Exhibit 13.0

MANAGEMENTS DISCUSSION AND ANALYSIS

Calgon Carbon Corporation

Overview

The Company experienced a difficult and unusual year in 2005. As a result, the Company reported a net loss
of $7.4 million or $(0.19) per share assuming dilution, as compared to net income of $5.9 million, or $0.15 per share assuming dilution in 2004. Net sales decreased 1.7% to $290.8 million for 2005 from $295.9 million for 2004. Selling, general and
administrative expenses increased 10.2% versus 2004 which was primarily attributed to higher litigation expenses for the Companys UV patent cases, higher employee benefit-related costs, and the nonrecoverable costs related to damage caused by
Hurricane Katrina to the Companys Pearl River plant.

The Companys financial statements for all periods presented were
significantly impacted by activities relating to the planned divestitures of the Charcoal/Liquid and Solvent Recovery businesses. These divestitures were a component of the 2005 re-engineering plan that is intended to result in sustainable profit
improvement in the future. The Company accounted for the aforementioned businesses as discontinued operations and assets held for sale for all periods presented within this annual report.

Results of Operations

2005 Versus 2004

CONTINUING OPERATIONS:

Consolidated net sales decreased in 2005
compared to 2004 by $5.0 million or 1.7%. Sales decreased in the Activated Carbon and Service segment by $3.6 million or 1.5%. The decrease was primarily due to the decline in the demand for resin service sales for the removal of perchlorate of $3.7
million. Ongoing delays in sales for specialty respirator carbons which were related to the temporary shutdown of a third-party testing facility, and shipment delays in the United States Gulf Coast region caused by the effects of Hurricane Katrina
also had an adverse impact on sales for 2005 versus 2004. Partially offsetting this decrease was the strong demand for activated carbon in the U.S. and European potable water markets. Sales in the Equipment segment decreased $3.1 million or 7.7%.
The decrease was primarily related to non-recurring projects for ISEP® in Asia that occurred in 2004. Partially offsetting this decrease was the increase in demand for traditional carbon adsorption equipment. Sales for the Consumer segment increased by $1.6 million or 15.3% due to higher
demand for activated carbon cloth and PreZerve®
products. Foreign currency translation did not have a material impact on sales for 2005.

Net sales less cost of products sold, as a
percentage of net sales, was 26.0% in 2005 compared to 29.9% in 2004. The decline was primarily due to higher raw material, energy, and freight costs of $9.9 million or 3.4%, the increased cost of U.S.-sourced carbon products shipped to the
Companys Belgian branch as a result of the weakening of the euro in 2005 versus 2004 of $2.5 million or 0.8%, higher inventory-related costs of $1.0 million or 0.3%, and increased employee benefit costs of $0.6 million. These costs were
partially offset by increased selling prices which were instituted as a component of the Companys 2005 re-engineering plan.

Depreciation and amortization decreased by $1.0 million or 4.4% in 2005 compared to 2004 primarily due to decreased intangible amortization and decreased depreciation due to an increase in fully depreciated fixed assets.

Selling, general and administrative expenses increased by $6.7 million or 11.5%. The increase was primarily related to $1.0 million of nonrecoverable
costs related to damage caused at the Companys Pearl River plant by Hurricane Katrina, a $2.8 million increase in litigation expenses primarily relating to the UV patent cases, and $2.2 million of employee-related expenses of which $1.6
million related to the Companys 2005 re-engineering plan. Partially offsetting this increase was $1.1 million of acquisition integration expenses that occurred in 2004.

Research and development expenses increased by $0.7 million or 18.5%. The increase was primarily related to an increase in rent expense of $0.2 million
as well as the additional costs associated with adding research and development functionality in Europe of $0.4 million.

The impairment
charge for the year 2005 of $2.2 million was a result of the Companys decision to cancel the construction of a reactivation facility on the U.S. Gulf Coast and to suspend the construction of such a facility for the foreseeable future.

The restructuring charge for the year 2005 of $0.4 million consisted of $0.2 million of pension curtailment charges and $0.2 million
pertaining to the closure of two small manufacturing facilities as a result of the aforementioned re-engineering plan.

Interest income in
2005 was comparable to 2004.

Interest expense increased in 2005 versus 2004 by $1.5 million or 43.5% as a result of increased interest
rates.

Other expense  net decreased in 2005 versus 2004 by $1.1 million or 34.0% primarily due to the sale of property of $0.2
million in 2005 and a non-recurring $0.8 million foreign exchange loss that occurred in 2004 which primarily related to an intercompany loan between the Company and its subsidiary, Chemviron Carbon Ltd., for the purchase of 100% of the outstanding
common shares of Waterlink (UK) Limited.



| |  |                               
| |  | ------------------------------
| |  | Calgon Carbon Corporation    5



---

The effective tax rate for 2005 was a benefit of 49.8% compared to a benefit of (41.1%) in 2004. The
2005 tax rate was greater than the federal income tax rate due to certain benefits, primarily the reversal of tax contingency accruals due to legal statutes expiring during the year ($2.2 million), recognition of foreign tax credit benefits ($0.4
million), and recognition of state income tax benefits ($0.7 million). The 2004 tax rate was lowered by the benefit realized from an exclusion provided under United States income tax laws with respect to certain Extraterritorial Income Exclusion
Benefit ($1.2 million), recognition of foreign tax credit benefits ($0.2 million), and recognition of state income tax benefits ($0.4 million).

The primary items that contributed to the change in the effective tax rate between 2005 and 2004 were the reversal of tax contingency accruals due to legal statutes expiring during the year, the Extraterritorial Income Exclusion Benefit,
and the repatriation of foreign earnings under the American Jobs Creation Act of 2004 (the AJCA). During 2005, the Company reversed a $2.2 million tax contingency reserve and the Extraterritorial Income Exclusion Benefit decreased due to
a change in estimate of the prior years accrual, and the Company recorded $0.3 million of current tax expense from the repatriation of foreign earnings.

On October 22, 2004, the AJCA was signed into law. The new law repeals an export tax benefit, provides for a 9 percent deduction on United States manufacturing income, and allows the repatriation of foreign
earnings at a reduced rate for one year, subject to certain limitations. Based on the calendar year 2005, and when fully phased in, management estimates that the repeal of the export tax benefit will increase income tax expense by approximately $0.4
million annually. The Company does not expect this to be offset by the manufacturing deduction in the short term due to its operating loss carryforwards. It is difficult to determine the exact impact on the effective income tax rate from repealing
the export tax benefit because of the volatility of the Companys earnings. For example, if pre-tax income were $3.0 million, the effective tax rate would increase by 13.3%, however, if pre-tax income were $6.0 million, the effective tax rate
would only increase by 6.7%.

The Company completed its evaluation of the AJCA on repatriation of foreign earnings during December 2005.
The new law reduced the federal income tax rate to 5.25% on earnings distributed from non-United States based subsidiaries for a one-year period. The Company repatriated a total of $4.9 million from two of its wholly owned subsidiaries ($1.7 million
from Calgon Carbon Canada, Inc. and $3.2 million from Chemviron Carbon, Ltd.). The current income tax included in the income tax provision for this repatriation is $0.3 million. The Company has not changed its policy of permanent reinvestment under
APB No. 23 due to this one-time repatriation of earnings.

Equity in income (loss), net of tax provision, of Calgon Mitsubishi
Chemical Corporation decreased in 2005 versus 2004 by $1.7 million. The decrease is primarily due to a charge of $1.9 million related to the shutdown of a carbon production facility in Japan owned and operated by the joint venture.

DISCONTINUED OPERATIONS:

Income from discontinued operations was
$3.1 million in 2005 compared with $1.9 million in 2004. Sales from discontinued operations increased $3.3 million in 2005 versus 2004, primarily due to higher seasonal demands of charcoal products. Net sales less cost of products sold, as a percent
of net sales, was 21.2% in 2005 compared to 19.1% in 2004, primarily due to solvent recovery equipment sales.

2004 Versus 2003

CONTINUING OPERATIONS:

Consolidated net sales increased in 2004
compared to 2003 by $42.7 million or 16.9%. This was primarily the result of the addition of Waterlink Specialty Products (WSP) as well as the effect of foreign currency translation. Sales increased in the Activated Carbon and Service
segment by $33.3 million or 15.7%. The increase was primarily due to the addition of WSP sales as well as a 27.9% increase in sales of specialty carbons and the effect of foreign currency translation which totaled $7.3 million. Sales in the
Equipment segment increased $9.5 million or 31.2%. The increase was primarily related to the acquisition of WSP and increased sales for ion exchange technology in Asia. Consumer segment sales in 2004 were comparable to 2003.

Net sales less cost of products sold, as a percentage of net sales, was 29.9% in 2004 compared to 31.3% in 2003. The decline was primarily due to the
addition of WSPs lower margin business and continued pricing pressures brought on by U.S. and offshore competition, and cost increases in the Activated Carbon and Service segment for raw materials, energy, and transportation of approximately
27.6%, 23.0%, and 20.0%, respectively. Those costs were partially offset by the lower cost of U.S.-sourced carbon products shipped to the Companys Belgian branch as a result of the strengthening of the euro in 2004 versus 2003.

Depreciation and amortization increased by $3.2 million or 16.7% primarily due to the intangible amortization and additional depreciation resulting from
the acquisition of WSP.

Selling, general and administrative expenses increased $4.8 million or 9.7%. Excluding the costs associated with
the CEO severance of $1.9 million in 2003, this represents a $6.7 million increase. The increase was primarily related to the addition of WSPs operating expenses of $4.9 million, $1.1 million related to the integration of WSP, the net
settlement of two unrelated legal cases of $0.3 million, and expenses pertaining to Sarbanes-Oxley compliance of $0.9 million. This increase was partially offset by a decrease in employee-related expenses of $2.0 million and reduced bad debt expense
of $0.6 million.



|                               |  | 
|------------------------------ |  | 
|6    Calgon Carbon Corporation |  | 



---

Research and development expenses in 2004 were comparable to 2003.

The Company did not incur any restructuring charges in 2004. The restructuring charge of $0.5 million in 2003 represents the change in estimate of
various components of the Companys restructuring liability based upon managements revised estimates of certain costs of these plans, primarily revisions to estimated sublease income on certain abandoned facilities.

Interest income in 2004 was comparable to 2003.

Interest expense increased in 2004 versus 2003 by $1.1 million or 45.6% as a result of the increased debt from the acquisition of WSP and increased borrowing rates in 2004 compared to 2003.

Other expense  net increased $1.5 million or 88.5% primarily due to a foreign exchange loss of $0.6 million, which was related to an intercompany
loan between the Company and its subsidiary, Chemviron Carbon, Ltd., with respect to the purchase of 100% of the outstanding common shares of Waterlink (UK) Limited, the disposition of certain fixed assets of $0.3 million, increased other non-income
tax expense of $0.3 million, and other foreign exchange losses of $0.2 million.

The effective tax rate for 2004 was (41.1%) compared
to (10.3%) in 2003. The 2004 rate was lowered by the benefit realized from an exclusion provided under United States income tax laws with respect to a certain Extraterritorial Income Exclusion Benefit ($1.2 million), recognition of foreign tax
credit benefits ($0.2 million), and recognition of state income tax benefits ($0.4 million). The 2003 rate was lowered by the Extraterritorial Income Exclusion Benefit ($0.9 million), recognition of foreign tax credit benefits ($0.2 million), and
research and development tax credits ($0.6 million).

The primary items that contributed to the change in the effective tax rate between
2004 and 2003 were state income taxes, a higher tax rate on foreign income, revision of prior year accruals, and research and development tax credits. During 2004, the Company obtained a $0.4 million state tax credit which increased the state income
tax benefit; the mix between domestic and international operations changed resulting in a reduction of the effective tax rate on foreign operations; and the Company recorded a one time adjustment of prior year tax accruals. During 2003, the Company
completed an analysis of research and development tax credits, which resulted in a one time tax benefit.

Equity in income, net of tax
provision, of Calgon Mitsubishi Chemical Corporation increased in 2004 versus 2003 by $0.6 million or 133.1%. The increase is primarily due to the sale of a large municipal fill that occurred in 2004.

DISCONTINUED OPERATIONS:

Income from discontinued operations was
$1.9 million in 2004 compared to $0.7 million in 2003. The increase was primarily due to the operating results of WSPs solvent recovery business which was acquired in February 2004.

Working Capital and Liquidity

Cash flows from operating activities
were $12.8 million for the year ended December 31, 2005. This was primarily the net result of the net loss for the year, depreciation and amortization partially offset by an increase in working capital, and $4.5 million of pension
contributions.

Total debt, net of foreign exchange, decreased during 2005 by $0.7 million.

At December 31, 2005, the Company had a $125.0 million revolving credit facility. Borrowings under this facility were being charged a weighted
average interest rate of 6.24% at December 31, 2005.

Included in the credit facility was a letter of credit sub-facility that could
not exceed $30.0 million. The interest rate was based upon euro-based (LIBOR) rates with other interest rate options available. The applicable Euro Dollar margin ranged from 0.80% to 1.85% and the annual facility fee ranged from 0.20% to 0.40% of
the committed amount and is based on the Companys ratio of debt to earnings before interest, income taxes, depreciation and amortization (EBITDA).

The credit facilitys covenants imposed financial restrictions on the Company, including maintaining certain ratios of debt to EBITDA, EBITDA to cash outlays and operating assets to debt and net worth. In
addition, the facility imposed gross spending restrictions on capital expenditures, dividends, treasury share repurchases, acquisitions and investments in non-controlled subsidiaries. The facility also contained mandatory prepayment provisions for
proceeds in excess of pre-established amounts of certain events as defined within the loan agreement.

At September 30, 2005, the
Company was in violation of its leverage covenant, a ratio of debt to EBITDA as defined in the credit agreement, and all debt outstanding under this facility was classified as short term. In November 2005, the Company secured a waiver of this
covenant which was scheduled to expire on January 31, 2006. The terms of the waiver increased the leverage covenant which limited borrowings to no more than 3.25 times trailing four quarters EBITDA to 3.75 for the September 30, 2005
testing period and included a requirement that the Companys borrowings (as defined in the agreement) not exceed $105.0 million during the waiver period. Availability under this credit facility at December 31, 2005 was $13.9 million. Also,
as a condition of the waiver, the Company and certain of its subsidiaries were required to enter into a security agreement granting a blanket security interest in favor of the lenders and a pledge agreement in favor of the lenders with respect to
the stock of certain subsidiaries. In addition, the Company agreed to execute mortgages, if requested, on its U.S. real property by December 31, 2005.



| |  |                               
| |  | ------------------------------
| |  | Calgon Carbon Corporation    7



---

On January 30, 2006, the Company amended and restated its then existing $125.0 million revolving
credit facility. The amended $118.0 million facility consists of a $100.0 million revolving loan and an $18.0 million term loan. Current commitments from the lenders under the new agreement total $105.0 million with an additional $13.0 million
available to the existing or new lenders. The amended and restated facility is secured by a blanket security interest in favor of the lenders and a pledge agreement in favor of the lenders with respect to the stock of certain subsidiaries.

Included in the credit facility is a letter of credit sub-facility that cannot exceed $30.0 million. The interest rate is based upon
euro-based (LIBOR) rates with other interest rate options available. The applicable Euro Dollar margin ranges from 1.25% to 2.50%, and an unused commitment fee that ranges from 0.25% to 0.50% and is based upon the Companys ratio of debt to
EBITDA. The credit facilitys covenants impose financial restrictions on the Company, including maintaining certain ratios of debt to EBITDA, EBITDA to cash outlays and operating assets to debt and minimum net worth. In addition, the facility
imposes gross spending restrictions on capital expenditures, dividends, treasury share repurchases, acquisitions and investments in non-controlled subsidiaries. The facility also contains mandatory prepayment provisions for the term loan and
proceeds in excess of pre-established amounts of certain events as defined within the loan agreement.

On February 23, 2006, the
Company, as required by the amended credit facility, repaid the $18.0 million term loan with the proceeds from the sale of the Companys Charcoal/Liquid business. The remaining $100.0 million revolving loan has $87.0 million of funding
commitments from the Companys lenders. The Company intends to secure the remaining $13.0 million of commitments either through its existing lenders or new lenders before the end of the first quarter of 2006.

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

The Company has classified the amounts outstanding on its revolving credit facility at December 31, 2005 as long term in accordance with the
provisions of SFAS No. 6, Classification of Short-Term Obligations Expected to be Refinanced.

In December 2004, the
Company entered into an agreement to purchase the additional 20% interest of the then 80% owned Datong Carbon Corporation for $0.7 million. The cash was transferred during January 2005 and the purchase resulted in the Company recording additional
goodwill of $0.4 million.

In May 2005, the Company formed a joint venture company with C. Gigantic Carbon to provide carbon reactivation
services to the Thailand market. The joint venture company was named Calgon Carbon (Thailand) Ltd. and is 20% owned by the Company after an initial investment of $0.2 million which is accounted for in the Companys financial statements under
the equity method.

The Company is obligated to make future payments under various contracts such as debt agreements, lease agreements, and
unconditional purchase obligations. The Company is contractually obligated to make monthly and quarterly interest payments on its outstanding debt agreements. At December 31, 2005, the weighted average interest rate was 6.24% and long-term
borrowings totaled $83.9 million. The Company is also required to make minimum funding contributions to its pension plans which are estimated at $6.4 million for the year ended December 31, 2006. The following table represents the significant
contractual cash obligations and other commercial commitments of the Company as of December 31, 2005, after taking into account the January 30, 2006 refinancing and excluding the $18.0 million term loan repayment.



|                                    |  |        |        |      |   |        |  |      |        |      |   |            |  |       |        |  |   |        |  |   |        
|----------------------------------- |  | ------ | ------ | ---- | - | ------ |  | ---- | ------ | ---- | - | ---------- |  | ----- | ------ |  | - | ------ |  | - | -------
|                                    |  | Due in |        |      |   |       
|(Thousands)                         |  | 2006   |        | 2007 |   | 2008   |  | 2009 |        | 2010 |   | Thereafter |  | Total
|Long-term debt                      |  | $      | 1,800  |      | $ | 3,600  |  | $    | 75,600 |      | $ | 2,925      |  | $     |       |  | $ |       |  | $ | 83,925 
|Operating leases                    |  |        | 5,019  |      |   | 3,781  |  |      | 3,029  |      |   | 2,694      |  |       | 2,539  |  |   | 12,245 |  |   | 29,307 
|Unconditional purchase obligations* |  |        | 26,755 |      |   | 21,626 |  |      | 16,887 |      |   | 8,041      |  |       | 7,753  |  |   | 5,711  |  |   | 86,773 
|                                    |  |        |        |      |   |        |  |      |        |      |   |            |  |       |        |  |   |        |  |   |        
|Total contractual cash obligations  |  | $      | 33,574 |      | $ | 29,007 |  | $    | 95,516 |      | $ | 13,660     |  | $     | 10,292 |  | $ | 17,956 |  | $ | 200,005
|                                    |  |        |        |      |   |        |  |      |        |      |   |            |  |       |        |  |   |        |  |   |        



|* | Primarily for the purchase of raw and other materials, transportation, and information systems services.
|- | --------------------------------------------------------------------------------------------------------

The Company does not have any significant long-term employment agreements.

The Company does not have any special-purpose entities or off-balance sheet financing arrangements except for the operating leases disclosed above.

The Company maintains qualified defined benefit pension plans (the Qualified Plans), which cover substantially all non-union and certain
union employees in the United States and Europe.

The Companys pension expense for all pension plans approximated $7.0 million and
$5.7 million for the years ended December 31, 2005 and 2004, respectively, and is calculated based upon a number of actuarial assumptions, including expected long-term rates of return on our Qualified Plans assets, which range from 7.16%
to 8.50%. In developing the expected long-term rate of return assumption, the Company evaluated input from its actuaries, including their review of asset class return expectations as well as long-term inflation



|                               |  | 
|------------------------------ |  | 
|8    Calgon Carbon Corporation |  | 



---

assumptions. Projected returns are based on broad equity and bond indices. The Company also considered its historical 10-year compounded return which ranged
from 6.31% to 8.09% and has been primarily in excess of these broad equity and bond benchmark indices. The expected long-term rate of return on the U.S. Qualified Plans assets is based on an asset allocation assumption of 70.0% with equity
managers and 30.0% with fixed-income managers. The European Qualified Plans assets are based on an asset allocation assumption of 60.0% with equity managers and 40.0% with fixed-income managers. Because of market fluctuation, the
Companys actual U.S. asset allocation as of December 31, 2005 was 73.4% with equity managers, 25.9% with fixed-income managers, and 0.7% with other investments. The Companys actual European asset allocation as of December 31,
2005 was 50.4% with equity managers, 39.6% with fixed-income managers, and 10.0% with other investments. The Company regularly reviews its asset allocation and periodically rebalances its investments to the targeted allocation when considered
appropriate. The Company continues to believe that the range of 7.16% to 8.50% is a reasonable long-term rate of return on its Qualified Plans assets. The Company will continue to evaluate its actuarial assumptions, including its expected rate
of return, at least annually, and will adjust as necessary.

The discount rates that the Company utilizes for its Qualified Plans to
determine pension obligations is based on a review of long-term bonds that receive one of the two highest ratings given by a recognized rating agency. The discount rate determined on this basis has decreased from a range of 5.43% to 6.25% at
December 31, 2004 to a range of 4.98% to 5.75% at December 31, 2005. The Company estimates that its pension expense for the Qualified Plans will approximate $6.9 million in 2006. Future actual pension expense will depend on future
investment performance, funding levels, changes in discount rates, and various other factors related to the populations participating in its Qualified Plans.

The fair value of the Companys Qualified Plans assets has increased from $66.9 million at December 31, 2004 to $67.3 million at December 31, 2005. During the year ended December 31, 2005,
the Company funded its Qualified Plans with $4.5 million in contributions. The Company expects that it will be required to fund the Qualified Plans with approximately $6.4 million in contributions during 2006.

With the exception of the first quarter of 2000 and the fourth quarter of 2005, the Company has paid quarterly cash dividends on its common stock since
the third quarter of 1987, the quarter succeeding the one in which the Company went public. During 2005, the Company paid dividends at a rate of $0.09 per share for a total amount of $3.6 million. Dividend declaration and payout are at the
discretion of the Board of Directors. Future dividends will depend on the Companys earnings, cash flow, and capital investment plans to pursue long-term growth opportunities.

The Company expects that cash from operating activities plus cash balances and available external financing will be sufficient to meet its operating
requirements for the next twelve months and foreseeable future.

