##### Table of Contents





SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
 Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File
    No. 001-15903
 CARBO Ceramics Inc.
 (Exact name of registrant as
    specified in its charter)
  DELAWARE(State or other jurisdiction
    of incorporation or organization)

72-1100013(I.R.S. Employer
    Identification Number)   6565 MacArthur Boulevard
    Suite 1050
    Irving, Texas 75039
  (972) 401-0090
    Title of Each Class

Name of Each Exchange on which RegisteredCommon Stock, par value $0.01 per share
    Preferred Stock Purchase Rights

New York Stock Exchange
    New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act: None
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
    Large accelerated
    filer þ

Accelerated
    filer o

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    Company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





TABLE OF
    CONTENTS
  PART IItem 1.

Business


1Item 1A.

Risk Factors


9Item 1B.

Unresolved Staff Comments


13Item 2.

Properties


13Item 3.

Legal Proceedings


14Item 4.

Submission of Matters to a Vote of Security
    Holders


15Item 4A.

Executive Officers


15PART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


15Item 6.

Selected Financial Data


16Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


17Item 7A.

Quantitative and Qualitative Disclosures about
    Market Risk


25Item 8.

Financial Statements and Supplementary Data


26Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


26Item 9A.

Controls and Procedures


26Item 9B.

Other Information


26PART IIIItem 10.

Directors and Executive Officers of the
    Registrant


27Item 11.

Executive Compensation


27Item 12.

Security Ownership of Certain Beneficial Owners
    and Management


27Item 13.

Certain Relationships and Related Transactions


28Item 14.

Principal Accounting Fees and Services


28PART IVItem 15.

Exhibits and Financial Statement Schedules


29Signatures


30Managements Report on Internal Control Over
    Financial Reporting


F-1Report of Independent Registered Public
    Accounting Firm on Internal Control Over Financial Reporting


F-2Report of Independent Registered Public
    Accounting Firm


F-3Consolidated Financial Statements


F-4Schedule II  Consolidated Valuation
    and Qualifying Accounts


S-1SubsidiariesConsent of Independent Registered Public Accounting FirmRule 13a-14(a)/15d-14(a) Certification by Gary A. KolstadRule 13a-14(a)/15d-14(a) Certification by Paul G. VitekCertification Pursuant to Section 906




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##### Table of Contents



PART I  Item 1.
    Business  General
              HSP ® PROP ® HSP ® PROP ® HSP ® HSP ®
  LITE ® ECONOPROP ® LITE ® LITE ®
 1




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##### Table of Contents



ECONOPROP ® HYDROPROP tm ECONOPROP ® HYDROPROP tm
      Competition
  (Saint-Gobain), HSP ® PROP ®
    HSP ® PROP ® LITE ® ECONOPROP ® HYDROPROP tm
   2




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Customers
    and Marketing
  just-in-time and/or
  and/or
 3




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For the Years Ended December 31,2007


2006


2005($ in millions)LocationUnited States

$
223.1


$
205.0


$
152.6International


117.2



107.1



100.1Total

$
340.3


$
312.1


$
252.7   Production
    Capacity
     4




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##### Table of Contents



ECONOPROP ® HYDROPROP TM
        AnnualLocation

Capacity


Products(millions of pounds)New Iberia, Louisiana


120


CARBOHSP®
    and
    CARBOPROP®Eufaula, Alabama


260


CARBOLITE®
    and
    CARBOECONOPROP®McIntyre, Georgia


275


CARBOLITE®,
    CARBOECONOPROP®
    CARBOHSP®
    and
    CARBOPROP®Toomsboro, Georgia


500


CARBOECONOPROP®and
CARBOHYDROPROPtmLuoyang, China


100


CARBOPROP®
    and
    CARBOLITE®Kopeysk, Russia


100


CARBOPROP®
    and
    CARBOLITE®Total current capacity


1,355
*     *
    
    Production activities at the New Iberia facility are expected to
    be idled in 2008. Excluding capacity at the New Iberia
    facility, total annual capacity is approximately
    1.2 billion pounds.  just-in-time
  Long-Lived
    Assets By Geographic Area
    2007


2006


2005($ in millions)Long-lived assets:United States

$
239.1


$
200.0


$
173.9International (primarily China and Russia)


65.9



58.8



31.6Total

$
305.0


$
258.8


$
205.5   Distribution
   5




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##### Table of Contents



just-in-time
  Raw
    Materials
    HSP ® PROP ®
  LITE ® ECONOPROP ®
  PROP ® HYDROPROP tm LITE ® ECONOPROP ®
  PROP ® LITE ®
  PROP ®
  Production
    Process
   6




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Patent
    Protection and Intellectual Property
    LITE ® ECONOPROP ® 2 PROP ®
  PROP ®
    and/or
   7




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##### Table of Contents



and/or
    Environmental
    and Other Governmental Regulations
    Employees
    Forward-Looking
    Information
  Form 10-K, Form 10-Q Form 8-K
 8




