##### 









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 1934     
|  
|   |  | For the fiscal year ended December 31, 2004.                                                 
|  
|or
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934.

Commission File No. 0-28178


CARBO Ceramics Inc.


(Exact name of registrant as specified in its charter)


|                                                                   |  |                                            
|------------------------------------------------------------------ |  | -------------------------------------------
|Delaware                                                           |  | 72-1100013                                 
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification Number)

6565 MacArthur Boulevard


Suite 1050


Irving, Texas 75039


(Address of principal executive offices)


(972) 401-0090


(Registrants telephone number)


Securities registered pursuant to Section 12(b) of the
Act:


None


Securities registered pursuant to Section 12(g) of the
Act:


Common Stock, par value $0.01 per share


Preferred Stock Purchase Rights


þ o





þ o






DOCUMENTS INCORPORATED BY REFERENCE












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PART I




|        |         
|------- | --------
|Item 1. | Business

General














Products


HSP tm PROP HSP tm HSP tm PROP





1


1



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HSP tm HSP tm


LITE ECONOPROP LITE LITE ECONOPROP ECONOPROP ECONOPROP


Competition


HSP tm PROP




HSP tm PROP LITE ECONOPROP







HSP tm PROP LITE ECONOPROP


2



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Customers and Marketing










3



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|         |               |                 |   |       |       |  |   |       |       |  |   |      |       | 
|-------- | ------------- | --------------- | - | ----- | ----- |  | - | ----- | ----- |  | - | ---- | ----- | 
|         |               | 2004            |   |       | 2003  |  |   | 2002  |      
|         |               |                 |   |       |       |  |   |       |      
|         |               | ($ In millions) |  
|Location |               |                 |   |       |       |  |   |       |       |  |   |     
|         | United States |                 | $ | 118.7 |       |  | $ | 108.0 |       |  | $ | 88.0 |      
|         | International |                 |   | 104.4 |       |  |   | 61.9  |       |  |   | 38.3 |      
|         |               |                 |   |       |       |  |   |       |      
|         |               | Total           |   | $     | 223.1 |  |   | $     | 169.9 |  |   | $    | 126.3 | 
|         |               |                 |   |       |       |  |   |       |      

Distribution




Raw Materials




HSP tm PROP PROP


4



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LITE ECONOPROP


ECONOPROP LITE ECONOPROP


PROP LITE


Production Process








Patent Protection and Intellectual Property








5



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Production Capacity


LITE ECONOPROP HSP tm PROP






6



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|                      |                        |                      |     |     |          |  |                                |  | 
|--------------------- | ---------------------- | -------------------- | --- | --- | -------- |  | ------------------------------ |  | 
|Location              |                        | Annual 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®        | 
|Luoyang, China        |                        |                      | 100 |     |          |  | CARBOPROP® and CARBOLITE®      | 
|                      |                        |                      |     |     |          | 
|                      | Total current capacity |                      |     | 755 |          |  |                                |  | 



Long-lived assets by geographic area




|                   |                                 |                 |   |       |       |  |   |       |       |  |   |       |       | 
|------------------ | ------------------------------- | --------------- | - | ----- | ----- |  | - | ----- | ----- |  | - | ----- | ----- | 
|                   |                                 | 2004            |   |       | 2003  |  |   | 2002  |      
|                   |                                 |                 |   |       |       |  |   |       |      
|                   |                                 | ($ In millions) |  
|Long-lived assets: |                                 |                 |   |       |       |  |   |       |       |  |   |      
|                   | United States                   |                 | $ | 130.2 |       |  | $ | 124.1 |       |  | $ | 119.4 |      
|                   | International (primarily China) |                 |   | 17.0  |       |  |   | 14.4  |       |  |   | 11.8  |      
|                   |                                 |                 |   |       |       |  |   |       |      
|                   |                                 | Total           |   | $     | 147.2 |  |   | $     | 138.5 |  |   | $     | 131.2 | 
|                   |                                 |                 |   |       |       |  |   |       |      



Environmental and Other Governmental Regulations




Employees




7



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##### 



Forward-Looking Information








| |   |                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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;
|
| |  | the development of alternative stimulation techniques;                                                                                                                      
|
| |  | 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


http://www.carboceramics.com


http://www.sec.gov


8



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|        |           
|------- | ----------
|Item 2. | Properties

















9



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##### 





|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings







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



Executive Officers of the Registrant












PART II




|        |                                                                          
|------- | -------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity and Related
    Stockholder Matters

Common Stock Market Prices and Dividends




10



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##### 





|              |  |             |       |  |           |   |       |             |  |   |           |  |  |     |       |  |          |   |       |  |  |   |      | 
|------------- |  | ----------- | ----- |  | --------- | - | ----- | ----------- |  | - | --------- |  |  | --- | ----- |  | -------- | - | ----- |  |  | - | ---- | 
|              |  | 2004        |       |  | 2003      |  
|              |  |             |       |  |           |  
|              |  | Sales Price |       |  | Cash      |   |       | Sales Price |  |   | Cash      | 
|              |  |             |       |  | Dividends |   |       |             |  |   | Dividends | 
|Quarter Ended |  | High        |       |  | Low       |   |       | Declared    |  |   | High      |  |  | Low |       |  | Declared |  
|              |  |             |       |  |           |   |       |             |  |   |           |  |  |     |       |  |          |  
|March 31      |  | $           | 66.45 |  |           | $ | 50.10 |             |  | $ | 0.10      |  |  | $   | 35.90 |  |          | $ | 30.72 |  |  | $ | 0.09 | 
|June 30       |  |             | 74.00 |  |           |   | 61.15 |             |  |   | 0.10      |  |  |     | 39.97 |  |          |   | 32.65 |  |  |   | 0.09 | 
|September 30  |  |             | 73.37 |  |           |   | 64.07 |             |  |   | 0.12      |  |  |     | 39.25 |  |          |   | 35.29 |  |  |   | 0.10 | 
|December 31   |  |             | 77.80 |  |           |   | 67.78 |             |  |   | 0.12      |  |  |     | 53.65 |  |          |   | 36.14 |  |  |   | 0.10 | 





|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



|                          |                                                 |                                         |   |         |      |  |   |         |      |  |      |         |      |      |   |         |      |  |   |        |      | 
|------------------------- | ----------------------------------------------- | --------------------------------------- | - | ------- | ---- |  | - | ------- | ---- |  | ---- | ------- | ---- | ---- | - | ------- | ---- |  | - | ------ | ---- | 
|                          |                                                 | Years Ended December 31,                |  
|                          |                                                 |                                         |  
|                          |                                                 | 2004                                    |   |         | 2003 |  |   | 2002    |      |  | 2001 |         |      | 2000 |  
|                          |                                                 |                                         |   |         |      |  |   |         |      |  |      |         |      |      |  
|                          |                                                 | ($ In thousands, except per share data) |  
|Statement of Income Data: |                                                 |                                         |   |         |      |  |   |         |      |  |      |         |      |      |   |         |      |  |   |       
|                          | Revenues                                        |                                         | $ | 223,054 |      |  | $ | 169,936 |      |  | $    | 126,308 |      |      | $ | 137,226 |      |  | $ | 93,324 |     
|                          | Cost of sales                                   |                                         |   | 129,701 |      |  |   | 102,316 |      |  |      | 78,753  |      |      |   | 82,919  |      |  |   | 61,330 |     
|                          |                                                 |                                         |   |         |      |  |   |         |      |  |      |         |      |      |  
|                          | Gross profit                                    |                                         |   | 93,353  |      |  |   | 67,620  |      |  |      | 47,555  |      |      |   | 54,307  |      |  |   | 31,994 |     
|                          | Selling, general and administrative expenses(1) |                                         |   | 27,955  |      |  |   | 20,606  |      |  |      | 16,875  |      |      |   | 14,732  |      |  |   | 8,837  |     
|                          |                                                 |                                         |   |         |      |  |   |         |      |  |      |         |      |      |  
|                          | Operating profit                                |                                         |   | 65,398  |      |  |   | 47,014  |      |  |      | 30,680  |      |      |   | 39,575  |      |  |   | 23,157 |     
|                          | Other, net                                      |                                         |   | 824     |      |  |   | 73      |      |  |      | 563     |      |      |   | 1,106   |      |  |   | 268    |     
|                          |                                                 |                                         |   |         |      |  |   |         |      |  |      |         |      |      |  
|                          | Income before income taxes                      |                                         |   | 66,222  |      |  |   | 47,087  |      |  |      | 31,243  |      |      |   | 40,681  |      |  |   | 23,425 |     
|                          | Income taxes                                    |                                         |   | 24,549  |      |  |   | 17,518  |      |  |      | 11,529  |      |      |   | 14,483  |      |  |   | 8,595  |     
|                          |                                                 |                                         |   |         |      |  |   |         |      |  |      |         |      |      |  
|                          | Net income                                      |                                         | $ | 41,673  |      |  | $ | 29,569  |      |  | $    | 19,714  |      |      | $ | 26,198  |      |  | $ | 14,830 |     
|                          |                                                 |                                         |   |         |      |  |   |         |      |  |      |         |      |      |  
|                          | Earnings per share                              |                                         |   |         |      |  |   |         |      |  |      |         |      |      |   |         |      |  |   |        |     
|                          |                                                 | Basic                                   |   | $       | 2.62 |  |   | $       | 1.90 |  |      | $       | 1.29 |      |   | $       | 1.76 |  |   | $      | 1.01 | 
|                          |                                                 |                                         |   |         |      |  |   |         |      |  |      |         |      |      |  
|                          |                                                 | Diluted                                 |   | $       | 2.60 |  |   | $       | 1.88 |  |      | $       | 1.28 |      |   | $       | 1.74 |  |   | $      | 1.00 | 
|                          |                                                 |                                         |   |         |      |  |   |         |      |  |      |         |      |      |  