Capital Expenditures and Investments

Capital expenditures were $16.0 million in 2005, $12.4 million in 2004, and $8.7 million in 2003. Expenditures for 2005 primarily included $10.8 million for improvements
to manufacturing facilities, $3.8 million related to the repair of the Companys Pearl River plant as a result of Hurricane Katrina, and $1.1 million for customer capital. The 2004 expenditure amount consisted primarily of $8.2 million for
improvements to manufacturing facilities, $3.1 million for customer capital, and $1.0 million on improvements to information systems. Capital expenditures for 2006 are projected to be approximately $15.6 million.

In 2003, the Company temporarily suspended construction of a new facility in the Gulf Coast region of the United States. On March 22, 2005, the
Company concluded, and the Board of Directors approved, that the cancellation of this project was warranted and that construction of such a facility should be suspended for the foreseeable future. Accordingly, the Company recorded an impairment
charge of $2.2 million for the year ended December 31, 2005.

Also in 2003, the Company partially discontinued operation of one of its
three activated carbon lines at its Catlettsburg, Kentucky facility. The Company will need to install pollution abatement equipment estimated at approximately $7.0 million in order to remain in compliance with state requirements regulating air
emissions before resuming full operation of this line. Management has not concluded its plan of action for compliance related to this activated carbon line; however, if it is determined that a shutdown of the full operation of the activated carbon
line for other than a temporary period is warranted, the impact to operating results would be insignificant.

In January 2006, the Company
announced the temporary idling of its reactivation facility in Blue Lake, California in an effort to reduce operating costs and to more efficiently utilize the available capacity at its other existing locations. The Company conducted an impairment
review, in accordance with SFAS No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets, of the plants assets having a net book value of $1.8 million in connection with the temporary idling of the facility and
concluded that the assets were not impaired. It is managements intention to resume operation of the plant in 2007. If management should conclude that the idling of the plant beyond 2007 is warranted, operating results may be adversely affected
by impairment charges.

The 2005 purchase of business cash out flow of $0.9 million, as shown on the statement of cash flows, represents
the Companys acquisition of the additional 20% interest of Datong Carbon Corporation of $0.7 million and $0.2 million related to the joint venture that was formed with C. Gigantic Carbon Corporation.



| |  |                               
| |  | ------------------------------
| |  | Calgon Carbon Corporation    9



---

Market Risk

Commodity Price Risk

In the normal course of its business, the Company is exposed to market risk or price fluctuations related to the
production of activated carbon products. Coal and natural gas, which are significant to the manufacturing of activated carbon, have market prices that fluctuate regularly. Based on the estimated 2006 usage of coal and natural gas, a hypothetical 10%
increase (or decrease) in the price of coal and natural gas, would result in a pretax loss (or gain) of $0.9 million, respectively.

To
mitigate the risk of fluctuating prices, the Company has entered into long-term contracts to hedge the purchase of a percentage of the estimated need of coal and natural gas at fixed prices. The value of the hedged future commitments is disclosed
within Note 10.

Interest Rate Risk

Substantially all
current and long-term debt is based on rates that float with Euro Dollar-based rates or prime rates, and the carrying value approximates fair value. A hypothetical change of 10% in the Companys effective interest rate from year-end 2005 levels
would increase or decrease interest expense by $0.5 million.

Foreign Currency Exchange Risk

The Company is subject to the risk of price fluctuations related to anticipated revenues and operating costs, firm commitments for capital expenditures, and existing
assets and liabilities denominated in currencies other than U.S. dollars. The Company enters into foreign currency forward exchange contracts and purchases options to manage these exposures. At December 31, 2005, twelve foreign currency forward
exchange contracts were outstanding. A hypothetical 10% strengthening (or weakening) of the U.S. dollar and euro at December 31, 2005 would result in a pretax loss (or gain) of approximately $0.2 million. The foreign currency forward exchange
contracts purchased during 2005 have been accounted for according to SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities.

The Company had also entered into a ten-year foreign currency swap agreement to fix the foreign exchange rate on a $6.5 million intercompany loan between the Company and its subsidiary, Chemviron Carbon Ltd. The swap
agreement provides the offset for the foreign currency fluctuation and neutralizes its effect on loan payments and valuation. This swap transaction has been accounted for in accordance with SFAS No. 133.

Critical Accounting Policies

Management of the Company has evaluated
the accounting policies used in the preparation of the financial statements and related footnotes and believes the policies to be reasonable and appropriate. The preparation of the financial statements in accordance with accounting principles
generally accepted in the United States requires management to make judgments, estimates, and assumptions regarding uncertainties that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the
reported amounts of revenues and expenses. Management uses historical experience and all available information to make these judgments and estimates, and actual results will inevitably differ from those estimates and assumptions that are used to
prepare the Companys financial statements at any given time. Despite these inherent limitations, management believes that Managements Discussion and Analysis (MD&A) and the financial statements and related footnotes provide a
meaningful and fair perspective of the Company.

The following are the critical accounting policies impacted by managements
judgements, assumptions, and estimates. Management believes that the application of these policies on a consistent basis enables the Company to provide the users of the financial statements with useful and reliable information about the
Companys operating results and financial condition.

Revenue Recognition

The Company recognizes revenue and related costs when goods are shipped or services are rendered to customers provided that ownership and risk of loss have passed to the customer. Revenue for major equipment projects
is recognized under the percentage of completion method by comparing actual costs incurred to total estimated costs to complete the respective projects.

Allowance for Doubtful Accounts

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of
its customers to make required payments. The amount of allowance recorded is based upon a quarterly review of specific customer transactions that remain outstanding at least three months beyond their respective due dates. If the financial condition
of the Companys customers were to deteriorate resulting in an impairment of their ability to make payments, additional allowances may be required.

Inventories

The Companys inventories are carried at the lower of cost or market and adjusted to net realizable value by recording a
reserve for inventory obsolescence. The inventory obsolescence reserve is adjusted quarterly based upon a review of specific products that have remained unsold for a prescribed period of time. If the market demand for various products softens, an
additional reserve may be required.



|                                |  | 
|------------------------------- |  | 
|10    Calgon Carbon Corporation |  | 



---

Goodwill and Other Intangible Assets

The Company tests goodwill for impairment at least annually by initially comparing the fair value of the Companys reporting units to their related carrying values. If the fair value of a reporting unit were less
than its carrying value, additional steps would be necessary to determine the amount, if any, of goodwill impairment. Fair values are estimated using discounted cash flow and other valuation methodologies that are based on projections of the amounts
and timing of future revenues and cash flows.

Pensions

Accounting for pensions involves estimating the cost of benefits to be provided well into the future and attributing that cost over the time period each employee works. To accomplish this, extensive use is made of assumptions about
inflation, investment returns, mortality, turnover and discount rates. These assumptions are reviewed annually. In determining the expected return on plan asset assumption, the Company evaluates long-term actual return information, the mix of
investments that comprise plan assets and future estimates of long-term investment returns.

Income Taxes

During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Significant judgment is
required in determining the Companys annual tax rate and in evaluating tax positions. The Company establishes reserves when, despite managements belief that the Companys tax return positions are fully supportable, it believes that
certain positions are probable to be challenged upon review by tax authorities. Changes in estimates are reflected in the year of settlement or expiration of the statute of limitations. While it is often difficult to predict the final outcome or the
timing of resolution of any particular tax matter, the Company believes that its reserves reflect the probable outcome of known tax contingencies. The resolution of tax matters will not have a material impact on the consolidated financial condition
of the Company, although a resolution could have a material impact on the Companys consolidated statements of income and comprehensive income for a particular future period and on the Companys effective tax rate.

The Company is subject to varying statutory tax rates in the countries where it conducts business. Fluctuations in the mix of the Companys income
between countries result in changes to the Companys overall effective tax rate.

Litigation

The Company is involved in various asserted and unasserted legal claims. An estimate is made to accrue for a loss contingency relating to any of these legal claims if it
is probable that a liability was incurred at the date of the financial statements and the amount of loss can be reasonably estimated. Because of the subjective nature inherent in assessing the outcome of legal claims and because the potential that
an adverse outcome in a legal claim could have material impact on the Companys legal position or results of operations, such estimates are considered to be critical accounting estimates. After review, it was determined at December 31,
2005 that for each of the various unresolved legal claims in which the Company is involved, the conditions mentioned above were not met. As such, no accrual was recorded. The Company will continue to evaluate all legal matters as additional
information becomes available. Refer to Note 19 of the financial statements for a discussion of litigation and contingencies.

Long-Lived Assets

The Company evaluates long-lived assets under the provisions of Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets, which addresses financial accounting and reporting for the impairment of long-lived assets, and for long-lived assets to be disposed of. For assets to be held and used, the Company groups a
long-lived asset or assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. An impairment loss for an asset group reduces only the
carrying amounts of a long-lived asset or assets of the group being evaluated. The loss is allocated to the long-lived assets of the group on a pro-rata basis using the relative carrying amounts of those assets, except that the loss allocated to an
individual long-lived asset of the group does not reduce the carrying amount of that asset below its fair value whenever that fair value is determinable without undue cost and effort. Estimates of future cash flows used to test the recoverability of
a long-lived asset group include only the future cash flows that are associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset group. The future cash flow estimates used by the Company exclude
interest charges.



| |  |                                
| |  | -------------------------------
| |  | Calgon Carbon Corporation    11



---

New Accounting Pronouncements

In November 2004, the FASB issued SFAS No. 151, Inventory Costsan Amendment of ARB No. 43, Chapter 4, which requires the recognition of costs of idle facilities, excessive spoilage, double freight and rehandling
costs as a component of current-period expenses. The provisions of SFAS No. 151 are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Management has evaluated the impact of the adoption of SFAS
No. 151 on the Companys financial statements and expects it to be immaterial. The Company plans to adopt SFAS No. 151 effective January 1, 2006 as required.

In December 2004, the FASB issued SFAS No. 123R, Share-Based Payment, which establishes the accounting for transactions in which an
entity exchanges its equity instruments or certain liabilities based upon an entitys equity instruments for goods or services. SFAS No. 123R generally requires that publicly traded companies measure the cost of employee services received
in exchange for an award of equity instruments based on the fair value of the award at the grant date. That cost will be recognized over the period during which an employee is required to provide service in exchange for the award which is usually
the vesting period. Management expects to adopt SFAS No. 123R on January 1, 2006 as required. Management has not yet completed its evaluation of the impact of the adoption of SFAS No. 123R.

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

Forward-Looking Information Safe Harbor

This Annual Report contains
historical information and forward-looking statements. Statements looking forward in time, including statements regarding future growth and profitability, price increases, cost savings, broader product lines, enhanced competitive posture and
acquisitions are included in this Annual Report pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. They involve known and unknown risks and uncertainties that may cause the Companys
actual results in future periods to be materially different from any future performance suggested herein. Further, the Company operates in an industry sector where securities values may be volatile and may be influenced by economic and other factors
beyond the Companys control. In the context of the forward-looking information provided in this Annual Report, please refer to the discussions of risk factors detailed in, as well as the other information contained in, this Annual Report and
the Companys filings with the Securities and Exchange Commission.



|                                |  | 
|------------------------------- |  | 
|12    Calgon Carbon Corporation |  | 



---

REPORT OF MANAGEMENT

Responsibility for Preparation of the Financial Statements and Establishing and Maintaining Adequate Internal Control Over Financial Reporting

Responsibility for Financial Statements

Management is responsible for the preparation of the financial statements included in this Annual
Report. The Consolidated Financial Statements were prepared in accordance with accounting principles generally accepted in the United States of America and include amounts that are based on the best estimates and judgments of management. The Notes
to the Consolidated Financial Statements contained within this Annual Report are consistent with the Consolidated Financial Statements.

Managements Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining
adequate internal controls over financial reporting. The Companys internal control system is designed to provide reasonable assurance concerning the reliability of the financial data used in the preparation of the Companys financial
statements, as well as reasonable assurance with respect to safeguarding the Companys assets from unauthorized use or disposition. However, no matter how well designed and operated, an internal control system can provide only reasonable, not
absolute, assurance that the objectives of the control system are met.

Management conducted an evaluation of the effectiveness of the
Companys internal controls over financial reporting as of December 31, 2005. In making this evaluation, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal
ControlIntegrated Framework.Managements evaluation included reviewing the documentation of our controls, evaluating the design effectiveness of controls, and testing their operating effectiveness. Based on this evaluation,
management believes that, as of December 31, 2005, the Companys internal control over financial reporting was not effective.

A
material weakness is defined as a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or
detected. As of December 31, 2005, the Company has determined that a material weakness existed relating to the failure to record invoices for professional services in a timely manner. This determination resulted from errors identified during
the Companys audit for the year ended December 31, 2005.

Management evaluated the cause of these errors and determined that the controls over
the collection and recording of invoices for professional services did not operate effectively. As a result of the actual misstatement that occurred and the lack of other mitigating controls, management determined that this deficiency constitutes a
material weakness in internal control over financial reporting. The material weakness resulted in a restatement of the Companys Unaudited Condensed Consolidated Financial Statements for the quarters ended March 31, June 30, and
September 30, 2005.

Managements assessment of the effectiveness of internal control over financial reporting as of
December 31, 2005, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, who also audited our consolidated financial statements. Deloitte & Touche LLPs attestation report on
managements assessment of our internal control over financial reporting appears on page 14.

Remediation of Material Weakness in Internal Control

We have re-evaluated the internal controls relative to this area and have implemented additional internal controls so that, as of the date hereof, we
believe that we have remediated this material weakness. The Companys remediation plan, which included the implementation of additional controls to ensure proper recording of invoices for professional services in a timely manner, is as follows:



| |  | Centralized the collection and recordkeeping of invoices for professional services.
|- |  | -----------------------------------------------------------------------------------



| |  | Established balance sheet reconciliation review meetings with the business process owners.
|- |  | ------------------------------------------------------------------------------------------

In addition, the Company will continue to monitor the effectiveness of these remedial actions and make any further changes as management determines to be
appropriate.

Changes in Internal Control

There were
no changes during the most recent fiscal quarter that had a material effect or are reasonably likely to have a material effect on internal control over financial reporting.

March 24, 2006



| |  |                                
| |  | -------------------------------
| |  | Calgon Carbon Corporation    13



---

INTERNAL CONTROLS  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Calgon Carbon Corporation

Pittsburgh, Pennsylvania

We have audited managements
assessment, included in the accompanying Managements Annual Report on Internal Control over Financial Reporting, included in the Report of Management, that Calgon Carbon Corporation and subsidiaries (the Company) did
not maintain effective internal control over financial reporting as of December 31, 2005 because of the effect of the material weakness identified in managements assessment, based on criteria established in Internal Control
Integrated Framework issued by the Committee of Sponsoring Organization of the Treadway Commission. The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on managements assessment and an opinion on the effectiveness of the Companys internal control over financial reporting based on
our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating managements assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinions.

A companys internal control over financial reporting is a
process designed by, or under the supervision of, the companys principal executive and principal financial officers, or persons performing similar functions, and effected by the companys board of directors, management, and other
personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that
could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness
of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood
that a material misstatement of the annual or interim financial statements will not be prevented or detected. The following material weakness has been identified and included in managements assessment: The Company did not maintain effective
controls over the collection and recording of invoices for professional services. As a result, material adjustments were necessary to present the 2005 annual financial statements in accordance with generally accepted accounting principles. As a
result of the actual misstatement that occurred and the lack of other mitigating controls, this deficiency constitutes a material weakness in internal control over financial reporting. This material weakness was considered in determining the nature,
timing, and extent of audit tests applied in or audit of the consolidated financial statements as of and for the year ended December 31, 2005 of the Company and this report does not affect our report on such financial statements.

In our opinion, managements assessment that the Company did not maintain effective internal control over financial reporting as of
December 31, 2005, is fairly stated, in all material respects, based on the criteria established in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our
opinion, because of the effect of the material weakness described above on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2005,
based on the criteria established in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2005 of the
Company and our report dated March 24, 2006 expressed an unqualified opinion on those financial statements.



|                         
|-------------------------
|                         
|/s/ Deloitte & Touche LLP
|Pittsburgh, Pennsylvania 
|March 24, 2006           



|                                |  | 
|------------------------------- |  | 
|14    Calgon Carbon Corporation |  | 



---

FINANCIAL STATEMENTS  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Calgon Carbon Corporation

Pittsburgh, Pennsylvania

We have audited the accompanying
consolidated balance sheets of Calgon Carbon Corporation and subsidiaries (the Company) as of December 31, 2005 and 2004, and the related consolidated statements of income and comprehensive income, cash flows and stockholders
equity for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our
audits. We did not audit the financial statements of Chemviron Carbon Ltd. and subsidiaries (Chemviron UK) as of and for the years ending December 31, 2005 and 2004, which statements reflect total assets constituting 11 percent and
12 percent of consolidated total assets as of December 31, 2005 and 2004, and total revenues constituting 12 percent and 11 percent of consolidated total revenues for the year then ended. Such financial statements were audited by other auditors
whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for such subsidiary Chemviron UK, is based solely on the report of such other auditors.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors
provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of other auditors, such consolidated
financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2005 and 2004 and the results of its operations and its cash flows for each of the three years in the period ended
December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.

We have also audited,
in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Companys internal control over financial reporting as of December 31, 2005, based on the criteria established in
Internal Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 24, 2006 expressed an unqualified opinion on managements assessment of the
effectiveness of the Companys internal control over financial reporting and an adverse opinion on the effectiveness of the Companys internal control over financial reporting because of a material weakness.



|                         
|-------------------------
|                         
|/s/ Deloitte & Touche LLP
|Pittsburgh, Pennsylvania 
|March 24, 2006           



| |  |                                
| |  | -------------------------------
| |  | Calgon Carbon Corporation    15



---

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Calgon Carbon Corporation



|                                                                                                             |  |                        |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------------------------------------------------------ |  | ---------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                             |  | Year Ended December 31 |        
|(Dollars in thousands except per share data)                                                                 |  | 2005                   |         |   | 2004 |   |         | 2003 | 
|Net Sales                                                                                                    |  | $                      | 290,835 |   |      | $ | 295,877 |      |  | $ | 253,178 |  
|                                                                                                             |  |                        |         |   |      |   |         |      |  |   |         |  
|Cost of products sold (excluding depreciation)                                                               |  |                        | 215,330 |   |      |   | 207,523 |      |  |   | 174,012 |  
|Depreciation and amortization                                                                                |  |                        | 21,042  |   |      |   | 22,004  |      |  |   | 18,854  |  
|Selling, general and administrative expenses                                                                 |  |                        | 60,547  |   |      |   | 54,543  |      |  |   | 49,730  |  
|Research and development expenses                                                                            |  |                        | 4,506   |   |      |   | 3,801   |      |  |   | 3,955   |  
|Gulf Coast Facility impairment charge (Note 7)                                                               |  |                        | 2,158   |   |      |   |        |      |  |   |        |  
|Restructuring charges                                                                                        |  |                        | 412     |   |      |   |        |      |  |   | 452     |  
|                                                                                                             |  |                        |         |   |      |   |         |      |  |   |         |  
|                                                                                                             |  |                        | 303,995 |   |      |   | 287,871 |      |  |   | 247,003 |  
|                                                                                                             |  |                        |         |   |      |   |         |      |  |   |         |  
|Income (loss) from operations                                                                                |  |                        | (13,160 | ) |      |   | 8,006   |      |  |   | 6,175   |  
|Interest income                                                                                              |  |                        | 719     |   |      |   | 697     |      |  |   | 786     |  
|Interest expense                                                                                             |  |                        | (4,891  | ) |      |   | (3,409  | )    |  |   | (2,341  | )
|Other expensenet                                                                                            |  |                        | (2,138  | ) |      |   | (3,238  | )    |  |   | (1,718  | )
|                                                                                                             |  |                        |         |   |      |   |         |      |  |   |         |  
|Income (loss) from continuing operations before income taxes, equity in income (loss), and minority interest |  |                        | (19,470 | ) |      |   | 2,056   |      |  |   | 2,902   |  
|Income tax benefit                                                                                           |  |                        | (9,688  | ) |      |   | (846    | )    |  |   | (300    | )
|                                                                                                             |  |                        |         |   |      |   |         |      |  |   |         |  
|Income (loss) from continuing operations before equity in income (loss), and minority interest               |  |                        | (9,782  | ) |      |   | 2,902   |      |  |   | 3,202   |  
|Equity in income (loss) on equity investments                                                                |  |                        | (725    | ) |      |   | 1,000   |      |  |   | 429     |  
|Minority interest                                                                                            |  |                        |        |   |      |   | 66      |      |  |   | 179     |  
|                                                                                                             |  |                        |         |   |      |   |         |      |  |   |         |  
|Income (loss) from continuing operations                                                                     |  |                        | (10,507 | ) |      |   | 3,968   |      |  |   | 3,810   |  
|Income from discontinued operations                                                                          |  |                        | 3,091   |   |      |   | 1,920   |      |  |   | 675     |  
|                                                                                                             |  |                        |         |   |      |   |         |      |  |   |         |  
|Net income (loss)                                                                                            |  |                        | (7,416  | ) |      |   | 5,888   |      |  |   | 4,485   |  
|Other comprehensive income (loss), net of tax provision (benefit) of $3,019, ($816), and $773, respectively  |  |                        | (9,811  | ) |      |   | 3,939   |      |  |   | 8,529   |  
|                                                                                                             |  |                        |         |   |      |   |         |      |  |   |         |  
|Comprehensive income (loss)                                                                                  |  | $                      | (17,227 | ) |      | $ | 9,827   |      |  | $ | 13,014  |  
|                                                                                                             |  |                        |         |   |      |   |         |      |  |   |         |  
|Basic and diluted income (loss) from continuing operations per common share                                  |  | $                      | (.27    | ) |      | $ | .10     |      |  | $ | .10     |  
|Income from discontinued operations per common share                                                         |  | $                      | .08     |   |      | $ | .05     |      |  | $ | .02     |  
|                                                                                                             |  |                        |         |   |      |   |         |      |  |   |         |  
|Basic and diluted net income (loss) per common share                                                         |  | $                      | (.19    | ) |      | $ | .15     |      |  | $ | .12     |  
|                                                                                                             |  |                        |         |   |      |   |         |      |  |   |         |  
|Weighted average shares outstanding, in thousands                                                            |  |                        |         |   |      |   |         |      |  |   |         |  
|Basic                                                                                                        |  |                        | 39,615  |   |      |   | 39,054  |      |  |   | 39,000  |  
|Diluted                                                                                                      |  |                        | 39,615  |   |      |   | 39,456  |      |  |   | 39,157  |  

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



|                                |  | 
|------------------------------- |  | 
|16    Calgon Carbon Corporation |  | 