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
    a potential decline in the demand for oil and natural gas;
    potential declines or increased volatility in oil and natural
    gas prices that would adversely affect our customers, the energy
    industry or our production costs;
    potential reductions in spending on exploration and development
    drilling in the oil and natural gas industry that would reduce
    demand for our products and services;
    an increase in competition in the proppant market;
    the development of alternative stimulation techniques, such as
    extraction of oil or gas without fracturing;
    the development of alternative proppants for use in hydraulic
    fracturing;
    general global economic and business conditions;
    fluctuations in foreign currency exchange rates; and
    the potential expropriation of assets by foreign governments.    Available
    Information
  Form 10-K, Form 10-Q, Form 8-K http://www.carboceramics.com
  1-800-SEC-0330. http://www.sec.gov
  Item 1A.
    Risk
    Factors  Form 10-K
  Our
    business and financial performance depend on the level of
    activity in the natural gas and oil industries.
   9




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Our
    business and financial performance could suffer if new processes
    are developed to replace hydraulic fracturing.
    We may
    be adversely affected by decreased demand for ceramic proppant
    or the development by our competitors of effective alternative
    proppants.
    We
    rely upon, and receive a significant percentage of our revenues
    from, a limited number of key customers.
  just-in-time
  We
    rely on certain patents.
   10




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Third
    parties may claim that we are infringing their intellectual
    property rights.
    We
    operate in an increasingly competitive market.
    Major
    oilfield service companies offer or are developing competing
    fracture mapping and reservoir monitoring
    services.
    Significant
    increases in fuel prices for any extended periods of time will
    increase our operating expenses.
    Environmental
    compliance costs and liabilities could reduce our earnings and
    cash available for operations.
  Form 10-K,
   11




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Our
    international operations subject us to risks inherent in doing
    business on an international level that could adversely impact
    our results of operations.
    
    economic and political instability (including as a result of the
    threat or occurrence of armed international conflict or
    terrorist attacks);
    changes in regulatory requirements, tariffs, customs, duties and
    other trade barriers;
    transportation delays;
    power supply shortages and shutdowns;
    difficulties in staffing and managing foreign operations and
    other labor problems;
    currency rate fluctuations, convertibility and repatriation;
    taxation of our earnings and the earnings of our personnel;
    potential expropriation of assets by foreign
    governments; and
    other risks relating to the administration of or changes in, or
    new interpretations of, the laws, regulations and policies of
    the jurisdictions in which we conduct our business.  and/or
  Undetected
    defects in Pinnacles fracture simulation software could
    adversely affect its business.
    A
    significant failure of our computer systems or networks in
    connection with the implementation of new enterprise software
    could adversely affect our business.
   12




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The
    market price of our common stock will fluctuate, and could
    fluctuate significantly.
    
    the liquidity of the market for our common stock;
    differences between our actual financial or operating results
    and those expected by investors and analysts;
    changes in analysts recommendations or projections;
    new statutes or regulations or changes in interpretations of
    existing statutes and regulations affecting our business;
    changes in general economic or market conditions; and
    broad market fluctuations.  Our
    actual results could differ materially from results anticipated
    in forward-looking statements we make.
  Form 10-K Form 10-K.
  Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties       13




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786-acre
          Item 3.
    Legal
    Proceedings     14




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##### Table of Contents



Item 4.
    Submission
    of Matters to a Vote of Security Holders    Item 4A.
    Executive
    Officers of the Registrant               PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Common
    Stock Market Prices, Dividends and Stock Repurchases
   15




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##### Table of Contents



2007


2006Cash








CashSales Price


Dividends


Sales Price


DividendsQuarter Ended

High


Low


Declared


High


Low


DeclaredMarch 31

$
46.93


$
34.34


$
0.12


$
67.67


$
50.71


$
0.10June 30


48.33



41.37



0.12



65.83



44.37



0.10September 30


51.00



41.35



0.14



50.20



34.21



0.12December 31


51.94



36.69



0.14



39.81



32.16



0.12       Equity
    Compensation Plans and Stock Performance Graph
    Item 6.
    Selected
    Financial Data  Form 10-K.
  Years Ended December 31,2007


2006


2005


2004


2003($ in thousands, except per share data)Statement of Income Data:Revenues

$
340,351


$
312,126


$
252,673


$
223,054


$
169,936Cost of sales


221,202



196,133



153,941



131,648



103,769Gross profit


119,149



115,993



98,732



91,406



66,167Selling, general and administrative expenses(1)


41,098



35,206



28,432



26,008



19,153Operating profit


78,051



80,787



70,300



65,398



47,014Other, net


3,349



3,027



1,783



824



73Income before income taxes


81,400



83,814



72,083



66,222



47,087Income taxes


27,530



29,561



25,463



24,549



17,518Net income

$
53,870


$
54,253


$
46,620


$
41,673


$
29,569Earnings per shareBasic

$
2.21


$
2.23


$
1.94


$
1.75


$
1.27Diluted

$
2.20


$
2.22


$
1.93


$
1.73


$
1.26   16




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##### Table of Contents



December 31,2007


2006


2005


2004


2003($ in thousands, except per share data)Balance Sheet Data:Current assets

$
144,272


$
143,925


$
148,287


$
146,282


$
92,709Current liabilities excluding bank borrowings


33,264



34,246



36,309



29,192



16,432Bank borrowings-current


















Property, plant and equipment, net


275,826



231,748



179,500



125,385



116,664Total assets


453,123



404,665



355,796



297,517



235,124Total shareholders equity


389,439



342,859



293,366



244,367



200,139Cash dividends per share

$
0.52


$
0.44


$
0.36


$
0.29


$
0.25     (1)
    