|                    |                                               |                                         |   |         |      |  |   |         |  |  |      |         |  |      |   |         |  |  |   |         | 
|------------------- | --------------------------------------------- | --------------------------------------- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- |  | ---- | - | ------- |  |  | - | ------- | 
|                    |                                               | December 31,                            |  
|                    |                                               |                                         |  
|                    |                                               | 2004                                    |   |         | 2003 |  |   | 2002    |  |  | 2001 |         |  | 2000 |  
|                    |                                               |                                         |   |         |      |  |   |         |  |  |      |         |  |      |  
|                    |                                               | ($ In thousands, except per share data) |  
|Balance Sheet Data: |                                               |                                         |   |         |      |  |   |         |  |  |      |         |  |      |   |         |  |  |   |        
|                    | Current assets                                |                                         | $ | 146,282 |      |  | $ | 92,709  |  |  | $    | 64,867  |  |      | $ | 76,502  |  |  | $ | 47,415  | 
|                    | Current liabilities excluding bank borrowings |                                         |   | 29,192  |      |  |   | 16,432  |  |  |      | 17,940  |  |      |   | 11,127  |  |  |   | 9,415   | 
|                    | Bank borrowings-current                       |                                         |   |        |      |  |   |        |  |  |      |        |  |      |   |        |  |  |   |        | 
|                    | Property, plant and equipment, net            |                                         |   | 125,385 |      |  |   | 116,664 |  |  |      | 111,797 |  |      |   | 82,527  |  |  |   | 78,007  | 
|                    | Total assets                                  |                                         |   | 297,517 |      |  |   | 235,124 |  |  |      | 199,610 |  |      |   | 159,029 |  |  |   | 125,422 | 
|                    | Total shareholders equity                    |                                         |   | 244,367 |      |  |   | 200,139 |  |  |      | 168,585 |  |      |   | 136,942 |  |  |   | 106,140 | 
|                    | Cash dividends per share                      |                                         | $ | 0.440   |      |  | $ | 0.380   |  |  | $    | 0.360   |  |      | $ | 0.345   |  |  | $ | 0.300   | 






|    |                                                                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Selling, general and administrative (SG&A) expenses for
    2003, 2002, 2001 and 2000 include costs of start-up activities
    of $80,000, $1,099,000, $35,000 and $27,000, respectively.
    Start-up costs for 2003 are related to expansion of the McIntyre
    and New Iberia facilities and initial operation of the new China

11



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | facility. Start-up costs for 2002 and 2001 are related to the
    new production facility in China, including organizational and
    administrative costs associated with plant construction plus
    labor, materials and utilities expended to bring installed
    equipment to operating condition. Start-up costs in 2000 consist
    of labor, materials and utilities expended in bringing installed
    equipment to normal operating conditions at the Companys
    plant in McIntyre, Georgia. SG&A expenses in 2002 also
    include the accrual of a $993,000 reserve related to a legal
    judgment against the Company. SG&A expenses in 2004 and 2003
    also include losses of $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












12



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| |   |                                                       
| | - | ------------------------------------------------------
| |  | increasing marketing activities,                      
|
| |  | improving and expanding its distribution capabilities,
|
| |  | focusing on new product development, and              
|
| |  | increasing international activities.                  



General Business Conditions






Critical Accounting Policies






13



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Results of Operations


|           |  |                  |        |         |        |  |    |      |         |   |        |  |  |      |    |   |  |   |        | 
|---------- |  | ---------------- | ------ | ------- | ------ |  | -- | ---- | ------- | - | ------ |  |  | ---- | -- | - |  | - | ------ | 
|           |  |                  |        | Percent |        |  |    |      | Percent |   |        | 
|           |  | 2004             |        |         | Change |  |    | 2003 |         |   | Change |  |  | 2002 |   
|           |  |                  |        |         |        |  |    |      |         |   |        |  |  |      |   
|           |  | ($ In thousands) |       
|Net Income |  | $                | 41,673 |         |        |  | 41 | %    |         | $ | 29,569 |  |  |      | 50 | % |  | $ | 19,714 | 



14



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##### 









Revenues


|         |  |                  |         |         |        |  |    |      |         |   |         |  |  |      |    |   |  |   |         | 
|-------- |  | ---------------- | ------- | ------- | ------ |  | -- | ---- | ------- | - | ------- |  |  | ---- | -- | - |  | - | ------- | 
|         |  |                  |         | Percent |        |  |    |      | Percent |   |         | 
|         |  | 2004             |         |         | Change |  |    | 2003 |         |   | Change  |  |  | 2002 |   
|         |  |                  |         |         |        |  |    |      |         |   |         |  |  |      |   
|         |  | ($ In thousands) |        
|Revenues |  | $                | 223,054 |         |        |  | 31 | %    |         | $ | 169,936 |  |  |      | 35 | % |  | $ | 126,308 | 





Gross Profit


|               |  |                  |        |         |        |  |    |      |         |   |        |   |  |      |    |   |  |   |        |  
|-------------- |  | ---------------- | ------ | ------- | ------ |  | -- | ---- | ------- | - | ------ | - |  | ---- | -- | - |  | - | ------ | -
|               |  |                  |        | Percent |        |  |    |      | Percent |   |        |  
|               |  | 2004             |        |         | Change |  |    | 2003 |         |   | Change |   |  | 2002 |   
|               |  |                  |        |         |        |  |    |      |         |   |        |   |  |      |   
|               |  | ($ In thousands) |       
|Gross Profit   |  | $                | 93,353 |         |        |  | 38 | %    |         | $ | 67,620 |   |  |      | 42 | % |  | $ | 47,555 |  
|Gross Profit % |  |                  | 42     | %       |        |  |    |      |         |   | 40     | % |  |      |    |   |  |   | 38     | %

15



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##### 









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


|                   |  |                  |        |         |        |  |    |      |         |   |        |   |  |      |    |   |  |   |        |  
|------------------ |  | ---------------- | ------ | ------- | ------ |  | -- | ---- | ------- | - | ------ | - |  | ---- | -- | - |  | - | ------ | -
|                   |  |                  |        | Percent |        |  |    |      | Percent |   |        |  
|                   |  | 2004             |        |         | Change |  |    | 2003 |         |   | Change |   |  | 2002 |   
|                   |  |                  |        |         |        |  |    |      |         |   |        |   |  |      |   
|                   |  | ($ In thousands) |       
|SG&A and Other     |  | $                | 27,955 |         |        |  | 36 | %    |         | $ | 20,606 |   |  |      | 22 | % |  | $ | 16,875 |  
|As a % of Revenues |  |                  | 13     | %       |        |  |    |      |         |   | 12     | % |  |      |    |   |  |   | 13     | %





16



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Income Tax Expense


|                          |  |                  |        |         |        |  |    |      |         |   |        |   |  |      |    |   |  |   |        |  
|------------------------- |  | ---------------- | ------ | ------- | ------ |  | -- | ---- | ------- | - | ------ | - |  | ---- | -- | - |  | - | ------ | -
|                          |  |                  |        | Percent |        |  |    |      | Percent |   |        |  
|                          |  | 2004             |        |         | Change |  |    | 2003 |         |   | Change |   |  | 2002 |   
|                          |  |                  |        |         |        |  |    |      |         |   |        |   |  |      |   
|                          |  | ($ In thousands) |       
|Income Tax Expense        |  | $                | 24,549 |         |        |  | 40 | %    |         | $ | 17,518 |   |  |      | 52 | % |  | $ | 11,529 |  
|Effective Income Tax Rate |  |                  | 37.1   | %       |        |  |    |      |         |   | 37.2   | % |  |      |    |   |  |   | 36.9   | %





Liquidity and Capital Resources










17



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Off-Balance Sheet Arrangements




Contractual Obligations




|                              |                                |                        |        |           |        |   |        |        |  |     |       |       |           |         |       |       |  |   |     |     | 
|----------------------------- | ------------------------------ | ---------------------- | ------ | --------- | ------ | - | ------ | ------ |  | --- | ----- | ----- | --------- | ------- | ----- | ----- |  | - | --- | --- | 
|                              |                                | Payments Due in Period |       
|                              |                                |                        |       
|                              |                                |                        |        | Less than |        |   | 1-3    |        |  | 4-5 |       |       | More than |        
|                              |                                | Total                  |        |           | 1 Year |   |        | Years  |  |     | Years |       |           | 5 Years |      
|                              |                                |                        |        |           |        |   |        |        |  |     |       |       |           |         |      
|                              |                                | ($ In thousands)       |       
|Long-term debt                |                                | $                      |       |           |        | $ |       |        |  | $   |      |       |           | $       |      |       |  | $ |    |    
|Capital lease obligations     |                                |                        |       |           |        |   |       |        |  |     |      |       |           |         |      |       |  |   |    |    
|Operating lease obligations:  |                                |                        |        |           |        |   |        |        |  |     |       |       |           |         |       |       |  |   |     |    
|                              |  Primarily railroad equipment |                        |        | 10,506    |        |   |        | 2,656  |  |     |       | 4,310 |           |         |       | 2,706 |  |   |     | 834 | 
|Purchase obligations:         |                                |                        |        |           |        |   |        |        |  |     |       |       |           |         |       |       |  |   |     |    
|                              |  Natural gas contracts        |                        |        | 8,038     |        |   |        | 8,038  |  |     |       |      |           |         |       |      |  |   |     |    | 
|                              |  Raw materials contracts      |                        |        | 6,480     |        |   |        | 6,480  |  |     |       |      |           |         |       |      |  |   |     |    | 
|                              |  Equipment purchases          |                        |        | 13,700    |        |   |        | 13,700 |  |     |       |      |           |         |       |      |  |   |     |    | 
|Other long-term obligations   |                                |                        |       |           |        |   |       |        |  |     |      |       |           |         |      |       |  |   |    |    
|                              |                                |                        |        |           |        |   |        |        |  |     |       |       |           |         |      
|Total contractual obligations |                                | $                      | 38,724 |           |        | $ | 30,874 |        |  | $   | 4,310 |       |           | $       | 2,706 |       |  | $ | 834 |    
|                              |                                |                        |        |           |        |   |        |        |  |     |       |       |           |         |      









Trends, Risks and Uncertainties




18



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##### 



Our business and financial performance depend on the level
of activity in the natural gas and oil industries.




