could have exercised this option if the
          Optionee had survived; and

(iv)       
          In the event of the death of the Optionee while employed, this option shall
          thereupon become exercisable in full, and the person or persons to whom the
          Optionees rights are transferred by will or by the laws of descent and
          distribution shall have a period ending on the tenth anniversary of the Date of
          Agreement to exercise this option.

9.       
          This option does not confer on the Optionee any right to continue in the employ
          of the Company or any of its subsidiaries or interfere in any way with the right
          of the Company or its subsidiaries to determine the terms of the Optionees
          employment.

10.       
          To the extent permitted by Section 5(f) of the Plan, in the event of a stock
          split, stock dividend, combination of shares, recapitalization, reorganization,
          merger, consolidation, rights offering, or any other change in the corporate
          structure or shares of the Company, the Board of Directors shall make such
          adjustments, if any, as it deems appropriate in the number and kind of shares
          covered by this option, or in the option prices hereunder, in

30

---

&     order to
preserve the option holders proportionate interest and to maintain
          unchanged the aggregate option price (except for any immaterial increase
therein to reflect           mathematical adjustments).

11.       
          This option shall be subject to the requirement that if at any time the Board of
          Directors of the Company shall determine that the registration, listing, or
          qualification of shares covered hereby upon any securities exchange or under any
          federal or state law, or the consent or approval of any governmental regulatory
          body is necessary or desirable in connection with, the granting of this option
          or the purchase of shares hereunder, this option may not be exercised unless and
          until such registration, listing, qualification, consent or approval shall have
          been effected or obtained free of any conditions not acceptable to the Board of
          Directors. The Board of Directors may require that the person exercising this
          option shall make such representations and agreements and furnish such
          information as it deems appropriate to assure compliance with or exemption from
          the foregoing or any other applicable legal requirement and may cause the
          certificate or certificates issued upon exercise of this option to bear a legend
          indicating the existence of any restriction resulting from such representations
          and agreements.

12.       
          This option and the terms and conditions herein set forth are subject in all
          respects to the terms and conditions of the Plan, which shall be controlling and
          which are incorporated herein by reference. All interpretations or
          determinations of the Committee shall be binding and conclusive upon the
          Optionee and the Optionees legal representatives on any question arising
          hereunder or under the Plan.

Please indicate your understanding
and acceptance of the foregoing by signing and returning a copy of this Agreement.

ENGELHARD CORPORATION

| |  | BY: | 
| |  | --- | 
| |  |     | 
| |  |     | 

I confirm my understanding of the
foregoing and accept the option covering the above Shares, subject to the terms and
conditions described herein.

|Signature: |  | Date: | 
|---------- |  | ----- | 
|           |  |       | 
|           |  |       | 

31

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EXHIBIT (10)(b)

Form of Stock Option
Agreement

used pursuant to the Engelhard
Corporation

2002 Long Term
Incentive Plan

32

---

NONQUALIFIED STOCK OPTION
AGREEMENTENGELHARD CORPORATION

Name of Optionee:
Number of Shares Under Stock Option:
Date of Agreement: 
Option Price: $

WITNESSETH:

WHEREAS, the Stock Option/Stock Bonus
Committee (the Committee) has granted a stock option to the Optionee pursuant
to the Engelhard Corporation 2002 Long Term Incentive Plan (the Plan); and

WHEREAS,
it is desired to set forth herein the terms and conditions of such option;

NOW,
THEREFORE, the parties hereto agree as follows:

1.       
          The Company hereby confirms that it has granted to the Optionee on the Date of
          Agreement set forth above, and on the terms set forth herein, an option to
          purchase, pursuant to the Plan, the number of shares of Common Stock, $1 par
          value, of the Company (the Shares) set forth above. The option
          granted hereby is not intended to be an incentive stock option for purposes of
          Section 422 of the Internal Revenue Code of 1986, as amended (the
          Code).