    Selling, general and administrative (SG&A) expenses for
    2007, 2006, 2005, 2004 and 2003 include costs of
    start-up
    activities of $1,215,000, $474,000, $1,092,000, none, and
    $80,000, respectively.
    Start-up
    costs for 2007 are related primarily to the new production
    facility in Kopeysk, Russia.
    Start-up
    costs for 2006 and 2005 are related primarily to the new
    production facility in Toomsboro, Georgia.
    Start-up
    costs for 2003 are related to expansion of the McIntyre and New
    Iberia facilities and initial operation of the Luoyang, China
    facility. SG&A expenses in 2007, 2006, 2005, 2004 and 2003
    also include losses of $268,000, none, $95,000, $1,144,000 and
    $717,000, respectively, associated with the disposal of certain
    equipment and impairment of certain Pinnacle software.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Executive
    Level Overview
       17




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PROP ® HSP ®
    
    increasing marketing activities globally, 18




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##### Table of Contents




    improving and expanding its distribution capabilities, and
    focusing on new product development    General
    Business Conditions
        Critical
    Accounting Policies
     19




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Results
    of Operations
  Net
    Income
  Percent



Percent2007

Change

2006

Change

2005($ in thousands)Net Income

$
53,870



(1
)%

$
54,253



16
%

$
46,620   start-up start-up start-up start-up
 20




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##### Table of Contents



start-up start-up
    Revenues
  Percent





Percent2007


Change


2006


Change


2005($ in thousands)Consolidated revenues

$
340,351



9
%

$
312,126



24
%

$
252,673Revenues by operating segment:Proppant

$
290,859



5
%

$
278,020



23
%

$
225,751Fracture and Reservoir Diagnostics

$
49,492



45
%

$
34,106



27
%

$
26,922          21




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##### Table of Contents



Gross
    Profit
  Percent





Percent2007


Change


2006


Change


2005($ in thousands)Consolidated gross profit

$
119,149



3
%

$
115,993



17
%

$
98,732Consolidated gross profit %


35
%






37
%






39
%Gross profit by operating segment:Proppant

$
97,337



(3
)%

$
100,739



14
%

$
88,488Proppant %


33
%






36
%






39
%Fracture and Reservoir Diagnostics

$
21,812



43
%

$
15,254



49
%

$
10,244Fracture and Reservoir Diagnostics %


44
%






45
%






38
%     start-up
       22




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##### Table of Contents



Selling,
    General & Administrative (SG&A) and Other
    Operating Expenses
  Percent





Percent2007


Change


2006


Change


2005($ in thousands)Consolidated SG&A and other

$
41,098



17
%

$
35,206



24
%

$
28,432As a % of revenues


12
%






11
%






11
%SG&A and other by operating segment:Proppant

$
27,665



11
%

$
24,959



19
%

$
20,922Proppant %


10
%






9
%






9
%Fracture and Reservoir Diagnostics

$
13,433



31
%

$
10,247



36
%

$
7,510Fracture and Reservoir Diagnostics %


27
%






30
%






28
%   start-up start-up
        Income
    Tax Expense
  Percent



Percent2007

Change

2006

Change

2005($ in thousands)Income Tax Expense

$
27,530



(7
)%

$
29,561



16
%

$
25,463Effective Income Tax Rate


33.8
%






35.3
%






35.3
%    23




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##### Table of Contents



Liquidity
    and Capital Resources
    HYDROPROP tm
      Off-Balance
    Sheet Arrangements
   24




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##### Table of Contents



Contractual
    Obligations
    Payments Due in PeriodLess than


1 - 3


4 - 5


More thanTotal


1 year


years


years


5 years($ in thousands)Long-term debt obligations

$



$



$



$



$
Capital lease obligations


















Operating lease obligations:- Primarily railroad equipment


23,008



4,556



7,623



5,554



5,275Purchase obligations:- Natural gas contracts


13,882



13,882











- Raw materials contracts


2,711



2,416



295







Other long-term obligations


















Total contractual obligations

$
39,601


$
20,854


$
7,918


$
5,554


$
5,275           Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk     25




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Item 8.
    Financial
    Statements and Supplementary Data    Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  (a)
    Evaluation of Disclosure Controls and Procedures        page F-1
    page F-2
      Item 9B.
    Other
    Information   26




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##### Table of Contents



PART III    Item 10.
    Directors
    and Executive Officers of the Registrant  Regulation S-K Form 10-K.
  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and
    Management   27




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##### Table of Contents



Stock
    Performance Graph
    COMPARISON
    OF 10 YEAR CUMULATIVE TOTAL RETURN* Among
    CARBO Ceramics, Inc., The S & P 500 Index
    And The S & P SmallCap 600  Oil &
    Gas Equipment & Services Index
  
  *
    
    $100 invested on 12/31/97 in stock or index-including
    reinvestment of dividends.
    Fiscal year ending December 31.  Item 13.
    Certain
    Relationships and Related Transactions    Item 14.
    Principal
    Accounting Fees and Services   28




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##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules        Report of Independent Registered Public Accounting FirmConsolidated Balance Sheets at December 31, 2007 and 2006Consolidated Statements of Income for each of the three years
    ended December 31, 2007, 2006 and 2005Consolidated Statements of Shareholders Equity for each of
    the three years ended December 31, 2007, 2006 and 2005Consolidated Statements of Cash Flows for each of the three
    years ended December 31, 2007, 2006 and 2005     page S-1
     29




