10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the fiscal year ended December 31, 2005

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from                      to                     .

Commission file number 1-10776

Calgon Carbon Corporation

(Exact name of registrant as specified in its charter)

Delaware	25-0530110
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
400 Calgon Carbon Drive Pittsburgh, Pennsylvania	15205
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (412) 787-6700

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

Title of each class	Name of each exchange on which registered
Common Stock, par value $0.01 per share	New York Stock Exchange

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

None

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes ¨    No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes ¨    No x

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    Yes ¨    No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨            Accelerated filer x            Non-accelerated filer ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ¨    No x

As of February 28, 2006, there were outstanding 39,913,275 shares of Common Stock, par value of $0.01 per share.

The aggregate market value of the voting stock held by non-affiliates as of June 30, 2005 was $301,587,114.

The following documents have been incorporated by reference:

Document	Form 10-K Part Number
Portions of Annual Report to Shareholders for the Year Ended December 31, 2005	I, II and IV
Proxy Statement filed pursuant to Regulation 14A in connection with registrant’s Annual Meeting of Shareholders to be held on April 19, 2006	III

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INDEX

	PART I
Item 1.	Business	4
Item 1a.	Risk Factors	13
Item 1b.	Unresolved Staff Comments	14
Item 2.	Properties	14
Item 3.	Legal Proceedings	16
Item 4.	Submission of Matters to a Vote of Security Holders	17
	PART II
Item 5.	Market for Registrant’s Common Equity and Related Shareholder Matters	17
Item 6.	Selected Financial Data	17
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 7a.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 8.	Financial Statements and Supplementary Data	18
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	18
Item 9a.	Controls and Procedures	18
	PART III
Item 10.	Directors and Executive Officers of the Registrant	19
Item 11.	Executive Compensation	19
Item 12.	Security Ownership of Certain Beneficial Owners and Management	19
Item 13.	Certain Relationships and Related Transactions	20
Item 14.	Principal Accounting Fees and Services	20
	PART IV
Item 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	20
SIGNATURES		23
CERTIFICATIONS		24

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PART I

CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

The statements contained in this Annual Report on Form 10-K, specifically those contained in Item 1 “Business” and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and statements incorporated by reference into this Form 10-K from the 2005 Annual Report to Shareholders along with statements in other reports filed with the Securities and Exchange Commission, external documents and oral presentations, which are not historical are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent Calgon Carbon Corporation’s (the “Company’s”) present expectations or beliefs concerning future events. The Company cautions that such statements are qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements. Those factors which specifically relate to the Company’s business include, but are not limited to, the following: worldwide economy, competition, worldwide environmental and drinking water regulations, weather conditions, customers’ growth, productivity improvements at its locations, and new technologies that could affect the use of the Company’s products.

ITEM 1.     BUSINESS:

The Company:

The Company is a global leader in services, products, and solutions for purifying water and air. The Company has three reportable segments: Activated Carbon and Service, Equipment, and Consumer. These reportable segments are composed of global profit centers that make and sell different products and services.

The Activated Carbon and Service segment manufactures granular activated carbon for use in applications to remove organic compounds from water, air and other liquids and gases. The service aspect of the segment consists primarily of reactivation of spent carbon and the leasing, monitoring and maintenance of carbon adsorption equipment (explained below). The Equipment segment provides solutions to customers’ air and water purification problems through the design, fabrication and operation of systems that utilize a combination of the Company’s enabling technologies: carbon adsorption, ultra violet light and advanced ion exchange separation among others. The Consumer segment primarily consists of the manufacture and sale of carbon cloth and new consumer products based on the Company’s technologies already proven in large-scale industrial applications.

Segment information disclosed in Note 21 of the Annual Report to Shareholders for the year ended December 31, 2005 should be considered in the following discussion and is incorporated by reference.

Acquisitions:

On February 18, 2004, the Company acquired substantially all of the assets of the Waterlink, Inc.’s (“Waterlink”) 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 (collectively “Specialty Products”). The results of Waterlink have been included in the Company’s consolidated statement of income and comprehensive income from the date of acquisition through December 31, 2005.

Known as Barnebey Sutcliffe in the United States and Sutcliffe Speakman in the United Kingdom, Specialty Products 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.

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The Company completed the acquisition of Specialty Products 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, 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 through borrowings from its refinanced U.S. revolving credit facility.

Additionally, in December 2004 the Company entered into an agreement to purchase the additional 20% interest of the then 80% owned Datong Carbon Corporation.

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.

Discontinued Operations:

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 increase focus on its core activated carbon and service-related businesses. In the fourth quarter of 2005, management concluded such divestitures were 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 had 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.

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.

Products and Services:

The Company offers a diverse range of medias, services, and equipment specifically developed for the purification, separation and concentration of liquids and gases. The Activated Carbon and Service segment primarily consists of activated carbon products, field services, and reactivation. The Equipment segment designs and builds systems that include multiple technologies. The Consumer segment supplies carbon products for everyday use by consumers.

Activated Carbon and Service.    The sale of activated carbon is one principal component of this business segment. The Company produces and sells a broad range of activated, impregnated or acid washed carbons, in granular, powdered, or pellet form. Activated carbon is a porous material that removes organic compounds from liquids and gases by a process known as “adsorption.” In “adsorption,” organic molecules contained in a liquid or

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gas are attracted and bound to the surface of the pores of the activated carbon as the liquid or gas is passed by. The Company also has a patented manufacturing process which enhances the catalytic functionality of activated carbon, expanding its capability to remove inorganic compounds; the product was introduced in 1994 and is called Centaur^®.

The primary raw material used in the production of the Company’s activated carbons is bituminous coal which is crushed, mixed with pitch, sized, and processed in low temperature bakers followed by high temperature furnaces. This heating process is known as “activation” and develops the pore structure of the carbon. Through adjustments in the “activation” process, pores of the required size for a particular purification application are developed. The Company’s technological expertise in adjusting the pore structure in the activation process has been one of the factors that has enabled the Company to develop many special types of activated carbon. Currently, the Company offers many types of activated carbon with most available in several particle sizes. The Company also markets activated carbons from other raw materials, including coconut or wood which it purchases from industry partners and independent suppliers.

The Company sells granular, pelletized, and powdered activated carbons. Granular activated carbon is generally used in fixed filter beds for continuous flow purification processes, while powdered activated carbon is generally used in batch purification processes, or dosing in air purification applications. Use of fixed filter beds of activated carbon for continuous flow processing of a liquid or gas usually achieves a lower cost of operation and, through reactivation, avoids the disposal costs associated with powdered carbon.

The other significant component of the Activated Carbon and Service business segment is various services associated with the supply of media and systems for purification, separation, and concentration, including such media as activated carbon, ion exchange resins, and anthracite or other media required to accomplish purification, separation, or concentration.

For activated carbon, these services include carbon reactivation, handling, and transportation as well as the design, assembly, and supply of systems through leasing arrangements. The principal activated carbon service sold is the Calgon Carbon Service^™ which supplies customers with a complete process and treatment service, particularly suited for treating fluids at the customer’s facility containing hazardous organic compounds. The service is based primarily on reactivation of spent carbon and transportation of activated carbon to and from the reactivation facility, but also includes feasibility testing, process design, on-site equipment, initial activated carbon supply, performance monitoring and major maintenance of Company-owned equipment (such equipment is referred to as “customer capital”). Reactivation is a process by which organic compounds are driven off of activated carbon particles that have been loaded with organic materials by passing the spent activated carbon through a high temperature furnace. Granular activated carbon is reactivated for economic reasons or to destroy hazardous adsorbed organic compounds. Services are provided under contract at a fixed minimum monthly fee subject to additional charges for increased carbon usage. The Company provides services in packages ranging from a fifty-five-gallon drum to truckload quantities.

The Company also provides a perchlorate removal service for groundwater treatment which utilizes ion exchange resins and equipment. This service includes feasibility studies, process and equipment design, assembly and supply of systems with a selected ion exchange resin, treatment services, and major maintenance of Company-owned equipment. The Company also provides resin exchange service along with disposal of the spent resins.

In addition to offering services to clean water from contaminated aquifers and surface impoundments and to clean accidental spills on a fee basis, the Company also sells a line of adsorption and filtration equipment to clean water from contaminated aquifers and industrial wastewater and surface impoundments, and other equipment to purify gases and liquids in industrial process applications. Equipment for these applications can be custom designed and fabricated for a specific project or can be drawn from the Company’s inventory, dispatched on twenty-four hours notice and operational within forty-eight hours after arrival on site.