---

CONSOLIDATED BALANCE SHEETS

Calgon Carbon Corporation



|                                                                                                      |  |             |         |   |      |   |         |  
|----------------------------------------------------------------------------------------------------- |  | ----------- | ------- | - | ---- | - | ------- | -
|                                                                                                      |  | December 31 |        
|(Dollars in thousands)                                                                                |  | 2005        |         |   | 2004 |  
|Assets                                                                                                |  |             |         |   |      |   |         |  
|Current assets:                                                                                       |  |             |         |   |      |   |         |  
|Cash and cash equivalents                                                                             |  | $           | 5,446   |   |      | $ | 8,780   |  
|Receivables, net of allowance of $2,172 and $2,902                                                    |  |             | 51,224  |   |      |   | 57,554  |  
|Revenue recognized in excess of billings on uncompleted contracts                                     |  |             | 5,443   |   |      |   | 6,766   |  
|Inventories                                                                                           |  |             | 67,655  |   |      |   | 57,495  |  
|Deferred income taxescurrent                                                                         |  |             | 8,448   |   |      |   | 7,939   |  
|Other current assets                                                                                  |  |             | 6,044   |   |      |   | 4,938   |  
|Assets held for sale                                                                                  |  |             | 21,340  |   |      |   | 25,817  |  
|                                                                                                      |  |             |         |   |      |   |         |  
|Total current assets                                                                                  |  |             | 165,600 |   |      |   | 169,289 |  
|Property, plant and equipment, net                                                                    |  |             | 108,745 |   |      |   | 120,332 |  
|Equity investments                                                                                    |  |             | 7,219   |   |      |   | 8,135   |  
|Intangibles                                                                                           |  |             | 10,049  |   |      |   | 12,180  |  
|Goodwill                                                                                              |  |             | 33,874  |   |      |   | 34,071  |  
|Deferred income taxeslong-term                                                                       |  |             | 18,684  |   |      |   | 16,405  |  
|Other assets                                                                                          |  |             | 3,697   |   |      |   | 3,486   |  
|                                                                                                      |  |             |         |   |      |   |         |  
|Total assets                                                                                          |  | $           | 347,868 |   |      | $ | 363,898 |  
|                                                                                                      |  |             |         |   |      |   |         |  
|Liabilities and Shareholders Equity                                                                  |  |             |         |   |      |   |         |  
|Current liabilities:                                                                                  |  |             |         |   |      |   |         |  
|Accounts payable and accrued liabilities                                                              |  | $           | 36,182  |   |      | $ | 35,447  |  
|Billings in excess of revenue recognized on uncompleted contracts                                     |  |             | 3,933   |   |      |   | 750     |  
|Restructuring reserve                                                                                 |  |             | 320     |   |      |   | 872     |  
|Payroll and benefits payable                                                                          |  |             | 11,396  |   |      |   | 7,381   |  
|Accrued income taxes                                                                                  |  |             | 10,783  |   |      |   | 12,736  |  
|Liabilities held for sale                                                                             |  |             | 6,683   |   |      |   | 7,253   |  
|                                                                                                      |  |             |         |   |      |   |         |  
|Total current liabilities                                                                             |  |             | 69,297  |   |      |   | 64,439  |  
|Long-term debt                                                                                        |  |             | 83,925  |   |      |   | 84,600  |  
|Deferred income taxeslong-term                                                                       |  |             | 1,389   |   |      |   | 8,235   |  
|Accrued pension and other liabilities                                                                 |  |             | 42,697  |   |      |   | 38,753  |  
|                                                                                                      |  |             |         |   |      |   |         |  
|Total liabilities                                                                                     |  |             | 197,308 |   |      |   | 196,027 |  
|                                                                                                      |  |             |         |   |      |   |         |  
|Commitments and contingencies (Notes 10 and 19)                                                       |  |             |         |   |      |   |         |  
|Shareholders equity:                                                                                 |  |             |         |   |      |   |         |  
|Common shares, $.01 par value, 100,000,000 shares authorized, 42,459,733 and 41,958,933 shares issued |  |             | 425     |   |      |   | 420     |  
|Additional paid-in capital                                                                            |  |             | 69,906  |   |      |   | 65,523  |  
|Retained earnings                                                                                     |  |             | 101,833 |   |      |   | 112,804 |  
|Accumulated other comprehensive income                                                                |  |             | 6,442   |   |      |   | 16,253  |  
|Deferred compensation                                                                                 |  |             | (917    | ) |      |   |        |  
|                                                                                                      |  |             |         |   |      |   |         |  
|                                                                                                      |  |             | 177,689 |   |      |   | 195,000 |  
|Treasury stock, at cost, 2,787,258 shares                                                             |  |             | (27,129 | ) |      |   | (27,129 | )
|                                                                                                      |  |             |         |   |      |   |         |  
|Total shareholders equity                                                                            |  |             | 150,560 |   |      |   | 167,871 |  
|                                                                                                      |  |             |         |   |      |   |         |  
|Total liabilities and shareholders equity                                                            |  | $           | 347,868 |   |      | $ | 363,898 |  
|                                                                                                      |  |             |         |   |      |   |         |  

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



| |  |                                
| |  | -------------------------------
| |  | Calgon Carbon Corporation    17



---

CONSOLIDATED STATEMENTS OF CASH FLOWS

Calgon Carbon Corporation



|                                                                                                       |  |                        |          |   |      |   |          |      |  |   |          |  
|------------------------------------------------------------------------------------------------------ |  | ---------------------- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                                                                                       |  | Year Ended December 31 |         
|(Dollars in thousands)                                                                                 |  | 2005                   |          |   | 2004 |   |          | 2003 | 
|Cash flows from operating activities                                                                   |  |                        |          |   |      |   |          |      |  |   |          |  
|Net income (loss)                                                                                      |  | $                      | (7,416   | ) |      | $ | 5,888    |      |  | $ | 4,485    |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities:               |  |                        |          |   |      |   |          |      |  |   |          |  
|Depreciation and amortization                                                                          |  |                        | 22,062   |   |      |   | 23,126   |      |  |   | 19,789   |  
|Non-cash impairment and restructuring charges                                                          |  |                        | 2,976    |   |      |   |         |      |  |   |         |  
|Equity in (income) loss from equity investments                                                        |  |                        | 725      |   |      |   | (1,000   | )    |  |   | (429     | )
|Distributions received from equity investments                                                         |  |                        | 254      |   |      |   |         |      |  |   |         |  
|Employee benefit plan provisions                                                                       |  |                        | 4,046    |   |      |   | 4,580    |      |  |   | 4,622    |  
|Changes in assets and liabilitiesnet of effects from purchase of businesses:                          |  |                        |          |   |      |   |          |      |  |   |          |  
|Decrease (increase) in receivables                                                                     |  |                        | 4,273    |   |      |   | (3,469   | )    |  |   | 1,237    |  
|Increase in inventories                                                                                |  |                        | (13,009  | ) |      |   | (2,076   | )    |  |   | (648     | )
|Decrease (increase) in revenue in excess of billings on uncompleted contracts and other current assets |  |                        | 2,787    |   |      |   | 1,410    |      |  |   | (5,720   | )
|(Decrease) increase in restructuring reserve                                                           |  |                        | (498     | ) |      |   | (336     | )    |  |   | 241      |  
|Increase (decrease) in accounts payable and accrued liabilities                                        |  |                        | 5,346    |   |      |   | (2,606   | )    |  |   | (2,092   | )
|(Decrease) increase in long-term deferred income taxes                                                 |  |                        | (6,284   | ) |      |   | (2,373   | )    |  |   | 4,606    |  
|Decrease in accrued pensions and other liabilities                                                     |  |                        | (4,532   | ) |      |   | (4,908   | )    |  |   | (6,799   | )
|Other itemsnet                                                                                        |  |                        | 2,110    |   |      |   | 1,838    |      |  |   | 2,479    |  
|                                                                                                       |  |                        |          |   |      |   |          |      |  |   |          |  
|Net cash provided by operating activities                                                              |  |                        | 12,840   |   |      |   | 20,074   |      |  |   | 21,771   |  
|                                                                                                       |  |                        |          |   |      |   |          |      |  |   |          |  
|Cash flows from investing activities                                                                   |  |                        |          |   |      |   |          |      |  |   |          |  
|Purchase of businesses (net of cash)                                                                   |  |                        | (856     | ) |      |   | (35,250  | )    |  |   |         |  
|Purchase of intangible assets                                                                          |  |                        |         |   |      |   | (687     | )    |  |   |         |  
|Property, plant and equipment expenditures                                                             |  |                        | (15,996  | ) |      |   | (12,413  | )    |  |   | (8,684   | )
|Proceeds from disposals of property, plant and equipment                                               |  |                        | 1,356    |   |      |   | 1,527    |      |  |   | 642      |  
|                                                                                                       |  |                        |          |   |      |   |          |      |  |   |          |  
|Net cash used in investing activities                                                                  |  |                        | (15,496  | ) |      |   | (46,823  | )    |  |   | (8,042   | )
|                                                                                                       |  |                        |          |   |      |   |          |      |  |   |          |  
|Cash flows from financing activities                                                                   |  |                        |          |   |      |   |          |      |  |   |          |  
|Proceeds from borrowings                                                                               |  |                        | 108,821  |   |      |   | 171,900  |      |  |   | 107,208  |  
|Repayments of borrowings                                                                               |  |                        | (109,496 | ) |      |   | (141,561 | )    |  |   | (110,604 | )
|Common stock dividends                                                                                 |  |                        | (3,555   | ) |      |   | (4,685   | )    |  |   | (4,679   | )
|Common stock issued                                                                                    |  |                        | 3,050    |   |      |   | 856      |      |  |   |         |  
|                                                                                                       |  |                        |          |   |      |   |          |      |  |   |          |  
|Net cash (used in) provided by financing activities                                                    |  |                        | (1,180   | ) |      |   | 26,510   |      |  |   | (8,075   | )
|                                                                                                       |  |                        |          |   |      |   |          |      |  |   |          |  
|Effect of exchange rate changes on cash                                                                |  |                        | 502      |   |      |   | 65       |      |  |   | (793     | )
|                                                                                                       |  |                        |          |   |      |   |          |      |  |   |          |  
|(Decrease) increase in cash and cash equivalents                                                       |  |                        | (3,334   | ) |      |   | (174     | )    |  |   | 4,861    |  
|                                                                                                       |  |                        |          |   |      |   |          |      |  |   |          |  
|Cash and cash equivalents, beginning of period                                                         |  |                        | 8,780    |   |      |   | 8,954    |      |  |   | 4,093    |  
|                                                                                                       |  |                        |          |   |      |   |          |      |  |   |          |  
|Cash and cash equivalents, end of period                                                               |  | $                      | 5,446    |   |      | $ | 8,780    |      |  | $ | 8,954    |  
|                                                                                                       |  |                        |          |   |      |   |          |      |  |   |          |  
|Noncash transactions from investing activities:                                                        |  |                        |          |   |      |   |          |      |  |   |          |  
|Purchase of an additional 20% interest in Datong Carbon Corporation                                    |  | $                      |         |   |      | $ | 745      |      |  | $ |         |  
|                                                                                                       |  |                        |          |   |      |   |          |      |  |   |          |  

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



|                                |  | 
|------------------------------- |  | 
|18    Calgon Carbon Corporation |  | 



---

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

Calgon Carbon Corporation



|                                                 |  |                     |  |              |     |                          |   |                   |  |   |                      |   |  |                                     |        |   |           |   |        |                |  |   |         |   |  |           |   |  |   |         |   |  |   |         |  
|------------------------------------------------ |  | ------------------- |  | ------------ | --- | ------------------------ | - | ----------------- |  | - | -------------------- | - |  | ----------------------------------- | ------ | - | --------- | - | ------ | -------------- |  | - | ------- | - |  | --------- | - |  | - | ------- | - |  | - | ------- | -
|(Dollars in thousands, except per share data)    |  | CommonShares Issued |  | CommonShares |     | AdditionalPaid-InCapital |   | Retained Earnings |  |   | DeferredCompensation |   |  | AccumulatedOtherComprehensiveIncome |        |   | Sub-Total |   |        | Treasury Stock |  |   | Total   |  
|                                                 |  |                     |  |              |     |                          |   | Shares            |  |   | Amount               |   | 
|Balance, December 31, 2002                       |  | 41,750,116          |  | $            | 418 |                          | $ | 64,449            |  | $ | 111,795              |   |  | $                                   |       |   |           | $ | 3,785  |                |  | $ | 180,447 |   |  | 2,787,358 |   |  | $ | (27,129 | ) |  | $ | 153,318 |  
|                                                 |  |                     |  |              |     |                          |   |                   |  |  
|2003                                             |  |                     |  |              |     |                          |   |                   |  |   |                      |   |  |                                     |        |   |           |   |        |                |  |   |         |   |  |           |   |  |   |         |   |  |   |         |  
|Net income                                       |  |                    |  |              |    |                          |   |                  |  |   | 4,485                |   |  |                                     |       |   |           |   |       |                |  |   | 4,485   |   |  |          |   |  |   |        |   |  |   | 4,485   |  
|Employee and director stock plans                |  | 27,000              |  |              |    |                          |   | 139               |  |   |                     |   |  |                                     |       |   |           |   |       |                |  |   | 139     |   |  |          |   |  |   |        |   |  |   | 139     |  
|Director deferred compensation paid in stock     |  | 11,567              |  |              |    |                          |   | 55                |  |   |                     |   |  |                                     |       |   |           |   |       |                |  |   | 55      |   |  |          |   |  |   |        |   |  |   | 55      |  
|Issuance of restricted stock to management       |  | 5,000               |  |              |    |                          |   | 26                |  |   |                     |   |  |                                     |       |   |           |   |       |                |  |   | 26      |   |  |          |   |  |   |        |   |  |   | 26      |  
|Common stock dividends cash ($0.12 per share)    |  |                    |  |              |    |                          |   |                  |  |   | (4,679               | ) |  |                                     |       |   |           |   |       |                |  |   | (4,679  | ) |  |          |   |  |   |        |   |  |   | (4,679  | )
|Translation adjustments, net of tax              |  |                    |  |              |    |                          |   |                  |  |   |                     |   |  |                                     |       |   |           |   | 7,434  |                |  |   | 7,434   |   |  |          |   |  |   |        |   |  |   | 7,434   |  
|Additional minimum pension liability, net of tax |  |                    |  |              |    |                          |   |                  |  |   |                     |   |  |                                     |       |   |           |   | 1,209  |                |  |   | 1,209   |   |  |          |   |  |   |        |   |  |   | 1,209   |  
|Unrecognized loss on derivatives, net of tax     |  |                    |  |              |    |                          |   |                  |  |   |                     |   |  |                                     |       |   |           |   | (114   | )              |  |   | (114    | ) |  |          |   |  |   |        |   |  |   | (114    | )
|Treasury stock issued                            |  |                    |  |              |    |                          |   |                  |  |   |                     |   |  |                                     |       |   |           |   |       |                |  |   |        |   |  | (100      | ) |  |   |        |   |  |   |        |  
|                                                 |  |                     |  |              |     |                          |   |                   |  |   |                      |   |  |                                     |        |   |           |   |        |                |  |   |         |   |  |           |   |  |   |         |   |  |   |         |  
|Balance, December 31, 2003                       |  | 41,793,683          |  | $            | 418 |                          | $ | 64,669            |  | $ | 111,601              |   |  | $                                   |       |   |           | $ | 12,314 |                |  | $ | 189,002 |   |  | 2,787,258 |   |  | $ | (27,129 | ) |  | $ | 161,873 |  
|                                                 |  |                     |  |              |     |                          |   |                   |  |   |                      |   |  |                                     |        |   |           |   |        |                |  |   |         |   |  |           |   |  |   |         |   |  |   |         |  
|                                                 |  |                     |  |              |     |                          |   |                   |  |  
|2004                                             |  |                     |  |              |     |                          |   |                   |  |   |                      |   |  |                                     |        |   |           |   |        |                |  |   |         |   |  |           |   |  |   |         |   |  |   |         |  
|Net income                                       |  |                    |  |              |    |                          |   |                  |  |   | 5,888                |   |  |                                     |       |   |           |   |       |                |  |   | 5,888   |   |  |          |   |  |   |        |   |  |   | 5,888   |  
|Employee and director stock plans                |  | 165,250             |  |              | 2   |                          |   | 854               |  |   |                     |   |  |                                     |       |   |           |   |       |                |  |   | 856     |   |  |          |   |  |   |        |   |  |   | 856     |  
|Common stock dividends cash ($0.12 per share)    |  |                    |  |              |    |                          |   |                  |  |   | (4,685               | ) |  |                                     |       |   |           |   |       |                |  |   | (4,685  | ) |  |          |   |  |   |        |   |  |   | (4,685  | )
|Translation adjustments, net of tax              |  |                    |  |              |    |                          |   |                  |  |   |                     |   |  |                                     |       |   |           |   | 5,421  |                |  |   | 5,421   |   |  |          |   |  |   |        |   |  |   | 5,421   |  
|Additional minimum pension liability, net of tax |  |                    |  |              |    |                          |   |                  |  |   |                     |   |  |                                     |       |   |           |   | (1,380 | )              |  |   | (1,380  | ) |  |          |   |  |   |        |   |  |   | (1,380  | )
|Unrecognized loss on derivatives, net of tax     |  |                    |  |              |    |                          |   |                  |  |   |                     |   |  |                                     |       |   |           |   | (102   | )              |  |   | (102    | ) |  |          |   |  |   |        |   |  |   | (102    | )
|                                                 |  |                     |  |              |     |                          |   |                   |  |   |                      |   |  |                                     |        |   |           |   |        |                |  |   |         |   |  |           |   |  |   |         |   |  |   |         |  
|Balance, December 31, 2004                       |  | 41,958,933          |  | $            | 420 |                          | $ | 65,523            |  | $ | 112,804              |   |  | $                                   |       |   |           | $ | 16,253 |                |  | $ | 195,000 |   |  | 2,787,258 |   |  | $ | (27,129 | ) |  | $ | 167,871 |  
|                                                 |  |                     |  |              |     |                          |   |                   |  |   |                      |   |  |                                     |        |   |           |   |        |                |  |   |         |   |  |           |   |  |   |         |   |  |   |         |  
|                                                 |  |                     |  |              |     |                          |   |                   |  |  
|2005                                             |  |                     |  |              |     |                          |   |                   |  |   |                      |   |  |                                     |        |   |           |   |        |                |  |   |         |   |  |           |   |  |   |         |   |  |   |         |  
|Net loss                                         |  |                    |  |              |    |                          |   |                  |  |   | (7,416               | ) |  |                                     |       |   |           |   |       |                |  |   | (7,416  | ) |  |          |   |  |   |        |   |  |   | (7,416  | )
|Employee and director stock plans                |  | 500,800             |  |              | 5   |                          |   | 4,383             |  |   |                     |   |  |                                     | (1,338 | ) |           |   |       |                |  |   | 3,050   |   |  |          |   |  |   |        |   |  |   | 3,050   |  
|Employee and director deferred compensation      |  |                    |  |              |    |                          |   |                  |  |   |                     |   |  |                                     | 421    |   |           |   |       |                |  |   | 421     |   |  |          |   |  |   |        |   |  |   | 421     |  
|Common stock dividends cash ($.09 per share)     |  |                    |  |              |    |                          |   |                  |  |   | (3,555               | ) |  |                                     |       |   |           |   |       |                |  |   | (3,555  | ) |  |          |   |  |   |        |   |  |   | (3,555  | )
|Translation adjustments, net of tax              |  |                    |  |              |    |                          |   |                  |  |   |                     |   |  |                                     |       |   |           |   | (4,799 | )              |  |   | (4,799  | ) |  |          |   |  |   |        |   |  |   | (4,799  | )
|Additional minimum pension liability, net of tax |  |                    |  |              |    |                          |   |                  |  |   |                     |   |  |                                     |       |   |           |   | (4,856 | )              |  |   | (4,856  | ) |  |          |   |  |   |        |   |  |   | (4,856  | )
|Unrecognized loss on derivatives, net of tax     |  |                    |  |              |    |                          |   |                  |  |   |                     |   |  |                                     |       |   |           |   | (156   | )              |  |   | (156    | ) |  |          |   |  |   |        |   |  |   | (156    | )
|                                                 |  |                     |  |              |     |                          |   |                   |  |   |                      |   |  |                                     |        |   |           |   |        |                |  |   |         |   |  |           |   |  |   |         |   |  |   |         |  
|Balance, December 31, 2005                       |  | 42,459,733          |  | $            | 425 |                          | $ | 69,906            |  | $ | 101,833              |   |  | $                                   | (917   | ) |           | $ | 6,442  |                |  | $ | 177,689 |   |  | 2,787,258 |   |  | $ | (27,129 | ) |  | $ | 150,560 |  
|                                                 |  |                     |  |              |     |                          |   |                   |  |   |                      |   |  |                                     |        |   |           |   |        |                |  |   |         |   |  |           |   |  |   |         |   |  |   |         |  

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



| |  |                                
| |  | -------------------------------
| |  | Calgon Carbon Corporation    19



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Calgon Carbon Corporation

1. Summary of Accounting Policies

Operations

Calgon Carbon Corporation (the Company) is a
global leader in services and solutions for purifying water and air, food, beverage, and industrial process streams. The Companys operations are principally conducted in three business segments: Activated Carbon and Service, Equipment, and
Consumer. Each of these segments includes the production, design and marketing of products and services specifically developed for the purification, separation and concentration of liquids and gases. The Activated Carbon and Service segment relies
on activated carbon as a base material, while Equipment relies on a variety of other methods and materials which also involve other materials in addition to activated carbon. The Consumer segment brings the Companys purification technologies
directly to the consumer in the form of products and services. The Companys largest markets are in the United States, Europe, and Japan. The Company also markets in Canada, Latin America, and Asia.

Principles of Consolidation

The consolidated financial statements
include the accounts of Calgon Carbon Corporation and its wholly owned subsidiaries, Chemviron Carbon GmbH, Calgon Carbon Canada, Inc., Chemviron Carbon Ltd., Calgon Carbon Investments Inc., Solarchem Environmental Systems Inc., Charcoal Cloth
(International) Limited, Charcoal Cloth Ltd., Advanced Separation Technologies Inc., Calgon Carbon (Tianjin) Co., Ltd., Calgon Carbon Asia Ltd., Waterlink (UK) Holdings Ltd., Sutcliffe Croftshaw Ltd., Sutcliffe Speakman Ltd., Sutcliffe Speakman
Carbons Ltd., Lakeland Processing Ltd., and Sutcliffe Speakmanco 5 Ltd. In December 2004, the Company increased its equity ownership in Datong Carbon Corporation from 80% to 100% for a purchase price of $0.7 million which resulted in the Company
recording additional goodwill of $0.4 million. The Company has a 49% ownership stake in a joint venture with Mitsubishi Chemical Corporation named Calgon Mitsubishi Chemical Corporation (CMCC). CMCC is accounted for in the Companys financial
statements under the equity method. In May 2005, the Company formed a joint venture company with C. Gigantic Carbon which was named Calgon Carbon (Thailand) Ltd. The joint venture is 20% owned by the Company which is accounted for in the
Companys financial statements under the equity method.