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##### Table of Contents



SIGNATURES    CARBO Ceramics Inc.
  By:
    /s/  Gary
    A Kolstad   President and Chief Executive Officer
  By:
    /s/  Paul
    G. Vitek   Sr. Vice President, Finance and
 Chief Financial Officer
    POWER OF
    ATTORNEY
  Form 10-K,
    Signature

Title

Date/s/  William
    C. MorrisWilliam
    C. Morris

Chairman of the Board

February 27, 2008/s/  Gary
    A. KolstadGary
    A. Kolstad

President, Chief Executive Officer and Director (Principal
    Executive Officer)

February 27, 2008/s/  Paul
    G. VitekPaul
    G. Vitek

Sr. Vice President, Finance and Chief Financial Officer
    (Principal Financial and Accounting Officer)

February 27, 2008/s/  Claude
    E. Cooke, Jr.Claude
    E. Cooke, Jr.

Director

February 27, 2008/s/  Chad
    C. DeatonChad
    C. Deaton

Director

February 27, 2008 30




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##### Table of Contents



Signature

Title

Date/s/  James
    B. JenningsJames
    B. Jennings

Director

February 27, 2008/s/  H.E.
    Lentz, Jr.H.E.
    Lentz, Jr.

Director

February 27, 2008/s/  Randy
    L. LimbacherRandy
    L. Limbacher

Director

February 27, 2008/s/  Jesse
    P. OrsiniJesse
    P. Orsini

Director

February 27, 2008/s/  Robert
    S. RubinRobert
    S. Rubin

Director

February 27, 2008  31




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##### Table of Contents



MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING  Rules 13a-15(f) 15d-15(f)
       F-1




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL
    CONTROL OVER FINANCIAL REPORTING  
                  F-2




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
                F-3




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##### Table of Contents



CARBO
    CERAMICS INC.
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2007


2006($ in thousands)ASSETSCurrent assets:Cash and cash equivalents

$
12,296


$
24,973Short-term investments






7,500Trade accounts and other receivables, net


68,950



63,461Inventories:Finished goods


35,070



26,181Raw materials and supplies


18,917



14,602Total inventories


53,987



40,783Prepaid expenses and other current assets


2,588



2,558Deferred income taxes


6,451



4,650Total current assets


144,272



143,925Property, plant and equipment:Land and land improvements


9,707



8,659Land-use and mineral rights


6,168



6,101Buildings


46,903



26,209Machinery and equipment


310,593



207,341Construction in progress


12,767



71,744Total


386,138



320,054Less accumulated depreciation


110,312



88,306Net property, plant and equipment


275,826



231,748Goodwill


23,213



21,840Intangible and other assets, net


9,812



7,152Total assets

$
453,123


$
404,665LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
11,709


$
12,939Accrued payroll and benefits


8,812



8,115Accrued freight


2,979



2,061Accrued utilities


3,132



3,166Accrued income taxes


2,474



3,172Retainage related to construction in progress


108



117Other accrued expenses


4,050



4,676Total current liabilities


33,264



34,246Deferred income taxes


30,420



27,560Shareholders equity:Preferred stock, par value $0.01 per share, 5,000 shares
    authorized, none outstanding






Common stock, par value $0.01 per share, 40,000,000 shares
    authorized; 24,516,370 and 24,391,214 shares issued and
    outstanding at December 31, 2007 and 2006, respectively


245



244Additional paid-in capital


108,686



104,784Retained earnings


276,879



235,732Accumulated other comprehensive income


3,629



2,099Total shareholders equity


389,439



342,859Total liabilities and shareholders equity

$
453,123


$
404,665    F-4




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##### Table of Contents



CARBO
    CERAMICS INC.
  CONSOLIDATED
    STATEMENTS OF INCOME
  Years Ended December 31,2007


2006


2005($ in thousands, except per share data)Revenues

$
340,351


$
312,126


$
252,673Cost of sales


221,202



196,133



153,941Gross profit


119,149



115,993



98,732Selling, general and administrative expenses


39,615



34,732



27,245Start-up
    costs


1,215



474



1,092Loss on disposal of assets


268







95Operating profit


78,051



80,787



70,300Other income (expense):Interest income, net


419



1,590



1,756Foreign currency exchange gain (loss), net


2,882



1,387



(147
)Other, net


48



50



1743,349



3,027



1,783Income before income taxes


81,400



83,814



72,083Income taxes


27,530



29,561



25,463Net income

$
53,870


$
54,253


$
46,620Earnings per share:Basic

$
2.21


$
2.23


$
1.94Diluted

$
2.20


$
2.22


$
1.93    F-5




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##### Table of Contents



CARBO
    CERAMICS INC.
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY
  Unearned





AccumulatedAdditional


Stock





OtherCommon


Paid-In


Compen-


Retained


ComprehensiveStock


Capital


sation


Earnings


Income (Loss)


Total($ in thousands, except per share data)Balances at January 1, 2005

$
240


$
90,766


$
(943
)

$
154,335


$
(31
)

$
244,367Net income














46,620







46,620Foreign currency translation adjustment


















557



557Comprehensive income






















47,177Exercise of stock options


3



6,050















6,053Tax benefit from exercise of options






3,712















3,712Stock granted under restricted stock plan, net






2,008



(2,008
)










Amortization of unearned compensation










816











816Cash dividends ($0.36 per share)