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Purification services provided by the Company are used to improve the quality of food, chemical, pharmaceutical, and petrochemical products. Such services may be utilized in permanent installations or in temporary applications, as pilot studies for new manufacturing processes or recovery of off-specification products.

The Company also provides custom reactivation services. As part of this service, the Company picks up spent carbon at a customer’s site, transports it to the Company’s reactivation facilities, reactivates it and then returns the reactivated carbon to the customer.

Sales from continuing operations for the Activated Carbon and Service segment were $241.9 million, $245.5 million, and $212.2 million for the years ended December 31, 2005, 2004, and 2003, respectively.

Equipment.    The Company designs and sells equipment which employ activated carbon and ion exchange resins for purification, separation, and concentration and proprietary ISEP^® (Ionic Separator) continuous ion exchange units for the purification of many products in the food, pharmaceutical and biotechnology industries. The carbon equipment is used for vapor phase applications such as VOC emissions control, air stripper off-gases, and landfill gas emissions, and for liquid phase applications such as process purification, wastewater treatment, groundwater remediation, and dechlorination. The ISEP^® units are also used to remove nitrate and perchlorate contaminants from drinking water.

The Company also produces and sells UV equipment. UV light is effective in disinfecting both drinking water and wastewater. In drinking water, UV light alters the DNA of pathogens, killing them or making it impossible for them to reproduce and infect humans. The Company’s Sentinel^® UV drinking water disinfection product line is designed to protect municipal drinking water supplies from pathogens such as Cryptosporidium and Giardia. The Company also provides the C³ Series^™ open-channel wastewater disinfection product line for municipal wastewater disinfection. In combination with hydrogen peroxide, UV light is effective in destroying many contaminants common in groundwater remediation applications. The Company provides Rayox^® UV advanced oxidation equipment for treatment of contaminants such as 1,4-Dioxane, MTBE, and Vinyl Chloride in groundwater, process water, and industrial wastewater.

The Company also produces a wide range of odor control equipment that utilizes catalytic or activated carbon to control odors at municipal wastewater treatment facilities and pumping stations.

Sales from continuing operations for the Equipment segment were $36.9 million, $39.9 million, and $30.5 million for the years ended December 31, 2005, 2004, and 2003, respectively.

Consumer.    The primary product offered in the Consumer segment is carbon cloth. Carbon cloth, which is activated carbon in cloth form, is manufactured in England and sold to the medical and specialty markets.

Activated Carbon and carbon cloth are used as the primary raw material in the Company’s consumer home products group. The Company currently has two primary product lines that it markets to the retail market. The first product line, PreZerve^® storage products, uses carbon cloth to protect and preserve jewelry and keepsakes from deterioration. The PreZerve^® line currently offers over 30 different items. The second product line, AllGone!^™, is an odor elimination system that utilizes activated carbon discs to adsorb odors and impurities from the air safely and naturally.

Sales from continuing operations for the Consumer segment were $12.0 million, $10.4 million and $10.5 million for the years ended December 31, 2005, 2004 and 2003, respectively.

Markets:

The Company participates in five primary areas; Potable Water, Industrial Process, Environmental Water and Air, Food, and Specialty Markets. Potable Water applications include municipal drinking water purification

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as well as point of entry and point of use devices. Applications in the Industrial Process markets include catalysis, product recovery and purification of chemicals, pharmaceuticals as well as process water treatment. Food applications include brewing, bottling, and sweetener purification. Remediation of water and VOC removal from air are the major sub segments for the Environmental Markets. Medical, personal protection, cigarette, automotive, consumer, and precious metals applications comprise the Specialty Markets.

Potable Water Market.    The Company sells activated carbons, equipment, services, and ion exchange technologies to municipal customers for the treatment of potable water to remove pesticides and other dissolved organic and inorganic material to meet current regulations and to remove tastes and odors to make the water acceptable to the public. The Company also sells to OEM manufacturers of home water purification systems. The Company sells granular and powder activated carbon products to this market and in many cases the granular carbon functions both as the primary filtration media as well as an adsorption media to remove the contaminants from the water. In addition, the Company sells ultraviolet (UV) light systems for the destruction or inactivation of waterborne contaminants and organisms.

Industrial Process Market.    The Company’s products are used in this market either for purification, separation or concentration of customers’ products in the manufacturing process or for direct incorporation into customers’ products. The Company sells a wide range of activated carbons and reactivation services to the chemical, petroleum refining, and process industries for the purification of organic and inorganic chemicals, amine, soda ash, antibiotics and vitamins. Activated carbon products and services are also used to decolorize chemicals such as hydrochloric acid and remove pollutants from wastewater. Further, activated carbon is used in treatment of natural gas and other vapor streams for removal of carbon dioxide, acetylene, hydrogen, sulfur, and mercury compounds. The liquefied natural gas industry uses activated carbons to remove mercury compounds which would otherwise corrode process equipment. Activated carbons are also sold for gasoline vapor recovery equipment.

The Company offers its products and services to private industry to meet wastewater discharge requirements imposed by various governmental entities. Most of the Company’s sales to this market are sales of the Calgon Carbon Service^™ for wastewater treatment. The reactivation portion of this service is an especially important element if the contaminants in the wastewater are hazardous organic chemicals. The hazardous organic chemicals, which are adsorbed from the water by the activated carbons, are decomposed at the high temperatures of the reactivation furnace and thereby removed from the environment. Reactivation saves customers the difficulty of having to find a method of long-term containment (such as a landfill) for hazardous organic chemicals removed from their industrial wastewater.

Environmental Water and Air Market.    The Environmental Water and Air Markets consist of customers that use the Company’s products to control water and air pollutants. The cleanup of contaminated groundwater, surface impoundments and accidental spills comprise a significant market for the Company. The Company provides carbon, services and carbon equipment for these applications, as well as emergency and temporary cleanup services for public and private entities, employing both activated carbon adsorption and UV oxidation technologies.

Activated carbon is also used in the chemical, pharmaceutical, and refining industry for purification of air discharges to remove contaminants such as benzene, toluene, and other volatile organics. Reduction of mercury emissions from power plants is a growing market for the Company.

Municipal sewage treatment plants purchase the Company’s odor control systems and activated carbon products to remove objectionable odors emanating from the plants and to treat the wastewater to meet operating requirements. Granular activated carbon is used in odor control applications, but both granular and powdered activated carbons are used to treat wastewater. The granular activated carbon is used as a filtration/adsorption medium, and the powdered activated carbon is used to enhance the performance of existing biological waste treatment processes.

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The Company has formed two alliances to market systems for use in the municipal wastewater market. Such systems include the bio-scrubber, horizontal cross-flow chemical scrubber, and the biofilter which are used for odor control. The Company also offers UV systems for disinfection of municipal wastewater before it is discharged to rivers and streams.

Food Market.    Sweetener manufacturers are the principal purchasers of the Company’s products in the Food Market. The Company is the major supplier of activated carbons used in the purification of dextrose and high fructose corn syrup. Activated carbons are also sold for use in the purification of cane sugar. Other food processing applications include decolorization and purification of many different foods and beverages and for purifying water, liquids and gas prior to usage in brewing and bottling. Continuous ion exchange systems are also used in this market for the production of lysine and vitamin E, as well as purification of dextrose and high fructose corn syrup.

Specialty Markets.    Manufacturers of various OEM equipment and products purchase activated carbons for incorporation in their products. The Company is a major supplier of activated carbons to manufacturers of gas masks used by the United States and European military, as well as protective respirators and collective filters for first responders and private industry. The markets for collective filters for military equipment, indoor air quality and air containment in incineration and nuclear applications are also served.

Cigarette manufacturers use activated carbons in charcoal filters, carbon cloth is used in medical applications, and precious metals producers use activated carbons to recover gold and silver from low-grade ore.

Sales and Marketing:

The Company has a direct sales force in the United States with offices located in Pittsburgh, Pennsylvania; Santa Fe Springs, California; Houston, Texas; and Marlton, New Jersey. The Company conducts activated carbon related sales in Canada, Brazil, and Mexico through distributor relationships and maintains offices in Sao Paulo, Brazil and Mexico City, Mexico. The Company maintains offices in Singapore; Beijing and Shanghai, China; Taipei, Taiwan; and Tokyo, Japan to manage sales in the Asia Pacific Region.