A portion of the Companys international operations in Europe is owned
directly by the Company and is operated as branches. Intercompany accounts and transactions have been eliminated.

Foreign Currency

Substantially all assets and liabilities of the Companys international operations are translated at year-end exchange rates; income and expenses are translated at
average exchange rates prevailing during the year. Translation adjustments represent other comprehensive income or loss and are accumulated in a separate component of shareholders equity, net of tax effects. Transaction gains and losses are
included in other expense-net.

Revenue Recognition

Revenue and related costs are recognized when goods are shipped or services are rendered to customers provided that ownership and risk of loss have passed to the customer. Revenue for major equipment projects is recognized under the
percentage of completion method by comparing actual costs incurred to total estimated costs to complete the respective projects.

Inventories

Inventories are carried at the lower of cost or market. Inventory costs are primarily determined using the first-in, first-out (FIFO) method.

Property, Plant and Equipment

Property, plant and
equipment are recorded at cost. Repair and maintenance costs are expensed as incurred. Depreciation for financial reporting purposes is computed on the straight-line method over the estimated service lives of the assets, which are from 10 to 30
years for land improvements and buildings including leasehold improvements, 5 to 30 years for furniture, and machinery and equipment, 10 to 15 years for customer capital, 5 to 15 years for transportation equipment, and 5 to 10 years for computer
hardware and software.

Goodwill and Other Intangible Assets

The Company accounts for goodwill and intangible assets in accordance with SFAS No. 142, Goodwill and Other Intangible Assets. This standard requires that goodwill and intangible assets with
indefinite useful lives not be amortized but should be tested for impairment at least annually. As required by SFAS No. 142, management has allocated goodwill to the Companys reporting units. Management has elected to do the annual
impairment test on December 31 of each year and determined that no such impairment existed at December 31, 2005, 2004, and 2003, based on the Companys evaluation.

Other intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives in addition to being evaluated when
there is an indicator of impairment as prescribed by SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.



|                                |  | 
|------------------------------- |  | 
|20    Calgon Carbon Corporation |  | 



---

Long-Lived Assets

The Company evaluates long-lived assets under the provisions of Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which addresses financial
accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of. For assets to be held and used, the Company groups a long-lived asset or assets with other assets and liabilities at the lowest level for
which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. An impairment loss for an asset group reduces only the carrying amounts of a long-lived asset or assets of the group being evaluated. The loss
is allocated to the long-lived assets of the group on a pro-rata basis using the relative carrying amounts of those assets, except that the loss allocated to an individual long-lived asset of the group does not reduce the carrying amount of that
asset below its fair value whenever that fair value is determinable without undue cost and effort. Estimates of future cash flows used to test the recoverability of a long-lived asset group include only the future cash flows that are directly
associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset group. The future cash flow estimates used by the Company exclude interest charges. A long-lived asset to be disposed of other than by
sale shall continue to be classified as held and used until it is disposed of. A long-lived asset or group of assets classified as held for sale shall be measured at the lower of its carrying amount or fair value less cost to sell.

Income Taxes

The Company provides an estimate for income taxes based
on an evaluation of the underlying accounts, its tax filing positions and interpretations of existing law. Changes in estimates are reflected in the year of settlement or expiration of the statute of limitations. The Company does not believe that
the resolution of existing unresolved tax matters will have a material impact on the consolidated financial condition of the Company, although a resolution could have a material impact on the Companys consolidated statement of income and
comprehensive income for a particular future period and on the Companys effective tax rate.

Deferred tax assets and liabilities are
recognized for the future tax consequences of temporary differences between the book and tax basis of assets and liabilities. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance
is recognized.

No provision is made for United States income taxes on the undistributed earnings of non-United States subsidiaries because
these earnings are permanently invested or otherwise indefinitely retained for continuing international operations. Determination of the amount of unrecognized deferred income tax liability related to these earnings is not practicable.

Pensions

Substantially all U.S. employees of the Company are
covered by one of three non-contributory defined benefit pension plans. It is the Companys policy to annually fund these plans, subject to minimum and maximum amounts specified by governmental regulations. In Europe, employees are also covered
by various defined benefit pension plans or government-sponsored defined contribution plans. The Company funds these plans according to local laws and practices.

Net Income Per Common Share

Basic net income per common share is computed by dividing net income by the weighted average number of common
shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted average number of common shares outstanding plus all potential dilutive common shares outstanding during the period.
Dilutive common shares are determined using the treasury stock method. Under the treasury stock method, exercise of options is assumed at the beginning of the period when the average stock price during the period exceeds the exercise price of
outstanding options and common shares are assumed issued. The proceeds from exercise are assumed to be used to purchase common stock at the average market price during the period. The incremental shares to be issued are considered to be the
potential dilutive common shares outstanding.

Statement of Cash Flows

For the purpose of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Derivative Instruments

The Company applies Statement of Financial
Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133, as amended, establishes accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts and for hedging activities. Derivative financial instruments are occasionally utilized by the Company to manage risk exposure to movements in foreign exchange rates or interest rates. The Company,
from time to time, enters into forward exchange contracts to obtain foreign currencies at specified rates based on expected future cash flows for each currency. The premium or discount on the contracts is amortized over the life of the contract.
Changes in the value of derivative financial instruments are measured at the balance sheet date and recognized in current earnings or other comprehensive income depending on whether the derivative is designated as part of a hedge transaction and, if
it is, the type of transaction. The Company does not hold derivative financial instruments for trading purposes.



| |  |                                
| |  | -------------------------------
| |  | Calgon Carbon Corporation    21



---

Use of Estimates

The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

New Accounting Pronouncements

In November 2004, the FASB issued SFAS
No. 151, Inventory Costsan Amendment of ARB No. 43, Chapter 4, which requires the recognition of costs of idle facilities, excessive spoilage, double freight and rehandling costs as a component of current-period expenses.
The provisions of SFAS No. 151 are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Management has evaluated the impact of the adoption of SFAS No. 151 on the Companys financial
statements and expects it to be immaterial. The Company plans to adopt SFAS No. 151 effective January 1, 2006 as required.

In
December 2004, the FASB issued SFAS No. 123R, Share-Based Payment, which establishes the accounting for transactions in which an entity exchanges its equity instruments or certain liabilities based upon an entitys equity
instruments for goods or services. SFAS No. 123R generally requires that publicly traded companies measure the cost of employee services received in exchange for an award of equity instruments based on the fair value of the award at the grant
date. That cost will be recognized over the period during which an employee is required to provide service in exchange for the award which is usually the vesting period. Management expects that the provisions of SFAS No. 123R will be effective
for the Company beginning January 1, 2006 as required. Management has not yet completed its evaluation of the impact of the adoption of SFAS No. 123R.

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

In December 2005, the FASB issued Interpretation No. (FIN) 47, Accounting for Conditional Asset Retirement Obligations, which
clarifies that the term conditional asset retirement obligation, as used in FASB Statement No. 143, Accounting for Asset Retirement Obligations, refers to a legal obligation to perform an asset retirement activity in which the
timing and (or) method of settlement are conditional on a future event that may or may not be within the control of the entity. The provisions of FIN 47 are effective no later than the end of fiscal years ending after December 15, 2005
(December 31, 2005 for calendar-year enterprises). The Company has identified no material conditional asset retirement obligations and as a result, the adoption of FIN 47 had no material impact on the financial statements.

Labor Agreements

Collective bargaining agreements cover
approximately 32% of the Companys labor force at December 31, 2005 under agreements which expire in 2007, 2008 and 2009.

Stock-Based
Compensation

The Company has various stock-based compensation plans and applies Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations. Accordingly, stock-based compensation cost on stock options granted is not reflected in net income for stock options at the date of grant, unless stock options granted have an exercise
price less than the market value of the underlying common stock. Deferred compensation for restricted stock under the Companys stock-based compensation plans is charged to equity when the restricted stock is granted and expensed over the
vesting period as contingencies of the restricted stock grant are met. The following table illustrates the effect on net income (loss) and net income (loss) per common share if the Company had applied the fair value recognition provisions of SFAS
No. 123 Accounting for Stock-Based Compensation:



|                                                                                                     |  |                        |        |   |      |   |       |      |  |   |       |  
|---------------------------------------------------------------------------------------------------- |  | ---------------------- | ------ | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                                                                     |  | Year Ended December 31 |       
|(Dollars in thousandsexcept per share data)                                                          |  | 2005                   |        |   | 2004 |   |       | 2003 | 
|Net income (loss)                                                                                    |  |                        |        |   |      |   |       |      |  |   |       |  
|As reported                                                                                          |  | $                      | (7,416 | ) |      | $ | 5,888 |      |  | $ | 4,485 |  
|Stock-based employee compensation expense included in reported net income (loss), net of tax effects |  | $                      | 256    |   |      | $ |      |      |  | $ |      |  
|Stock based compensation, net of tax effect                                                          |  | $                      | (769   | ) |      | $ | (979  | )    |  | $ | (1    | )
|Pro forma                                                                                            |  | $                      | (7,929 | ) |      | $ | 4,909 |      |  | $ | 4,484 |  
|                                                                                                     |  |                        |       
|Net income (loss) per common share                                                                   |  |                        |        |   |      |   |       |      |  |   |       |  
|Basic                                                                                                |  |                        |        |   |      |   |       |      |  |   |       |  
|As reported                                                                                          |  | $                      | (.19   | ) |      | $ | .15   |      |  | $ | .12   |  
|Pro forma                                                                                            |  | $                      | (.20   | ) |      | $ | .13   |      |  | $ | .12   |  
|Diluted                                                                                              |  |                        |        |   |      |   |       |      |  |   |       |  
|As reported                                                                                          |  | $                      | (.19   | ) |      | $ | .15   |      |  | $ | .11   |  
|Pro forma                                                                                            |  | $                      | (.20   | ) |      | $ | .12   |      |  | $ | .11   |  

The fair value of each option granted is estimated on the date of the grant using the
Black-Scholes option-pricing model with the following weighted average assumptions:



|                          |  |           |   |  |           |   |  |           |  
|------------------------- |  | --------- | - |  | --------- | - |  | --------- | -
|                          |  | 2005      |   |  | 2004      |   |  | 2003      |  
|Dividend yield            |  | .71       | % |  | 1.59      | % |  | 2.21      | %
|Risk-free interest rates  |  | 3.384.53 | % |  | 3.033.26 | % |  | 2.685.87 | %
|Expected volatility       |  | 3644     | % |  | 4346     | % |  | 4246     | %
|Expected lives of options |  | 5 years   |   |  | 5 years   |   |  | 5 years   |  



|                                |  | 
|------------------------------- |  | 
|22    Calgon Carbon Corporation |  | 



---

2. Acquisitions

On
February 18, 2004, the Company acquired substantially all of the assets of Waterlink, Incorporateds (WSP) United States-based subsidiary, Barnebey Sutcliffe Corporation, and 100% of the outstanding common shares of Waterlink
(UK) Limited, a holding company that owns 100% of the outstanding common shares of Waterlinks operating subsidiaries in the United Kingdom.

Known as Barnebey Sutcliffe in the United States and Sutcliffe Speakman in the United Kingdom, WSP is a leading provider of products, equipment, systems and services related to activated carbon and its uses for water and air purification,
solvent recovery, odor control and chemical processing. The primary reasons for the Companys acquisition of WSP were to complement the Companys existing business in terms of (i) expanding its customer base; (ii) diversifying
its product mix; (iii) providing access to profitable, niche markets; and (iv) enhancing profitability and cash flow.

The
aggregate purchase price, including direct acquisition costs, and net of cash acquired, was $35.3 million, plus the assumption of certain non-working capital liabilities amounting to $14.2 million. The Company funded approximately $33.3 million of
the purchase price through borrowings from its refinanced U.S. revolving credit facility (see Note 9).

The purchase price was allocated to
the net assets acquired as follows:



|                                   |  |   |         |  
|---------------------------------- |  | - | ------- | -
|(in thousands)                     |  |   |        
|Current assets                     |  | $ | 22,705  |  
|Non-current assets                 |  |   | 6,772   |  
|Intangible assets                  |  |   | 10,153  |  
|Goodwill                           |  |   | 16,137  |  
|Liabilities assumed                |  |   | (19,377 | )
|                                   |  |   |         |  
|Total purchase price               |  | $ | 36,390  |  
|Less cash and cash equivalents     |  |   | (1,140  | )
|                                   |  |   |         |  
|Total purchase price (net of cash) |  | $ | 35,250  |  
|                                   |  |   |         |  

In December 2004, the Company entered into an agreement to purchase the additional 20% interest of
the then 80% owned Datong Carbon Corporation. The purchase resulted in the Company recording additional goodwill of $0.4 million related to the purchase.

In May 2005, the Company formed a joint venture company with C. Gigantic Carbon to provide carbon reactivation services to the Thailand market. The joint venture company was named Calgon Carbon (Thailand) Ltd. and is
20% owned by the Company after an initial investment of $0.2 million. It is accounted for in the Companys financial statements under the equity method.

3. Discontinued Operations and Assets and Liabilities Held for Sale

The Companys financial statements for all periods presented were
significantly impacted by activities relating to the planned divestiture of two of the Companys businesses.

On February 4,
2005, the Companys Board of Directors approved a re-engineering plan presented by the Company. The plan included the divestiture of two non-core businesses in order to allow the Company to focus on its core activated carbon and service related
businesses. In the fourth quarter of 2005, management concluded such divestitures are probable and the Company reclassified the following businesses from continuing operations to discontinued operations and assets held for sale for all periods
presented: Charcoal/Liquid in Bodenfelde, Germany and Solvent Recovery in Columbus, Ohio; Vero Beach, Florida; and Ashton, United Kingdom. The Charcoal/Liquid and Solvent Recovery businesses were reported in the Companys Consumer and Equipment
segments, respectively. As of December 31, 2005, no gain or loss has been recorded related to the divestitures. The pro forma effects of these dispositions are reflected on the Consolidated Balance Sheets and Consolidated Statements of Income
and Comprehensive Income through their treatment as discontinued businesses.

The following table details selected financial information
for the businesses included within the discontinued operations in the Consolidated Statements of Income and Comprehensive Income:



|                                    |  |                        |        |                        |   |        |  |      |        |      |   |        |  |   |        |  |   |       |  
|----------------------------------- |  | ---------------------- | ------ | ---------------------- | - | ------ |  | ---- | ------ | ---- | - | ------ |  | - | ------ |  | - | ----- | -
|                                    |  | Charcoal/Liquid        |        | Solvent Recovery       |  
|                                    |  | Year Ended December 31 |        | Year Ended December 31 |  
|Dollars in Thousands)               |  | 2005                   |        | 2004                   |   | 2003   |  | 2005 |        | 2004 |   | 2003   | 
|Net sales                           |  | $                      | 30,037 |                        | $ | 25,160 |  | $    | 22,432 |      | $ | 13,916 |  | $ | 15,530 |  | $ | 2,712 |  
|                                    |  |                        |        |                        |   |        |  |      |        |      |   |        |  |   |        |  |   |       |  
|Income from operations              |  |                        | 2,973  |                        |   | 2,080  |  |      | 1,017  |      |   | 1,709  |  |   | 789    |  |   | (49   | )
|Other incomenet                    |  |                        | 44     |                        |   | 67     |  |      | 72     |      |   |       |  |   |       |  |   |      |  
|                                    |  |                        |        |                        |   |        |  |      |        |      |   |        |  |   |        |  |   |       |  
|Income before income taxes          |  |                        | 3,017  |                        |   | 2,147  |  |      | 1,089  |      |   | 1,709  |  |   | 789    |  |   | (49   | )
|Provision for income taxes          |  |                        | 1,044  |                        |   | 743    |  |      | 382    |      |   | 591    |  |   | 273    |  |   | (17   | )
|                                    |  |                        |        |                        |   |        |  |      |        |      |   |        |  |   |        |  |   |       |  
|Income from discontinued operations |  | $                      | 1,973  |                        | $ | 1,404  |  | $    | 707    |      | $ | 1,118  |  | $ | 516    |  | $ | (32   | )
|                                    |  |                        |        |                        |   |        |  |      |        |      |   |        |  |   |        |  |   |       |  



| |  |                                
| |  | -------------------------------
| |  | Calgon Carbon Corporation    23



---

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



|                                         |  |                        |        |                        |   |        |  |      |       |  |   |      
|---------------------------------------- |  | ---------------------- | ------ | ---------------------- | - | ------ |  | ---- | ----- |  | - | -----
|                                         |  | Charcoal/Liquid        |        | Solvent Recovery      
|                                         |  | Year Ended December 31 |        | Year Ended December 31
|(Dollars in Thousands)                   |  | 2005                   |        | 2004                   |   | 2005   |  | 2004
|Assets:                                  |  |                        |        |                        |   |        |  |      |       |  |   |      
|Receivables                              |  | $                      | 1,059  |                        | $ | 1,123  |  | $    | 4,018 |  | $ | 2,921
|Inventories                              |  |                        | 6,924  |                        |   | 7,203  |  |      | 113   |  |   | 145  
|Property, plant and equipment, net       |  |                        | 7,310  |                        |   | 8,897  |  |      | 42    |  |   | 56   
|Goodwill                                 |  |                        |       |                        |   |       |  |      | 1,000 |  |   | 1,000
|Other assets                             |  |                        | 181    |                        |   | 305    |  |      | 693   |  |   | 4,167
|                                         |  |                        |        |                        |   |        |  |      |       |  |   |      
|Total assets held for sale               |  | $                      | 15,474 |                        | $ | 17,528 |  | $    | 5,866 |  | $ | 8,289
|                                         |  |                        |        |                        |   |        |  |      |       |  |   |      
|Liabilities:                             |  |                        |        |                        |   |        |  |      |       |  |   |      
|Accounts payable and accrued liabilities |  |                        | 2,604  |                        |   | 3,430  |  |      | 3,157 |  |   | 2,793
|Accrued pension and other liabilities    |  |                        | 922    |                        |   | 1,030  |  |      |      |  |   |     
|                                         |  |                        |        |                        |   |        |  |      |       |  |   |      
|Total liabilities held for sale          |  | $                      | 3,526  |                        | $ | 4,460  |  | $    | 3,157 |  | $ | 2,793
|                                         |  |                        |        |                        |   |        |  |      |       |  |   |      

On February 17, 2006, Calgon Carbon Corporation, through its wholly owned subsidiary
Chemviron Carbon GmbH, executed an agreement (the Business Sale Agreement) with proFagus GmbH, proFagus Grundstucksverwaltungs GmbH and proFagus Beteiligungen GmbH (as Guarantor) to sell, and sold, substantially all the assets, real
estate, and specified liabilities of the Bodenfelde, Germany facility (the Charcoal/Liquid business). The facility includes the production of charcoal for consumer use and liquids that are recovered during charcoal production. The products are sold
to retail and industrial markets.

The aggregate sales price, based on an exchange rate of 1.19 dollars per euro, consisted of $19.1
million of cash and is subject to a potential working capital adjustment. An additional $5.0 million could be paid contingent upon the business meeting certain earnings targets over the next three years.

4. Restructuring of Operations

On February 4, 2005, the
Companys Board of Directors approved a re-engineering plan presented by the Company. The plan included the closure of two small manufacturing facilities, the potential divestiture of two non-core businesses, and the elimination of
approximately 70 employees globally. All activities related to the re-engineering plan other than the divestitures were completed by year-end 2005. The divestiture of the Charcoal/Liquid business occurred on February 17, 2006, and the
divestiture of the solvent recovery business is expected to be completed during the first quarter of 2006.

The restructuring charges for
the years ended December 31, 2005, 2004 and 2003 were:



|                                                 |  |             |     |      |   |      |  |   |     |  
|------------------------------------------------ |  | ----------- | --- | ---- | - | ---- |  | - | --- | -
|                                                 |  | December 31 |    
|(Thousands)                                      |  | 2005        |     | 2004 |   | 2003 | 
|Pension curtailment charge                       |  | $           | 215 |      | $ |     |  | $ |    |  
|Closure of manufacturing facilities              |  |             | 197 |      |   |     |  |   |    |  
|Employee severance and termination benefit costs |  |             |    |      |   |     |  |   | (64 | )
|Other costs                                      |  |             |    |      |   |     |  |   | 516 |  
|                                                 |  |             |     |      |   |      |  |   |     |  
|Total                                            |  | $           | 412 |      | $ |     |  | $ | 452 |  
|                                                 |  |             |     |      |   |      |  |   |     |  

The 2003 restructuring costs primarily related to ongoing lease commitments for rental space which had been
abandoned as a result of the Companys 1999 restructuring plan.

5. Inventories



|               |  |             |        |      |   |       
|-------------- |  | ----------- | ------ | ---- | - | ------
|               |  | December 31
|(Thousands)    |  | 2005        |        | 2004
|Raw materials  |  | $           | 16,501 |      | $ | 13,907
|Finished goods |  |             | 51,154 |      |   | 43,588
|               |  |             |        |      |   |       
|Total          |  | $           | 67,655 |      | $ | 57,495
|               |  |             |        |      |   |       

Inventories at December 31, 2005 and 2004 are recorded net of reserves of $1,482,000 and $1,282,000,
respectively, for obsolete and slow-moving items.



|                                |  | 
|------------------------------- |  | 
|24    Calgon Carbon Corporation |  | 



---

6. Property, Plant and Equipment



|                                          |  |             |          |   |      |   |          |  
|----------------------------------------- |  | ----------- | -------- | - | ---- | - | -------- | -
|                                          |  | December 31 |         
|(Thousands)                               |  | 2005        |          |   | 2004 |  
|Land and improvements                     |  | $           | 10,581   |   |      | $ | 11,328   |  
|Buildings                                 |  |             | 27,836   |   |      |   | 25,929   |  
|Machinery, equipment and customer capital |  |             | 286,753  |   |      |   | 298,886  |  
|Computer hardware and software            |  |             | 18,191   |   |      |   | 18,269   |  
|Furniture and vehicles                    |  |             | 7,368    |   |      |   | 8,249    |  
|Construction-in-progress                  |  |             | 11,640   |   |      |   | 4,779    |  
|                                          |  |             |          |   |      |   |          |  
|                                          |  | $           | 362,369  |   |      | $ | 367,440  |  
|Less accumulated depreciation             |  |             | (253,624 | ) |      |   | (247,108 | )
|                                          |  |             |          |   |      |   |          |  
|Net                                       |  | $           | 108,745  |   |      | $ | 120,332  |  
|                                          |  |             |          |   |      |   |          |  

In 2003, the Company temporarily suspended construction of a new facility in the Gulf Coast region of the United
States as it evaluated strategic alternatives. On March 22, 2005, the Company concluded, and the Board of Directors approved, that cancellation of this project was warranted and that construction of such a facility should be suspended for the
foreseeable future. Accordingly, the Company recorded an impairment charge of $2.2 million in 2005.