(8,759
)






(8,759
)Balances at December 31, 2005


243



102,536



(2,135
)


192,196



526



293,366Net income














54,253







54,253Foreign currency translation adjustment


















1,573



1,573Comprehensive income






















55,826Exercise of stock options






1,024















1,024Tax benefit from stock based compensation






554















554Stock based compensation


1



2,805















2,806Adoption of SFAS 123(R) (Note 7)






(2,135
)


2,135











Cash dividends ($0.44 per share)














(10,717
)






(10,717
)Balances at December 31, 2006


244



104,784







235,732



2,099



342,859Net income














53,870







53,870Foreign currency translation adjustment, net of tax


















1,530



1,530Comprehensive income






















55,400Exercise of stock options


1



1,398















1,399Tax benefit from stock based compensation






328















328Stock based compensation






2,176















2,176Cash dividends ($0.52 per share)














(12,723
)






(12,723
)Balances at December 31, 2007

$
245


$
108,686


$



$
276,879


$
3,629


$
389,439    F-6




---



##### Table of Contents



CARBO
    CERAMICS INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years Ended December 31,2007


2006


2005($ in thousands)Operating activitiesNet income

$
53,870


$
54,253


$
46,620Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation


23,589



18,712



12,949Amortization


1,173



805



675Provision for doubtful accounts


82



507



682Deferred income taxes


(776
)


584



920Excess tax benefits from stock based compensation


(247
)


(360
)


Loss on disposal of assets


268







95Foreign currency transaction (gain) loss, net


(2,882
)


(1,387
)


147Non-cash stock compensation expense


2,176



2,806



816Earnings in equity-method investee


(229
)


(84
)


(208
)Changes in operating assets and liabilities:Trade accounts and other receivables


(4,191
)


(9,726
)


(13,347
)Inventories


(12,143
)


(14,104
)


(5,203
)Prepaid expenses and other current assets


102



(76
)


(1,199
)Long-term prepaid expenses


173



92



(1,107
)Accounts payable


(1,614
)


1,634



794Accrued payroll and benefits


635



1,169



753Accrued freight


913



702



(23
)Accrued utilities


(40
)


(227
)


1,323Accrued income taxes


(369
)


(6,272
)


8,116Other accrued expenses


(753
)


1,636



(55
)Net cash provided by operating activities


59,737



50,664



52,748Investing activitiesCapital expenditures, net


(65,034
)


(70,460
)


(67,811
)Acquisition of business, net of cash acquired


(2,545
)






Investment in equity-method investee


(1,500
)






(611
)Purchases of short-term investments


(4,000
)


(26,765
)


(72,175
)Proceeds from maturities of short-term investments


11,500



61,240



76,325Net cash used in investing activities


(61,579
)


(35,985
)


(64,272
)Financing activitiesProceeds from bank borrowings


12,000







Repayments on bank borrowings


(12,000
)






Proceeds from exercise of stock options


1,398



1,024



6,053Dividends paid


(12,723
)


(10,717
)


(8,759
)Excess tax benefits from stock based compensation


247



360



Net cash used in financing activities


(11,078
)


(9,333
)


(2,706
)Net increase (decrease) in cash and cash equivalents


(12,920
)


5,346



(14,230
)Effect of exchange rate changes on cash


243



(68
)


(65
)Cash and cash equivalents at beginning of year


24,973



19,695



33,990Cash and cash equivalents at end of year

$
12,296


$
24,973


$
19,695Supplemental cash flow informationInterest paid

$
43


$



$
9Income taxes paid

$
28,675


$
35,249


$
16,427    F-7




---



##### Table of Contents



CARBO
    CERAMICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Significant
    Accounting Policies  Description
    of Business
    Principles
    of Consolidation
    Concentration
    of Credit Risk, Accounts Receivable and Other
    Receivables
    Cash
    Equivalents
    Short-Term
    Investments
   F-8




---



##### Table of Contents



CARBO
    CERAMICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Inventories
  (first-in,
  Property,
    Plant and Equipment
    Buildings and improvements


15 to 30 yearsMachinery and equipment


3 to 30 yearsLand-use rights


30 years     Impairment
    of Long-Lived Assets and Intangible Assets
      Capitalized
    Costs of Software for Sale or Use in Revenue Generating
    Activities
   F-9




---



##### Table of Contents



CARBO
    CERAMICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Goodwill
    Stock
    Split
    Revenue
    Recognition
    Shipping
    and Handling Costs
    Cost
    of Start-Up
    Activities
  Start-up Start-up Start-up Start-up
  Use of
    Estimates
    Research
    and Development Costs
    Stock-Based
    Compensation
  Accounting for Stock Issued to Employees Accounting
 F-10




---



##### Table of Contents



CARBO
    CERAMICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  for Stock-Based Compensation
  Share-Based Payment
    Foreign
    Subsidiaries
    New
    Accounting Pronouncements
  Accounting for Uncertainty in Income Taxes
 F-11




---



##### Table of Contents



CARBO
    CERAMICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Fair Value Measurements
  The Fair Value Option for
    Financial Assets and Financial Liabilities instrument-by-instrument
  2.
    Acquisition
    of Business    3.
    Intangible
    and Other Assets    2007


2006Gross


Accumulated


Gross


AccumulatedAmount


Amortization


Amount


Amortization($ in thousands)Intangibles subject to amortization:Patents and licenses