In Europe, the Company has sales offices in Feluy, Belgium; Ashton and Houghton Le Spring, England. The Company also has a network of agents and distributors that conduct sales in certain countries in Europe, the Middle East, Africa, Latin America, the Far East, Australia and New Zealand.

All offices can play a role in sales of products or services from any of the Company’s segments.

Geographic sales information is incorporated by reference to Note 21 of the Annual Report to Shareholders for the Year Ended December 31, 2005.

Over the past three years, no single customer accounted for more than 10% of the total sales of the Company in any year.

Backlog:

The Company had a sales backlog from continuing operations of $15.2 million and $13.6 million as of January 31, 2006 and 2005, respectively, in the Equipment segment. The Company expects to carry less than one-third of the 2006 balance into 2007.

Competition:

The Company has several major competitors in the world-wide market with respect to the production and sale of activated carbon related products: Norit, N.V., a Dutch company, Westvaco Corporation, a United States

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company, and Siemens Water, a United States company, are the primary competitors. Chinese producers of coal-based activated carbon and certain East Asian producers of coconut-based activated carbon participate in the market on a worldwide basis and sell principally through numerous resellers. Competition in activated carbons, carbon equipment and services is based on price, quality, and performance. Other sources of competition for the Company’s activated carbon services and systems are alternative technologies for purification, filtration, and extraction processes that do not employ activated carbons.

A number of other smaller competitors engage in the production and sale of activated carbons in local markets, but do not compete with the Company on a worldwide basis. These companies compete with the Company in the sale of specific types of activated carbons, but do not generally compete with a broad range of products in the worldwide activated carbon business.

In the United States and Europe, the Company also competes with several small regional companies for the sale of its reactivation services and carbon equipment.

The Company’s competitors for its UV technology product line include Trojan Technologies, Inc., a Canadian company owned by Danaher Corporation, a United States company and Wedeco Ideal Horizons, a German company now owned by ITT Industries, a United States company.

Raw Materials:

The principal raw material purchased by the Company for its Activated Carbon and Service segment is bituminous coal from mines in the Appalachian Region and mines outside the United States, under both long-term and annual supply contracts.

The Company purchases natural gas from various suppliers for use in its Activated Carbon and Service segment production facilities. In both the United States and Europe, substantially all natural gas is purchased pursuant to various annual and multi-year contracts with natural gas companies.

The Company purchases hydrogen peroxide via an annual supply contract for its UV Technologies business.

The only other raw material that is purchased by the Company in significant quantities is pitch, which is used as a binder in the carbon manufacturing process. The Company purchases pitch from various suppliers in the United States under annual supply contracts and spot purchases.

The purchase of key equipment components is coordinated through agreements with various suppliers.

The Company does not presently anticipate any problems in obtaining adequate supplies of any of its raw materials or equipment components.

Research and Development:

The Company’s research and development activities are conducted primarily at a research center in Pittsburgh, Pennsylvania. This facility is used for the evaluation of experimental activated carbon and equipment for testing and applications development. Experimental systems are also designed and evaluated at this location. Facilities in Columbus, Ohio and Ashton, England, which were part of the Waterlink acquisition, supplement the work performed in Pittsburgh.

The principal goals of the Company’s research program are improving the Company’s position as a technological leader in solving customers’ problems with its products, services and equipment; developing new products and services; and providing technical support to customers and operations of the Company.

The Company’s research programs include new and improved methods for manufacturing and utilizing improved activated carbons. Emerging purification/separation/concentration technologies are rigorously

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evaluated including opportunities to license technologies that complement existing businesses and markets. New activated carbons are developed to address specific needs for a given market such as a new line of activated carbons for use in respirators by first responders. Product line extensions also occur. For example, a new line of activated carbons was created for the food and process industry market segment based upon an activated carbon that was developed for the removal of methyl tertiary butyl ether (MTBE) from drinking water. Non-carbon media evaluation and selection are primary components of the perchlorate and arsenic removal technologies. A key technology in the Equipment segment is the Sentinel^® Ultraviolet light system that has been developed and patented for the disinfection and inactivation of cryptosporidium in drinking water. In the Consumer segment, jewelry boxes and cases are being designed to incorporate activated carbon cloth to prevent tarnishing of the jewelry, and novel uses of activated carbon for consumer odor removal devices are being developed.

Research and development expenses were $4.5 million, $3.8 million, and $4.0 million in 2005, 2004 and 2003, respectively.

Patents and Trade Secrets:

The Company possesses a substantial body of technical knowledge and trade secrets and owns 92 United States patents and 352 patents in other countries expiring in various years from 2006 through 2025. The technology embodied in these patents, trade secrets and technical knowledge applies to all phases of the Company’s business including production processes, product formulations and application engineering. The Company considers this body of technology important to the conduct of its business.

Regulatory Matters:

USA.    The Company is subject to extensive environmental laws and regulations concerning emissions to the air, discharges to waterways and the generation, handling, storage, transportation, treatment and disposal of waste materials and is also subject to other federal and state laws regarding health and safety matters. The Company believes it is presently in substantial compliance with these laws and regulations. These laws and regulations are constantly evolving, and it is impossible to predict the effect these laws and regulations may have on the Company in the future.

The U.S. Environmental Protection Agency (EPA) has issued certain regulations under the Resource Conservation and Recovery Act (RCRA) dealing with the transportation, storage and treatment of hazardous waste that impact the Company in its carbon reactivation services. When activated carbon supplied to a customer can no longer adsorb contaminants, it is returned to the Company’s facilities for reactivation and subsequent reuse. If the substance(s) adsorbed by the spent carbon is (are) considered hazardous, under these EPA regulations the activated carbon used in the treatment process is also considered hazardous. Therefore, a permit is required to transport the hazardous carbon to the Company’s facility for reactivation. The Company possesses the necessary federal and state permits to transport hazardous waste. At the Company’s reactivation site, the hazardous spent activated carbon is placed in temporary storage tanks. Under the EPA regulations, the Company is required to have a hazardous waste storage permit. The Company has obtained RCRA Part B permits to store hazardous waste at its Pittsburgh and Catlettsburg facilities. The process of reactivating the spent activated carbon, which destroys the hazardous organic substances, is subject to permitting as a thermal treatment unit under RCRA. The Company has filed for these permits at its Pittsburgh and Catlettsburg facilities and is working toward obtaining the permits with the respective government agencies. The Company does not accept carbons containing certain hazardous materials for reactivation.

Each of the Company’s domestic production facilities has permits and licenses regulating air emissions and water discharges. All of the Company’s domestic production facilities are controlled under permits issued by local, state and federal air pollution control entities. The Company is presently in compliance with these permits. Continued compliance will require administrative control and will be subject to any new or additional standards. In May 2003, the Company partially discontinued operation of one of its three activated carbon lines at its

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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 on current operating results would be insignificant.

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 various alternatives. Liability estimates are based on an evaluation of, among other factors, currently available facts, existing technology, laws, 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, 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.

Europe.    The Company is also subject to various environmental health and safety laws and regulations at its facilities in Belgium, England and Germany. These laws and regulations address substantially the same issues as those applicable to the Company in the United States. The Company believes it is presently in substantial compliance with these laws and regulations.

Indemnification.    The Company has a limited indemnification agreement with the previous owner of the Company which will fund certain environmental costs if they are incurred at the Company’s Catlettsburg, Kentucky plant. The Company believes that the amount of the indemnification is sufficient to fund these liabilities if they arise.

Employee Relations:

As of December 31, 2005, the Company employed 972 persons on a full-time basis, 663 of whom were salaried production, office, supervisory and sales personnel. The 257 hourly personnel in the United States are represented by the United Steelworkers of America. The current contracts with the United Steelworkers of America expire on February 19, 2007, February 1, 2008, and April 1, 2009 at the Columbus, Ohio: Pittsburgh, Pennsylvania: and Catlettsburg, Kentucky facilities, respectively. The 52 hourly personnel at the Company’s Belgian facility are represented by two national labor organizations with contracts expiring on July 31, 2007. The Company also has hourly employees at three non-union United Kingdom facilities, one United States facility located in Mississippi, and at two non-union China facilities.