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 operate in a competitive market.




We rely upon, and receive a significant percentage of our
revenues from, a limited number of key customers.




19



---



##### 



We rely on certain patents.






Significant increases in fuel prices for any extended
periods of time will increase our operating expenses.




We are exposed to increased costs associated with
complying with increasing and new regulation of corporate
governance and disclosure standards.




Environmental compliance costs and liabilities could
reduce our earnings and cash available for operations.






20



---



##### 





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 convertibility and repatriation;                                                                                                                                                
|
| |  | taxation of our earnings and the earnings of our
    personnel; and                                                                                                                      
|
| |  | potential expropriation of assets by foreign governments;                                                                                                                                
|
| |  | 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.



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.




21



---



##### 







|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures about Market
    Risk







|        |                                            
|------- | -------------------------------------------
|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















22



---



##### 









|         |                  
|-------- | -----------------
|Item 9B. | Other Information





PART III






|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant





|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation





|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management





|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions





|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services





PART IV




|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules





| |                                     
| | ------------------------------------
| | 1. Consolidated Financial Statements







| |                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------
| | Consolidated Statements of Income for each of the three years
    ended December 31, 2004, 2003 and 2002              
| | Consolidated Statements of Shareholders Equity for each
    of the three years ended December 31, 2004, 2003 and 2002
| | Consolidated Statements of Cash Flows for each of the three
    years ended December 31, 2004, 2003 and 2002          



| |                                              
| | ---------------------------------------------
| | 2. Consolidated Financial Statement Schedules

23



---



##### 







| |            
| | -----------
| | 3. Exhibits



24



---



##### 



SIGNATURES






| |                    
| | -------------------
| | CARBO Ceramics Inc.



| |     |                    
| | --- | -------------------
| | By: | /s/ C. MARK PEARSON

| |                                      
| | -------------------------------------
| |                                      
| | C. Mark Pearson                      
| | President and Chief Executive Officer



| |     |                  
| | --- | -----------------
| | By: | /s/ PAUL G. VITEK

| |                                
| | -------------------------------
| |                                
| | Paul G. Vitek                  
| | Sr. Vice President, Finance and
| | Chief Financial Officer        



POWER OF ATTORNEY






|                                                 |  |                                                                                                          |  |               |  | 
|------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------- |  | ------------- |  | 
|Signature                                        |  | Title                                                                                                    |  | Date         
|                                                 |  |                                                                                                          |  |              
|                                                
|/s/ WILLIAM C. MORRISWilliam
    C. Morris       |  | Chairman of the Board                                                                                    |  | March 2, 2005
|                                                
|/s/ C. MARK PEARSONC.
    Mark Pearson           |  | President, Chief Executive Officer and Director (Principal
    Executive Officer)                        |  | March 2, 2005
|                                                
|/s/ PAUL G. VITEKPaul
    G. Vitek               |  | Sr. Vice President, Finance and Chief Financial Officer
    (Principal Financial and Accounting Officer) |  | March 2, 2005
|                                                
|/s/ CLAUDE E. COOKE, JR.Claude
    E. Cooke, Jr. |  | Director                                                                                                 |  | March 2, 2005
|                                                
|/s/ CHAD C. DEATONChad
    C. Deaton             |  | Director                                                                                                 |  | March 2, 2005

25



---



##### 



|                                       |  |          |  |               |  | 
|-------------------------------------- |  | -------- |  | ------------- |  | 
|Signature                              |  | Title    |  | Date         
|                                       |  |          |  |              
|                                      
|/s/ H.E. LENTZ, JR.H.E.
    Lentz, Jr. |  | Director |  | March 2, 2005
|                                      
|/s/ JOHN J. MURPHYJohn
    J. Murphy   |  | Director |  | March 2, 2005
|                                      
|/s/ ROBERT S. RUBINRobert
    S. Rubin |  | Director |  | March 2, 2005

26



---



##### 



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING










F-1



---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
INTERNAL


CONTROL OVER FINANCIAL REPORTING




















| |                  
| | -----------------
| | ERNST & YOUNG LLP





F-2



---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
















| |                  
| | -----------------
| | ERNST & YOUNG LLP





F-3



---



##### 



CARBO CERAMICS INC.


CONSOLIDATED BALANCE SHEETS


|                                     |                                                                                                                                                                                        |                                            |                   |         |         |        |        |         |         |        | 
|------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ----------------- | ------- | ------- | ------ | ------ | ------- | ------- | ------ | 
|                                     |                                                                                                                                                                                        | December 31,                               |                  
|                                     |                                                                                                                                                                                        |                                            |                  
|                                     |                                                                                                                                                                                        | 2004                                       |                   |         | 2003    |       
|                                     |                                                                                                                                                                                        |                                            |                   |         |         |       
|                                     |                                                                                                                                                                                        | ($ In thousands)                           |                  
|ASSETS                              
|Current assets:                      |                                                                                                                                                                                        |                                            |                   |         |         |        |        |        
|                                     | Cash and cash equivalents                                                                                                                                                              |                                            | $                 | 80,115  |         |        | $      | 38,714  |        
|                                     | Trade accounts receivable, net                                                                                                                                                         |                                            |                   | 41,191  |         |        |        | 30,395  |        
|                                     | Inventories:                                                                                                                                                                           |                                            |                   |         |         |        |        |         |        
|                                     |                                                                                                                                                                                        | Finished goods                             |                   |         | 12,878  |        |        |         | 14,004  |       
|                                     |                                                                                                                                                                                        | Raw materials and supplies                 |                   |         | 8,314   |        |        |         | 6,433   |       
|                                     |                                                                                                                                                                                        |                                            |                   |         |         |       
|                                     |                                                                                                                                                                                        |                                            | Total inventories |         |         | 21,192 |        |         |         | 20,437 | 
|                                     | Prepaid expenses and other current assets                                                                                                                                              |                                            |                   | 1,232   |         |        |        | 1,086   |        
|                                     | Deferred income taxes                                                                                                                                                                  |                                            |                   | 2,552   |         |        |        | 2,077   |        
|                                     |                                                                                                                                                                                        |                                            |                   |         |         |       
|                                     |                                                                                                                                                                                        | Total current assets                       |                   |         | 146,282 |        |        |         | 92,709  |       
|Property, plant and equipment:       |                                                                                                                                                                                        |                                            |                   |         |         |        |        |        
|                                     | Land and land improvements                                                                                                                                                             |                                            |                   | 1,958   |         |        |        | 1,958   |        
|                                     | Land-use and mineral rights                                                                                                                                                            |                                            |                   | 5,248   |         |        |        | 5,052   |        
|                                     | Buildings                                                                                                                                                                              |                                            |                   | 14,604  |         |        |        | 12,826  |        
|                                     | Machinery and equipment                                                                                                                                                                |                                            |                   | 145,043 |         |        |        | 132,973 |        
|                                     | Construction in progress                                                                                                                                                               |                                            |                   | 16,278  |         |        |        | 11,011  |        
|                                     |                                                                                                                                                                                        |                                            |                   |         |         |       
|                                     |                                                                                                                                                                                        | Total                                      |                   |         | 183,131 |        |        |         | 163,820 |       
|                                     | Less accumulated depreciation                                                                                                                                                          |                                            |                   | 57,746  |         |        |        | 47,156  |        
|                                     |                                                                                                                                                                                        |                                            |                   |         |         |       
|                                     |                                                                                                                                                                                        | Net property, plant and equipment          |                   |         | 125,385 |        |        |         | 116,664 |       
|Goodwill                             |                                                                                                                                                                                        |                                            | 21,840            |         |         |        | 21,840 |        
|Intangible assets, net               |                                                                                                                                                                                        |                                            | 4,010             |         |         |        | 3,911  |        
|                                     |                                                                                                                                                                                        |                                            |                   |         |         |       
|                                     |                                                                                                                                                                                        | Total assets                               |                   | $       | 297,517 |        |        | $       | 235,124 |       
|                                     |                                                                                                                                                                                        |                                            |                   |         |         |       
|                                    
|LIABILITIES AND SHAREHOLDERS EQUITY
|Current liabilities:                 |                                                                                                                                                                                        |                                            |                   |         |         |        |        |        
|                                     | Accounts payable                                                                                                                                                                       |                                            | $                 | 10,454  |         |        | $      | 5,599   |        
|                                     | Accrued payroll and benefits                                                                                                                                                           |                                            |                   | 6,182   |         |        |        | 4,680   |        
|                                     | Accrued freight                                                                                                                                                                        |                                            |                   | 1,378   |         |        |        | 1,076   |        
|                                     | Accrued utilities                                                                                                                                                                      |                                            |                   | 2,065   |         |        |        | 1,645   |        
|                                     | Accrued income taxes                                                                                                                                                                   |                                            |                   | 5,595   |         |        |        | 38      |        
|                                     | Retainage related to construction in progress                                                                                                                                          |                                            |                   | 456     |         |        |        | 265     |        
|                                     | Provision for legal judgment                                                                                                                                                           |                                            |                   |        |         |        |        | 975     |        
|                                     | Other accrued expenses                                                                                                                                                                 |                                            |                   | 3,062   |         |        |        | 2,154   |        
|                                     |                                                                                                                                                                                        |                                            |                   |         |         |       
|                                     |                                                                                                                                                                                        | Total current liabilities                  |                   |         | 29,192  |        |        |         | 16,432  |       
|Deferred income taxes                |                                                                                                                                                                                        |                                            | 23,958            |         |         |        | 18,553 |        
|Shareholders 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; 15,983,662 and
    15,733,432 shares issued and outstanding at
    December 31, 2004 and 2003, respectively |                                            |                   | 160     |         |        |        | 157     |        
|                                     | Additional paid-in capital                                                                                                                                                             |                                            |                   | 90,766  |         |        |        | 80,534  |        
|                                     | Unearned stock compensation                                                                                                                                                            |                                            |                   | (943    | )       |        |        | (253    | )      
|                                     | Retained earnings                                                                                                                                                                      |                                            |                   | 154,415 |         |        |        | 119,743 |        
|                                     | Accumulated other comprehensive income (loss)                                                                                                                                          |                                            |                   | (31     | )       |        |        | (42     | )      
|                                     |                                                                                                                                                                                        |                                            |                   |         |         |       
|                                     |                                                                                                                                                                                        | Total shareholders equity                 |                   |         | 244,367 |        |        |         | 200,139 |       
|                                     |                                                                                                                                                                                        |                                            |                   |         |         |       
|                                     |                                                                                                                                                                                        | Total liabilities and shareholders equity |                   | $       | 297,517 |        |        | $       | 235,124 |       
|                                     |                                                                                                                                                                                        |                                            |                   |         |         |       



F-4



---



##### 



CARBO CERAMICS INC.