Also in 2003, the Company partially
discontinued operation of one of its three activated carbon lines at its Catlettsburg, Kentucky facility. The Company will need to install pollution abatement equipment estimated at approximately $7.0 million in order to remain in compliance with
state requirements regulating air emissions before resuming full operation of this line. Management has not concluded its plan of action for compliance related to this activated carbon line; however, if it is determined that a shutdown of the full
operation of the activated carbon line for other than a temporary period is warranted, the impact to current operating results would be insignificant.

In January 2006, the Company announced the temporary idling of its reactivation facility in Blue Lake, California in an effort to reduce operating costs and to more efficiently utilize the available capacity at other
existing locations. The Company conducted an impairment review of the plants assets, having a net book value of $1.8 million, in connection with the temporary idling of the facility, and concluded that the assets were not impaired. It is
managements intention to resume operation of the plant in 2007. If management concludes that the idling of the plant beyond 2007 is warranted, operating results may be adversely affected by impairment charges.

7. Goodwill and Intangible Assets

The Company used a combination of
methods to determine the fair value of the intangible assets of the acquired Waterlink Specialty Products (see Note 2), including the cost approach, the market approach, and the income approach. The acquired intangible assets consist primarily of
customer contracts and customer relationships and are recognized apart from goodwill. The acquired intangible assets useful lives are based on the expected future cash flows the Company is expected to realize and the amortization will be
recognized to match the expected cash flows.

The following is the categorization of the Companys intangible assets as of
December 31, 2005 and 2004, respectively:



|                             |  |                                    |                     |                   |                 |  |                   |                         |   |  |                     |        |                 |  |   |                         |  |   |     |   |  |   |        |  
|---------------------------- |  | ---------------------------------- | ------------------- | ----------------- | --------------- |  | ----------------- | ----------------------- | - |  | ------------------- | ------ | --------------- |  | - | ----------------------- |  | - | --- | - |  | - | ------ | -
|                             |  | WeightedAverage AmortizationPeriod |                     | December 31, 2005 |                 |  | December 31, 2004 |                        
|                             |  |                                    | GrossCarryingAmount |                   | ForeignExchange |  |                   | AccumulatedAmortization |   |  | GrossCarryingAmount |        | ForeignExchange |  |   | AccumulatedAmortization | 
|Amortized Intangible Assets: |  |                                    |                     |                   |                 |  |                   |                         |   |  |                     |        |                 |  |   |                         |  |   |     |   |  |   |        |  
|Patents                      |  | 15.4 Years                         |                     | $                 | 1,369           |  | $                 |                        |   |  | $                   | (711   | )               |  | $ | 1,369                   |  | $ |    |   |  | $ | (626   | )
|Customer Relationships       |  | 17.0 Years                         |                     |                   | 9,323           |  |                   | (206                    | ) |  |                     | (2,316 | )               |  |   | 9,323                   |  |   | (21 | ) |  |   | (1,104 | )
|Customer Contracts           |  | 2.8 Years                          |                     |                   | 664             |  |                   | (19                     | ) |  |                     | (577   | )               |  |   | 664                     |  |   | 3   |   |  |   | (325   | )
|License Agreement            |  | 5.0 Years                          |                     |                   | 500             |  |                   |                        |   |  |                     | (217   | )               |  |   | 500                     |  |   |    |   |  |   | (117   | )
|Other                        |  | 7.9 Years                          |                     |                   | 665             |  |                   |                        |   |  |                     | (270   | )               |  |   | 665                     |  |   |    |   |  |   | (161   | )
|Unpatented Technology        |  | 20.0 Years                         |                     |                   | 2,875           |  |                   |                        |   |  |                     | (1,031 | )               |  |   | 2,875                   |  |   |    |   |  |   | (865   | )
|                             |  |                                    |                     |                   |                 |  |                   |                         |   |  |                     |        |                 |  |   |                         |  |   |     |   |  |   |        |  
|Total                        |  | 15.8 Years                         |                     | $                 | 15,396          |  | $                 | (225                    | ) |  | $                   | (5,122 | )               |  | $ | 15,396                  |  | $ | (18 | ) |  | $ | (3,198 | )
|                             |  |                                    |                     |                   |                 |  |                   |                         |   |  |                     |        |                 |  |   |                         |  |   |     |   |  |   |        |  

For the years ended December 31, 2005, 2004 and 2003 the Company recognized $1.9 million,
$2.0 million, and $0.3 million, respectively, of amortization expense from continuing operations related to intangible assets. The Company estimates amortization expense from continuing operations recognized during the next five years to be $1.8
million in 2006, $1.5 million in 2007, $1.3 million in 2008, $1.1 million in 2009, and $0.9 million in 2010.



| |  |                                
| |  | -------------------------------
| |  | Calgon Carbon Corporation    25



---

The changes in the carrying amounts of goodwill by segment for the years ended December 31, 2005 and
2004 are as follows:



|                                                                    |  |                                     |        |   |                  |   |                 |  |       |    |  |   |        |  
|------------------------------------------------------------------- |  | ----------------------------------- | ------ | - | ---------------- | - | --------------- |  | ----- | -- |  | - | ------ | -
|                                                                    |  | Activated Carbonand Service Segment |        |   | EquipmentSegment |   | ConsumerSegment |  | Total |   
|Balance as of January 1, 2004                                       |  | $                                   | 5,801  |   |                  | $ | 12,505          |  | $     | 60 |  | $ | 18,366 |  
|Acquisition of WSP                                                  |  |                                     | 15,137 |   |                  |   |                |  |       |   |  |   | 15,137 |  
|Acquisition of additional 20% interest in Datong Carbon Corporation |  |                                     | 417    |   |                  |   |                |  |       |   |  |   | 417    |  
|Foreign exchange                                                    |  |                                     | (372   | ) |                  |   | 523             |  |       |   |  |   | 151    |  
|                                                                    |  |                                     |        |   |                  |   |                 |  |       |    |  |   |        |  
|Balance as of December 31, 2004                                     |  | $                                   | 20,983 |   |                  | $ | 13,028          |  | $     | 60 |  | $ | 34,071 |  
|                                                                    |  |                                     |        |   |                  |   |                 |  |       |    |  |   |        |  
|Foreign exchange                                                    |  |                                     | (449   | ) |                  |   | 252             |  |       |   |  |   | (197   | )
|                                                                    |  |                                     |        |   |                  |   |                 |  |       |    |  |   |        |  
|Balance as of December 31, 2005                                     |  | $                                   | 20,534 |   |                  | $ | 13,280          |  | $     | 60 |  | $ | 33,874 |  
|                                                                    |  |                                     |        |   |                  |   |                 |  |       |    |  |   |        |  

8. Product Warranties

The Company establishes a warranty reserve for equipment project sales and estimates the warranty accrual based on the history of warranty claims to total sales, adjusted for significant known claims in excess of established reserves.

Warranty terms are based on the negotiated equipment project contract and typically are either 18 months from shipment date or 12 months
from project startup date. The change in the warranty reserve, which is included in accounts payable and accrued liabilities in the consolidated balance sheets, is as follows:



|                                                                      |  |             |       |   |      |   |       |      |  |   |       |  
|--------------------------------------------------------------------- |  | ----------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                                      |  | December 31 |      
|                                                                      |  | 2005        |       |   | 2004 |   |       | 2003 | 
|Beginning Balance                                                     |  | $           | 1,184 |   |      | $ | 1,985 |      |  | $ | 1,799 |  
|Payments and replacement product                                      |  |             | (468  | ) |      |   | (426  | )    |  |   | (757  | )
|Additions to warranty reserve for warranties issued during the period |  |             | 515   |   |      |   | 497   |      |  |   | 903   |  
|Change in the warranty reserve for pre-existing warranties            |  |             | (203  | ) |      |   | (872  | )    |  |   | 40    |  
|                                                                      |  |             |       |   |      |   |       |      |  |   |       |  
|Ending Balance                                                        |  | $           | 1,028 |   |      | $ | 1,184 |      |  | $ | 1,985 |  
|                                                                      |  |             |       |   |      |   |       |      |  |   |       |  

9. Borrowing Arrangements

Long-Term Debt



|                                          |  |             |        |      |   |       
|----------------------------------------- |  | ----------- | ------ | ---- | - | ------
|                                          |  | December 31
|(Thousands)                               |  | 2005        |        | 2004
|United States credit facilities           |  | $           | 81,000 |      | $ | 81,600
|Industrial revenue bonds                  |  |             | 2,925  |      |   | 3,000 
|                                          |  |             |        |      |   |       
|Total                                     |  | $           | 83,925 |      | $ | 84,600
|Less current maturities of long-term debt |  |             |       |      |   |      
|                                          |  |             |        |      |   |       
|Net                                       |  | $           | 83,925 |      | $ | 84,600
|                                          |  |             |        |      |   |       

United States Credit Facilities

At December 31, 2005, the Company had a $125.0 million revolving credit facility. Borrowings under this facility were being charged a weighted average interest rate of 6.24% at December 31, 2005.

Included in the credit facility was a letter of credit sub-facility that could not exceed $30.0 million. The interest rate was based upon euro-based
(LIBOR) rates with other interest rate options available. The applicable Euro Dollar margin ranged from 0.80% to 1.85% and the annual facility fee ranged from 0.20% to 0.40% of the committed amount and is based upon the Companys ratio of debt
to earnings before interest, income taxes, depreciation and amortization (EBITDA).

The credit facilitys covenants imposed financial
restrictions on the Company, including maintaining certain ratios of debt to EBITDA, EBITDA to cash outlays and operating assets to debt and net worth. In addition, the facility imposed gross spending restrictions on capital expenditures, dividends,
treasury share repurchases, acquisitions and investments in non-controlled subsidiaries. The facility also contained mandatory prepayment provisions for proceeds in excess of pre-established amounts of certain events as defined within the loan
agreement.



|                                |  | 
|------------------------------- |  | 
|26    Calgon Carbon Corporation |  | 



---

At September 30, 2005, the Company was in violation of its leverage covenant, a ratio of debt to
EBITDA as defined in the credit agreement and all debt outstanding under this facility was classified as short term. In November 2005, the Company secured a waiver of this covenant which was scheduled to expire on January 31, 2006. The terms of
the waiver increased the leverage covenant which limited borrowings to no more than 3.25 times trailing four quarters EBITDA to 3.75 for the September 30, 2005 testing period and included a requirement that the Companys borrowings (as
defined in the agreement) not exceed $105.0 million during the waiver period. Availability under this credit facility at December 31, 2005 was $13.9 million. Also, as a condition of the waiver, the Company and certain of its subsidiaries were
required to enter into a security agreement granting a blanket security interest in favor of the lenders, and a pledge agreement in favor of the lenders with respect to the stock of certain subsidiaries. In addition, the Company agreed to execute
mortgages, if requested, on its U.S. real property.

On January 30, 2006, the Company amended and restated its then existing $125.0
million revolving credit facility. The amended $118.0 million facility consists of a $100.0 million revolving loan and an $18.0 million term loan. Current commitments from the lenders under the new agreement total $105.0 million with an additional
$13.0 million available to the existing or new lenders. The amended and restated facility is secured by a blanket security interest in favor of the lenders and a pledge agreement in favor of the lenders with respect to the stock of certain
subsidiaries.

Included in the credit facility is a letter of credit sub-facility that cannot exceed $30.0 million. The interest rate is
based upon euro-based (LIBOR) rates with other interest rate options available. The applicable Euro Dollar margin ranges from 1.25% to 2.50%, and an unused commitment fee that ranges from 0.25% to 0.50% and is based upon the Companys ratio of
debt to EBITDA. The credit facilitys covenants impose financial restrictions on the Company, including maintaining certain ratios of debt to EBITDA, EBITDA to cash outlays and operating assets to debt and minimum net worth. In addition, the
facility imposes gross spending restrictions on capital expenditures, dividends, treasury share repurchases, acquisitions and investments in non-controlled subsidiaries. The facility also contains mandatory prepayment provisions for the term loan
and proceeds in excess of pre-established amounts of certain events as defined within the loan agreement.

On February 23, 2006, the
Company, as required by the amended credit facility, repaid the $18.0 million term loan with the proceeds from the sale of the Companys Charcoal/Liquid business. The remaining $100.0 million revolving loan has $87.0 million of funding
commitments from the Companys lenders. The Company intends to secure the remaining $13.0 million of commitments either through its existing lenders or new lenders before the end of the first quarter of 2006.

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

The Company has classified the amounts outstanding on its revolving credit facility at December 31, 2005 as long term in accordance with the
provisions of SFAS No. 6, Classification of Short-Term Obligations Expected to be Refinanced.

Industrial Revenue Bonds

The Mississippi Industrial Revenue Bonds totaling $2.9 million and $3.0 million at December 31, 2005 and 2004, respectively, bear interest at a variable rate and
mature in May 2009. The interest rate as of December 31, 2005 was 3.02%. These bonds were issued to finance certain equipment acquisitions at the Companys Pearl River, Mississippi plant.

Belgian Credit Facility

The Company maintains a Belgian credit
facility totaling 4.0 million euros which is secured by a U.S. letter of credit. There are no financial covenants, and the Company had no outstanding borrowings under the Belgian credit facility as of December 31, 2005. Bank guarantees of
1.5 million euros were issued as of December 31, 2005. The maturity date of this facility is December 15, 2006. Availability under this facility was 2.5 million euros at December 31, 2005.

United Kingdom Credit Facilities

The Company maintains a United
Kingdom unsecured overdraft facility totaling 200,000 British Pounds Sterling. There are no financial covenants and the Company had no outstanding borrowings under this overdraft facility as of December 31, 2005. This facility is reviewed
annually. The bank, in its sole discretion, may cancel at any time its commitment to provide this facility.

The Company also maintains a
United Kingdom unsecured bonds, guarantees and indemnities facility totaling 500,000 British Pounds Sterling. The bank, in its sole discretion, may cancel at any time its commitment to provide this facility. This facility was fully utilized at
December 31, 2005.

Fair Value of Long-Term Debt

Substantially all long-term debt is based on rates that float with Euro Dollar-based rates or prime rates, and, accordingly, the carrying value of these obligations approximates their fair value.

Maturities of Debt

The Company is obligated to make principal
payments on long-term debt outstanding, after taking into account the January 30, 2006 refinancing, at December 31, 2005 of $1.8 million in 2006, of $3.6 million in 2007, $75.6 million in 2008, and $2.9 million in 2009, and excluding the
$18.0 million repayment made on February 23, 2006.



| |  |                                
| |  | -------------------------------
| |  | Calgon Carbon Corporation    27



---

10. Commitments

The
Company has entered into leases covering principally office, research and warehouse space, office equipment and vehicles. Future minimum rental payments required under all operating leases that have remaining noncancelable lease terms in excess of
one year are $5.0 million in 2006, $3.8 million in 2007, $3.0 million in 2008, $2.7 million in 2009, $2.5 million in 2010, and $12.2 million thereafter. Total rental expenses on all operating leases were $8.2 million, $4.9 million, and $5.4 million
for the years ended December 31, 2005, 2004, and 2003, respectively.

The Company has in place long-term supply contracts for the
purchase of raw materials, transportation, and information system services. The following table represents the total payments made for the purchases under the aforementioned supply contracts:



|                            |  |             |        |      |   |        |  |   |       
|--------------------------- |  | ----------- | ------ | ---- | - | ------ |  | - | ------
|                            |  | December 31
|(Thousands)                 |  | 2005        |        | 2004 |   | 2003  
|Raw and other materials     |  | $           | 26,101 |      | $ | 11,667 |  | $ | 11,228
|Transportation              |  |             | 4,297  |      |   | 3,983  |  |   | 3,954 
|Information system services |  |             | 2,427  |      |   | 3,370  |  |   | 2,054 
|                            |  |             |        |      |   |        |  |   |       
|Total payments              |  | $           | 32,825 |      | $ | 19,020 |  | $ | 17,236
|                            |  |             |        |      |   |        |  |   |       

Future minimum purchase requirements under the terms of the aforementioned contracts are as
follows:



|                                   |  |        |        |      |   |        |  |      |        |      |   |            |  |   |       |  |   |      
|---------------------------------- |  | ------ | ------ | ---- | - | ------ |  | ---- | ------ | ---- | - | ---------- |  | - | ----- |  | - | -----
|                                   |  | Due in
|(Thousands)                        |  | 2006   |        | 2007 |   | 2008   |  | 2009 |        | 2010 |   | Thereafter
|Raw and other materials            |  | $      | 23,033 |      | $ | 17,890 |  | $    | 13,120 |      | $ | 5,711      |  | $ | 5,711 |  | $ | 5,711
|Transportation                     |  |        | 1,680  |      |   | 1,694  |  |      | 1,725  |      |   | 288        |  |   |      |  |   |     
|Information system services        |  |        | 2,042  |      |   | 2,042  |  |      | 2,042  |      |   | 2,042      |  |   | 2,042 |  |   |     
|                                   |  |        |        |      |   |        |  |      |        |      |   |            |  |   |       |  |   |      
|Total contractual cash obligations |  | $      | 26,755 |      | $ | 21,626 |  | $    | 16,887 |      | $ | 8,041      |  | $ | 7,753 |  | $ | 5,711
|                                   |  |        |        |      |   |        |  |      |        |      |   |            |  |   |       |  |   |      

11. Shareholders Equity

The Companys Board of Directors in 2000 authorized the purchase of up to 500,000 shares of the Companys stock. As of December 31, 2005, 11,300 shares have been purchased under this stock buy back
program.

The Board of Directors adopted a new Stockholder Rights Plan in February 2005 designed to guard against (1) coercive and
abusive tactics that might be used in an attempt to gain control of the Company without paying all stockholders a fair price for their share or (2) the accumulation of a substantial block of stock without offering to pay stockholders a fair
control premium. The Rights Plan will not prevent takeovers, but is designed to preserve the Boards bargaining power and flexibility to deal with third-party acquirers and to otherwise seek to maximize value for all stockholders. The Plan
awards one Right for each outstanding share of common stock held by stockholders of record on February 3, 2005 and thereafter. Each Right entitles the holder to purchase from the Company one unit of one ten-thousandth of a share of a newly
created series of preferred stock at a purchase price of $35 per unit. The Rights will be exercisable only if a person or group acquires beneficial ownership of 10% or more of the Companys outstanding common stock (15% or more in the case of
certain institutional investors) or commences a tender or exchange offer upon consummation of which such person or group would beneficially own 10% or more of the Companys common stock (Acquiring Person). If one of those events
occurs, each stockholder (with the exception of the acquiring person or group) can purchase stock of the Company or the acquiring person at a 50% discount. The Rights can be redeemed by the Board of Directors under certain circumstances, in which
case the Rights will not be exchangeable for shares.



|                                |  | 
|------------------------------- |  | 
|28    Calgon Carbon Corporation |  | 



---

12. Stock Compensation Plans

At December 31, 2005, the Company had two stock-based compensation plans that are described below.

Employee Stock Option Plan

The Company has an Employee Stock Option Plan for officers and other key employees of the Company which permits grants of up to 8,238,640 shares of the
Companys common stock. Stock options may be nonstatutory or incentive with a purchase price of not less than 100% of the fair market value on the date of grant, restricted, or restricted
performance. Stock appreciation rights may be granted at date of option grant or at any later date during the term of the option. Incentive stock options granted since 1986 become exercisable no less than six months after the date
of grant and are no longer exercisable after the expiration of four to ten years from the date of grant.

A summary of the Plan activity
for the years ended December 31, 2005, 2004 and 2003 is presented below:



|                                                               |  |           |   |      |                                |      |        |           |   |                                |   |        |  |            |                                |  |   |     
|-------------------------------------------------------------- |  | --------- | - | ---- | ------------------------------ | ---- | ------ | --------- | - | ------------------------------ | - | ------ |  | ---------- | ------------------------------ |  | - | ----
|                                                               |  | 2005      |   | 2004 |                                | 2003
|                                                               |  | Shares    |   |      | Weighted-AverageExercise Price |      | Shares |           |   | Weighted-AverageExercise Price |   | Shares |  |            | Weighted-AverageExercise Price
|Outstanding at beginning of year                               |  | 2,507,750 |   |      | $                              | 6.52 |        | 2,172,250 |   |                                | $ | 6.27   |  | 3,138,150  |                                |  | $ | 6.66
|Granted                                                        |  | 353,800   |   |      |                                | 2.75 |        | 575,500   |   |                                |   | 7.03   |  | 94,000     |                                |  |   | 5.66
|Exercised                                                      |  | (469,550  | ) |      |                                | 6.03 |        | (165,250  | ) |                                |   | 5.17   |  | (27,000    | )                              |  |   | 5.19
|Canceled                                                       |  | (12,300   | ) |      |                                | 6.88 |        | (74,750   | ) |                                |   | 7.59   |  | (1,032,900 | )                              |  |   | 7.42
|                                                               |  |           |   |      |                                |     
|Outstanding at end of year                                     |  | 2,379,700 |   |      | $                              | 6.00 |        | 2,507,750 |   |                                | $ | 6.52   |  | 2,172,250  |                                |  | $ | 6.27
|Options exercisable at year end                                |  | 988,650   |   |      |                                |      |        | 1,464,500 |   |                                |   |        |  | 968,600    |                                |  |   |     
|Weighted-average fair value of options granted during the year |  |           |   |      | $                              | 3.08 |        |           |   |                                | $ | 2.68   |  |            |                                |  | $ | 2.03

The following table summarizes information about stock options outstanding at December 31,
2005:



|                         |  |                     |  |                                           |  |                                |      |                   |         |                                |   |     
|------------------------ |  | ------------------- |  | ----------------------------------------- |  | ------------------------------ | ---- | ----------------- | ------- | ------------------------------ | - | ----
|                         |  | Options Outstanding |  | Options Exercisable                      
|Range of Exercise Prices |  | NumberOutstanding   |  | Weighted-AverageRemainingContractual Life |  | Weighted-AverageExercise Price |      | NumberExercisable |         | Weighted-AverageExercise Price
|$0.00                    |  | 240,800             |  | 9.1 Years                                 |  | $                              |     |                   |        |                                | $ |    
|$4.96 to $7.25           |  | 1,509,500           |  | 6.6 Years                                 |  |                                | 6.06 |                   | 466,250 |                                |   | 5.85
|$7.63 to $9.35           |  | 629,400             |  | 7.0 Years                                 |  |                                | 8.14 |                   | 522,400 |                                |   | 8.01
|                         |  |                     |  |                                           |  |                                |      |                   |         |                                |   |     
|                         |  | 2,379,700           |  | 6.8 Years                                 |  | $                              | 6.00 |                   | 988,650 |                                | $ | 6.99
|                         |  |                     |  |                                           |  |                                |      |                   |         |                                |   |     

Non-Employee Directors Stock Option Plan

The 1993 Non-Employee Directors Stock Option Plan, as last amended in 2005, provides for an annual grant on the day following the Annual Meeting of Stockholders of
option shares equal to a number of shares which will result in a Black-Scholes calculated value of $25,000 per Director on the date of grant. The options vest and become exercisable six months after the date of grant and, in general, expire ten
years after the date of grant.