Copies of Reports:

The periodic and current reports of the Company filed with the SEC pursuant to Section 13(a) of the Securities Exchange Act of 1934 are available free of charge, as soon as reasonably practicable after the same are filed with or furnished to the SEC, at the Company’s website at www.calgoncarbon.com.

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Copies of Corporate Governance Documents:

The following Company corporate governance documents are available free of charge at the Company’s website at www.calgoncarbon.com and such information is available in print to any shareholder who requests it by contacting the Secretary of the Company at 400 Calgon Carbon Drive, Pittsburgh, PA 15205.

• Corporate Governance Guidelines

• Audit Committee Charter

• Compensation Committee Charter

• Governance Committee Charter

• Code of Ethical Business Conduct

• Code of Ethical Business Conduct Supplement for Chief Executive and Senior Financial Officers

ITEM 1A.    RISK FACTORS:

Failure to innovate new products or applications could adversely affect the Company’s ability to meet its strategic growth targets. One of the ways that Calgon Carbon differentiates itself from its competition is through its technological superiority in helping customers to find solutions to their problems through the application of the Company’s products or services. Part of Calgon Carbon’s strategic growth and profitability plans involve the development of new products or new applications for its current products in order to replace more mature products or markets that have seen increased competition. If the Company is unable to develop new products or applications then the Company’s financial results could be adversely affected.

Calgon Carbon holds a variety of patents that give the Company a competitive advantage in certain markets. An inability to defend those patents from competitive attack could have an adverse effect on both current results as well as future growth projections. From time to time in the course of its business the Company has to address competitive challenges to its patented technology. Calgon Carbon is currently in litigation to defend its process patent for the use of ultraviolet light in the prevention of cryptosporidium infection in drinking water. While the Company believes it will prevail in this action, an unfavorable outcome of that patent defense would impair the Company’s ability to capitalize on substantial future revenues from the licensing of that technology.

Delays in enactment of new state or federal regulations could restrict Calgon Carbon’s ability to reach its strategic growth targets. The Company’s strategic growth initiatives are reliant upon more restrictive environmental regulations being enacted for the purpose of making water and air cleaner and safer. If stricter regulations are delayed or are not enacted, then the Company’s sales growth targets could be adversely affected.

Calgon Carbon’s business includes capital equipment sales which could have extreme fluctuations due to the cyclical nature of that type of business. Calgon Carbon’s Equipment segment approximated 13% of the Company’s overall revenues in 2005. This business generally has a long project life cycle from bid solicitation to project completion and often requires customers to make large capital commitments well in advance of project execution. In addition, this business is usually affected by the general health of the overall economy. As a result, sales and earnings from the Equipment segment could be volatile.

Encroachment into Calgon Carbon’s markets by competitive technologies could adversely affect financial results. Activated carbon is utilized in various applications as a cost effective solution for solving customer problems. If other competitive technologies are advanced to the stage in which technologies could effectively compete with activated carbon costs and technologies, the Company could experience a decline in sales and profitability.

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Increases in United States and European imports of Chinese manufactured activated carbon could have an adverse effect on Calgon Carbon’s financial results. Calgon Carbon faces competition in its U.S. and European markets from brokers of low cost imported activated carbon products, primarily from China. This could include competition from foreign imports which could be deemed to be unfairly priced, otherwise known as “dumped imports.” Calgon Carbon is currently a party to an anti-dumping petition filed with the United States Department of Commerce and the United States International Trade Commission relating to imports of Chinese carbon. While the Company believes it has a technically superior product, if imports increase and Chinese products are accepted in more applications, the Company could see declines in sales and profitability as it tries to remain competitive.

Calgon Carbon uses bituminous coal as the main raw material in its granular activated carbon production process. An interruption of supply or an increase in coal prices could have an adverse effect on Calgon Carbon’s financial results. The Company has various long term contracts in place for the supply of coal that expire at various intervals. Interruptions in coal supply caused by mine accidents, labor disputes, transportation delays, or other events for other than a temporary period could have an adverse effect on the Company being able to meet its customer demand, in addition to increasing production costs.

Calgon Carbon’s financial results could be adversely affected by shortages in natural gas supply or increases in natural gas prices. Calgon Carbon utilizes natural gas as a key component in its activated carbon manufacturing process, and has long term contracts for the supply of natural gas at each of its major facilities. If shortages of or restrictions on the delivery of natural gas occurs, production at the Company’s activated carbon facilities would be reduced which could result in missed deliveries or lost sales. Additionally, the Company hedges its future supply of natural gas by purchasing forward contracts for up to two years in duration in order to limit prices fluctuations in the near term and smooth out the cost volatility. These purchases however do not protect the Company from longer term trends of rising natural gas prices which could result in significant production cost increases.

Most of Calgon Carbon’s hourly workforce is covered under union contracts; the Company’s inability to successfully negotiate contracts upon expiration could have an adverse affect on financial results. The Company has collective bargaining agreements in place at four of the Company’s production facilities covering approximately 309 employees that expire from 2007 to 2009. Any work stoppages as a result of disagreements with any of the labor unions or the failure to renegotiate any of the contracts as they expire could disrupt production and significantly increase product costs as a result of less efficient operations brought on by temporary labor.

An unplanned shutdown at one of the Company’s production facilities could have an adverse effect on financial results. The Company operates multiple facilities and sources product from strategic partners that operate facilities that are close to water or in areas susceptible to earthquakes. An unplanned shutdown at any of the Company’s or its strategic partners’ facilities for more than a temporary period as a result of a labor dispute, hurricane, typhoon, earthquake or other natural disaster could significantly affect the Company’s ability to meet its demand requirements, thereby resulting in lost sales and profitability in the short term or eventual loss of customers in the long term.

Environmental compliance and remediation could result in substantially increased capital requirements and operating costs. The Company’s production facilities are subject to a variety of environmental laws and regulations in the jurisdictions in which they operate or maintain properties. Costs may be incurred in complying with such laws and regulations if environmental remediation measures are required. Each of the Company’s domestic production facilities has permits and licenses regulating air emissions and water discharges. All of the Company’s domestic production facilities are controlled under permits issued by local, state, and federal air pollution control entities. International environmental requirements vary and could have substantially lesser requirements that may give competitors a competitive advantage.

Calgon Carbon’s international operations expose it to uncertainties and risks from abroad, which could negatively affect its results of operations. The Company has locations in Europe, China, Japan, and the

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United Kingdom which are subject to economic conditions and political factors within the respective countries, which if changed could negatively affect the Company’s results of operations and cash flow. Political factors include, but are not limited to, taxation, nationalization, inflation, currency fluctuations, increased regulation and quotas, tariffs and other protectionist measures.

Calgon Carbon has locations operating in multiple foreign countries and as a result is subject to foreign exchange translation risk which could have an adverse effect on the Company’s financial results. Calgon Carbon conducts business in the local currencies of each of its foreign subsidiaries or affiliates. Those results are then converted to U.S. dollars at prevailing exchange rates and consolidated into the Company’s financial statements. Changes in exchange rates, particularly the strengthening of the U.S. dollar, could significantly reduce the Company’s sales and profitability from foreign subsidiaries or affiliates from one period to the next as local currency amounts are translated into less U.S. dollars. The Company does not hedge foreign translation risk.

Calgon Carbon’s European and Japanese activated carbon businesses are sourced from both the United States and China which subjects the Company to foreign exchange translation risk. Calgon Carbon’s only source of production for virgin granular activated carbon is in the United States and China. Those facilities are used to supply all of the Company’s global demand of such product. The Company’s foreign operations all purchase from the U.S. operations in U.S. dollars, yet sell in local currency, resulting in foreign exchange translation risk. The Company attempts to mitigate that risk in the short term by executing foreign currency derivative contracts of not more than one year in duration to cover its known or projected foreign currency exposure. However, those contracts do not protect the Company from longer term trends of a strengthening U.S. dollar, which could significantly increase the Company’s cost of activated carbon delivered to its European and Japanese markets and for which the Company may not be able to offset by increases in its prices.

Calgon Carbon could find it difficult to fund the capital needed to complete its growth strategy due to borrowing restrictions under its U.S. credit facility. Calgon Carbon is extended credit under its U.S. credit facility subject to compliance with certain financial covenants. The Company has had to amend its credit facility several times within the past year in order to cure violations or remain compliant as financial results have declined. If the Company’s liquidity remains constrained for more than a temporary period the Company may need to either delay certain strategic growth projects or access higher cost capital markets in order to fund the projects.