CONSOLIDATED STATEMENTS OF INCOME


|                                             |                  |                                         |         |      |      |   |         |      |   |   |         |      |  
|-------------------------------------------- | ---------------- | --------------------------------------- | ------- | ---- | ---- | - | ------- | ---- | - | - | ------- | ---- | -
|                                             |                  | Years Ended December 31,                |        
|                                             |                  |                                         |        
|                                             |                  | 2004                                    |         |      | 2003 |   |         | 2002 |  
|                                             |                  |                                         |         |      |      |   |         |      |  
|                                             |                  | ($ In thousands, except per share data) |        
|Revenues                                     |                  | $                                       | 223,054 |      |      | $ | 169,936 |      |   | $ | 126,308 |     
|Cost of sales                                |                  |                                         | 129,701 |      |      |   | 102,316 |      |   |   | 78,753  |     
|                                             |                  |                                         |         |      |      |   |         |      |  
|Gross profit                                 |                  |                                         | 93,353  |      |      |   | 67,620  |      |   |   | 47,555  |     
|Selling, general and administrative expenses |                  |                                         | 26,811  |      |      |   | 19,827  |      |   |   | 14,783  |     
|Start-up costs                               |                  |                                         |        |      |      |   | 80      |      |   |   | 1,099   |     
|Provision for legal judgment                 |                  |                                         |        |      |      |   | (18     | )    |   |   | 993     |     
|Loss on disposal or impairment of assets     |                  |                                         | 1,144   |      |      |   | 717     |      |   |   |        |     
|                                             |                  |                                         |         |      |      |   |         |      |  
|Operating profit                             |                  |                                         | 65,398  |      |      |   | 47,014  |      |   |   | 30,680  |     
|Other income (expense):                      |                  |                                         |         |      |      |   |         |      |   |   |         |     
|                                             | Interest income  |                                         |         | 580  |      |   |         | 204  |   |   |         | 500  |  
|                                             | Interest expense |                                         |         | (10  | )    |   |         | (13  | ) |   |         | (14  | )
|                                             | Other, net       |                                         |         | 254  |      |   |         | (118 | ) |   |         | 77   |  
|                                             |                  |                                         |         |      |      |   |         |      |  
|                                             |                  |                                         | 824     |      |      |   | 73      |      |   |   | 563     |     
|                                             |                  |                                         |         |      |      |   |         |      |  
|Income before income taxes                   |                  |                                         | 66,222  |      |      |   | 47,087  |      |   |   | 31,243  |     
|Income taxes                                 |                  |                                         | 24,549  |      |      |   | 17,518  |      |   |   | 11,529  |     
|                                             |                  |                                         |         |      |      |   |         |      |  
|Net income                                   |                  | $                                       | 41,673  |      |      | $ | 29,569  |      |   | $ | 19,714  |     
|                                             |                  |                                         |         |      |      |   |         |      |  
|Earnings per share:                          |                  |                                         |         |      |      |   |         |      |   |   |         |     
|                                             | Basic            |                                         | $       | 2.62 |      |   | $       | 1.90 |   |   | $       | 1.29 |  
|                                             |                  |                                         |         |      |      |   |         |      |  
|                                             | Diluted          |                                         | $       | 2.60 |      |   | $       | 1.88 |   |   | $       | 1.28 |  
|                                             |                  |                                         |         |      |      |   |         |      |  



F-5



---



##### 



CARBO CERAMICS INC.


CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY


|                              |                                                |                                        |     |            |         |   |          |              |  |             |          |        |   |               |         |        |       |   |     |     |   |   |         |        |  
|----------------------------- | ---------------------------------------------- | -------------------------------------- | --- | ---------- | ------- | - | -------- | ------------ |  | ----------- | -------- | ------ | - | ------------- | ------- | ------ | ----- | - | --- | --- | - | - | ------- | ------ | -
|                              |                                                |                                        |     |            |         |   |          |              |  | Accumulated |          |        |  
|                              |                                                |                                        |     | Additional |         |   | Unearned |              |  |             |          | Other  |   |               |        
|                              |                                                | Common                                 |     |            | Paid-In |   |          | Stock        |  |             | Retained |        |   | Comprehensive |         |        |      
|                              |                                                | Stock                                  |     |            | Capital |   |          | Compensation |  |             | Earnings |        |   | Income (Loss) |         |        | Total |  
|                              |                                                |                                        |     |            |         |   |          |              |  |             |          |        |   |               |         |        |       |  
|                              |                                                | ($ In thousands except per share data) |    
|Balances at January 1, 2002   |                                                | $                                      | 149 |            |         | $ | 54,967   |              |  | $           |         |        |   | $             | 81,834  |        |       | $ | (8  | )   |   | $ | 136,942 |       
|                              | Net income                                     |                                        |     |           |         |   |          |             |  |             |          |       |   |               |         | 19,714 |       |   |     |    |   |   |         | 19,714 |  
|                              | Foreign currency translation adjustment        |                                        |     |           |         |   |          |             |  |             |          |       |   |               |         |       |       |   |     | (8  | ) |   |         | (8     | )
|                              |                                                |                                        |     |            |         |   |          |              |  |             |          |        |   |               |         |        |       |  
|                              | Comprehensive income                           |                                        |     |            |         |   |          |              |  |             |          |        |   |               |         |        |       |   |     |     |   |   |         | 19,706 |  
|                              | Exercise of stock options                      |                                        |     | 3          |         |   |          | 4,480        |  |             |          |       |   |               |         |       |       |   |     |    |   |   |         | 4,483  |  
|                              | Tax benefit from exercise of options           |                                        |     |           |         |   |          | 382          |  |             |          |       |   |               |         |       |       |   |     |    |   |   |         | 382    |  
|                              | Shares issued in acquisition                   |                                        |     | 3          |         |   |          | 9,677        |  |             |          |       |   |               |         |       |       |   |     |    |   |   |         | 9,680  |  
|                              | Vested options assumed in acquisition          |                                        |     |           |         |   |          | 2,630        |  |             |          |       |   |               |         |       |       |   |     |    |   |   |         | 2,630  |  
|                              | Unvested options assumed in acquisition        |                                        |     |           |         |   |          | 789          |  |             |          | (789   | ) |               |         |       |       |   |     |    |   |   |         |       |  
|                              | Amortization of unearned compensation          |                                        |     |           |         |   |          |             |  |             |          | 232    |   |               |         |       |       |   |     |    |   |   |         | 232    |  
|                              | Cash dividends ($0.36 per share)               |                                        |     |           |         |   |          |             |  |             |          |       |   |               |         | (5,470 | )     |   |     |    |   |   |         | (5,470 | )
|                              |                                                |                                        |     |            |         |   |          |              |  |             |          |        |   |               |         |        |       |  
|Balances at December 31, 2002 |                                                |                                        | 155 |            |         |   | 72,925   |              |  |             | (557     | )      |   |               | 96,078  |        |       |   | (16 | )   |   |   | 168,585 |       
|                              | Net income                                     |                                        |     |           |         |   |          |             |  |             |          |       |   |               |         | 29,569 |       |   |     |    |   |   |         | 29,569 |  
|                              | Foreign currency translation adjustment        |                                        |     |           |         |   |          |             |  |             |          |       |   |               |         |       |       |   |     | (26 | ) |   |         | (26    | )
|                              |                                                |                                        |     |            |         |   |          |              |  |             |          |        |   |               |         |        |       |  
|                              | Comprehensive income                           |                                        |     |            |         |   |          |              |  |             |          |        |   |               |         |        |       |   |     |     |   |   |         | 29,543 |  
|                              | Exercise of stock options                      |                                        |     | 2          |         |   |          | 4,796        |  |             |          |       |   |               |         |       |       |   |     |    |   |   |         | 4,798  |  
|                              | Tax benefit from exercise of options           |                                        |     |           |         |   |          | 1,308        |  |             |          |       |   |               |         |       |       |   |     |    |   |   |         | 1,308  |  
|                              | Shares issued in acquisition                   |                                        |     |           |         |   |          | 1,505        |  |             |          |       |   |               |         |       |       |   |     |    |   |   |         | 1,505  |  
|                              | Amortization of unearned compensation          |                                        |     |           |         |   |          |             |  |             |          | 304    |   |               |         |       |       |   |     |    |   |   |         | 304    |  
|                              | Cash dividends ($0.38 per share)               |                                        |     |           |         |   |          |             |  |             |          |       |   |               |         | (5,904 | )     |   |     |    |   |   |         | (5,904 | )
|                              |                                                |                                        |     |            |         |   |          |              |  |             |          |        |   |               |         |        |       |  
|Balances at December 31, 2003 |                                                |                                        | 157 |            |         |   | 80,534   |              |  |             | (253     | )      |   |               | 119,743 |        |       |   | (42 | )   |   |   | 200,139 |       
|                              | Net income                                     |                                        |     |           |         |   |          |             |  |             |          |       |   |               |         | 41,673 |       |   |     |    |   |   |         | 41,673 |  
|                              | Foreign currency translation adjustment        |                                        |     |           |         |   |          |             |  |             |          |       |   |               |         |       |       |   |     | 11  |   |   |         | 11     |  
|                              |                                                |                                        |     |            |         |   |          |              |  |             |          |        |   |               |         |        |       |  
|                              | Comprehensive income                           |                                        |     |            |         |   |          |              |  |             |          |        |   |               |         |        |       |   |     |     |   |   |         | 41,684 |  
|                              | Exercise of stock options                      |                                        |     | 3          |         |   |          | 6,128        |  |             |          |       |   |               |         |       |       |   |     |    |   |   |         | 6,131  |  
|                              | Tax benefit from exercise of options           |                                        |     |           |         |   |          | 2,981        |  |             |          |       |   |               |         |       |       |   |     |    |   |   |         | 2,981  |  
|                              | Stock granted under restricted stock plan, net |                                        |     |           |         |   |          | 1,123        |  |             |          | (1,123 | ) |               |         |       |       |   |     |    |   |   |         |       |  
|                              | Amortization of unearned compensation          |                                        |     |           |         |   |          |             |  |             |          | 433    |   |               |         |       |       |   |     |    |   |   |         | 433    |  
|                              | Cash dividends ($0.44 per share)               |                                        |     |           |         |   |          |             |  |             |          |       |   |               |         | (7,001 | )     |   |     |    |   |   |         | (7,001 | )
|                              |                                                |                                        |     |            |         |   |          |              |  |             |          |        |   |               |         |        |       |  
|Balances at December 31, 2004 |                                                | $                                      | 160 |            |         | $ | 90,766   |              |  | $           | (943     | )      |   | $             | 154,415 |        |       | $ | (31 | )   |   | $ | 244,367 |       
|                              |                                                |                                        |     |            |         |   |          |              |  |             |          |        |   |               |         |        |       |  