A summary of the Plan activity for the years ended December 31, 2005, 2004 and 2003 is presented
below:



|                                                               |  |         |   |      |                                 |       |        |         |                                |   |        |  |                                |  |   |     
|-------------------------------------------------------------- |  | ------- | - | ---- | ------------------------------- | ----- | ------ | ------- | ------------------------------ | - | ------ |  | ------------------------------ |  | - | ----
|                                                               |  | 2005    |   | 2004 |                                 | 2003 
|                                                               |  | Shares  |   |      | Weighted-Average Exercise Price |       | Shares |         | Weighted-AverageExercise Price |   | Shares |  | Weighted-AverageExercise Price
|Outstanding at beginning of year                               |  | 435,300 |   |      | $                               | 7.08  |        | 379,300 |                                | $ | 7.11   |  | 293,200                        |  | $ | 7.76
|Granted                                                        |  | 51,810  |   |      |                                 | 8.32  |        | 56,000  |                                |   | 6.89   |  | 86,100                         |  |   | 4.90
|Exercised                                                      |  | (31,250 | ) |      |                                 | 7.06  |        |        |                                |   |       |  |                               |  |   |    
|Canceled                                                       |  | (5,123  | ) |      |                                 | 14.45 |        |        |                                |   |       |  |                               |  |   |    
|                                                               |  |         |   |      |                                 |      
|Outstanding at end of year                                     |  | 450,737 |   |      | $                               | 7.14  |        | 435,300 |                                | $ | 7.08   |  | 379,300                        |  | $ | 7.11
|Options exercisable at year end                                |  | 445,225 |   |      |                                 |       |        | 435,300 |                                |   |        |  | 379,300                        |  |   |     
|Weighted-average fair value of options granted during the year |  |         |   |      | $                               | 2.99  |        |         |                                | $ | 2.47   |  |                                |  | $ | 1.85



| |  |                                
| |  | -------------------------------
| |  | Calgon Carbon Corporation    29



---

The following table summarizes information about stock options outstanding under the Non-Employee Stock
Option Plan at December 31, 2005:



|                         |  |                     |  |                                           |  |                                |       |                   |         |                                |   |      
|------------------------ |  | ------------------- |  | ----------------------------------------- |  | ------------------------------ | ----- | ----------------- | ------- | ------------------------------ | - | -----
|                         |  | Options Outstanding |  | Options Exercisable                      
|Range of Exercise Prices |  | NumberOutstanding   |  | Weighted-AverageRemainingContractual Life |  | Weighted-AverageExercise Price |       | NumberExercisable |         | Weighted-AverageExercise Price
|$4.90 to $6.89           |  | 254,489             |  | 6.5 Years                                 |  | $                              | 6.01  |                   | 248,977 |                                | $ | 6.02 
|$8.06 to $8.39           |  | 190,148             |  | 6.6 Years                                 |  |                                | 8.39  |                   | 190,148 |                                |   | 8.39 
|$15.50                   |  | 6,100               |  | 0.4 Years                                 |  |                                | 15.50 |                   | 6,100   |                                |   | 15.50
|                         |  |                     |  |                                           |  |                                |       |                   |         |                                |   |      
|                         |  | 450,737             |  | 6.5 Years                                 |  | $                              | 7.14  |                   | 445,225 |                                | $ | 7.16 
|                         |  |                     |  |                                           |  |                                |       |                   |         |                                |   |      

13. Pensions

The Company sponsors defined benefit plans covering substantially all employees. The Company uses a measurement date of December 31 for all of its pension plans.

For U.S. plans, the following table provides a reconciliation of changes in the plans benefit obligations and fair value of assets over the
two-year period ended December 31, 2005 and the funded status as of December 31 of both years:

Benefit Obligations

|                                               |  |             |        |   |      |   |        |  
|---------------------------------------------- |  | ----------- | ------ | - | ---- | - | ------ | -
|                                               |  | December 31 |       
|(Thousands)                                    |  | 2005        |        |   | 2004 |  
|Reconciliation of projected benefit obligation |  |             |        |   |      |   |        |  
|Projected benefit obligations at January 1     |  | $           | 79,470 |   |      | $ | 64,709 |  
|Acquisition of WSP                             |  |             |       |   |      |   | 7,000  |  
|Service cost                                   |  |             | 2,954  |   |      |   | 2,777  |  
|Interest cost                                  |  |             | 4,714  |   |      |   | 4,424  |  
|Amendments                                     |  |             | (299   | ) |      |   |       |  
|Actuarial losses                               |  |             | 6,899  |   |      |   | 3,542  |  
|Benefits paid                                  |  |             | (2,999 | ) |      |   | (2,852 | )
|Curtailment                                    |  |             | (2,202 | ) |      |   | (130   | )
|                                               |  |             |        |   |      |   |        |  
|Projected benefit obligations at December 31   |  | $           | 88,537 |   |      | $ | 79,470 |  
|                                               |  |             |        |   |      |   |        |  

The accumulated benefit obligation at the end of 2005 and 2004 was $76.6 million and $65.7
million, respectively. For all U.S. plans, at December 31, 2005 and 2004, the projected benefit obligation and accumulated benefit obligation each exceed fair value of plan assets. Two of the Companys U.S. plans were amended to allow
non-union employees a one-time choice between continued accrual of benefits under the existing plan as of December 31, 2005 or to begin accruing benefits under the Retirement Savings Plan effective January 1, 2006. In addition, the
Companys Salaried Plan has been closed to new participants. The Company also incurred curtailment charges related to the aforementioned amendment as well as the reduction in workforce as a result of the Companys 2005 re-engineering plan.

For U.S. plans, the assumptions used to determine benefit obligations are shown in the following table:



|                                                       |  |      |   |  |      |  
|------------------------------------------------------ |  | ---- | - |  | ---- | -
|                                                       |  | 2005 |   |  | 2004 |  
|Weighted average actuarial assumptions at December 31: |  |      |   |  |      |  
|Discount rate                                          |  | 5.60 | % |  | 5.75 | %
|Rate of increase in compensation levels                |  | 4.00 | % |  | 4.00 | %



|                                |  | 
|------------------------------- |  | 
|30    Calgon Carbon Corporation |  | 



---

Plan Assets



|                                            |  |             |        |   |      |   |        |  
|------------------------------------------- |  | ----------- | ------ | - | ---- | - | ------ | -
|                                            |  | December 31 |       
|(Thousands)                                 |  | 2005        |        |   | 2004 |  
|Reconciliation of fair value of plan assets |  |             |        |   |      |   |        |  
|Fair value of plan assets at January 1      |  | $           | 49,957 |   |      | $ | 39,258 |  
|Acquisition of WSP                          |  |             |       |   |      |   | 4,603  |  
|Actual return on plan assets                |  |             | 2,136  |   |      |   | 4,998  |  
|Employer contributions                      |  |             | 2,394  |   |      |   | 3,950  |  
|Benefits paid                               |  |             | (2,999 | ) |      |   | (2,852 | )
|                                            |  |             |        |   |      |   |        |  
|Fair value of plan assets at December 31    |  | $           | 51,488 |   |      | $ | 49,957 |  
|                                            |  |             |        |   |      |   |        |  

The asset allocation for the Companys pension plans at the end of 2005 and 2004, and the
target allocation for 2006, by asset category, is as follows.



|                  |  |                  |   |  |                                      |   |  |       |  
|----------------- |  | ---------------- | - |  | ------------------------------------ | - |  | ----- | -
|                  |  | TargetAllocation |   |  | Percentage of PlanAssets at Year End |  
|Asset Category    |  | 2006             |   |  | 2005                                 |   |  | 2004  |  
|Equity securities |  | 70.0             | % |  | 73.4                                 | % |  | 72.8  | %
|Debt securities   |  | 30.0             |   |  | 25.9                                 |   |  | 26.6  |  
|Other             |  |                 |   |  | 0.7                                  |   |  | 0.6   |  
|                  |  |                  |   |  |                                      |   |  |       |  
|Total             |  | 100.0            | % |  | 100.0                                | % |  | 100.0 | %
|                  |  |                  |   |  |                                      |   |  |       |  

The Companys investment strategy is to earn the highest possible long-term total rate of
return and minimize risk to ensure the preservation of the plan assets for the provision of benefits to participants and their beneficiaries. This is accomplished by active management of a diversified portfolio by fund managers, fund styles, asset
types, risk characteristics and investment holdings.

Funded Status



|                                                                              |  |             |         |   |      |   |         |  
|----------------------------------------------------------------------------- |  | ----------- | ------- | - | ---- | - | ------- | -
|                                                                              |  | December 31 |        
|(Thousands)                                                                   |  | 2005        |         |   | 2004 |  
|Funded status of plans at December 31                                         |  | $           | (37,049 | ) |      | $ | (29,513 | )
|Unrecognized net actuarial losses                                             |  |             | 20,318  |   |      |   | 14,328  |  
|Unrecognized prior service cost                                               |  |             | 2,288   |   |      |   | 3,772   |  
|                                                                              |  |             |         |   |      |   |         |  
|Accrued pension cost at December 31                                           |  | $           | (14,443 | ) |      | $ | (11,413 | )
|                                                                              |  |             |         |   |      |   |         |  
|Amounts Recognized in the Balance Sheets                                      |  |             |         |   |      |   |         |  
|Accrued benefit liability (included in accrued pension and other liabilities) |  | $           | (25,551 | ) |      | $ | (16,624 | )
|Intangible pension asset (included in other assets)                           |  |             | 2,288   |   |      |   | 2,342   |  
|Accumulated other comprehensive loss (pre-tax)                                |  |             | 8,820   |   |      |   | 2,869   |  
|                                                                              |  |             |         |   |      |   |         |  
|Net amount recognized at December 31                                          |  | $           | (14,443 | ) |      | $ | (11,413 | )
|                                                                              |  |             |         |   |      |   |         |  

Information about the expected cash flows for the U.S. pension plans is as follows:



|                       |  |                  |       
|---------------------- |  | ---------------- | ------
|Year(Thousands)        |  | Pension Benefits
|Employer contributions |  |                  |       
|2006                   |  | $                | 4,448 
|                       | 
|Benefit Payments       |  |                  |       
|2006                   |  | $                | 3,007 
|2007                   |  |                  | 2,861 
|2008                   |  |                  | 3,173 
|2009                   |  |                  | 3,143 
|2010                   |  |                  | 5,308 
|2011-2015              |  |                  | 27,144



| |  |                                
| |  | -------------------------------
| |  | Calgon Carbon Corporation    31



---

For U.S. plans, the following table provides the components of net periodic pension costs of the plans
for the years ended December 31, 2005, 2004 and 2003:



|                          |  |                        |        |   |      |   |        |      |  |   |        |  
|------------------------- |  | ---------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                          |  | Year Ended December 31 |       
|(Thousands)               |  | 2005                   |        |   | 2004 |   |        | 2003 | 
|Service cost              |  | $                      | 2,954  |   |      | $ | 2,777  |      |  | $ | 2,082  |  
|Interest cost             |  |                        | 4,714  |   |      |   | 4,424  |      |  |   | 3,744  |  
|Expected return on assets |  |                        | (4,154 | ) |      |   | (3,831 | )    |  |   | (2,713 | )
|Prior service cost        |  |                        | 459    |   |      |   | 472    |      |  |   | 472    |  
|Net amortization          |  |                        | 634    |   |      |   | 355    |      |  |   | 313    |  
|Curtailment               |  |                        | 818    |   |      |   |       |      |  |   |       |  
|                          |  |                        |        |   |      |   |        |      |  |   |        |  
|Net periodic pension cost |  | $                      | 5,425  |   |      | $ | 4,197  |      |  | $ | 3,898  |  
|                          |  |                        |        |   |      |   |        |      |  |   |        |  

The Company incurred curtailment charges during 2005 due to plan amendments as well as the
reduction in workforce as a result of the 2005 re-engineering plan.

For U.S. plans, the assumptions used in the measurement of net
periodic cost are shown in the following table:



|                                                       |  |           |   |  |           |   |  |           |  
|------------------------------------------------------ |  | --------- | - |  | --------- | - |  | --------- | -
|                                                       |  | 2005      |   |  | 2004      |   |  | 2003      |  
|Weighted average actuarial assumptions at December 31: |  |           |   |  |           |   |  |           |  
|Discount rate                                          |  | 5.75      | % |  | 6.25      | % |  | 6.75      | %
|Expected annual return on plan assets                  |  | 8.50      | % |  | 8.75      | % |  | 8.75      | %
|Rate of increase in compensation levels                |  | 3.22-4.00 | % |  | 2.00-4.00 | % |  | 2.00-4.00 | %

The expected rate of return on plan assets was determined by evaluating input from the
Companys actuaries, including their review of asset class return expectations as well as long-term inflation assumptions. Projected returns are based on broad equity and bond indices. The Company also considered its historical 10-year
compounded return of 8.09% which has been in excess of these broad equity and bond benchmark indices.

For European plans, the following
tables provide a reconciliation of changes in the plans benefit obligations and fair value of assets over the two-year period ended December 31, 2005 and the funded status as of December 31 of both years:

Benefit Obligations



|                                               |  |      |        |   |      |   |        |  
|---------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|(Thousands)                                    |  | 2005 |        |   | 2004 |  
|Reconciliation of projected benefit obligation |  |      |        |   |      |   |        |  
|Projected benefit obligations at January 1     |  | $    | 34,749 |   |      | $ | 18,868 |  
|Acquisition of WSP                             |  |      |       |   |      |   | 10,595 |  
|Service cost                                   |  |      | 864    |   |      |   | 867    |  
|Interest cost                                  |  |      | 1,583  |   |      |   | 1,528  |  
|Employee contributions                         |  |      | 244    |   |      |   | 243    |  
|Actuarial losses                               |  |      | 4,949  |   |      |   | 1,624  |  
|Benefits paid                                  |  |      | (3,562 | ) |      |   | (877   | )
|Foreign currency exchange rate changes         |  |      | (4,505 | ) |      |   | 1,901  |  
|                                               |  |      |        |   |      |   |        |  
|Projected benefit obligations at December 31   |  | $    | 34,322 |   |      | $ | 34,749 |  
|                                               |  |      |        |   |      |   |        |  

The accumulated benefit obligation at the end of 2005 and 2004 was $31.1 million and $32.5
million, respectively.



|                                |  | 
|------------------------------- |  | 
|32    Calgon Carbon Corporation |  | 



---

For European plans, the assumptions used to determine end of year benefit obligations are shown in the
following table:



|                                                       |  |      |   |  |      |  
|------------------------------------------------------ |  | ---- | - |  | ---- | -
|                                                       |  | 2005 |   |  | 2004 |  
|Weighted average actuarial assumptions at December 31: |  |      |   |  |      |  
|Discount rate                                          |  | 4.45 | % |  | 4.98 | %
|Rate of increase in compensation levels                |  | 3.75 | % |  | 3.22 | %

Plan Assets



|                                            |  |             |        |   |      |   |        |  
|------------------------------------------- |  | ----------- | ------ | - | ---- | - | ------ | -
|                                            |  | December 31 |       
|(Thousands)                                 |  | 2005        |        |   | 2004 |  
|Reconciliation of fair value of plan assets |  |             |        |   |      |   |        |  
|Fair value of plan assets at January 1      |  | $           | 16,908 |   |      | $ | 9,296  |  
|Acquisition of WSP                          |  |             |       |   |      |   | 5,269  |  
|Actual return on plan assets                |  |             | 2,096  |   |      |   | 1,102  |  
|Employer contributions                      |  |             | 2,137  |   |      |   | 957    |  
|Employee contributions                      |  |             | 244    |   |      |   | 243    |  
|Benefits paid                               |  |             | (3,562 | ) |      |   | (877   | )
|Foreign currency exchange rate changes      |  |             | (2,033 | ) |      |   | 918    |  
|                                            |  |             |        |   |      |   |        |  
|Fair value of plan assets at December 31    |  | $           | 15,790 |   |      | $ | 16,908 |  
|                                            |  |             |        |   |      |   |        |  

The asset allocation for the Companys pension plans at the end of 2005 and 2004, and the
target allocation for 2006, by asset category, is as follows:



|                  |  |                  |   |  |                                      |   |  |       |  
|----------------- |  | ---------------- | - |  | ------------------------------------ | - |  | ----- | -
|                  |  | TargetAllocation |   |  | Percentage of PlanAssets at Year End |  
|Asset Category    |  | 2006             |   |  | 2005                                 |   |  | 2004  |  
|Equity securities |  | 60.0             | % |  | 50.4                                 | % |  | 58.8  | %
|Debt securities   |  | 40.0             |   |  | 39.6                                 |   |  | 39.2  |  
|Other             |  |                 |   |  | 10.0                                 |   |  | 2.0   |  
|                  |  |                  |   |  |                                      |   |  |       |  
|Total             |  | 100.0            | % |  | 100.0                                | % |  | 100.0 | %
|                  |  |                  |   |  |                                      |   |  |       |  

Funded Status



|                                                                              |  |             |         |   |      |   |         |  
|----------------------------------------------------------------------------- |  | ----------- | ------- | - | ---- | - | ------- | -
|                                                                              |  | December 31 |        
|(Thousands)                                                                   |  | 2005        |         |   | 2004 |  
|Funded status of plans at December 31                                         |  | $           | (18,532 | ) |      | $ | (17,841 | )
|Unrecognized net actuarial losses                                             |  |             | 6,204   |   |      |   | 3,020   |  
|Unrecognized net transition obligation                                        |  |             | 208     |   |      |   | 292     |  
|                                                                              |  |             |         |   |      |   |         |  
|Accrued pension cost at December 31                                           |  | $           | (12,120 | ) |      | $ | (14,529 | )
|                                                                              |  |             |         |   |      |   |         |  
|Amounts Recognized in the Balance Sheets                                      |  |             |         |   |      |   |         |  
|Accrued benefit liability (included in accrued pension and other liabilities) |  | $           | (15,933 | ) |      | $ | (16,457 | )
|Intangible pension asset (included in other assets)                           |  |             | 88      |   |      |   | 119     |  
|Accumulated other comprehensive loss (pre-tax)                                |  |             | 3,725   |   |      |   | 1,809   |  
|                                                                              |  |             |         |   |      |   |         |  
|Net amount recognized at December 31                                          |  | $           | (12,120 | ) |      | $ | (14,529 | )
|                                                                              |  |             |         |   |      |   |         |  



| |  |                                
| |  | -------------------------------
| |  | Calgon Carbon Corporation    33



---

At the end of 2005 and 2004, the projected benefit obligation, accumulated benefit obligation, and fair
value of plan assets for European pension plans with a projected benefit obligation in excess of plan assets, and for pension plans with an accumulated benefit obligation in excess of plan assets, were as follows:



|                               |  |                                                                     |        |                                                                       |   |        |  |      |        |  |   |       
|------------------------------ |  | ------------------------------------------------------------------- | ------ | --------------------------------------------------------------------- | - | ------ |  | ---- | ------ |  | - | ------
|                               |  | Projected Benefit Obligation Exceeds theFair Value of Plans Assets |        | Accumulated Benefit Obligation Exceeds theFair Value of Plans Assets
|(Thousands)                    |  | 2005                                                                |        | 2004                                                                  |   | 2005   |  | 2004
|Projected Benefit Obligation   |  | $                                                                   | 34,322 |                                                                       | $ | 34,749 |  | $    | 29,561 |  | $ | 28,404
|Accumulated Benefit Obligation |  | $                                                                   | 31,065 |                                                                       | $ | 32,451 |  | $    | 27,147 |  | $ | 27,000
|Fair Value of Plan Assets      |  | $                                                                   | 15,790 |                                                                       | $ | 16,908 |  | $    | 11,554 |  | $ | 11,196

Information about the expected cash flows for the European pension plans is as follows:



|                       |  |                  |       
|---------------------- |  | ---------------- | ------
|Year(Thousands)        |  | Pension Benefits
|Employer contributions |  |                  |       
|2006                   |  | $                | 1,993 
|                       | 
|Benefit Payments       |  |                  |       
|2006                   |  | $                | 1,593 
|2007                   |  |                  | 1,120 
|2008                   |  |                  | 1,099 
|2009                   |  |                  | 1,442 
|2010                   |  |                  | 1,916 
|2011-2015              |  |                  | 12,340

Total benefits expected to be paid include both the Companys share of the benefit cost and
the participants share of the cost, which is funded by participant contributions to the plan.