Calgon Carbon could be subject to significant increases in pension contributions to its defined benefit pension plans thereby restricting cash flow. The Company has made commitments to pay certain retirement benefits to its current and former employees under its defined benefit pension plans. The funded status is determined using many assumptions such as inflation, investment rates, mortality, turnover, and discount rates which could turn out to be different than projected. Currently those plans in the aggregate are significantly under funded, and require a certain level of mandatory contributions as prescribed by law. Significant increases in the Company’s pension liabilities or decreases in pension assets as a result of actual experience being materially different than the projected assumptions would result in higher levels of mandatory contributions. In addition, changes in pension legislation could also increase funding requirements which would have an adverse effect on the Company’s cash flow and could restrict strategic investments.

Calgon Carbon has significant domestic and foreign net operating tax loss (NOL) carryforwards which, if they are not utilized, would have an adverse effect on the Company’s financial results. The Company has significant deferred tax assets associated with net operating loss carryforwards that were generated from both the Company’s domestic and foreign operations. The Company has reduced that value of these assets by an appropriate valuation allowance for the amounts that are deemed not likely to be realized. However if the Company does not meet its projections of profitability in the future, some or all of those NOL’s could expire, which would result in a reduction of the Company’s deferred tax asset and an increase in tax expense, and which would reduce the Company’s profitability.

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Calgon Carbon faces risks in connection with the material weakness described in its Sarbanes-Oxley Section 404 Management Report and any related remedial measures that the Company undertakes. In connection with the preparation of the Company’s annual report on Form 10-K for the year ended December 31, 2005, we concluded that the Company’s internal controls were ineffective as of December 31, 2005 as a result of the failure to record invoices for professional services in a timely manner. We have initiated remediation measures to address the identified material weakness as described in Part II, Item 9a, Controls and Procedures, and will continue to evaluate the effectiveness of the Company’s disclosure controls and procedures and internal control over financial reporting on an ongoing basis, taking additional remedial action as appropriate. If we are unable to effectively remediate material weaknesses in internal control over financial reporting and to assert that disclosure controls and procedures including internal control over financial reporting are effective in any future period, the Company could lose investor confidence in the accuracy and completeness of its financial reports, which could have an adverse effect on the Company’s stock price and potentially subject it to litigation.

Provisions of Delaware Law and our rights plan may make a takeover of the Company more difficult. Certain provisions of Delaware law, our certificate of incorporation and by-laws and our rights plan could make more difficult or delay our acquisition by means of a tender offer, a proxy contest or otherwise and the removal of incumbent directors. These provisions are intended to discourage certain types of coercive takeover practices even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above the prevailing market price.

ITEM 1B.    UNRESOLVED STAFF COMMENTS:

None.

ITEM 2.    PROPERTIES:

The Company owns eleven production facilities, three of which are located in Pittsburgh, Pennsylvania; and one each in the following locations: Catlettsburg, Kentucky; Pearlington, Mississippi; Blue Lake, California; Feluy, Belgium; Grays, England; Tianjin, China; Datong, China; and Columbus, Ohio. The Company leases one production facility in Houghton Le Spring, England. The Company’s 49% owned joint venture; Calgon Mitsubishi Chemical Corporation has two facilities, one each in Fukui, Fukui Prefecture, Japan and Kurosaki, Fukuoka Prefecture, Japan. The Company also leases thirty warehouses, service centers, and sales office facilities. Of these, twenty-five are located in the United States and one each in England and Canada. Eight of the United States facilities are located in Pittsburgh, Pennsylvania; two are located in Torrance, California and Ironton, Ohio; and one each in the following locations: Downingtown, Pennsylvania; Providence, Rhode Island; Rock Place, Illinois; Santa Fe Springs, California; Houston, Texas; Marlton, New Jersey; Richmond, California; Baytown, Texas; South Point, Ohio; Huntington, West Virginia; and Tornball, Texas. The facility in England is located in Ashton-in-Makerfield, England. The Canadian facility is located in Richmond Hill, Ontario.

The Catlettsburg, Kentucky plant is the Company’s largest facility, with plant operations occupying approximately 50 acres of a 226-acre site. This plant, which serves the Activated Carbon and Service segment, produces granular and powdered activated carbons and acid washed granular activated carbons and reactivates spent granular activated carbons.

The Pittsburgh, Pennsylvania carbon production plant occupies a four-acre site and serves the Activated Carbon and Service segment. Operations at the plant include the reactivation of spent granular activated carbons, the impregnation of granular activated carbons and the grinding of granular activated carbons into powdered activated carbons. The plant also has the capacity to produce coal-based or coconut-based specialty activated carbons.

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The Pearlington, Mississippi plant occupies a site of approximately 100 acres. The plant has one production line that produces granular activated carbons and powdered carbons for the Activated Carbon and Service segment.

The Blue Lake plant, located near the city of Eureka, California occupies approximately two acres. The primary operation at the plant includes reactivation of spent granular activated carbons for the Activated Carbon and Service segment. This plant was temporarily idled in December 2005.

The Pittsburgh, Pennsylvania Equipment and Assembly plant is located on Neville Island and is situated within a 16-acre site that includes a 300,000 square foot building. The Equipment and Assembly plant occupies 85,000 square feet with the remaining space used as a centralized warehouse for carbon inventory. The plant, which serves the Equipment and Activated Carbon and Service segments, manufactures and assembles fully engineered carbon equipment for purification, concentration and separation systems. This plant also serves as the east coast staging and refurbishment point for carbon service equipment.

The Pittsburgh, Pennsylvania Engineered Solutions plant, established in 1998, is a 37,500 sq. ft. production facility located on Neville Island. The primary focus of this facility is the manufacture of UV and Ion Exchange (ISEP) equipment, including mechanical and electrical assembly, controls systems integration and validation testing of equipment. This location also serves as the Pilot Testing facility for Process Development, as well as the spare parts distribution center for UV and ISEP systems.

The Feluy plant occupies a site of approximately 21 acres located 30 miles south of Brussels, Belgium. Operations at the plant include both the reactivation of spent granular activated carbons and the grinding of granular activated carbons into powdered activated carbons for the Activated Carbon and Service segment.

The Grays plant occupies a three-acre site near London, England. Operations at the plant include both the reactivation of spent granular activated carbons for the Activated Carbon and Service segment and the impregnation of granular activated carbon.

The Houghton Le Spring plant, located near the city of Newcastle, England, occupies approximately two acres. Operations at the plant include the manufacture of woven and knitted activated carbon textiles and their impregnation and lamination for the Consumer segment.

The Fukui, Fukui Prefecture, Japan plant is 49% owned by Calgon Carbon as part of a joint venture with Mitsubishi Chemical Company. The joint venture is Calgon Mitsubishi Chemical Corporation. The plant, which serves the Activated Carbon and Service segment, occupies a site of approximately six acres and has one production line for carbon reactivation.

The Kurosaki, Fukuoka Prefecture, Japan plant is 49% owned by Calgon Carbon as part of the joint venture with Mitsubishi Chemical Corporation. The joint venture is Calgon Mitsubishi Chemical Corporation. This plant serves the Activated Carbon and Service markets and is used to produce granular activated carbon. This plant was shutdown in December 2005.

The Datong plant located in Datong, China occupies 15,000 square meters. This plant produces agglomerated activated carbon intermediate product for the Activated Carbon and Service segment for use in both the potable and industrial markets.

The Tianjin plant is located in Tianjin, China and is licensed to export activated carbon products. It occupies approximately 35,000 square meters. This plant finishes, sizes, tests, and packages activated carbon products for the Activated Carbon and Service segment for distribution both inside China and for export.

The Columbus plant occupies approximately 27 acres in Columbus, Ohio. Operations at the plant include reactivation of spent granular activated carbons, impregnation of activated carbon, crushing activated carbon to

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fine mesh, acid and water washing, filter-filling, and various other value added processes to granular activated carbon for the Activated Carbon and Service segment.

The Company believes that the plants and leased facilities are adequate and suitable for its operating needs.

ITEM 3.    LEGAL PROCEEDINGS:

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 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.