2.       
          The price at which each Share subject to this option may be purchased (the
          Option Price) is set forth above and is not less than the fair
          market value of such shares on the Date of Agreement.

3.       
          Subject to the terms and conditions set forth in the Plan and herein, this
          option may be exercised to purchase the Shares covered hereby only in accordance
          with the following schedule:

| | Period of Exercise                           | Cumulative Percentage of TotalShares Which May be Purchased | 
| | -------------------------------------------- | ----------------------------------------------------------- | 
| | Within 1st Year from the Date of Agreement   | None                                                        | 
| | Beginning 1 years from the Date of Agreement | 25%                                                         | 
| | Beginning 2 years from the Date of Agreement | 50%                                                         | 
| | Beginning 3 years from the Date of Agreement | 75%                                                         | 
| | Beginning 4 years from the Date of Agreement | 100%                                                        | 

less, in the case of each period, the
number of Shares, if any, previously purchased hereunder; provided, however, that this
option shall become immediately exercisable in full at the time of a Change of Control (as
defined in the Plan). This option shall terminate and no Shares may be purchased hereunder
after ten (10) years from the Date of Agreement.

4.       
          Except as provided in Section 8 hereof or in the Plan, this option may not be
          exercised unless the Optionee is in the employ of the Company or one of its
          subsidiary corporations at the time of such exercise and shall have been
          continuously so employed since the Date of Agreement.

5.       
          Subject to the terms and conditions set forth herein, this option may be
          exercised at any time as to all or any of the shares then purchasable in
          accordance with Section 3 hereof by giving written notice to the Company (or
          notice by such means and to such representative(s) as the Company may otherwise
          designate) specifying the number of whole shares to be purchased and accompanied
          by payment in full of the aggregate Option Price of such shares together with
          any amount which the Company may be required to withhold upon such exercise with
          respect to applicable taxes, or, if so elected, the Optionees direction
          that the Company withhold Shares otherwise issuable upon such exercise in order
          to satisfy such withholding obligation; provided that this option may not be
          exercised for less than 10 Shares or the number of Shares remaining subject to
          the option, whichever is smaller. The amount of tax withholding to be satisfied
          by withholding Shares from the option exercise shall be limited to the minimum

33

---

amount
of taxes, including employment taxes, required to be withheld under           applicable
Federal, state and local law. The Optionee may pay the Option Price           of such
Shares in whole or in part with Shares having a fair market value on the
          exercise date equal to the cash value for which such Shares are substituted;
          provided that in no event may any portion of the Option Price be paid with
          Shares acquired either under an award granted pursuant to the Plan, upon
          exercise of a stock option granted under another Company plan or as a stock
          bonus or other stock award granted under another Company plan unless, in any
          such case, the Shares were acquired and vested more than six months in advance
          of the date of exercise hereunder. No holder of this option shall be entitled
to           any rights of a stockholder of the Company in respect of any Shares covered
by           this option until such Shares shall have been paid for in full and issued to
the           holder of this option.

6.       
          As soon as practicable after receipt by the Company or its representative of
          notice of exercise and payment in full for any Shares being purchased upon
          exercise of this option, the Company will deliver or transfer certificate(s) or
          account credit(s) to or at the direction of the Optionee representing the fully
          paid and nonassessable Shares so purchased.

7.       
          This option is personal to the Optionee and during the Optionees lifetime
          may be exercised only by the Optionee. This option shall not be transferable
          other than by will or the laws of descent and distribution.