F-6



---



##### 



CARBO CERAMICS INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                      |                                              |                                           |         |        |         |   |         |       |        |   |         |       |        |  
|------------------------------------------------------------------------------------- | -------------------------------------------- | ----------------------------------------- | ------- | ------ | ------- | - | ------- | ----- | ------ | - | ------- | ----- | ------ | -
|                                                                                      |                                              | Years Ended December 31,                  |        
|                                                                                      |                                              |                                           |        
|                                                                                      |                                              | 2004                                      |         |        | 2003    |   |         | 2002  |       
|                                                                                      |                                              |                                           |         |        |         |   |         |       |       
|                                                                                      |                                              | ($ In thousands)                          |        
|Operating activities                                                                  |                                              |                                           |         |        |         |   |         |       |        |   |         |      
|Net income                                                                            |                                              | $                                         | 41,673  |        |         | $ | 29,569  |       |        | $ | 19,714  |      
|Adjustments to reconcile net income to net cash provided by
    operating activities: |                                              |                                           |         |        |         |   |         |       |        |   |         |      
|                                                                                      | Depreciation                                 |                                           |         | 11,762 |         |   |         | 9,921 |        |   |         | 7,592 |       
|                                                                                      | Amortization                                 |                                           |         | 415    |         |   |         | 472   |        |   |         | 223   |       
|                                                                                      | Provision for doubtful accounts              |                                           |         | 666    |         |   |         | 160   |        |   |         |      |       
|                                                                                      | Deferred income taxes                        |                                           |         | 4,930  |         |   |         | 4,414 |        |   |         | 1,977 |       
|                                                                                      | Loss on disposal or impairment of assets     |                                           |         | 1,144  |         |   |         | 717   |        |   |         |      |       
|                                                                                      | Non-cash stock compensation expense          |                                           |         | 433    |         |   |         | 304   |        |   |         | 232   |       
|                                                                                      | Changes in operating assets and liabilities: |                                           |         |        |         |   |         |       |        |   |         |       |       
|                                                                                      |                                              | Trade accounts receivable                 |         |        | (11,462 | ) |         |       | (7,588 | ) |         |       | 651    |  
|                                                                                      |                                              | Inventories                               |         |        | (755    | ) |         |       | (4,607 | ) |         |       | (421   | )
|                                                                                      |                                              | Prepaid expenses and other current assets |         |        | (146    | ) |         |       | (486   | ) |         |       | 92     |  
|                                                                                      |                                              | Accounts payable                          |         |        | 4,855   |   |         |       | 1,880  |   |         |       | (1,222 | )
|                                                                                      |                                              | Accrued payroll and benefits              |         |        | 1,502   |   |         |       | 1,699  |   |         |       | 159    |  
|                                                                                      |                                              | Accrued freight                           |         |        | 302     |   |         |       | 322    |   |         |       | (385   | )
|                                                                                      |                                              | Accrued utilities                         |         |        | 420     |   |         |       | 584    |   |         |       | 213    |  
|                                                                                      |                                              | Accrued income taxes                      |         |        | 8,538   |   |         |       | (194   | ) |         |       | (359   | )
|                                                                                      |                                              | Provision for legal judgment              |         |        | (975    | ) |         |       | (18    | ) |         |       | 993    |  
|                                                                                      |                                              | Other accrued expenses                    |         |        | 908     |   |         |       | 1,134  |   |         |       | 12     |  
|                                                                                      |                                              |                                           |         |        |         |   |         |       |       
|Net cash provided by operating activities                                             |                                              |                                           | 64,210  |        |         |   | 38,283  |       |        |   | 29,471  |      
|Investing activities                                                                  |                                              |                                           |         |        |         |   |         |       |        |   |         |      
|Maturities of investment securities                                                   |                                              |                                           |        |        |         |   |        |       |        |   | 6,000   |      
|Capital expenditures, net                                                             |                                              |                                           | (21,950 | )      |         |   | (21,975 | )     |        |   | (27,356 | )    
|Purchase of Pinnacle Technologies, Inc.                                               |                                              |                                           |        |        |         |   | (909    | )     |        |   | (12,022 | )    
|                                                                                      |                                              |                                           |         |        |         |   |         |       |       
|Net cash used in investing activities                                                 |                                              |                                           | (21,950 | )      |         |   | (22,884 | )     |        |   | (33,378 | )    
|Financing activities                                                                  |                                              |                                           |         |        |         |   |         |       |        |   |         |      
|Repayments on bank borrowings                                                         |                                              |                                           |        |        |         |   |        |       |        |   | (2,198  | )    
|Proceeds from exercise of stock options                                               |                                              |                                           | 6,131   |        |         |   | 4,798   |       |        |   | 4,483   |      
|Dividends paid                                                                        |                                              |                                           | (7,001  | )      |         |   | (5,904  | )     |        |   | (5,470  | )    
|                                                                                      |                                              |                                           |         |        |         |   |         |       |       
|Net cash used in financing activities                                                 |                                              |                                           | (870    | )      |         |   | (1,106  | )     |        |   | (3,185  | )    
|                                                                                      |                                              |                                           |         |        |         |   |         |       |       
|Net increase (decrease) in cash and cash equivalents                                  |                                              |                                           | 41,390  |        |         |   | 14,293  |       |        |   | (7,092  | )    
|Effect of exchange rate changes on cash                                               |                                              |                                           | 11      |        |         |   | (26     | )     |        |   | (8      | )    
|Cash and cash equivalents at beginning of year                                        |                                              |                                           | 38,714  |        |         |   | 24,447  |       |        |   | 31,547  |      
|                                                                                      |                                              |                                           |         |        |         |   |         |       |       
|Cash and cash equivalents at end of year                                              |                                              | $                                         | 80,115  |        |         | $ | 38,714  |       |        | $ | 24,447  |      
|                                                                                      |                                              |                                           |         |        |         |   |         |       |       
|Supplemental cash flow information                                                    |                                              |                                           |         |        |         |   |         |       |        |   |         |      
|Interest paid                                                                         |                                              | $                                         | 10      |        |         | $ | 13      |       |        | $ | 14      |      
|                                                                                      |                                              |                                           |         |        |         |   |         |       |       
|Income taxes paid                                                                     |                                              | $                                         | 11,081  |        |         | $ | 13,298  |       |        | $ | 9,764   |      
|                                                                                      |                                              |                                           |         |        |         |   |         |       |       
|Capital expenditures through accounts payable and retainage                           |                                              | $                                         | 191     |        |         | $ | 265     |       |        | $ | 5,849   |      
|                                                                                      |                                              |                                           |         |        |         |   |         |       |       



F-7



---



##### 



CARBO CERAMICS INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|   |                                
|-- | -------------------------------
|1. | Significant Accounting Policies



| |                        
| | -----------------------
| | Description of Business





| |                            
| | ---------------------------
| | Principles of Consolidation





| |                                                         
| | --------------------------------------------------------
| | Concentration of Credit Risk and Accounts
    Receivable





| |                 
| | ----------------
| | Cash Equivalents





| |            
| | -----------
| | Inventories



F-8



---



##### 



CARBO CERAMICS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                              
| | -----------------------------
| | Property, Plant and Equipment



|                           |  |  |                 | 
|-------------------------- |  |  | --------------- | 
|Buildings and improvements |  |  | 15 to 30  years | 
|Machinery and equipment    |  |  | 3 to 30 years   | 
|Land-use rights            |  |  | 30 years        | 







| |                                                          
| | ---------------------------------------------------------
| | Impairment of Long-Lived Assets and Intangible
    Assets





| |                           
| | --------------------------
| | Capitalized Software Costs





| |         
| | --------
| | Goodwill



F-9



---



##### 



CARBO CERAMICS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                    
| | -------------------
| | Revenue Recognition





| |                            
| | ---------------------------
| | Shipping and Handling Costs





| |                            
| | ---------------------------
| | Cost of Start-Up Activities





| |                 
| | ----------------
| | Use of Estimates





| |                               
| | ------------------------------
| | Research and Development Costs





| |                         
| | ------------------------
| | Stock-Based Compensation