For European plans, the following
table provides the components of net periodic pension costs of the plans for the years ended December 31, 2005, 2004 and 2003:



|                          |  |                        |        |   |      |   |        |      |  |   |      |  
|------------------------- |  | ---------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ---- | -
|                          |  | Year Ended December 31 |       
|(Thousands)               |  | 2005                   |        |   | 2004 |   |        | 2003 | 
|Service cost              |  | $                      | 864    |   |      | $ | 867    |      |  | $ | 375  |  
|Interest cost             |  |                        | 1,583  |   |      |   | 1,528  |      |  |   | 967  |  
|Expected return on assets |  |                        | (1,739 | ) |      |   | (1,126 | )    |  |   | (619 | )
|Net amortization          |  |                        | 820    |   |      |   | 228    |      |  |   | 90   |  
|                          |  |                        |        |   |      |   |        |      |  |   |      |  
|Net periodic pension cost |  | $                      | 1,528  |   |      | $ | 1,497  |      |  | $ | 813  |  
|                          |  |                        |        |   |      |   |        |      |  |   |      |  

For European plans, the assumptions used in the measurement of the net periodic pension cost are
shown in the following table:



|                                                       |  |      |   |  |      |   |  |      |  
|------------------------------------------------------ |  | ---- | - |  | ---- | - |  | ---- | -
|                                                       |  | 2005 |   |  | 2004 |   |  | 2003 |  
|Weighted average actuarial assumptions at December 31: |  |      |   |  |      |   |  |      |  
|Discount rate                                          |  | 4.98 | % |  | 5.43 | % |  | 5.78 | %
|Expected annual return on plan assets                  |  | 7.16 | % |  | 6.99 | % |  | 7.08 | %
|Rate of increase in compensation levels                |  | 3.22 | % |  | 3.31 | % |  | 3.48 | %

The expected rate of return on plan assets was determined by evaluating input from the
Companys actuaries, including their review of asset class return expectations as well as long-term inflation assumptions. Projected returns are based on broad equity and bond indices. The Company also considered its historical 10-year
compounded return of 6.31% which has been below these broad equity and bond benchmark indices. Managements estimate considers the achievement of plan asset returns at or in excess of levels attained in the broad equity and bond indices.

The non-current portion of $37.3 million and $26.3 million at December 31, 2005 and 2004, respectively, for the U.S. and European
pension liabilities is included in other liabilities.

The Company also sponsors a defined contribution pension plan for certain U.S.
employees that permits employee contributions of up to 50% of eligible compensation in accordance with Internal Revenue Service guidance. The Company makes matching contributions on behalf of each participant in an amount equal to 25% of the
employee contribution up to a maximum of 4% of employee compensation. Employer contributions vest immediately. Total expenses related to this defined contribution plan were $0.2 million, $0.2 million, and $0.2 million at December 31, 2005,
2004, and 2003, respectively.



|                                |  | 
|------------------------------- |  | 
|34    Calgon Carbon Corporation |  | 



---

14. Benefit for Income Taxes

The components of the provision (benefit) for income taxes for continuing operations were as follows:



|                                                   |  |                        |        |   |      |   |        |      |  |   |        |  
|-------------------------------------------------- |  | ---------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                   |  | Year Ended December 31 |       
|(Thousands)                                        |  | 2005                   |        |   | 2004 |   |        | 2003 | 
|Current                                            |  |                        |        |   |      |   |        |      |  |   |        |  
|Federal                                            |  | $                      | (2,167 | ) |      | $ | 51     |      |  | $ |       |  
|State and local                                    |  |                        | (7     | ) |      |   | 39     |      |  |   | 16     |  
|Foreign                                            |  |                        | 304    |   |      |   | 575    |      |  |   | 1,775  |  
|                                                   |  |                        |        |   |      |   |        |      |  |   |        |  
|                                                   |  |                        | (1,870 | ) |      |   | 665    |      |  |   | 1,791  |  
|                                                   |  |                        |        |   |      |   |        |      |  |   |        |  
|Deferred                                           |  |                        |        |   |      |   |        |      |  |   |        |  
|Federal                                            |  |                        | (8,800 | ) |      |   | (1,794 | )    |  |   | (2,000 | )
|State and local                                    |  |                        | (1,027 | ) |      |   | (649   | )    |  |   | (180   | )
|Foreign                                            |  |                        | 1,713  |   |      |   | 932    |      |  |   | 89     |  
|                                                   |  |                        |        |   |      |   |        |      |  |   |        |  
|                                                   |  |                        | (8,114 | ) |      |   | (1,511 | )    |  |   | (2,091 | )
|                                                   |  |                        |        |   |      |   |        |      |  |   |        |  
|Tax expense on repatriation                        |  |                        | 296    |   |      |   |       |      |  |   |       |  
|                                                   |  |                        |        |   |      |   |        |      |  |   |        |  
|Benefit for income taxes for continuing operations |  | $                      | (9,688 | ) |      | $ | (846   | )    |  | $ | (300   | )
|                                                   |  |                        |        |   |      |   |        |      |  |   |        |  

Income from continuing operations before income taxes, equity in income (loss), and minority
interest for 2005, 2004, and 2003 includes $9.4 million, $7.1 million and $7.6 million, generated by operations outside the United States.

The difference between the U.S. federal statutory tax rate and the Companys effective income tax rate is as follows:



|                                                      |  |                        |   |  |       |    |  |       |   
|----------------------------------------------------- |  | ---------------------- | - |  | ----- | -- |  | ----- | --
|                                                      |  | Year Ended December 31 |  
|                                                      |  | 2005                   |   |  | 2004  |    |  | 2003  |   
|U.S. federal statutory rate                           |  | 35.0                   | % |  | 35.0  | %  |  | 35.0  | % 
|State income taxes, net of federal income tax benefit |  | 3.4                    |   |  | (19.3 | )  |  | (3.7  | ) 
|Higher tax rate on foreign income                     |  | 0.7                    |   |  | 23.7  |    |  | 16.0  |   
|Benefit of extraterritorial income exclusion          |  | (0.2                   | ) |  | (58.6 | )  |  | (32.0 | ) 
|Benefit of research and development tax credits       |  |                       |   |  |      |    |  | (19.6 | ) 
|Benefit of foreign tax credits                        |  | 2.0                    |   |  | (11.2 | )  |  | (6.2  | ) 
|Revision of prior years accruals                     |  |                       |   |  | (16.8 | )  |  |      |   
|Tax statute expiration                                |  | 11.1                   |   |  |      |    |  |      |   
|Othernet                                             |  | (2.2                   | ) |  | 6.1   |    |  | 0.2   |   
|                                                      |  |                        |   |  |       |    |  |       |   
|Effective income tax rate                             |  | 49.8                   | % |  | (41.1 | )% |  | (10.3 | )%
|                                                      |  |                        |   |  |       |    |  |       |   

The Company completed its evaluation of the new law on repatriation of foreign earnings during
December 2005. The new law reduced the federal income tax rate to 5.25% of earnings distributed from non-United States based subsidiaries for a one-year period. The Company repatriated a total of $4.9 million from two wholly owned subsidiaries ($1.7
million from Calgon Carbon Canada, Inc. and $3.2 million from Chemviron Carbon, Ltd.). The current income tax included in the provision for this repatriation is $0.3 million. The Company has not changed its policy of permanent reinvestment under APB
No. 23 due to this one-time repatriation of earnings.

The Company also has the following operating loss carryforwards and domestic
tax credit carryforwards as of December 31, 2005:



|                                        |  |        |        |                 |          
|--------------------------------------- |  | ------ | ------ | --------------- | ---------
|Type(Thousands)                         |  | Amount |        | Expiration Date
|Tax creditsdomestic                    |  | $      | 3,684  |                 | 2009-2022
|Tax creditsdomestic                    |  |        | 637    |                 | None     
|Operating loss carryforwards  domestic |  |        | 86,113 |                 | 2006-2025
|Operating loss carryforwardsforeign    |  |        | 37,828 |                 | None     

The Companys 2002 U.S. federal income tax returns were examined by the Internal Revenue
Service and no changes were made to the tax reported.



| |  |                                
| |  | -------------------------------
| |  | Calgon Carbon Corporation    35



---

The components of deferred taxes are comprised of the following:



|                                                  |  |      |        |   |      |   |        |  
|------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|(Thousands)                                       |  | 2005 |        |   | 2004 |  
|Deferred tax assets                               |  |      |        |   |      |   |        |  
|Foreign tax loss and credit carryforwards         |  | $    | 12,393 |   |      | $ | 17,656 |  
|U.S. net operating loss and credit carryforwards  |  |      | 14,757 |   |      |   | 8,927  |  
|Accruals                                          |  |      | 5,015  |   |      |   | 4,497  |  
|Inventories                                       |  |      | 1,087  |   |      |   | 968    |  
|Pensions                                          |  |      | 11,385 |   |      |   | 9,330  |  
|Goodwill and other intangible assets              |  |      | 4,897  |   |      |   | 6,658  |  
|Valuation reserve                                 |  |      | (3,382 | ) |      |   | (3,539 | )
|                                                  |  |      |        |   |      |   |        |  
|Total deferred tax assets                         |  | $    | 46,152 |   |      | $ | 44,497 |  
|                                                  |  |      |        |   |      |   |        |  
|Deferred tax liabilities                          |  |      |        |   |      |   |        |  
|Property, plant and equipment                     |  | $    | 17,929 |   |      | $ | 21,326 |  
|U.S. liability on Belgian net deferred tax assets |  |      | 1,232  |   |      |   | 2,860  |  
|U.S. liability on German net deferred tax assets  |  |      | 1,101  |   |      |   | 2,157  |  
|U.S. liability on deferred foreign income         |  |      | 695    |   |      |   | 1,102  |  
|Cumulative translation adjustment                 |  |      | (548   | ) |      |   | 943    |  
|                                                  |  |      |        |   |      |   |        |  
|Total deferred tax liabilities                    |  | $    | 20,409 |   |      | $ | 28,388 |  
|                                                  |  |      |        |   |      |   |        |  
|Net deferred tax asset                            |  | $    | 25,743 |   |      | $ | 16,109 |  
|                                                  |  |      |        |   |      |   |        |  

Valuation reserves are established when it is more likely than not that a portion of the deferred
tax assets will not be realized. The valuation reserves are adjusted based on the changing facts and circumstances, such as the expected expiration of an operating loss carryforward.

The 2005 valuation reserves represent reserves for U.S. foreign tax credits ($1,338), certain state operating loss carryforwards ($588), and certain
foreign operating loss carryforwards ($1,456). The 2004 valuation reserves represent reserves for U.S. foreign tax credits ($1,508), certain state operating loss carryforwards ($401) and certain foreign operating loss carryforwards ($1,630). The
2005 decrease in the valuation reserve was attributable to recording a foreign tax credit benefit, an additional reserve for state loss carryforwards, and foreign exchange on the foreign loss carryforwards.

15. Accumulated Other Comprehensive Income (Loss)



|                           |  |                               |        |   |                         |   |        |       |  |   |                                            |   |  |   |        |  
|-------------------------- |  | ----------------------------- | ------ | - | ----------------------- | - | ------ | ----- |  | - | ------------------------------------------ | - |  | - | ------ | -
|                           |  | CurrencyTranslationAdjustment |        |   | MinimumPensionLiability |   |        | Other |  |   | AccumulatedOtherComprehensiveIncome (Loss) |  
|Balance, January 1, 2003   |  | $                             | 6,579  |   |                         | $ | (2,794 | )     |  | $ |                                           |   |  | $ | 3,785  |  
|Net Change                 |  |                               | 7,434  |   |                         |   | 1,209  |       |  |   | (114                                       | ) |  |   | 8,529  |  
|                           |  |                               |        |   |                         |   |        |       |  |   |                                            |   |  |   |        |  
|Balance, December 31, 2003 |  |                               | 14,013 |   |                         |   | (1,585 | )     |  |   | (114                                       | ) |  |   | 12,314 |  
|Net Change                 |  |                               | 5,421  |   |                         |   | (1,380 | )     |  |   | (102                                       | ) |  |   | 3,939  |  
|                           |  |                               |        |   |                         |   |        |       |  |   |                                            |   |  |   |        |  
|Balance, December 31, 2004 |  |                               | 19,434 |   |                         |   | (2,965 | )     |  |   | (216                                       | ) |  |   | 16,253 |  
|Net Change                 |  |                               | (4,799 | ) |                         |   | (4,856 | )     |  |   | (156                                       | ) |  |   | (9,811 | )
|                           |  |                               |        |   |                         |   |        |       |  |   |                                            |   |  |   |        |  
|Balance, December 31,2005  |  | $                             | 14,635 |   |                         | $ | (7,821 | )     |  | $ | (372                                       | ) |  | $ | 6,442  |  
|                           |  |                               |        |   |                         |   |        |       |  |   |                                            |   |  |   |        |  

Foreign currency translation adjustments exclude income tax expense (benefit) for the earnings of the
Companys non-United States subsidiaries as management believes these earnings will be reinvested for an indefinite period of time. An estimate of the amount of unrecognized deferred tax liability is currently not practicable. The Company has
made a one-time repatriation under the new law on repatriations, but has not changed its policy of permanent reinvestment under APB No. 23 Accounting for Income TaxesSpecial Areas due to this one-time repatriation of earnings.

The income tax effect included in accumulated other comprehensive income (loss) for other non-U.S. subsidiaries was $178,000 at
December 31, 2005, 2004, and 2003. The income tax benefit associated with the minimum pension liability adjustment included in accumulated other comprehensive income was $4,725,000, $1,706,000, and $890,000 at December 31, 2005, 2004, and
2003, respectively.



|                                |  | 
|------------------------------- |  | 
|36    Calgon Carbon Corporation |  | 



---

16. Other Information

Repair and maintenance expenses were $9,294,000, $9,806,000 and $9,298,000 for the years ended December 31, 2005, 2004, and 2003, respectively.

Other expensenet includes net foreign currency transaction losses of $139,000, $1,002,000 and $256,000 for the years ended December 31, 2005, 2004, and 2003, tax expense other than on income of $743,000,
$920,000 and $595,000 for the years ended December 31, 2005, 2004, and 2003, and a derivative gain of $0, $16,000, and $36,000 for the years ended December 31, 2005, 2004 and 2003.

Deferred tax (benefit) expense included in the currency translation adjustments for 2005, 2004, and 2003 was ($1,491,000), ($800,000), and $152,000,
respectively.

17. Supplemental Cash Flow Information



|                              |  |      |       |      |   |       |  |   |      
|----------------------------- |  | ---- | ----- | ---- | - | ----- |  | - | -----
|(Thousands)                   |  | 2005 |       | 2004 |   | 2003 
|Cash paid during the year for |  |      |       |      |   |       |  |   |      
|Interest                      |  | $    | 5,074 |      | $ | 3,348 |  | $ | 2,310
|Income taxes paidnet         |  | $    | 362   |      | $ | 1,457 |  | $ | 1,335

18. Derivative Instruments

The Company accounts for its derivative instruments under Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, as
amended. This standard requires recognition of all derivatives as either assets or liabilities at fair value and may result in additional volatility in both current period earnings and other comprehensive income as a result of recording recognized
and unrecognized gains and losses from changes in the fair value of derivative instruments.

The Companys corporate and foreign
subsidiaries use forward exchange contracts to limit the exposure of exchange rate fluctuations on certain foreign currency receivables, payables, and other known and forecasted transactional exposures for periods consistent with the expected cash
flow of the underlying transactions. The contracts generally mature within one year and are designed to limit exposure to exchange rate fluctuations.

At December 31, 2005, the Company had twelve foreign currency forward exchange contracts outstanding. The Company applied hedge accounting treatment for two of the foreign currency forward exchange contracts and
recorded an immaterial gain in other income for the other ten foreign currency forward exchange contracts. The two foreign currency forward exchange contracts held at December 31, 2005, which received hedge accounting treatment, were treated as
foreign exchange cash flow hedges regarding payment for inventory purchases and were released into operations during the year based on the timing of the sales of the underlying inventory. At December 31, 2004, the Company had one derivative
instrument outstanding which was a foreign currency forward exchange contract. The Company did not apply hedge accounting treatment for the foreign currency forward exchange contract and recorded an immaterial gain in other income.

On April 26, 2004, the Company entered into a ten-year foreign currency swap agreement to fix the foreign exchange rate on a $6.5 million
intercompany loan between the Company and its foreign subsidiary, Chemviron Carbon Ltd. Since its inception the foreign currency swap has been treated as a foreign exchange cash flow hedge. Accordingly, the changes in the fair value of the effective
hedge portion of the foreign currency swap of ($0.2) million and ($0.3) million, respectively, for the years ended December 31, 2005 and 2004 and was recorded in other comprehensive income (loss). The balance of the effective hedge portion of
the foreign currency swap recorded in other long-term liabilities was $0.2 million and $0.8 million, respectively, as of December 31, 2005 and 2004.

No component of the derivative gains or losses has been excluded from the assessment of hedge effectiveness. For the years ended December 31, 2005 and 2004, the net gain or loss recognized due to the amount of
hedge ineffectiveness was insignificant.

Managements policy for managing foreign currency risk is to use derivatives to hedge up to
75% of the forecasted intercompany sales to its European subsidiaries. The hedges involving foreign currency derivative instruments do not span a period greater than one year from the contract inception date. Management uses various hedging
instruments including, but not limited to foreign currency forward contracts, foreign currency option contracts and foreign currency swaps. Hedge effectiveness is measured on a quarterly basis and any portion of ineffectiveness is recorded directly
to the Companys earnings.



| |  |                                
| |  | -------------------------------
| |  | Calgon Carbon Corporation    37



---

19. Contingencies

During the year ended December 31, 2005, the Companys Pearl River plant was impacted by Hurricane Katrina. The Company has both property and business interruption insurance coverage for this plant. Management is in the process of
filing claims with its insurance carrier to recover damages for both property and business interruption related to this event. As of the year ended December 31, 2005, the Company had incurred a $1.0 million charge for costs which are not
recoverable from insurance and $6.8 million for damages which the Company deems to be recoverable from insurance. Included in the recoverable amount is $3.8 million recorded as additions to property, plant, and equipment. In the fourth quarter of
2005, the Company received an advance on its claim of $1.5 million from its insurance carrier for property damage which reduced the receivable recorded. The Company has an insurance receivable recorded at December 31, 2005 in the amount of $1.5
million. No amounts have been recorded for any amounts claimed or to be claimed for business interruption as of the year ended December 31, 2005. In February 2006, the Company received an additional advance on its claim of $2.0 million from its
insurance carrier for property damage.

On December 31, 1996, the Company purchased the common stock of Advanced Separation
Technologies Incorporated (AST) from Progress Capital Holdings, Inc. and Potomac Capital Investment Corporation. On January 12, 1998, the Company filed a claim for unspecified damages in the United States District Court in the Western District
of Pennsylvania alleging among other things that Progress Capital Holdings and Potomac Capital Investment Corporation materially breached various AST financial and operational representations and warranties included in the Stock Purchase Agreement.
Based upon information obtained since the acquisition and corroborated in the course of pre-trial discovery, the Company believes that it has a reasonable basis for this claim and intends to vigorously pursue reimbursement for damages sustained.
Neither the Company nor its counsel can predict with certainty the amount, if any, of recovery that will be obtained from the defendants in this matter.

The Company is also currently a party in three cases involving alleged infringement of its U.S. Patent No. 6,129,893 and U.S. Patent No. 6,565,803 B1 (U.S. Patents) or Canadian Patent
No. 2,331,525 (525 Patent) for the method of preventing infection from cryptosporidium found in drinking water. In the first case, Wedeco Ideal Horizons, Inc. has filed suit against the Company seeking a declaratory judgment that it
does not infringe the Companys U.S. Patents and alleging unfair competition by the Company. This matter is currently pending in the United States District Court for the District of New Jersey. In the second case, the Company filed suit against
the Town of Ontario, NY, Trojan Technologies Inc. (Trojan) and Robert Wykle, et al. in the United States District Court for the Western District of New York alleging that the defendant is practicing the method claimed within the U.S. patent without
a license. In the third case, the Company has filed suit against the City of North Bay, Ontario, Canada (North Bay) and Trojan in the Federal court of Canada alleging infringement of the 525 Patent by North Bay and inducement of infringement by
Trojan. In June 2005, North Bay obtained a ruling that the 525 Patent is invalid in Canada. The Company appealed the ruling, and in December 2005, the Canadian Federal Court of Appeal allowed the Companys appeal. As a result of the appellate
courts decision, the case will move forward to trial in April 2006 to determine the merits of the Companys claim that the City of North Bay, Ontario, Canada infringed its patent and Trojan Technologies, Inc. induced that infringement.
Neither the Company nor its counsel can predict with any certainty the outcome of the three matters.

The Company has received a demand
from the Pennsylvania Department of Environmental Protection (PADEP) that the Company reimburse PADEP for response costs the agency alleges have been taken at a site owned by a third party and located in Allegheny County, Pennsylvania
(Site). The letter also included an unspecified demand for interest and for any future costs incurred by PADEP at the Site. The Company understands that the response costs are approximately $1.3 million. Based on information provided by
the PADEP, the Site is approximately 8 acres and was used from the 1950s until the 1960s as a disposal site for coke or carbon sweepings and other industrial wastes. The Company has been in discussions with PADEP regarding the Companys
position that it is not the entity that disposed of materials containing the contaminants identified by PADEP at the Site and that any materials that may have been deposited by the Companys predecessor did not contain actionable levels of
hazardous substances identified by PADEP. PADEP has advised the



|                                |  | 
|------------------------------- |  | 
|38    Calgon Carbon Corporation |  | 



---

Company that it is prepared to settle the matter for payment of $475,000. The Company believes PADEPs position is not meritorious, and the demand is
unwarranted. The Company intends to continue to vigorously defend the matter.

In September 2004, a customer of one of the Companys
distributors demanded payment by the Company of approximately $340,000 as reimbursement for losses allegedly caused by activated carbon produced by the Company and sold by the distributor. The claimant contends that the activated carbon contained
contamination which adversely impacted its production process. The Company is in the process of evaluating the claim, and at this time, cannot predict with any certainty the outcome of this matter.

The Company is involved in various legal proceedings, lawsuits and claims, including employment, product warranty and environmental matters of a nature
considered normal to its business. It is the Companys policy to accrue for amounts related to these legal matters if it is probable that a liability has been incurred and an amount is reasonably estimable. Management believes, after consulting
with counsel, that the ultimate liabilities, if any, resulting from such lawsuits and claims will not materially affect the consolidated results of operations, cash flows or financial position of the Company.

In conjunction with the purchase of substantially all of Waterlinks operating assets and the stock of Waterlinks U.K. subsidiary, several
environmental studies were performed on its Columbus, Ohio property by environmental consulting firms which identified and characterized areas of contamination. In addition, these firms identified alternative methods of remediating the property,
identified feasible alternatives and prepared cost evaluations of the cost of the various alternatives. Liability estimates are based on an evaluation of, among other factors, currently available facts, existing technology, presently enacted laws
and regulations, and the remediation experience of other companies. The Company has concluded from the information in the studies that a loss at this property is probable and has included an estimate of such loss of $5.6 million, which was recorded
as an undiscounted liability on the opening balance sheet at the date of the acquisition and was presented as a component of noncurrent other liabilities in the Companys consolidated balance sheet. As of December 31, 2005 and 2004,
respectively, the Company had recorded an accrual of $5.3 million. The change in the accrual is a result of a decrease in estimated costs of $0.2 million, which reduced the acquisition price of WSP, and the environmental remediation previously
incurred of $0.1 million for the year ended December 31, 2004. A change in the estimate of this obligation may occur as additional investigative work is performed and the remediation activity commences. The ultimate remediation costs are
dependent upon the extent and types of contamination, which will not be fully determined until more detailed information is developed through upcoming investigations and experience gained through remediation activities. The accrued amounts are
expected to be paid out over the course of several years. The Company has incurred $27,000 of environmental remediation expense for the year ended December 31, 2005.