8.       
          Except as otherwise provided in the Plan, if the Optionees employment
          terminates or the Optionee dies under any of the circumstances set forth below
          but prior to the time this option has been fully exercised, this option shall be
          exercisable, as to any remaining Shares subject thereto, only in accordance with
          the following provisions; provided that this option in no event shall be
          exercisable more than ten (10) years from the Date of Agreement:

(i.)       
          If the Optionees employment terminates by reason of disability or
          retirement, at normal, deferred or early retirement age, under any retirement
          plan maintained by the Company or any of its subsidiaries, or for any other
          reason specifically approved in advance by the Committee, this option may be
          exercised in full by the Optionee within ten (10) years from the Date of
          Agreement;

(ii)       
          If the Optionees employment is terminated by action of the employer other
          than as provided in (i) above and other than by reason of willful violation of
          the rules of the Company or instructions of superior(s), this option shall
          continue to become exercisable at the times set forth in Section 3 hereof
          notwithstanding such termination of employment and this option may be exercised
          during the period ending either three months following the date the option
          becomes exercisable in full or three months following such termination of
          employment, whichever is later;

(iii)       
          In the event of the death of the Optionee after termination of employment
          covered by (i) or (ii) above, the person or persons to whom the Optionees
          rights are transferred by will or the laws of descent and distribution may
          exercise this option to the extent to which the Optionee could have exercised
          this option had the Optionee survived for the remainder of the period under (i)
          or (ii) above during which the Optionee could have exercised this option if the
          Optionee had survived;

(iv)       
          In the event of the death of the Optionee while employed, this option shall
          thereupon become exercisable in full, and the person or persons to whom the
          Optionees rights are transferred by will or by the laws of descent and
          distribution shall have a period ending on the tenth anniversary of the Date of
          Agreement to exercise this option; and

(v)       
          If the Optionees employment is terminated by action of the Employer by
          reason of willful violation of the rules of the Company or instructions of
          superior(s), this option shall not be exercisable and shall be immediately
          forfeited to the Company.

9.       
          This option does not confer on the Optionee any right to continue in the employ
          of the Company or any of its subsidiaries or interfere in any way with the right
          of the Company or its subsidiaries to determine the terms of the Optionees
          employment.

10.       
          In the event that the Committee shall determine that any dividend in Shares,
          recapitalization, Share split, reverse split, reorganization, merger,
          consolidation, spin-off, combination, repurchase, or share exchange, or other
          similar corporate transaction or event, affects the Shares such that an
          adjustment is appropriate in order to prevent

34

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dilution
or enlargement of the rights of participants under the Plan, then the Committee shall
make such           equitable changes or adjustments as it deems appropriate and, in such
manner as           it may deem equitable, adjust any or all of the number and kind of
shares, other           securities or other consideration issued or issuable in respect
of this option           and the Option Price.

11.       
          This option shall be subject to the requirement that if at any time the Board of
          Directors of the Company shall determine that the registration, listing, or
          qualification of Shares covered hereby upon any securities exchange or under any
          federal or state law, or the consent or approval of any governmental regulatory
          body is necessary or desirable in connection with, the granting of this option
          or the purchase of Shares hereunder, this option may not be exercised unless and
          until such registration, listing, qualification, consent or approval shall have
          been effected or obtained free of any conditions not acceptable to the Board of
          Directors. The Board of Directors may require that the person exercising this
          option shall make such representations and agreements and furnish such
          information as it deems appropriate to assure compliance with or exemption from
          the foregoing or any other applicable legal requirement and may cause the
          certificate or certificates issued upon exercise of this option to bear a legend
          indicating the existence of any restriction resulting from such representations
          and agreements.

12.       
          This option and the terms and conditions herein set forth are subject in all
          respects to the terms and conditions of the Plan, which shall be controlling and
          which are incorporated herein by reference. All interpretations or
          determinations of the Committee shall be binding and conclusive upon the
          Optionee and the Optionees legal representatives on any question arising
          hereunder or under the Plan.

Please indicate your understanding
and acceptance of the foregoing by signing and returning a copy of this Agreement.

ENGELHARD CORPORATION

| |  | BY: | 
| |  | --- | 
| |  |     | 
| |  |     | 

I confirm my understanding of the
foregoing and accept the option covering the above Shares, subject to the terms and
conditions described herein.

|Signature: |  | Date: | 
|---------- |  | ----- | 
|           |  |       | 
|           |  |       | 

35

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EXHIBIT (10) (c)

Form of Restricted
Share Unit Agreement

used pursuant to the
Engelhard Corporation

2002 Long Term
Incentive Plan

36

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ENGELHARD CORPORATION

RESTRICTED SHARE UNIT
AGREEMENT

THIS
AGREEMENT, dated as of ____________, 2004, is between Engelhard Corporation (the
Company), a Delaware company, and _______________ (the Employee).