$
3,286


$
1,615


$
3,113


$
1,248Hardware designs


1,501



369



1,148



595Software


4,552



1,351



3,496



748$
9,339


$
3,335


$
7,757


$
2,591  F-12




---



##### Table of Contents



CARBO
    CERAMICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      4.
    Bank
    Borrowings    5.
    Leases    2008

$
4,5562009


4,0322010


3,5912011


3,2622012


2,292Thereafter


5,275Total

$
23,008    F-13




---



##### Table of Contents



CARBO
    CERAMICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  6.
    Income
    Taxes    2007


2006($ in thousands)Deferred tax assets:Employee benefits

$
1,390


$
2,021Inventories


1,826



708Foreign tax credits


1,600



912Other


1,635



1,009Total deferred tax assets


6,451



4,650Deferred tax liabilities:Depreciation


21,665



21,624Goodwill


2,697



2,052Foreign currency translation


1,954



Foreign earnings and other


4,104



3,884Total deferred tax liabilities


30,420



27,560Net deferred tax liabilities

$
23,969


$
22,910     2007


2006


2005($ in thousands)Current:Federal

$
26,028


$
25,420


$
21,229State


979



3,513



2,728Foreign


1,299



44



586Total current


28,306



28,977



24,543Deferred


(776
)


584



920$
27,530


$
29,561


$
25,463  F-14




---



##### Table of Contents



CARBO
    CERAMICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006


2005Amount


Percent


Amount


Percent


Amount


Percent($ in thousands)U.S. statutory rate

$
28,490



35.0
%

$
29,335



35.0
%

$
25,229



35.0
%State income taxes, net of federal tax benefit


538



0.6



1,969



2.3



1,950



2.7ETI Exclusion, Section 199 Manufacturing Benefit and other


(1,498
)


(1.8
)


(1,743
)


(2.0
)


(1,716
)


(2.4
)$
27,530



33.8
%

$
29,561



35.3
%

$
25,463



35.3
%     7.
    Shareholders
    Equity  Common
    Stock
        Preferred
    Stock
   F-15




---



##### Table of Contents



CARBO
    CERAMICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Shareholder
    Rights Plan
    8.
    Stock
    Based Compensation     F-16




---



##### Table of Contents



CARBO
    CERAMICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2005Net income, as reported

$
46,620Add: Stock based employee compensation expense included in
    reported net income, net of related tax effects


514Deduct: Total stock based compensation expense determined under
    fair value based method for all awards, net of related tax
    effects


(1,157
)Pro forma net income

$
45,977Earnings per share:Basic  as reported

$
1.94Basic  pro forma

$
1.92Diluted  as reported

$
1.93Diluted  pro forma

$
1.90       Weighted-


AggregateAverage


IntrinsicOptions


Exercise Price


ValueOutstanding at January 1, 2007


241,400


$
22.49Granted


Exercised


(64,795
)

$
21.58Forfeited


(5,530
)

$
34.98Outstanding at December 31, 2007


171,075


$
22.43


$
2,527Exercisable at December 31, 2007


167,650


$
22.04


$
2,542    F-17




---



##### Table of Contents



CARBO
    CERAMICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted-AverageGrant-DateShares


Fair ValueNonvested at January 1, 2007


80,083


$
52.96Granted


64,953


$
38.75Vested


(39,446
)

$
50.63Forfeited


(5,869
)

$
44.77Nonvested at December 31, 2007


99,721


$
45.10     9.
    Earnings
    Per Share    2007


2006


2005($ in thousands, except per share data)Numerator for basic and diluted earnings per share:Net income

$
53,870


$
54,253


$
46,620Denominator:Denominator for basic earnings per share Weighted-average shares


24,367,479



24,280,778



24,004,563Effect of dilutive securities:Employee stock options (See Note 8)


80,203



100,640



166,141Nonvested and deferred stock awards (See Note 8)


36,220



19,113



6,660Dilutive potential common shares


116,423



119,753



172,801Denominator for diluted earnings per share  adjusted
    weighted-average shares


24,483,902



24,400,531



24,177,364Basic earnings per share

$
2.21


$
2.23


$
1.94Diluted earnings per share

$
2.20


$
2.22


$
1.93  F-18




---



##### Table of Contents



CARBO
    CERAMICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  10.
    Quarterly
    Operating Results  (Unaudited)    Three Months Ended,March 31


June 30


September 30


December 31($ in thousands, except per share data)2007Revenues

$
83,971


$
77,918


$
84,788


$
93,674Gross profit


28,717



29,681



29,470



31,281Net income


13,299



12,881



14,063



13,627Earnings per share:Basic

$
0.55


$
0.53


$
0.58


$
0.56Diluted

$
0.54


$
0.53


$
0.57


$
0.562006Revenues

$
74,278


$
73,485


$
77,410


$
86,953Gross profit


27,366



27,390



28,865



32,372Net income


12,984



12,862



13,452



14,955Earnings per share:Basic

$
0.54


$
0.53


$
0.55


$
0.62Diluted

$
0.53


$
0.53


$
0.55


$
0.61     11.
    Segment
    Information  Disclosures about Segments of an Enterprise and Related
    Information,
     F-19




---



##### Table of Contents



CARBO
    CERAMICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fracture andReservoirProppant