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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.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:

No matters were submitted to a vote of security holders during the fourth quarter of 2005.

PART II

ITEM 5.    MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS:

The information required for this Item 5 appears under the caption “Common Shares and Market Information” on page 43 of the Annual Report to Shareholders for the Year Ended December 31, 2005 and is incorporated in this Annual Report by reference.

ITEM 6.    SELECTED FINANCIAL DATA:

The information required by this Item 6 appears under the caption “Five-Year Summary, Selected Financial and Statistical Data” on page 43 of the Annual Report to Shareholders for the Year Ended December 31, 2005 and is incorporated in this Annual Report by reference.

ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS:

The Discussion and Analysis of Financial Condition required by this Item 7 appears on pages 5 through 12 of the Annual Report to Shareholders for the Year Ended December 31, 2005 and is incorporated in this Annual Report by reference.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:

The information required by this Item 7a appears on page 10 of the Annual Report to Shareholders for the Year Ended December 31, 2005 and is incorporated in this Annual Report by reference.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:

The consolidated financial statements and supplementary data of Calgon Carbon Corporation and its subsidiaries for the Years Ended December 31, 2005, 2004 and 2003 required by this Item 8 appear on pages 16 through 42 of the Annual Report to Shareholders for the Year Ended December 31, 2005 and are incorporated in this Annual Report by reference. The independent registered public accounting firm’s reports of Deloitte & Touche LLP on the Company’s consolidated financial statements as of December 31, 2005 and on management’s report on the effectiveness of internal controls over financial reporting appear on page 14 through 15 of the Annual Report to Shareholders for the year ended December 31, 2005, and are incorporated in this Annual Report by reference.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE:

Not Applicable

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ITEM 9A.    CONTROLS AND PROCEDURES:

The Company maintains controls and procedures designed to ensure that it is able to collect the information required to disclose in the reports filed with the Securities and Exchange Commission (the “SEC”), and to process, summarize, and disclose this information within the time periods specified in the rules of the SEC. The Company’s management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), for the end of the period covered by this Form 10-K.

Based on this evaluation, management has concluded that the Company’s disclosure controls and procedures were not effective as of the end of the period covered by this Form 10-K. The basis for this determination was that the Company has identified a material weakness in its internal controls over financial reporting, which is viewed as an integral part of the Company’s disclosure controls and procedures. The material weakness related 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.

Remediation of Material Weakness in Internal Control

The Company has re-evaluated the internal controls relative to this area and has 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.

Management’s Annual Report on Internal Control over Financial Reporting is on page 13 of the Annual Report and is incorporated by reference.

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in the Deloitte & Touche LLP report which is on page 14 of the Annual Report and is incorporated by reference.

PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:

Information concerning the directors and executive officers of the Corporation required by this item is incorporated by reference to the material appearing under the headings “Board of Directors and Committees of the Board,” “Election of Directors,” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the Company’s Proxy Statement for the 2006 Annual Meeting of its Shareholders.

The Company’s Code of Ethical Business Conduct Supplement for Chief Executive and Senior Financial Officers is set forth in Exhibit 14.1 hereto.

ITEM 11.    EXECUTIVE COMPENSATION:

Information required by this item is incorporated by reference to the material appearing under the headings “Board of Directors and Committees of the Board—Compensation of Directors” and “Executive Compensation”

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in the Company’s Proxy Statement for the 2006 Annual Meeting of its Shareholders. The information contained in the “Compensation Committee Report on Executive Compensation” and the “Performance Graph” is specifically not incorporated herein by reference.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:

	Equity Compensation Plan Information
Plan category	Number of securities to be issued upon exercise of outstanding options, warranty and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) (c)
Equity compensation plans approved by security holders	2,830,437	$	6.18	2,467,503
Equity compensation plans not approved by security holders	—		—	58,790	(1)
Total	2,830,437	$	6.18	2,526,293

(1) On December 31, 2005 there were 58,790 shares available for issuance under the Company’s 1997 Directors’ Fee Plan, as last amended in 2005. The Plan provides non-employee directors of the Company with payment alternatives for retainer fees by being able to elect to receive Common Stock of the Company instead of cash for such fees. Under the plan, directors have the alternative to elect their retainer fees in a current payment of shares of Common Stock of the Company, or to defer payment of such fees into a Common Stock account. Shares which are deferred are credited to a deferred stock compensation account maintained by the Company. On each date when director fees are otherwise payable to a director who has made a stock deferral election, his or her stock deferral account will be credited with a number of shares equal to the cash amount of the director’s fees payable divided by the fair market value of one share of the Common Stock on the date on which the fees are payable. Dividends or other distributions payable on Common Stock are similarly credited to the deferred stock account of a director on the date when such dividends or distributions are payable. The deferred stock compensation accounts are payable to the directors in accordance with their stock deferral elections and are typically paid either in a lump sum or in annual installments after the retirement or other termination of service of the director from the Company’s Board of Directors.

The additional information required by this item is incorporated by reference to the material appearing under the heading “Security Ownership of Management and Certain Beneficial Owners” in the Company’s Proxy Statement for the 2006 Annual Meeting of its Shareholders.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:

Information required by this item is incorporated by reference to the material appearing under the headings “Election of Directors” and “Corporate Governance” in the Company’s Proxy Statement for the 2006 Annual Meeting of its Shareholders.

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES:

Information required by this item is incorporated by reference to the material appearing under the heading “Independent Auditors—Certain Fees” in the Company’s Proxy Statement for the 2006 Annual Meeting of its Shareholders.

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PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:

A. Financial Statements

1. The following documents are filed as part of this report:

Financial Statements and Related Reports	Page(s) in Annual Report to Shareholders for the Year Ended December 31, 2005
Report of Management	13
Internal Controls—Report of Independent Registered Public Accounting Firm, dated March 24, 2006	14
Financial Statements—Report of Independent Registered Public Accounting Firm, dated March 24, 2006	15
Consolidated Statements of Income and Comprehensive Income for the Years Ended December 31, 2005, 2004 and 2003	16
Consolidated Balance Sheets as of December 31, 2005 and 2004	17
Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003	18
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2005, 2004 and 2003	19
Notes to the Consolidated Financial Statements	20 – 42
Quarterly Financial Data—Unaudited	43

2. The following report and schedule should be read with the Company’s consolidated financial statements in the Annual Report:

Report of Deloitte & Touche LLP dated March 24, 2006 on the Company’s financial statement schedules filed as part here of for the fiscal years ended December 31, 2005, 2004, and 2003.

Schedule II—Valuation and Qualifying Accounts for the years ended December 31, 2005, 2004 and 2003.

C. Exhibits

			Page
3.1		Amended Certificate of Incorporation	(a)
3.2		Amended By-laws of the Registrant	(b)
4.0		Amended Rights Agreement	(c)
10.1	*	Calgon Carbon Corporation Stock Option Plan, as Amended	Filed herewith
10.2	*	1999 Non-Employee Directors’ Phantom Stock Unit Plan, as Amended	Filed herewith
10.3	*	1993 Non-Employee, Directors’ Stock Option Plan, as Amended	Filed herewith
10.4	*	1997 Directors’ Fee Plan	Filed herewith
10.5	*	Employment agreement between Calgon Carbon Corporation and executive officers (i) The form of employment agreement has been entered into with the following executive officers, Leroy M. Ball, James G. Fishburne, Gail A. Gerono, Robert P. O’Brien, John S. Stanik, C. H. S. (Kees) Majoor	(d)
10.6		Calgon Carbon Corporation Senior Credit Facility	(e)