WHEREAS,
the Employee has been granted the following Award under the Companys 2002 Long Term
Incentive Plan (the Plan);

NOW,
THEREFORE, in consideration of the premises and mutual covenants contained herein, the
parties hereto agree as follows.

1.       
Award of Restricted Share Units.  Pursuant to the provisions of the
Plan, the terms of which are incorporated herein by reference, the Employee is
hereby awarded ______________ Restricted Share Units (the Restricted Share
Units or the Award), subject to the terms and conditions
herein set forth. Capitalized terms used herein and not defined shall have the
meanings set forth in the Plan. In the event of any conflict between this
Agreement and the Plan, the Plan shall control.

2.       
Terms and Conditions.  It is understood and agreed that the Award of
Restricted Share Units evidenced hereby is subject to the following terms and
conditions:

(a).       
Vesting of Award. Subject to Section 2(b) and 2(f) below and the other
terms and conditions of this Agreement, this Award shall become vested in five
equal annual installments, commencing on the first anniversary hereof and
continuing thereafter on the second, third, fourth and fifth anniversaries
thereof. Unless otherwise provided by the Company, all amounts receivable in
connection with any adjustments to the Shares under Section 4(c) of the Plan
shall be subject to the vesting schedule in this Section 2(a).

(b)       
Termination of Service; Forfeiture of Unvested Restricted Share Units. Any
unvested portion of the Award (together with Dividend Equivalents (as defined
below) credited with respect to that portion of the Award) will be forfeited
immediately upon the termination of employment of the Employee, except that:
(i) if such termination is by reason of disability or for any other reason
specifically approved in advance by the Committee, any unvested portion of the
Award (together with Dividend Equivalents credited with respect thereto) held by
the Employee shall thereupon become vested in full; (ii) if such
termination is by action of the Company or a subsidiary other than as provided
in (i) above and other than discharge by reason of willful violation of the
rules of the Company or instructions of superior(s), the unvested portion of the
Award (together with Dividend Equivalents credited with respect thereto) shall
continue to vest on its regular vesting schedule, notwithstanding such
termination of employment; and (iii) in the event of the death of the Employee
while employed, any unvested portion of the Award (together with Dividend
Equivalents credited with respect thereto) then held by the Employee shall
thereupon become vested in full.

(c)       
Distribution of Shares.  At the time the Employee ceases to be an
Employee of the Company for any reason, the Company shall distribute to the
Employee (or his or her heirs in the event of the Employees death) a
number of Shares equal to the number of vested Restricted Share Units then held
by the Employee (together with Dividend Equivalents credited with respect
thereto); provided, however, that if the Employees termination of
employment is described in Section 2(b)(ii) above, then the Shares
(together with Dividend Equivalents credited with respect thereto) shall be
distributed on the date of vesting, if later; provided further, however, that
the Employee may elect in writing at least one year prior to termination of his
employment to receive distribution of all vested Shares (together with Dividend
Equivalents credited with respect thereto) subject to this Agreement in up to
ten annual installments, beginning upon termination of employment or the first
anniversary of termination of employment, as so elected by the Employee (or, if
later, the date of vesting). If Shares (together with Dividend Equivalents
credited with respect thereto) are distributed hereunder in installments, the
amount of each installment shall be determined by dividing the number of
undistributed vested Shares credited to the Employee under this Award at such
date (and the amount of undistributed Dividend Equivalents credited with respect
thereto) by the number of installments remaining to be paid. Cash will be paid
in lieu of any fractional Shares.