Diagnostics


Other


Total($ in thousands)2007Revenue from external customers

$
290,859


$
49,492


$



$
340,351Income before income taxes


73,267



8,133







81,400Total assets


401,386



56,628



(4,891
)


453,123Capital expenditures, net


52,341



12,693







65,034Depreciation and amortization


19,394



5,368







24,7622006Revenue from external customers

$
278,020


$
34,106






$
312,126Income before income taxes


79,253



4,561







83,814Total assets


362,697



37,632



4,336



404,665Capital expenditures, net


60,612



9,848







70,460Depreciation and amortization


15,376



4,141







19,5172005Revenue from external customers

$
225,751


$
26,922






$
252,673Income before income taxes


69,415



2,668







72,083Total assets


319,573



27,799



8,424



355,796Capital expenditures, net


60,983



6,828







67,811Depreciation and amortization


10,520



3,104







13,624   Geographic
    Information
    2007


2006


2005($ in thousands)Long-lived assets:United States

$
239,096


$
199,967


$
173,917International (primarily China and Russia)


65,947



58,787



31,625Total

$
305,043


$
258,754


$
205,542  F-20




---



##### Table of Contents



CARBO
    CERAMICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006


2005($ in thousands)Revenues:United States

$
223,111


$
205,029


$
152,595Canada


42,024



52,102



38,775Other international


75,216



54,995



61,303Total

$
340,351


$
312,126


$
252,673   Sales to
    Customers
    Major CustomersA


B


C


Others


Total2007


22.7
%


19.0
%


19.9
%


38.4
%


100
%2006


24.5
%


19.2
%


26.2
%


30.1
%


100
%2005


30.5
%


17.3
%


16.9
%


35.3
%


100
%   12.
    Benefit
    Plans    2007


2006


2005($ in thousands)Contributions:Profit sharing

$
1,385


$
1,256


$
941Savings


879



710



606$
2,264


$
1,966


$
1,547     13.
    Commitments   F-21




---



##### Table of Contents



CARBO
    CERAMICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            agreed-upon
 F-22




---



##### Table of Contents



CARBO
    CERAMICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      14.
    Employment
    Agreements    15.
    Foreign
    Currencies    16.
    Legal
    Proceedings and Regulatory Matters      17.
    Subsequent
    Events   F-23




---



##### Table of Contents



CARBO
    Ceramics Inc.Schedule II  Consolidated Valuation and
    Qualifying Accounts
    For the Years Ended December 31, 2007, 2006 and
    2005
  Balance at


Charged to





Balance atBeginning of


Costs and





End ofYear Ended

Year


Expenses


Write-offs


Year($ in thousands)Allowance for doubtful accounts:December 31, 2007

$
1,753


$
82


$
(7
)

$
1,842December 31, 2006

$
1,335


$
507


$
89


$
1,753December 31, 2005

$
665


$
682


$
12


$
1,335  S-1




---



##### Table of Contents



Exhibit Index
  3.1

Amended and Restated Certificate of Incorporation of CARBO
    Ceramics Inc. (incorporated by reference to exhibit 3.1 to
    the registrants
    Form S-1
    Registration Statement
    No. 333-1884
    filed July 19,1996)3.2

Bylaws of CARBO Ceramics Inc. (incorporated by reference to
    exhibit 3.2 to the registrants
    Form S-1
    Registration Statement
    No. 333-1884)3.3

Amendment to Bylaws of CARBO Ceramics Inc. (incorporated by
    reference to exhibit 99.2 to the Companys
    form 8-K
    Current Report filed July 20, 2005)4.1

Form of Common Stock Certificate of CARBO Ceramics Inc.
    (incorporated by reference to exhibit 4.1 to the
    registrants
    Form S-1
    Registration Statement
    No. 333-1884
    filed July 19, 1996)4.2

Certificate of Designations of Series A Preferred Stock
    (incorporated by reference to exhibit 2 to
    registrants
    Form 8-A
    Registration Statement
    No. 001-15903
    filed February 25, 2002)10.1

Second Amended and Restated Credit Agreement dated as of
    December 31, 2000, as amended December 23, 2003 and as
    further amended December 10, 2004, between Brown Brothers
    Harriman & Co. and CARBO Ceramics Inc. (incorporated
    by reference to exhibit 10.1 to the registrants
    Form 10-K
    Annual Report for the year ended December 31, 2000)10.2

Form of Tax Indemnification Agreement between CARBO Ceramics
    Inc. and William C. Morris, Robert S. Rubin, Lewis C. Glucksman,
    George A. Wiegers, William A. Griffin, and Jesse P. Orsini
    (incorporated by reference to exhibit 10.2 to the
    registrants
    Form S-1
    Registration Statement
    No. 333-1884
    filed July 19, 1996)10.3

Purchase and Sale Agreement dated as of March 31, 1995,
    between CARBO Ceramics Inc. and GEO Specialty Chemicals, Inc.,
    as amended (incorporated by reference to exhibit 10.5 to
    the registrants
    Form S-1
    Registration Statement
    No. 333-1884
    filed July 19, 1996)10.4

Raw Material Requirements Agreement dated as of June 1,
    2003, between CARBO Ceramics Inc. and C-E Minerals Inc.
    (incorporated by reference to exhibit 10.4 the
    registrants
    Form 10-K
    Annual Report for the year ended December 31, 2003)*10.5