F-10



---



##### 



CARBO CERAMICS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                                                                                                                                           |                       |                                   |        |      |      |   |        |      |  |   |        |      | 
|------------------------------------------------------------------------------------------------------------------------------------------ | --------------------- | --------------------------------- | ------ | ---- | ---- | - | ------ | ---- |  | - | ------ | ---- | 
|                                                                                                                                           |                       | 2004                              |        |      | 2003 |   |        | 2002 | 
|                                                                                                                                           |                       |                                   |        |      |      |   |        |      | 
|                                                                                                                                           |                       | ($ In thousands, except per share |       
|                                                                                                                                           |                       | data)                             |       
|Net income, as reported                                                                                                                    |                       | $                                 | 41,673 |      |      | $ | 29,569 |      |  | $ | 19,714 |     
|Add: stock-based employee compensation expense included in
    reported net income, net of related tax effects                             |                       |                                   | 273    |      |      |   | 191    |      |  |   | 146    |     
|Deduct: total stock-based compensation expense determined under
    fair value based method for all awards, net of related tax
    effects |                       |                                   | (1,255 | )    |      |   | (1,145 | )    |  |   | (976   | )   
|                                                                                                                                           |                       |                                   |        |      |      |   |        |      | 
|Pro forma net income                                                                                                                       |                       | $                                 | 40,691 |      |      | $ | 28,615 |      |  | $ | 18,884 |     
|                                                                                                                                           |                       |                                   |        |      |      |   |        |      | 
|Earnings per share:                                                                                                                        |                       |                                   |        |      |      |   |        |      |  |   |        |     
|                                                                                                                                           | Basic  as reported   |                                   | $      | 2.62 |      |   | $      | 1.90 |  |   | $      | 1.29 | 
|                                                                                                                                           |                       |                                   |        |      |      |   |        |      | 
|                                                                                                                                           | Basic  pro forma     |                                   | $      | 2.56 |      |   | $      | 1.84 |  |   | $      | 1.24 | 
|                                                                                                                                           |                       |                                   |        |      |      |   |        |      | 
|                                                                                                                                           | Diluted  as reported |                                   | $      | 2.60 |      |   | $      | 1.88 |  |   | $      | 1.28 | 
|                                                                                                                                           |                       |                                   |        |      |      |   |        |      | 
|                                                                                                                                           | Diluted  pro forma   |                                   | $      | 2.54 |      |   | $      | 1.82 |  |   | $      | 1.23 | 
|                                                                                                                                           |                       |                                   |        |      |      |   |        |      | 



| |                     
| | --------------------
| | Foreign Subsidiaries





| |                              
| | -----------------------------
| | New Accounting Pronouncements

Inventory Costs Inventory Pricing,


F-11



---



##### 



CARBO CERAMICS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Share-Based Payment. Accounting for
Stock-Based Compensation, Accounting for Stock Issued to Employees




|   |                        
|-- | -----------------------
|2. | Acquisition of Business





F-12



---



##### 



CARBO CERAMICS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                              |         |              |         |      | 
|----------------------------- | ------- | ------------ | ------- | ---- | 
|                              |         | Year Ended   |        
|                              |         | December 31, |        
|                              |         | 2002         |        
|                              |         |              |        
|Pro forma revenue             |         | $            | 129,808 |     
|Pro forma net income          |         | $            | 19,213  |     
|Pro forma earnings per share: |         |              |         |     
|                              | Basic   |              | $       | 1.25 | 
|                              |         |              |        
|                              | Diluted |              | $       | 1.24 | 
|                              |         |              |        



|                                    |  |   |        |  
|----------------------------------- |  | - | ------ | -
|Current assets                      |  | $ | 1,639  |  
|Property, plant and equipment       |  |   | 3,942  |  
|Intangible assets                   |  |   | 3,434  |  
|Goodwill arising in the transaction |  |   | 21,840 |  
|                                    |  |   |       
|                                    |  |   | 30,855 |  
|Current liabilities                 |  |   | (3,212 | )
|Long-term debt                      |  |   | (921   | )
|                                    |  |   |       
|Net assets acquired                 |  | $ | 26,722 |  
|                                    |  |   |       



|   |                  
|-- | -----------------
|3. | Intangible Assets



|                                              |                      |                  |       |       |              |   |       |        |  |   |              |       |  |   |     |     | 
|--------------------------------------------- | -------------------- | ---------------- | ----- | ----- | ------------ | - | ----- | ------ |  | - | ------------ | ----- |  | - | --- | --- | 
|                                              |                      | 2004             |       |       | 2003         |  
|                                              |                      |                  |       |       |              |  
|                                              |                      | Gross            |       |       | Accumulated  |   |       | Gross  |  |   | Accumulated  |      
|                                              |                      | Amount           |       |       | Amortization |   |       | Amount |  |   | Amortization |      
|                                              |                      |                  |       |       |              |   |       |        |  |   |              |      
|                                              |                      | ($ In thousands) |      
|Intangibles subject to amortization:          |                      |                  |       |       |              |   |       |        |  |   |              |       |  |   |     |    
|                                              | Patents and licenses |                  | $     | 2,526 |              |   | $     | 672    |  |   | $            | 2,547 |  |   | $   | 412 | 
|                                              | Hardware designs     |                  |       | 758   |              |   |       | 331    |  |   |              | 683   |  |   |     | 193 | 
|                                              | Software             |                  |       | 1,836 |              |   |       | 107    |  |   |              | 369   |  |   |     | 90  | 
|Other intangibles not subject to amortization |                      |                  |      |       |              |   |      |        |  |   | 1,007        |       |  |   |    |    
|                                              |                      |                  |       |       |              |   |       |        |  |   |              |      
|                                              |                      | $                | 5,120 |       |              | $ | 1,110 |        |  | $ | 4,606        |       |  | $ | 695 |    
|                                              |                      |                  |       |       |              |   |       |        |  |   |              |      





F-13



---



##### 



CARBO CERAMICS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                
|-- | ---------------
|4. | Bank Borrowings





|   |       
|-- | ------
|5. | Leases



|           |  |   |        | 
|---------- |  | - | ------ | 
|2005       |  | $ | 2,656  | 
|2006       |  |   | 2,288  | 
|2007       |  |   | 2,022  | 
|2008       |  |   | 1,601  | 
|2009       |  |   | 1,105  | 
|Thereafter |  |   | 834    | 
|           |  |   |       
|Total      |  | $ | 10,506 | 
|           |  |   |       





|   |             
|-- | ------------
|6. | Income Taxes



|                           |                                |                  |        |        |      |   |        |        | 
|-------------------------- | ------------------------------ | ---------------- | ------ | ------ | ---- | - | ------ | ------ | 
|                           |                                | 2004             |        |        | 2003 |  
|                           |                                |                  |        |        |      |  
|                           |                                | ($ In thousands) |       
|Deferred tax assets:       |                                |                  |        |        |      |   |        |       
|Employee benefits          |                                | $                | 933    |        |      | $ | 734    |       
|Inventories                |                                |                  | 803    |        |      |   | 953    |       
|Foreign tax credits        |                                |                  | 283    |        |      |   |       |       
|Other                      |                                |                  | 533    |        |      |   | 390    |       
|                           |                                |                  |        |        |      |  
|                           | Total deferred tax assets      |                  |        | 2,552  |      |   |        | 2,077  | 
|                           |                                |                  |        |        |      |  
|Deferred tax liabilities:  |                                |                  |        |        |      |   |        |       
|Depreciation               |                                |                  | 22,100 |        |      |   | 17,087 |       
|Goodwill                   |                                |                  | 1,139  |        |      |   | 815    |       
|Foreign earnings and other |                                |                  | 719    |        |      |   | 651    |       
|                           |                                |                  |        |        |      |  
|                           | Total deferred tax liabilities |                  |        | 23,958 |      |   |        | 18,553 | 
|                           |                                |                  |        |        |      |  
|                           | Net deferred tax liabilities   |                  | $      | 21,406 |      |   | $      | 16,476 | 
|                           |                                |                  |        |        |      |  