The Company owns a 49% interest in a joint venture, Calgon Mitsubishi Chemical Corporation, which was formed on October 1, 2002. At December 31, 2005, Calgon Mitsubishi Chemical Corporation had $9.9 million
in borrowings from an affiliate of the majority owner of the joint venture. The Company has agreed with the joint venture and the lender that, upon request by the lender, the Company will execute a guarantee for up to 49% of such borrowings. At
December 31, 2005, the lender has not requested, and the Company has not provided, such guarantee.



| |  |                                
| |  | -------------------------------
| |  | Calgon Carbon Corporation    39



---

20. Basic and Diluted Net Income (Loss) from Continuing Operations Per Common Share

Computation of basic and diluted net income (loss) per common share from continuing operations is performed as follows:



|                                                                                |  |                    |            |   |      |   |            |  |   |           
|------------------------------------------------------------------------------- |  | ------------------ | ---------- | - | ---- | - | ---------- |  | - | ----------
|                                                                                |  | For the Year Ended
|(Dollars in thousands, except per share amounts)                                |  | 2005               |            |   | 2004 |   | 2003      
|Income (loss) from continuing operations available to common stockholders       |  | $                  | (10,507    | ) |      | $ | 3,968      |  | $ | 3,810     
|Weighted Average Shares Outstanding                                             |  |                    |            |   |      |   |            |  |   |           
|Basic                                                                           |  |                    | 39,615,117 |   |      |   | 39,054,142 |  |   | 39,000,197
|Effect of Dilutive Securities                                                   |  |                    |           |   |      |   | 402,043    |  |   | 157,062   
|                                                                                |  |                    |            |   |      |   |            |  |   |           
|Diluted                                                                         |  |                    | 39,615,117 |   |      |   | 39,456,185 |  |   | 39,157,259
|                                                                                |  |                    |            |   |      |   |            |  |   |           
|Basic and diluted net income (loss) from continuing operations per common share |  | $                  | (.27       | ) |      | $ | .10        |  | $ | .10       
|                                                                                |  |                    |            |   |      |   |            |  |   |           

For the years ended December 31, 2005, 2004, and 2003, there were 1,045,479, 943,700 and
1,278,775 options that were excluded from the dilutive calculations as the effect would have been antidilutive.

21. Segment Information

The Activated Carbon and Service segment manufactures granular activated carbon for use in applications to remove organic compounds from liquids, gases, water, and
air. This segment also consists of services related to activated carbon including reactivation of spent carbon and the leasing, monitoring, and maintenance of carbon fills at customer sites. The service portion of this segment also includes services
related to the Companys ion exchange technologies for treatment of groundwater and process streams. The Equipment segment provides solutions to customers air and water process problems through the design, fabrication, and operation of
systems that utilize the Companys enabling technologies: carbon adsorption, ultraviolet light, and advanced ion exchange separation. The Consumer segment brings the Companys purification technologies directly to the consumer in the form
of products and services including carbon cloth and activated carbon for household odors. The following segment information represents the results of the Companys continuing operations.



|                             |  |                        |         |      |   |         |  |   |        
|---------------------------- |  | ---------------------- | ------- | ---- | - | ------- |  | - | -------
|                             |  | Year Ended December 31
|(Thousands)                  |  | 2005                   |         | 2004 |   | 2003   
|Net sales                    |  |                        |         |      |   |         |  |   |        
|Activated Carbon and Service |  | $                      | 241,934 |      | $ | 245,500 |  | $ | 212,186
|Equipment                    |  |                        | 36,867  |      |   | 39,936  |  |   | 30,450 
|Consumer                     |  |                        | 12,034  |      |   | 10,441  |  |   | 10,542 
|                             |  |                        |         |      |   |         |  |   |        
|Consolidated net sales       |  | $                      | 290,835 |      | $ | 295,877 |  | $ | 253,178
|                             |  |                        |         |      |   |         |  |   |        



|                                |  | 
|------------------------------- |  | 
|40    Calgon Carbon Corporation |  | 



---

|                                                                                                                          |  |                        |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                                          |  | Year Ended December 31 |        
|(Thousands)                                                                                                               |  | 2005                   |         |   | 2004 |   |         | 2003 | 
|Income (loss) from continuing operations before amortization and restructuring charges                                    |  |                        |         |   |      |   |         |      |  |   |         |  
|Activated Carbon and Service                                                                                              |  | $                      | (1,584  | ) |      | $ | 14,249  |      |  | $ | 10,741  |  
|Equipment                                                                                                                 |  |                        | (6,217  | ) |      |   | (3,582  | )    |  |   | (2,572  | )
|Consumer                                                                                                                  |  |                        | (883    | ) |      |   | (657    | )    |  |   | (1,281  | )
|                                                                                                                          |  |                        |         |   |      |   |         |      |  |   |         |  
|                                                                                                                          |  | $                      | (8,684  | ) |      | $ | 10,010  |      |  | $ | 6,888   |  
|Reconciling items                                                                                                         |  |                        |         |   |      |   |         |      |  |   |         |  
|Gulf Coast impairment charge                                                                                              |  |                        | (2,158  | ) |      |   |        |      |  |   |        |  
|Restructuring charges                                                                                                     |  |                        | (412    | ) |      |   |        |      |  |   | (452    | )
|Amortization                                                                                                              |  |                        | (1,906  | ) |      |   | (2,004  | )    |  |   | (261    | )
|Interest income                                                                                                           |  |                        | 719     |   |      |   | 697     |      |  |   | 786     |  
|Interest expense                                                                                                          |  |                        | (4,891  | ) |      |   | (3,409  | )    |  |   | (2,341  | )
|Other expensenet                                                                                                         |  |                        | (2,138  | ) |      |   | (3,238  | )    |  |   | (1,718  | )
|                                                                                                                          |  |                        |         |   |      |   |         |      |  |   |         |  
|Consolidated income (loss) from continuing operations before income taxes, equity in income (loss), and minority interest |  | $                      | (19,470 | ) |      | $ | 2,056   |      |  | $ | 2,902   |  
|                                                                                                                          |  |                        |         |   |      |   |         |      |  |   |         |  
|                                                                                                                          | 
|                                                                                                                          |  | Year Ended December 31 |        
|(Thousands)                                                                                                               |  | 2005                   |         |   | 2004 |   |         | 2003 | 
|Depreciation                                                                                                              |  |                        |         |   |      |   |         |      |  |   |         |  
|Activated Carbon and Service                                                                                              |  | $                      | 17,593  |   |      | $ | 18,068  |      |  | $ | 17,317  |  
|Equipment                                                                                                                 |  |                        | 962     |   |      |   | 1,373   |      |  |   | 797     |  
|Consumer                                                                                                                  |  |                        | 581     |   |      |   | 559     |      |  |   | 479     |  
|                                                                                                                          |  |                        |         |   |      |   |         |      |  |   |         |  
|                                                                                                                          |  | $                      | 19,136  |   |      | $ | 20,000  |      |  | $ | 18,593  |  
|Amortization                                                                                                              |  |                        | 1,906   |   |      |   | 2,004   |      |  |   | 261     |  
|                                                                                                                          |  |                        |         |   |      |   |         |      |  |   |         |  
|Consolidated depreciation and amortization                                                                                |  | $                      | 21,042  |   |      | $ | 22,004  |      |  | $ | 18,854  |  
|                                                                                                                          |  |                        |         |   |      |   |         |      |  |   |         |  
|                                                                                                                          | 
|                                                                                                                          |  | Year Ended December 31 |        
|(Thousands)                                                                                                               |  | 2005                   |         |   | 2004 |   |         | 2003 | 
|Total Assets                                                                                                              |  |                        |         |   |      |   |         |      |  |   |         |  
|Activated Carbon and Service                                                                                              |  | $                      | 267,408 |   |      | $ | 268,241 |      |  | $ | 222,012 |  
|Equipment                                                                                                                 |  |                        | 44,607  |   |      |   | 55,135  |      |  |   | 54,004  |  
|Consumer                                                                                                                  |  |                        | 14,513  |   |      |   | 14,705  |      |  |   | 9,636   |  
|                                                                                                                          |  |                        |         |   |      |   |         |      |  |   |         |  
|Total assets from continuing operations                                                                                   |  | $                      | 326,528 |   |      | $ | 338,081 |      |  | $ | 285,652 |  
|Assets held for sale                                                                                                      |  |                        | 21,340  |   |      |   | 25,817  |      |  |   | 16,543  |  
|                                                                                                                          |  |                        |         |   |      |   |         |      |  |   |         |  
|Consolidated total assets                                                                                                 |  | $                      | 347,868 |   |      | $ | 363,898 |      |  | $ | 302,195 |  
|                                                                                                                          |  |                        |         |   |      |   |         |      |  |   |         |  
|                                                                                                                          | 
|                                                                                                                          |  | Year Ended December 31 |        
|(Thousands)                                                                                                               |  | 2005                   |         |   | 2004 |   |         | 2003 | 
|Property, plant and equipment expenditures                                                                                |  |                        |         |   |      |   |         |      |  |   |         |  
|Activated Carbon and Service                                                                                              |  | $                      | 14,608  |   |      | $ | 10,317  |      |  | $ | 6,754   |  
|Equipment                                                                                                                 |  |                        | 1,120   |   |      |   | 1,640   |      |  |   | 1,028   |  
|Consumer                                                                                                                  |  |                        | 9       |   |      |   | 98      |      |  |   | 363     |  
|                                                                                                                          |  |                        |         |   |      |   |         |      |  |   |         |  
|Property, plant and equipment expenditures from continuing operations                                                     |  | $                      | 15,737  |   |      | $ | 12,055  |      |  | $ | 8,145   |  
|Expenditures related to discontinued operations                                                                           |  |                        | 259     |   |      |   | 358     |      |  |   | 539     |  
|                                                                                                                          |  |                        |         |   |      |   |         |      |  |   |         |  
|Consolidated property, plant and equipment expenditures                                                                   |  | $                      | 15,996  |   |      | $ | 12,413  |      |  | $ | 8,684   |  
|                                                                                                                          |  |                        |         |   |      |   |         |      |  |   |         |  



| |  |                                
| |  | -------------------------------
| |  | Calgon Carbon Corporation    41



---

GEOGRAPHIC INFORMATION

Net sales are attributable to countries based on location of customer.



|                               |  |                        |         |      |   |         |  |   |        
|------------------------------ |  | ---------------------- | ------- | ---- | - | ------- |  | - | -------
|                               |  | Year Ended December 31
|(Thousands)                    |  | 2005                   |         | 2004 |   | 2003   
|Net sales                      |  |                        |         |      |   |         |  |   |        
|United States                  |  | $                      | 167,329 |      | $ | 178,101 |  | $ | 149,496
|United Kingdom                 |  |                        | 23,577  |      |   | 29,570  |  |   | 20,974 
|Germany                        |  |                        | 17,121  |      |   | 12,965  |  |   | 10,285 
|France                         |  |                        | 11,423  |      |   | 10,585  |  |   | 10,028 
|Canada                         |  |                        | 10,105  |      |   | 10,602  |  |   | 10,268 
|Belgium                        |  |                        | 6,970   |      |   | 7,492   |  |   | 6,937  
|Netherlands                    |  |                        | 5,230   |      |   | 2,730   |  |   | 2,465  
|Switzerland                    |  |                        | 4,894   |      |   | 5,609   |  |   | 2,563  
|Japan                          |  |                        | 4,485   |      |   | 4,742   |  |   | 7,123  
|Other                          |  |                        | 39,701  |      |   | 33,481  |  |   | 33,039 
|                               |  |                        |         |      |   |         |  |   |        
|Consolidated net sales         |  | $                      | 290,835 |      | $ | 295,877 |  | $ | 253,178
|                               |  |                        |         |      |   |         |  |   |        
|                               | 
|                               |  | December 31           
|(Thousands)                    |  | 2005                   |         | 2004 |   | 2003   
|Long-lived assets              |  |                        |         |      |   |         |  |   |        
|United States                  |  | $                      | 113,213 |      | $ | 123,041 |  | $ | 107,546
|Belgium                        |  |                        | 16,665  |      |   | 18,947  |  |   | 19,183 
|United Kingdom                 |  |                        | 11,309  |      |   | 14,053  |  |   | 5,424  
|Japan                          |  |                        | 7,034   |      |   | 8,135   |  |   | 6,798  
|Canada                         |  |                        | 8,010   |      |   | 7,358   |  |   | 6,698  
|China                          |  |                        | 7,327   |      |   | 6,614   |  |   | 6,329  
|Germany                        |  |                        | 21      |      |   | 30      |  |   | 12     
|France                         |  |                        | 5       |      |   | 26      |  |   | 39     
|                               |  |                        |         |      |   |         |  |   |        
|                               |  |                        | 163,584 |      |   | 178,204 |  |   | 152,029
|Deferred taxes                 |  |                        | 18,684  |      |   | 16,405  |  |   | 9,779  
|                               |  |                        |         |      |   |         |  |   |        
|Consolidated long-lived assets |  | $                      | 182,268 |      | $ | 194,609 |  | $ | 161,808
|                               |  |                        |         |      |   |         |  |   |        



|                                |  | 
|------------------------------- |  | 
|42    Calgon Carbon Corporation |  | 



---

FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA

Calgon Carbon Corporation



|                                                                             |  |      |         |   |      |   |         |  |      |         |  |      |         |   |  |   |        
|---------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- |  | ---- | ------- |  | ---- | ------- | - |  | - | -------
|(Dollars in thousands, except per share data)                                |  | 2005 |         |   | 2004 |   | 2003    |  | 2002 |         |  | 2001
|Income Statement Data:                                                       |  |      |         |   |      |   |         |  |      |         |  |      |         |   |  |   |        
|Net sales                                                                    |  | $    | 290,835 |   |      | $ | 295,877 |  | $    | 253,178 |  | $    | 237,351 |   |  | $ | 250,449
|Income (loss) from continuing operations                                     |  | $    | (10,507 | ) |      | $ | 3,968   |  | $    | 3,810   |  | $    | (26,591 | ) |  | $ | 7,457  
|Income (loss) from continuing operations per common share, basic and diluted |  | $    | (0.27   | ) |      | $ | 0.10    |  | $    | 0.10    |  | $    | (0.68   | ) |  | $ | 0.19   
|Cash dividends declared per common share                                     |  | $    | 0.09    |   |      | $ | 0.12    |  | $    | 0.12    |  | $    | 0.12    |   |  | $ | 0.20   
|                                                                             |  |      |         |   |     
|Balance Sheet Data (at year end):                                            |  |      |         |   |      |   |         |  |      |         |  |      |         |   |  |   |        
|Total Assets                                                                 |  | $    | 347,868 |   |      | $ | 363,898 |  | $    | 302,195 |  | $    | 290,629 |   |  | $ | 339,548
|Long-term debt                                                               |  | $    | 83,925  |   |      | $ | 84,600  |  | $    | 53,600  |  | $    | 57,600  |   |  | $ | 54,360 

QUARTERLY FINANCIAL DATAUNAUDITED



|                                                            |  |            |        |   |            |   |            |  |   |            |   |  |            |        |   |            |   |            |   |            |   |        |  |   |        |  |   |       
|----------------------------------------------------------- |  | ---------- | ------ | - | ---------- | - | ---------- |  | - | ---------- | - |  | ---------- | ------ | - | ---------- | - | ---------- | - | ---------- | - | ------ |  | - | ------ |  | - | ------
|                                                            |  | 2005       |        |   | 2004      
|(Thousands except per share data)                           |  | 1stQuarter |        |   | 2ndQuarter |   | 3rdQuarter |  |   | 4thQuarter |   |  | 1stQuarter |        |   | 2ndQuarter |   | 3rdQuarter |   | 4thQuarter
|Net sales                                                   |  | $          | 73,055 |   |            | $ | 77,658     |  | $ | 68,863     |   |  | $          | 71,259 |   |            | $ | 64,981     |   |            | $ | 81,503 |  | $ | 72,652 |  | $ | 76,741
|Gross profit from continuing operations                     |  | $          | 20,239 |   |            | $ | 21,567     |  | $ | 17,573     |   |  | $          | 16,126 |   |            | $ | 19,753     |   |            | $ | 24,750 |  | $ | 21,284 |  | $ | 22,567
|Net income (loss) from continuing operations                |  | $          | (4,378 | ) |            | $ | 193        |  | $ | (39        | ) |  | $          | (6,283 | ) |            | $ | (847       | ) |            | $ | 3,216  |  | $ | 1,063  |  | $ | 536   
|Income (loss) from discontinued operations                  |  | $          | 969    |   |            | $ | 1,803      |  | $ | (314       | ) |  | $          | 633    |   |            | $ | 297        |   |            | $ | 1,034  |  | $ | 203    |  | $ | 386   
|Net income (loss)                                           |  | $          | (3,409 | ) |            | $ | 1,996      |  | $ | (353       | ) |  | $          | (5,650 | ) |            | $ | (550       | ) |            | $ | 4,250  |  | $ | 1,266  |  | $ | 922   
|                                                            |  |            |        |   |            |   |            | 
|Common Stock Data:                                          |  |            |        |   |            |   |            |  |   |            |   |  |            |        |   |            |   |            |   |            |   |        |  |   |        |  |   |       
|Basic and Diluted:                                          |  |            |        |   |            |   |            |  |   |            |   |  |            |        |   |            |   |            |   |            |   |        |  |   |        |  |   |       
|Income (loss) from continuing operations per common share   |  | $          | (0.11  | ) |            | $ |           |  | $ |           |   |  | $          | (0.16  | ) |            | $ | (0.02      | ) |            | $ | 0.08   |  | $ | 0.03   |  | $ | 0.01  
|Income (loss) from discontinued operations per common share |  | $          | 0.02   |   |            | $ | 0.05       |  | $ | (0.01      | ) |  | $          | 0.02   |   |            | $ | 0.01       |   |            | $ | 0.03   |  | $ | 0.01   |  | $ | 0.01  
|Net income (loss) per common share                          |  | $          | (0.09  | ) |            | $ | 0.05       |  | $ | (0.01      | ) |  | $          | (0.14  | ) |            | $ | (0.01      | ) |            | $ | 0.11   |  | $ | 0.03   |  | $ | 0.02  
|                                                            |  |            |        |   |            |   |            | 
|Average common shares outstanding                           |  |            |        |   |            |   |            |  |   |            |   |  |            |        |   |            |   |            |   |            |   |        |  |   |        |  |   |       
|Basic                                                       |  |            | 39,206 |   |            |   | 39,485     |  |   | 39,569     |   |  |            | 39,736 |   |            |   | 39,024     |   |            |   | 39,035 |  |   | 39,054 |  |   | 39,103
|Diluted                                                     |  |            | 39,206 |   |            |   | 40,094     |  |   | 39,569     |   |  |            | 39,736 |   |            |   | 39,024     |   |            |   | 39,283 |  |   | 39,367 |  |   | 39,771

The financial information for all periods presented has been reclassified to reflect assets held for sale and
discontinued operations.

See Note 3 to the Consolidated Financial Statements for further information.

COMMON SHARES AND MARKET INFORMATION

Common shares are traded on the
New York Stock Exchange under the trading symbol CCC. There were 1,427 registered shareholders at year end.

Quarterly Common Stock Price Ranges and
Dividends Paid



|               |  |       |  |      |  |          |      |      |      |     |      |          |   |     
|-------------- |  | ----- |  | ---- |  | -------- | ---- | ---- | ---- | --- | ---- | -------- | - | ----
|               |  | 2005  |  | 2004
|Fiscal Quarter |  | High  |  | Low  |  | Dividend |      | High |      | Low |      | Dividend
|First          |  | 9.27  |  | 7.72 |  | $        | .030 |      | 7.95 |     | 6.20 |          | $ | .030
|Second         |  | 9.55  |  | 7.94 |  | $        | .030 |      | 7.75 |     | 5.25 |          | $ | .030
|Third          |  | 10.25 |  | 7.29 |  | $        | .030 |      | 7.38 |     | 5.45 |          | $ | .030
|Fourth         |  | 7.90  |  | 4.94 |  |          |     |      | 9.70 |     | 6.80 |          | $ | .030



| |  |                                
| |  | -------------------------------
| |  | Calgon Carbon Corporation    43



---

Board of Directors

Robert W. Cruickshank (1) (3)

Financial Consultant

Thomas A. McConomy (3) (4)

Retired President, Chief Executive Officer,

Calgon Carbon Corporation

Chairman of the Board,

Calgon Carbon Corporation

William R. Newlin (4)

Executive Vice President and Chief Administrative Officer,

Dicks Sporting Goods, Inc.

Julie S. Roberts (1)

Vice President, Global Finance Transformation,

Marriott International, Inc.

Timothy G. Rupert (2)

President and Chief Executive Officer,

RTI International Metals, Inc.

Seth E. Schofield
(3) (4)

Retired Chairman and Chief Executive Officer,

USAir Group (currently US Airways)

John P. Surma (2)

Chairman, President, and Chief Executive Officer,

United States Steel Corporation

John S. Stanik

President and Chief Executive Officer,

Calgon Carbon Corporation

Harry H. Weil*

Retired Counsel to the Law Firm of Reed Smith LLP

Robert L. Yohe (1)
(2) (3) (4)

Retired Vice Chairman, Olin Corporation

Corporate Officers

Leroy M. Ball

Senior
Vice President, Chief Financial Officer

James G. Fishburne

Senior Vice President, Asia

Gail A. Gerono

Vice President, Investor Relations,

Communications, and Human Resources

C.H.S. (Kees) Majoor

Senior Vice
President, Europe

Robert P. OBrien

Senior Vice
President, Americas

John S. Stanik

President and
Chief Executive Officer



|(1) | Audit Committee
|--- | ---------------



|(2) | Compensation Committee
|--- | ----------------------



|(3) | Executive Committee
|--- | -------------------



|(4) | Corporate Governance Committee
|--- | ------------------------------



|* | Retiring April 2006 in accordance with Directors retirement policy
|- | -------------------------------------------------------------------



|                                |  | 
|------------------------------- |  | 
|44    Calgon Carbon Corporation |  |