37

---

(d)       
Rights and Restrictions.  The Restricted Share Units and Dividend
Equivalents shall not be transferable, other than pursuant to will or the laws
of descent and distribution. Prior to vesting of the Restricted Share Units and
delivery of the Shares to the Employee following his termination of employment,
the Employee shall not have any rights or privileges of a shareholder as to the
Shares subject to the Award. Specifically, the Employee shall not have the right
to receive dividends or the right to vote such Shares prior to vesting of the
Award and delivery of the Shares. The Employees rights hereunder to
undistributed Shares and Dividend Equivalents shall be those of a general
unsecured creditor of the Company.

(e)       
Dividend Equivalents. As of each date on which a cash dividend is paid on
Shares, there shall be credited to an account for the Employee an amount of cash
determined by multiplying the amount of such dividend per Share by the number of
Restricted Share Units held by the Employee. Such amounts shall be increased by
an interest factor from the crediting date through the date of payment set forth
above. The interest rate utilized to calculate such increase shall be set
monthly and shall be equal to 120% of the long-term federal rate, compounded
monthly (within the meaning of Section 1274(d) of the Internal Revenue Code of
1986, as amended) as in effect for the month for which the interest is being
computed. The amount credited under this Section 2(e) (together with
interest attributable thereto) is referred to herein as the Dividend
Equivalents.

(f)       
Change in Control. Upon the occurrence of a Change in Control (as defined in the
Plan), the unvested portion of the Restricted Share Units (together with
Dividend Equivalents credited with respect thereto) shall immediately become
vested in full, and all of the Shares subject to the Award (together with
Dividend Equivalents credited with respect thereto) shall be distributed to the
Employee immediately at the time of the Change in Control. In the event of a
Change in Control, the Employee shall be entitled to an additional payment in
respect of this Award computed as set forth in the last paragraph of
Section 6 of the Companys Deferred Compensation Plan for Key
Employees.

3.       
Transfer of Shares. The Shares delivered hereunder, or any interest therein, may
be sold, assigned, pledged, hypothecated, encumbered, or transferred or disposed
of in any other manner, in whole or in part, only in compliance with the terms,
conditions and restrictions as set forth in the governing instruments of the
Company, applicable United States federal and state securities laws or any other
applicable laws or regulations and the terms and conditions hereof.

4.       
Expenses of Issuance of Shares. The issuance of stock certificates hereunder
shall be without charge to the Employee. The Company shall pay, and indemnify
the Employee from and against any issuance, stamp or documentary taxes (other
than transfer taxes) or charges imposed by any governmental body, agency or
official (other than income taxes) or by reason of the issuance of Shares.

5.       
Withholding. The Employee shall pay to the Company or make arrangements
satisfactory to the Committee regarding payment of any federal, state or local
taxes of any kind required by law to be withheld with respect to the Award and
the Company shall, to the extent permitted or required by law, have the right to
deduct from any payment of any kind otherwise due to the Employee, federal,
state and local taxes of any kind required by law to be withheld.

6.       
References.  References herein to rights and obligations of the
Employee shall apply, where appropriate, to the Employees legal
representative or estate without regard to whether specific reference to such
legal representative or estate is contained in a particular provision of this
Agreement.

7.       
Notices.  Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or by courier, or sent by certified or registered mail,
postage prepaid, return receipt requested, duly addressed to the party concerned
at the address indicated below or to such changed address as such party may
subsequently by similar process give notice of:

| |                                                                                        
| | ---------------------------------------------------------------------------------------
| | If to the Company:                                                                     
| | Engelhard Corporation101 Wood AvenueIselin, New Jersey 08830-0770Attn:  General Counsel

38

---

| |                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------
| | If to the Employee: To the last address delivered to the Company by the Employee in the manner set forth herein.
| |                                                                                                                 

8.       
Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of New Jersey, without giving effect to principles of
conflict of laws.

9.       
Entire Agreement. This Agreement and the Plan constitute the entire agreement
among the parties relating to the subject matter hereof, and any previous
agreement or understanding among the parties with respect thereto is superseded
by this Agreement and the Plan.