F-14



---



##### 



CARBO CERAMICS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |           |                  |        |        |        |   |        |        |        |   |        |       |       | 
|-------- | --------- | ---------------- | ------ | ------ | ------ | - | ------ | ------ | ------ | - | ------ | ----- | ----- | 
|         |           | 2004             |        |        | 2003   |   |        | 2002   |       
|         |           |                  |        |        |        |   |        |        |       
|         |           | ($ In thousands) |       
|Current: |           |                  |        |        |        |   |        |        |        |   |        |      
|         | Federal   |                  | $      | 16,803 |        |   | $      | 11,211 |        |   | $      | 8,620 |      
|         | State     |                  |        | 2,816  |        |   |        | 1,893  |        |   |        | 932   |      
|         |           |                  |        |        |        |   |        |        |       
|         |           | Total current    |        |        | 19,619 |   |        |        | 13,104 |   |        |       | 9,552 | 
|         |           |                  |        |        |        |   |        |        |       
|         | Deferred: |                  |        |        |        |   |        |        |        |   |        |       |      
|         | Federal   |                  |        | 4,237  |        |   |        | 3,829  |        |   |        | 1,784 |      
|         | State     |                  |        | 693    |        |   |        | 585    |        |   |        | 193   |      
|         |           |                  |        |        |        |   |        |        |       
|         |           | Total deferred   |        |        | 4,930  |   |        |        | 4,414  |   |        |       | 1,977 | 
|         |           |                  |        |        |        |   |        |        |       
|         |           | $                | 24,549 |        |        | $ | 17,518 |        |        | $ | 11,529 |      
|         |           |                  |        |        |        |   |        |        |       



|                                               |  |                  |        |   |         |  |      |        |  |   |         |   |  |        |      |   |         |   |        |   |  |  |      |  
|---------------------------------------------- |  | ---------------- | ------ | - | ------- |  | ---- | ------ |  | - | ------- | - |  | ------ | ---- | - | ------- | - | ------ | - |  |  | ---- | -
|                                               |  | 2004             |        |   | 2003    |  |      | 2002   | 
|                                               |  |                  |        |   |         |  |      |        | 
|                                               |  | Amount           |        |   | Percent |  |      | Amount |  |   | Percent |   |  | Amount |      |   | Percent |  
|                                               |  |                  |        |   |         |  |      |        |  |   |         |   |  |        |      |   |         |  
|                                               |  | ($ In thousands) |       
|U.S. statutory rate                            |  | $                | 23,178 |   |         |  | 35.0 | %      |  | $ | 16,480  |   |  |        | 35.0 | % |         | $ | 10,935 |   |  |  | 35.0 | %
|State income taxes, net of federal tax benefit |  |                  | 2,281  |   |         |  | 3.4  |        |  |   | 1,611   |   |  |        | 3.4  |   |         |   | 1,125  |   |  |  | 3.6  |  
|Extraterritorial Income Exclusion and other    |  |                  | (910   | ) |         |  | (1.3 | )      |  |   | (573    | ) |  |        | (1.2 | ) |         |   | (531   | ) |  |  | (1.7 | )
|                                               |  |                  |        |   |         |  |      |        |  |   |         |   |  |        |      |   |         |  
|                                               |  | $                | 24,549 |   |         |  | 37.1 | %      |  | $ | 17,518  |   |  |        | 37.2 | % |         | $ | 11,529 |   |  |  | 36.9 | %
|                                               |  |                  |        |   |         |  |      |        |  |   |         |   |  |        |      |   |         |  



|   |                     
|-- | --------------------
|7. | Shareholders Equity

Common Stock






Preferred Stock




F-15



---



##### 



CARBO CERAMICS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Shareholder Rights Plan






|   |                   
|-- | ------------------
|8. | Stock Option Plans







F-16



---



##### 



CARBO CERAMICS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                               |  |         |       |  |                  |   |    |         |  |   |                  |  |  |         |    |  |                  |   |       |  |  |   |    | 
|-------------------------------------------------------------- |  | ------- | ----- |  | ---------------- | - | -- | ------- |  | - | ---------------- |  |  | ------- | -- |  | ---------------- | - | ----- |  |  | - | -- | 
|                                                               |  | 2004    |       |  | 2003             |   |    | 2002    | 
|                                                               |  |         |       |  |                  |   |    |         | 
|                                                               |  | Options |       |  | Weighted-Average |   |    | Options |  |   | Weighted-Average |  |  | Options |    |  | Weighted-Average |  
|                                                               |  | (000)   |       |  | Exercise Price   |   |    | (000)   |  |   | Exercise Price   |  |  | (000)   |    |  | Exercise Price   |  
|                                                               |  |         |       |  |                  |   |    |         |  |   |                  |  |  |         |    |  |                  |  
|Outstanding-beginning of year                                  |  |         | 593   |  |                  | $ | 30 |         |  |   | 778              |  |  | $       | 28 |  |                  |   | 757   |  |  | $ | 25 | 
|Granted                                                        |  |         | 24    |  |                  |   | 56 |         |  |   | 34               |  |  |         | 35 |  |                  |   | 279   |  |  |   | 26 | 
|Exercised                                                      |  |         | 232   |  |                  |   | 26 |         |  |   | 207              |  |  |         | 23 |  |                  |   | 252   |  |  |   | 18 | 
|Forfeited                                                      |  |         | 5     |  |                  |   | 36 |         |  |   | 12               |  |  |         | 26 |  |                  |   | 6     |  |  |   | 32 | 
|                                                               |  |         |       |  |                  |   |    |         |  |   |                  |  |  |         |    |  |                  |  
|Outstanding-end of year                                        |  |         | 380   |  |                  | $ | 33 |         |  |   | 593              |  |  | $       | 30 |  |                  |   | 778   |  |  | $ | 28 | 
|                                                               |  |         |       |  |                  |   |    |         |  |   |                  |  |  |         |    |  |                  |  
|Exercisable at end of year                                     |  |         | 212   |  |                  | $ | 30 |         |  |   | 341              |  |  | $       | 27 |  |                  |   | 443   |  |  | $ | 24 | 
|Weighted-average fair value of options granted during the year |  | $       | 23.61 |  |                  |   |    |         |  | $ | 14.00            |  |  |         |    |  |                  | $ | 19.30 |  |  |   |    | 



|         |  |                     |     |                  |                     |  |         |                  |  |   |        |  |  |                  |     |  |  |   |    | 
|-------- |  | ------------------- | --- | ---------------- | ------------------- |  | ------- | ---------------- |  | - | ------ |  |  | ---------------- | --- |  |  | - | -- | 
|         |  | Outstanding Options |     |                  | Exercisable Options | 
|         |  |                     |     |                  |                     | 
|Exercise |  |                     |     | Weighted Average |                     |  |         |                  | 
|Price    |  | Number              |     |                  | Remaining           |  |         | Weighted Average |  |   | Number |  |  | Weighted Average |    
|Range    |  | (000)               |     |                  | Contractual Life    |  |         | Exercise Price   |  |   | (000)  |  |  | Exercise Price   |    
|         |  |                     |     |                  |                     |  |         |                  |  |   |        |  |  |                  |    
|$ 8-24   |  |                     | 41  |                  |                     |  | 4 years |                  |  | $ | 15     |  |  |                  | 37  |  |  | $ | 14 | 
|30-42    |  |                     | 315 |                  |                     |  | 7 years |                  |  |   | 34     |  |  |                  | 175 |  |  |   | 34 | 
|52-62    |  |                     | 24  |                  |                     |  | 9 years |                  |  |   | 56     |  |  |                  |    |  |  |   |   | 
|         |  |                     |     |                  |                     |  |         |                  |  |   |        |  |  |                  |    
|         |  |                     | 380 |                  |                     |  |         |                  |  |   | 33     |  |  |                  | 212 |  |  |   | 30 | 
|         |  |                     |     |                  |                     |  |         |                  |  |   |        |  |  |                  |    



|   |                   
|-- | ------------------
|9. | Earnings Per Share



|                                                    |                                                                                   |                                         |      |            |         |   |      |            |         |   |      |            |         | 
|--------------------------------------------------- | --------------------------------------------------------------------------------- | --------------------------------------- | ---- | ---------- | ------- | - | ---- | ---------- | ------- | - | ---- | ---------- | ------- | 
|                                                    |                                                                                   | 2004                                    |      |            | 2003    |   |      | 2002       |        
|                                                    |                                                                                   |                                         |      |            |         |   |      |            |        
|                                                    |                                                                                   | ($ In thousands, except per share data) |     
|Numerator for basic and diluted earnings per share: |                                                                                   |                                         |      |            |         |   |      |            |         |   |      |           
|                                                    | Net income                                                                        |                                         | $    | 41,673     |         |   | $    | 29,569     |         |   | $    | 19,714     |        
|                                                    |                                                                                   |                                         |      |            |         |   |      |            |        
|Denominator:                                        |                                                                                   |                                         |      |            |         |   |      |            |         |   |      |           
|                                                    | Denominator for basic earnings per share  weighted-average
    shares            |                                         |      | 15,912,092 |         |   |      | 15,559,785 |         |   |      | 15,233,096 |        
|                                                    | Effect of dilutive securities:                                                    |                                         |      |            |         |   |      |            |         |   |      |            |        
|                                                    |                                                                                   | Employee stock options (See Note 8)     |      |            | 126,325 |   |      |            | 111,530 |   |      |            | 116,454 | 
|                                                    |                                                                                   | Nonvested stock awards                  |      |            | 4,682   |   |      |            |        |   |      |            |        | 
|                                                    |                                                                                   | Contingent stock acquisition            |      |            |        |   |      |            | 18,046  |   |      |            | 25,706  | 
|                                                    |                                                                                   |                                         |      |            |         |   |      |            |        
|                                                    | Dilutive potential common shares                                                  |                                         |      | 131,007    |         |   |      | 129,576    |         |   |      | 142,160    |        
|                                                    |                                                                                   |                                         |      |            |         |   |      |            |        
|                                                    | Denominator for diluted earnings per share  adjusted
    weighted-average shares |                                         |      | 16,043,099 |         |   |      | 15,689,361 |         |   |      | 15,375,256 |        
|                                                    |                                                                                   |                                         |      |            |         |   |      |            |        
|Basic earnings per share                            |                                                                                   | $                                       | 2.62 |            |         | $ | 1.90 |            |         | $ | 1.29 |           
|                                                    |                                                                                   |                                         |      |            |         |   |      |            |        
|Diluted earnings per share                          |                                                                                   | $                                       | 2.60 |            |         | $ | 1.88 |            |         | $ | 1.28 |           
|                                                    |                                                                                   |                                         |      |            |         |   |      |            |        