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		Page
10.7	Amendment No. 1 to Calgon Carbon Corporation Senior Credit Facility	Filed herewith
10.8	Purchase Agreement among Waterlink, Inc. and Barnebey Sutcliffe Corporation and Calgon Carbon Corporation	(f)
13.0	Annual Report to Shareholders for the Year Ended December 31, 2005	Filed herewith
14.1	Code of Ethical Business Conduct Supplement for Chief Executive and Senior Financial Officers	(g)
21.0	The wholly owned subsidiaries of the Company at December 31, 2005 are Chemviron Carbon GmbH, a German corporation; Calgon Carbon Canada, Inc., a Canadian corporation; Chemviron Carbon Ltd., a United Kingdom corporation; Calgon Carbon Investments Inc., a Delaware corporation; Solarchem Environmental Systems Inc., a Nevada corporation; Charcoal Cloth (International) Limited, a United Kingdom corporation; Charcoal Cloth Limited, a United Kingdom corporation; Waterlink UK Holdings Ltd., a United Kingdom corporation, Sutcliffe Croftshaw Ltd., a United Kingdom corporation; Sutcliffe Speakman Ltd., a United Kingdom corporation; Sutcliffe Speakman Carbons Ltd., a United Kingdom corporation; Lakeland Processing Ltd., a United Kingdom corporation; Sutcliffe Speakmanco 5 Ltd., a United Kingdom corporation; Advanced Separation Technologies Incorporated, a Florida corporation and Calgon Carbon (Tianjin) Co., Ltd., a Chinese Corporation; Datong Carbon Corporation, a Chinese corporation and Calgon Carbon Asia Ltd., a Singapore corporation. In addition, the Company owns 49% of Calgon Mitsubishi Chemical Corporation, a Japanese corporation and 20% of Calgon Carbon (Thailand) Ltd., a Thailand corporation	Filed herewith
23.1	Consent of Independent Registered Public Accounting Firm	Filed herewith
31.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

Note: The Registrant hereby undertakes to furnish, upon request of the Commission, copies of all instruments defining the rights of holders of long-term debt of the Registrant and its consolidated subsidiaries. The total amount of securities authorized thereunder does not exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis.

(a) Incorporated herein by reference to Exhibit 3.1 to the Company’s report on Form 10-K filed for the fiscal year ended December 31, 1990.

(b) Incorporated herein by reference to Exhibit 3.2 to the Company’s report on Form 8-K dated January 28, 2005.

(c) Incorporated herein by reference to Exhibit 4.1 of the Company’s report on Form 8-K dated January 28, 2005.

(d) Incorporated herein by reference to Exhibit 10.2 to the Company’s report on Form 10-Q filed for the fiscal quarter ended March 31, 2005.

(e) Incorporated herein by reference to Exhibit 10.1 to the Company’s report on Form 8-K dated January 31, 2006.

(f) Incorporated herein by reference to Exhibit 10.9 to the Company’s report on Form 10-K filed for the fiscal year ended December 31, 2003.

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(g) Incorporated herein by reference to Exhibit 14.1 to the Company’s report on Form 10-K filed for the fiscal year ended December 31, 2003.

 * Management contract or compensatory plan, contract or arrangement required to be filed by Item 601(b)(10)(iii) of Regulation S-K.

D. Reports on Form 8-K

During the last fiscal quarter of the year ended December 31, 2005, the Company filed five Current Reports on Form 8-K. Form 8-K dated October 25, 2005 related to the news release dated October 24, 2005 announcing the Company’s third quarter financial results. Form 8-K dated November 7, 2005 related to the news release dated November 7, 2005 announcing the resuming of operations of the Company’s Pearl River plant. Form 8-K dated November 10, 2005 related to the news release dated November 9, 2005 announcing the launch of a new UV product. Form 8-K dated November 14, 2005 related to the news release dated November 11, 2005 announcing the election of new Board of Directors members. Form 8-K dated December 9, 2005 related to the news release dated December 8, 2005 announcing the appeal awarded in the Canadian patent case.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CALGON CARBON CORPORATION
By	/s/    JOHN S. STANIK
	John S. Stanik
	President and Chief Executive Officer

March 30, 2006

      (Date)

24

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated.

Signature	Title	Date
John S. Stanik	President, Chief Executive Officer	March 30, 2006
/S/    LEROY M. BALL         Leroy M. Ball	Chief Financial Officer (and Principal Accounting Officer)	March 30, 2006
/S/    ROBERT W. CRUICKSHANK         Robert W. Cruickshank	Director	March 30, 2006
/S/    THOMAS A. MCCONOMY         Thomas A. McConomy	Chairman	March 30, 2006
/S/    WILLIAM R. NEWLIN         William R. Newlin	Director	March 30, 2006
/S/    JULIE S. ROBERTS         Julie S. Roberts	Director	March 30, 2006
/S/    TIMOTHY G. RUPERT         Timothy G. Rupert	Director	March 30, 2006
/S/    SETH E. SCHOFIELD         Seth E. Schofield	Director	March 30, 2006
/S/    JOHN P. SURMA         John P. Surma	Director	March 30, 2006
/S/    HARRY H. WEIL         Harry H. Weil	Director	March 30, 2006
/S/    ROBERT L. YOHE         Robert L. Yohe	Director	March 30, 2006

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Calgon Carbon Corporation

Pittsburgh, Pennsylvania

We have audited the consolidated financial statements of Calgon Carbon Corporation (the “Company”) as of December 31, 2005 and 2004, and for each of the three years in the period ended December 31, 2005, management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005, and the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005, and have issued our reports thereon dated March 24, 2006; such consolidated financial statements and reports are included in your 2005 Annual Report to Stockholders and are incorporated herein by reference. We did not audit the financial statements of Chemviron Carbon Ltd. and subsidiaries (“Chemviron UK”) as of and for the years ended 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, respectively, and total revenues constituting 12 percent and 11 percent of consolidated total revenues for the years ended December 31, 2005 an 2004, respectively. 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. Our audits and the report of other auditors also included the consolidated financial statement schedules of the Company listed in Item 15. These consolidated financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits. In our opinion, based on our audits and the report of other auditors, such consolidated financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

DELOITTE & TOUCHE LLP

Pittsburgh, Pennsylvania

March 24, 2006

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SCHEDULE II

CALGON CARBON CORPORATION

VALUATION AND QUALIFYING ACCOUNTS

Description	Balance at Beginning of Year		Additions- Charged to Costs and Expenses		Deductions- Returns and Write-Offs			Balance at End of Year
Year ended December 31, 2005
Allowance for doubtful accounts	$	2,902	$	510	$	(1,240	)	$	2,172
Year ended December 31, 2004
Allowance for doubtful accounts		3,595		946		(1,639	)		2,902
Year ended December 31, 2003
Allowance for doubtful accounts		2,839		1,127		(371	)		3,595
Description	Balance at Beginning of Year		Additions- Charged to Costs and Expenses		Deductions			Balance at End of Year
Year ended December 31, 2005
Income tax valuation allowance	$	3,539	$	188	$	(345	)	$	3,382
Year ended December 31, 2004
Income tax valuation allowance		1,916		1,835		(212	)		3,539
Year ended December 31, 2003
Income tax valuation allowance		2,658		326		(1,068	)		1,916

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EXHIBIT INDEX

Exhibit No.	Description	Method of Filing
3.1	Amended Certificate of Incorporation	(a)
3.2	Amended By-laws of the Registrant	(b)
4.0	Amended Rights Agreement	(c)
10.1*	Calgon Carbon Corporation Stock Option Plan, as Amended	Filed herewith
10.2*	1999 Non-Employee Directors’ Phantom Stock Unit Plan, as Amended	Filed herewith
10.3*	1993 Non-Employee, Directors’ Stock Option Plan, as Amended	Filed herewith
10.4*	1997 Directors’ Fee Plan	Filed herewith
10.5*	Employment agreement between Calgon Carbon Corporation and executive officers (i) The form of employment agreement has been entered into with the following executive officers, Leroy M. Ball, James G. Fishburne, Gail A. Gerono, Robert P. O’Brien, John S. Stanik, C. H. S. (Kees) Majoor	(d)
10.6	Calgon Carbon Corporation Senior Credit Facility	(e)
10.7	Amendment No. 1 to Calgon Carbon Corporation Senior Credit Facility	Filed herewith
10.8	Purchase Agreement among Waterlink, Inc. and Barnebey Sutcliffe Corporation and Calgon Carbon Corporation	(f)
13.0	Annual Report to Shareholders for the Year Ended December 31, 2005	Filed herewith
14.1	Code of Ethical Business Conduct Supplement for Chief Executive and Senior Financial Officers	(g)
21.0	The wholly owned subsidiaries of the Company at December 31, 2005 are Chemviron Carbon GmbH, a German corporation; Calgon Carbon Canada, Inc., a Canadian corporation; Chemviron Carbon Ltd., a United Kingdom corporation; Calgon Carbon Investments Inc., a Delaware corporation; Solarchem Environmental Systems Inc., a Nevada corporation; Charcoal Cloth (International) Limited, a United Kingdom corporation; Charcoal Cloth Limited, a United Kingdom corporation; Waterlink UK Holdings Ltd., a United Kingdom corporation, Sutcliffe Croftshaw Ltd., a United Kingdom corporation; Sutcliffe Speakman Ltd., a United Kingdom corporation; Sutcliffe Speakman Carbons Ltd., a United Kingdom corporation; Lakeland Processing Ltd., a United Kingdom corporation; Sutcliffe Speakmanco 5 Ltd., a United Kingdom corporation; Advanced Separation Technologies Incorporated, a Florida corporation and Calgon Carbon (Tianjin) Co., Ltd., a Chinese Corporation; Datong Carbon Corporation, a Chinese corporation and Calgon Carbon Asia Ltd., a Singapore corporation. In addition, the Company owns 49% of Calgon Mitsubishi Chemical Corporation, a Japanese corporation and 20% of Calgon Carbon (Thailand) Ltd., a Thailand corporation	Filed herewith
23.1	Consent of Independent Registered Public Accounting Firm	Filed herewith
31.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