CARBO Ceramics Inc. 1996 Stock Option Plan for Key Employees
    (incorporated by reference to exhibit 10.9 to the
    registrants
    Form S-1
    Registration Statement
    No. 333-1884
    filed July 19, 1996)*10.6

Amendment No. 1 to the CARBO Ceramics Inc. 1996 Stock
    Option Plan for Key Employees (incorporated by reference to
    exhibit 4.5 to the registrants
    Form S-8
    Registration Statement
    No. 333-88100
    filed May 13, 2002)*10.7

Form of Stock Option Award Agreement (incorporated by reference
    to exhibit 10.10 to the registrants
    Form S-1
    Registration Statement
    No. 333-1884
    filed July 19, 1996)10.8

Mining Agreement dated as of January 1, 2003 between CARBO
    Ceramics Inc. and Arcilla Mining and Land Co. (incorporated by
    reference to exhibit 10.8 to the registrants
    Form 10-K
    Annual Report for the year ended December 31, 2002)*10.9

Employment Agreement between CARBO Ceramics Inc. and Christopher
    A. Wright (incorporated by reference to exhibit 10.10 to
    the registrants
    Form 10-K
    Annual Report for the year ended December 31, 2002)*10.10

1996 Stock Option Plan of Pinnacle Technologies, Inc., as
    amended and restated May 31, 2002 (incorporated by
    reference to exhibit 4.1 to registrants
    Form S-8
    Registration Statement
    No. 333-91252
    filed June 26, 2002)10.11

Lease Agreement dated as of November 1, 2003, between the
    Development Authority of Wilkinson County and CARBO Ceramics
    Inc. (incorporated by reference to exhibit 10.12 of the
    registrants
    Form 10-K
    Annual Report for the year ended December 31, 2003)*10.12

CARBO Ceramics Inc. Incentive Compensation Plan (incorporated by
    reference to exhibit 99.1 of the registrants
    Form 8-K
    Current Report filed January 24, 2005)*10.13(a)

2004 CARBO Ceramics Inc. Long-Term Incentive Plan (incorporated
    by reference to exhibit 99.2 of the registrants
    Form 8-K
    Current Report filed January 24, 2005)*10.13(b)

Amendment No. 1 to the 2004 CARBO Ceramics Inc. Long-Term
    Incentive Plan (incorporated by reference to exhibit 10.1
    of the registrants
    Form 8-K
    Current Report filed April 24, 2006)*10.14

Form of Officer Restricted Stock Award Agreement (incorporated
    by reference to exhibit 99.3 of the registrants
    Form 8-K
    Current Report filed January 24, 2005)




---



##### Table of Contents



*10.15

CARBO Ceramics Inc. Director Deferred Fee Plan (incorporated by
    reference to exhibit 99.1 of the registrants
    Form 8-K
    Current Report filed December 19, 2005)*10.16

Letter Agreement dated December 2, 2005 between CARBO
    Ceramics Inc. and Jesse P. Orsini (incorporated by reference to
    exhibit 10.18 to the registrants
    Form 10-K
    Annual Report for the year ended December 31, 2005)*10.17

Form of Non-Employee Director Restricted Stock Award Agreement
    (incorporated by reference to exhibit 10.2 of the
    registrants
    Form 8-K
    Current Report filed April 24, 2006)*10.18

Form of Officer Restricted Stock Award Agreement (incorporated
    by reference to exhibit 10.3 of the registrants
    Form 8-K
    Current Report filed April 24, 2006)*10.19

Employment Agreement dated as of May 10, 2006 between CARBO
    Ceramics Inc. and Gary Kolstad (incorporated by reference to
    exhibit 10.1 to the registrants
    Form 8-K
    Current Report filed May 16, 2006)*10.20

First Amendment to Employment Agreement of Gary A. Kolstad,
    dated as of October 16, 2007 (incorporated by reference to
    Exhibit 10.1 of the Registrants Form 10-Q Quarterly
    Report for the quarter ended September 30, 2007).*10.21

Incentive Compensation Plan for Key Employees (incorporated by
    reference to exhibit 10.1 to the registrants
    Form 8-K
    Current Report filed January 22, 2007)*10.22

Incentive Compensation Plan for Energy Professional Staff
    (incorporated by reference to exhibit 10.2 to the
    registrants
    Form 8-K
    Current Report filed January 22, 2007)*10.23

Corporate and Proppant Incentive Compensation Plan for Key
    Employees (effective January 1, 2008) (incorporated by
    reference to exhibit 10.1 to the registrants
    Form 8-K
    Current Report filed January 22, 2008)*10.24

Pinnacle Technologies, Inc. Incentive Compensation Plan for Key
    Employees (effective January 1, 2008) (incorporated by
    reference to exhibit 10.2 to the registrants
    Form 8-K
    Current Report filed January 22, 2008)14

Code of Ethics (incorporated by reference to exhibit 14 to
    the registrants
    Form 10-K
    Annual Report for the year ended December 31, 2003)21

Subsidiaries23.1

Consent of Independent Registered Public Accounting Firm31.1

Rule 13a-14(a)/15d-14(a)
    Certification by Gary A. Kolstad31.2

Rule 13a-14(a)/15d-14(a)
    Certification by Paul G. Vitek32

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

Management contract or compensatory plan or arrangement filed as
    an exhibit pursuant to Item 15(b) of the requirements for
    an Annual Report on
    Form 10-K