F-17



---



##### 



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) |       
|2004                |         |                                         |        |      |         |   |        |              |  |   |             |      |  |   |        |     
|Revenues            |         | $                                       | 50,011 |      |         | $ | 52,350 |              |  | $ | 58,482      |      |  | $ | 62,211 |     
|Gross profit        |         |                                         | 20,781 |      |         |   | 21,879 |              |  |   | 25,356      |      |  |   | 25,337 |     
|Net income          |         |                                         | 9,568  |      |         |   | 9,857  |              |  |   | 11,497      |      |  |   | 10,751 |     
|Earnings per share: |         |                                         |        |      |         |   |        |              |  |   |             |      |  |   |        |     
|                    | Basic   |                                         | $      | 0.60 |         |   | $      | 0.62         |  |   | $           | 0.72 |  |   | $      | 0.67 | 
|                    | Diluted |                                         | $      | 0.60 |         |   | $      | 0.61         |  |   | $           | 0.72 |  |   | $      | 0.67 | 
|2003                |         |                                         |        |      |         |   |        |              |  |   |             |      |  |   |        |     
|Revenues            |         | $                                       | 38,538 |      |         | $ | 39,423 |              |  | $ | 43,260      |      |  | $ | 48,715 |     
|Gross profit        |         |                                         | 13,866 |      |         |   | 15,619 |              |  |   | 17,773      |      |  |   | 20,362 |     
|Net income          |         |                                         | 5,710  |      |         |   | 6,444  |              |  |   | 8,114       |      |  |   | 9,301  |     
|Earnings per share: |         |                                         |        |      |         |   |        |              |  |   |             |      |  |   |        |     
|                    | Basic   |                                         | $      | 0.37 |         |   | $      | 0.42         |  |   | $           | 0.52 |  |   | $      | 0.59 | 
|                    | Diluted |                                         | $      | 0.37 |         |   | $      | 0.41         |  |   | $           | 0.52 |  |   | $      | 0.59 | 





|    |                   
|--- | ------------------
|11. | Sales to Customers



|     |  |                 |      |   |   |  |      |   |  |  |        |   |  |       |      |   |  |  |     |  
|---- |  | --------------- | ---- | - | - |  | ---- | - |  |  | ------ | - |  | ----- | ---- | - |  |  | --- | -
|     |  | Major Customers |      |   |   |  |     
|     |  |                 |      |   |   |  |     
|     |  | A               |      |   | B |  |      | C |  |  | Others |   |  | Total |     
|     |  |                 |      |   |   |  |      |   |  |  |        |   |  |       |     
|2004 |  |                 | 28.3 | % |   |  | 13.5 | % |  |  | 23.6   | % |  |       | 34.6 | % |  |  | 100 | %
|2003 |  |                 | 30.1 | % |   |  | 16.5 | % |  |  | 24.3   | % |  |       | 29.1 | % |  |  | 100 | %
|2002 |  |                 | 35.0 | % |   |  | 20.0 | % |  |  | 23.6   | % |  |       | 21.4 | % |  |  | 100 | %



|    |                       
|--- | ----------------------
|12. | Geographic Information



|                   |                                 |                 |   |       |       |  |   |       |       |  |   |       |       | 
|------------------ | ------------------------------- | --------------- | - | ----- | ----- |  | - | ----- | ----- |  | - | ----- | ----- | 
|                   |                                 | 2004            |   |       | 2003  |  |   | 2002  |      
|                   |                                 |                 |   |       |       |  |   |       |      
|                   |                                 | ($ In millions) |  
|Long-lived assets: |                                 |                 |   |       |       |  |   |       |       |  |   |      
|                   | United States                   |                 | $ | 130.2 |       |  | $ | 124.1 |       |  | $ | 119.4 |      
|                   | International (primarily China) |                 |   | 17.0  |       |  |   | 14.4  |       |  |   | 11.8  |      
|                   |                                 |                 |   |       |       |  |   |       |      
|                   |                                 | Total           |   | $     | 147.2 |  |   | $     | 138.5 |  |   | $     | 131.2 | 
|                   |                                 |                 |   |       |       |  |   |       |      

F-18



---



##### 



CARBO CERAMICS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|          |                     |                 |   |       |       |  |   |       |       |  |   |      |       | 
|--------- | ------------------- | --------------- | - | ----- | ----- |  | - | ----- | ----- |  | - | ---- | ----- | 
|          |                     | 2004            |   |       | 2003  |  |   | 2002  |      
|          |                     |                 |   |       |       |  |   |       |      
|          |                     | ($ In millions) |  
|Revenues: |                     |                 |   |       |       |  |   |       |       |  |   |     
|          | United States       |                 | $ | 118.7 |       |  | $ | 108.0 |       |  | $ | 88.0 |      
|          | Canada              |                 |   | 28.2  |       |  |   | 18.1  |       |  |   | 13.0 |      
|          | Russia              |                 |   | 35.2  |       |  |   | 9.8   |       |  |   | 2.4  |      
|          | Other international |                 |   | 41.0  |       |  |   | 34.0  |       |  |   | 22.9 |      
|          |                     |                 |   |       |       |  |   |       |      
|          |                     | Total           |   | $     | 223.1 |  |   | $     | 169.9 |  |   | $    | 126.3 | 
|          |                     |                 |   |       |       |  |   |       |      



|    |              
|--- | -------------
|13. | Benefit Plans



|               |                |                  |       |     |      |   |       |      |  |   |     |     | 
|-------------- | -------------- | ---------------- | ----- | --- | ---- | - | ----- | ---- |  | - | --- | --- | 
|               |                | 2004             |       |     | 2003 |   |       | 2002 | 
|               |                |                  |       |     |      |   |       |      | 
|               |                | ($ In thousands) |      
|Contributions: |                |                  |       |     |      |   |       |      |  |   |     |    
|               | Profit sharing |                  | $     | 990 |      |   | $     | 719  |  |   | $   | 425 | 
|               | Savings        |                  |       | 525 |      |   |       | 431  |  |   |     | 338 | 
|               |                |                  |       |     |      |   |       |      | 
|               |                | $                | 1,515 |     |      | $ | 1,150 |      |  | $ | 763 |    
|               |                |                  |       |     |      |   |       |      | 



|    |            
|--- | -----------
|14. | Commitments





F-19



---



##### 



CARBO CERAMICS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)














|    |                      
|--- | ---------------------
|15. | Employment Agreements





F-20



---



##### 



CARBO CERAMICS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                               
|--- | ------------------------------
|16. | Legal Proceedings and Judgment









|    |                 
|--- | ----------------
|17. | Subsequent Event



F-21



---



##### 



CARBO Ceramics Inc.


Schedule II  Consolidated Valuation and
Qualifying Accounts


For the Years Ended December 31, 2004, 2003 and 2002


|                                 |  |                  |    |  |            |   |     |            |  |            |      |  |  |   |     | 
|-------------------------------- |  | ---------------- | -- |  | ---------- | - | --- | ---------- |  | ---------- | ---- |  |  | - | --- | 
|                                 |  | Balance at       |    |  | Charged to |   |     |            |  | Balance at |     
|                                 |  | Beginning of     |    |  | Costs and  |   |     |            |  | End of     |     
|Year Ended                       |  | Year             |    |  | Expenses   |   |     | Write-Offs |  |            | Year | 
|                                 |  |                  |    |  |            |   |     |            |  |            |      | 
|                                 |  | ($ In thousands) |   
|Allowance for doubtful accounts: |  |                  |    |  |            |   |     |            |  |            |      |  |  |   |     | 
|December 31, 2004                |  | $                | 20 |  |            | $ | 666 |            |  | $          | 21   |  |  | $ | 665 | 
|December 31, 2003                |  | $                |   |  |            | $ | 160 |            |  | $          | 140  |  |  | $ | 20  | 
|December 31, 2002                |  | $                |   |  |            | $ |    |            |  | $          |     |  |  | $ |    | 

S-1



---



##### 



Exhibit Index


| |    |     |  |                                                                                                                                                                                                                                                                                                                                                                      
| | -- | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3  | .1  |  | 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)                                                                                                                                                                                          
|
| | 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)                                                                                                                                                                                                                    
|
| | 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)                                                                                                                                                                                      
|
| | 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)                                                                                                                                                                                           
|
| | 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)                                            
|
| | 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)                                                                                                       
|
| | 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  |  | Incentive Compensation Plan (incorporated by reference to
    exhibit 10.8 to the registrants Form S-1
    Registration Statement No. 333-1884)                                                                                                                                                                                                                     
|
| | 10 | .6  |  | 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)                                                                                                                                                                                
|
| | 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)                                                                                                                                                                                                           
|
| | 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  |  | Form of Employment Agreement between CARBO Ceramics Inc. and C.
    Mark Pearson (incorporated by reference to exhibit 10.11 to
    the registrants Form  10-K Annual Report for the
    year ended December 31, 2001)                                                                                                                                              
|
| | 10 | .10 |  | Form of Employment Agreement between CARBO Ceramics Inc. and
    Christopher A. Wright (incorporated by reference to the
    registrants Form 10-K Annual Report for the year
    ended December 31, 2002)                                                                                                                                                          
|
| | 10 | .11 |  | 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)                                                                                                                                                     
|
| | 10 | .12 |  | Lease Agreement dated as of November 1, 2003, between the
    Development Authority of Wilkinson Count and CARBO Ceramics
    Inc.. (incorporated by reference to exhibit 10.12 the
    registrants Form 10-K Annual Report for the year
    ended December 31, 2003.)                                                                                              
|
| | 10 | .13 |  | 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 | .14 |  | 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 in January 24, 2005)                                                                                                                                                                                          
|
| | 10 | .15 |  | Form of Officer Restricted Stock Award Agreement (incorporated
    by reference to exhibit 99.3 of the registrants
    Form 8-K Current Report filed in January 24, 2005)                                                                                                                                                                                           
|
| | 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)                                                                                                                                                                                                                    
|
| | 23 | .1  |  | Consent of Ernst & Young LLP                                                                                                                                                                                                                                                                                                                                         



---



##### 



| |    |    |  |                                                                                                                               
| | -- | -- |  | ------------------------------------------------------------------------------------------------------------------------------
|
| | 31 | .1 |  | Rule 13a-14(a)/15d-14(a) Certification by C. Mark Pearson                                                                     
|
| | 31 | .2 |  | Rule 13a-14(a)/15d-14(a) Certification by Paul G. Vitek                                                                       
|
| | 32 |    |  | Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002