10.       
Counterparts.  This Agreement may be executed in two counterparts,
each of which shall constitute one and the same instrument.

IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above
written.

ENGELHARD CORPORATION

| |  | BY: | 
| |  | --- | 
| |  |     | 
| |  |     | 

| |  |  |         
| |  |  | --------
| |  |  |         
| |  |  | Employee

39

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EXHIBIT (31)(a)

Rule 13a-14(a)/15d-14(a)

Certification of Chief
Executive Officer

I, Barry W. Perry, Chairman and Chief Executive
Officer of Engelhard Corporation (the Company), certify that:

| | 1. | I have reviewed this quarterly report on Form 10-Q of the Company;
| | -- | ------------------------------------------------------------------

| | 2. | Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The registrants other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | Disclosed in this report any change in the registrants internal control
over financial reporting that occurred during the registrants most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial
reporting; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | The registrants other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrants auditors and to the audit committee of registrants board
of directors (or persons performing the equivalent function):
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | All significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to
adversely affect the registrants ability to record, process, summarize and
report financial information; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrants internal control over
financial reporting.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date: | August 6, 2004 |  | /s/ Barry W. Perry                                           
|----- | -------------- |  | -------------------------------------------------------------
|      |                |  |                                                              
|      |                |  | Barry W. Perry
     Chairman and Chief
     Executive Officer

40

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EXHIBIT (31)(b)

Rule 13a-14(a)/15d-14(a)

Certification of Chief
Financial Officer

I, Michael A. Sperduto, Vice
President and Chief Financial Officer of Engelhard Corporation (the Company),
certify that:

| | 1. | I have reviewed this quarterly report on Form 10-Q of the Company;
| | -- | ------------------------------------------------------------------

| | 2. | Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The registrants other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | Disclosed in this report any change in the registrants internal control
over financial reporting that occurred during the registrants most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial
reporting; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | The registrants other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrants auditors and to the audit committee of registrants board
of directors (or persons performing the equivalent function):
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | All significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to
adversely affect the registrants ability to record, process, summarize and
report financial information; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrants internal control over
financial reporting.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date: | August 6, 2004 |  | /s/ Michael A. Sperduto                                                 
|----- | -------------- |  | ------------------------------------------------------------------------
|      |                |  |                                                                         
|      |                |  | Michael A. Sperduto
     Vice President and Chief
     Financial Officer

41

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EXHIBIT (32)

Section 1350
Certifications of

Chief Executive Officer
and Chief Financial Officer

The
undersigned, Barry W. Perry, Chairman and Chief Executive Officer of Engelhard Corporation
(the Company), and Michael A. Sperduto, Vice President and Chief Financial
Officer of the Company, each hereby certifies that the Quarterly Report of the Company on
Form 10-Q for the period ended June 30, 2004 (the Report) (1) fully complies
with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and (2) the
information contained in the Report fairly presents, in all material respects, the
financial condition and the results of operations of the Company.

|Date: | August 6, 2004 |  | /s/ Barry W. Perry                                           
|----- | -------------- |  | -------------------------------------------------------------
|      |                |  |                                                              
|      |                |  | Barry W. Perry
     Chairman and Chief
     Executive Officer

|Date: | August 6, 2004 |  | /s/ Michael A. Sperduto                                                 
|----- | -------------- |  | ------------------------------------------------------------------------
|      |                |  |                                                                         
|      |                |  | Michael A. Sperduto
     Vice President and Chief
     Financial Officer

This certification accompanies this
Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed
filed by the Company for purposes of Section 18 or any other provision of the Securities
Exchange Act of 1934, as amended.

A signed original of this written
statement required by Section 906 or other document authenticating, acknowledging or
otherwise adopting the signature that appears in typed form within the electronic version
of this written statement required by Section 906, has been provided to the Company and
will be retained by the Company and furnished to the Securities and Exchange Commission or
its staff upon request.

42