28

Note: The Registrant hereby undertakes to furnish, upon request of the Commission, copies of all instruments defining the rights of holders of long-term debt of the Registrant and its consolidated subsidiaries. The total amount of securities authorized thereunder does not exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis.

(a) Incorporated herein by reference to Exhibit 3.1 to the Company’s report on Form 10-K filed for the fiscal year ended December 31, 1990.

(b) Incorporated herein by reference to Exhibit 3.2 to the Company’s report on Form 8-K dated January 28, 2005.

(c) Incorporated herein by reference to Exhibit 4.1 of the Company’s report on Form 8-K dated January 28, 2005.

(d) Incorporated herein by reference to Exhibit 10.2 to the Company’s report on Form 10-Q filed for the fiscal quarter ended March 31, 2005.

(e) Incorporated herein by reference to Exhibit 10.1 to the Company’s report on Form 8-K dated January 31, 2006.

(f) Incorporated herein by reference to Exhibit 10.9 to the Company’s report on Form 10-K filed for the fiscal year ended December 31, 2003.

(g) Incorporated herein by reference to Exhibit 14.1 to the Company’s report on Form 10-K filed for the fiscal year ended December 31, 2003.

 * Management contract or compensatory plan, contract or arrangement required to be filed by Item 601(b)(10)(iii) of Regulation S-K.

29

EX-10.1

Exhibit 10.1

CALGON CARBON CORPORATION

STOCK OPTION PLAN

(As amended and restated through February 14, 2006)

The purposes of the Stock Option Plan (the “Plan”) are to encourage eligible employees of Calgon Carbon Corporation (the “Company”) and any other corporation in the Chain, as defined below, including officers who are employees, to increase their efforts to make the Company and each Subsidiary more successful, to provide an additional inducement for such individuals to remain with the Company or a Subsidiary, to reward such individuals by providing the opportunity to acquire Common Stock of the Company (“Common Stock”) on favorable terms and to provide a means through which the Company may attract able persons to enter the employ of the Company or one of its Subsidiaries. The “Chain” shall mean all corporations in an unbroken chain of corporations including the Company, in which each of the corporations other than the last corporation in the chain owns stock possessing at least fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in the chain. “Subsidiary” shall mean any corporation in the Chain directly or indirectly controlled by the Company.

SECTION 1

Administration

The Plan shall be administered by a Committee (the “Committee”) appointed by the Board of Directors of the Company (the “Board”) and consisting of not less than two members of the Board, each of whom at the time of appointment to the Committee and at all times during service as a member of the Committee shall be (i) “Non-Employee Directors” as then defined under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any successor Rule and (ii) an “outside director” under Section 162(m)(4)(C) of the Internal Revenue Code of 1986 (the “Code”), or any successor provision.

The Committee shall interpret the Plan and prescribe such rules, regulations and procedures in connection with the operations of the Plan as it shall deem to be necessary and advisable for the administration of the Plan consistent with the purposes of the Plan. All questions of interpretation and application of the Plan, or as to grants or awards under the Plan, shall be subject to the determination of the Committee which shall be final and binding.

The Committee shall keep records of action taken at its meetings, a majority of the Committee shall constitute a

quorum at any meeting and the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by a majority of the Committee, shall be the acts of the Committee.

SECTION 2

Eligibility

Those employees (“Key Employees”) of the Company or any Subsidiary (including, but not limited to, covered employees as defined in Section 162(m)(3) of the Code, or any successor provision) who are important to the management, growth or protection of the business of the Company or any Subsidiary shall be eligible to receive stock options (with or without stock appreciation rights) and to receive restricted or restricted performance share awards as described herein.

Stock options (with or without stock appreciation rights) may be granted and restricted or restricted performance shares may be awarded to any person conditional upon such person’s becoming a Key Employee of the Company or any Subsidiary, but any such options or rights or restricted or restricted performance shares shall be deemed granted or awarded as of the date such person becomes such a Key Employee and shall be null and void unless that occurs before a date specified by the Committee and not more than six months after the Committee acts to grant such options or rights or award such restricted or restricted performance shares.

Subject to the provisions of the Plan, the Committee shall have full and final authority, in its discretion, to grant stock options (with or without stock appreciation rights) and to award restricted or restricted performance shares as described herein and to determine the individuals to whom any such grant or award shall be made and the number of shares to be covered by each stock option. In determining the eligibility of any individual, as well as in determining the number of shares covered by each grant of a stock option or award of restricted or restricted performance shares, the Committee shall consider the position and the responsibilities of the individual being considered, the nature and value to the Company or a Subsidiary of his or her services, his or her present and/or potential contribution to the success of the Company or a Subsidiary and such other factors as the Committee may deem relevant.

SECTION 3

Shares Available under the Plan

Effective April 1999, the aggregate number of shares of Common Stock available under the Plan, as adjusted to reflect stock splits and distributions by the Company, was 6,838,640 shares. Immediately prior to the date of the amendment and restatement of the Plan, after adjustment to reflect the past transfer of 100,000 shares to the 1993 Directors’ Stock Option

2

Plan, the remaining aggregate number of shares of Common Stock which may be issued or delivered under the Plan upon exercise of stock options is 3,320,240 shares (consisting of 2,528,150 shares reserved for outstanding stock options and 792,090 shares available for stock options which have not yet been granted or for awards of restricted or restricted performance shares), subject to adjustment and substitution as set forth in Section 6. As of the date of the amendment and restatement, an additional 1,500,000 shares are available under the Plan, subject to adjustment and substitution as set forth in Section 6. All shares under the Plan are available to grant incentive stock options.

In addition, if non-alternative stock appreciation rights are granted together with any stock option with the effect provided in Section 5(D)(1), up to one additional share of Common Stock may be issued or delivered under the Plan in payment of such stock appreciation rights for each share issued or delivered upon the exercise of such stock option. If alternative stock appreciation rights are granted together with any stock option with the effect provided in Section 5(D)(2), upon the exercise of any such alternative stock appreciation rights in lieu of the related stock option, the number of shares which may be issued or delivered under the Plan upon the exercise of stock options shall be reduced by the number of shares, if any, issued or delivered in payment of such alternative stock appreciation rights. The shares which may be issued or delivered under the Plan may be either authorized but unissued shares or treasury shares or partly each, as shall be determined by the Board.

Except as provided in the preceding paragraph, if any stock option granted under the Plan is cancelled by mutual consent or terminates or expires for any reason without having been exercised in full, the number of shares subject to such stock option shall again be available for the purposes of the Plan. If shares of Common Stock are forfeited to the Company pursuant to the restrictions applicable to restricted or restricted performance shares awarded under the Plan, the shares so forfeited shall again be available for purposes of the Plan.

SECTION 4

Grant of Stock Options and Stock Appreciation Rights

and Awards of Restricted or Restricted Performance Shares

The Committee shall have authority, in its discretion, (a) to grant “incentive stock options” pursuant to Section 422 of the Code to grant “nonstatutory stock options” (stock options which do not qualify under Section 422 or Section 423 of the Code) or to grant both types of stock options (but not in tandem), (b) to award restricted shares and (c) to award restricted performance shares, all as provided herein. The Committee shall also have authority, in its discretion, to grant alternative or non-alternative stock appreciation rights together with stock options with the effect provided in Section 5(D).

3

Stock appreciation rights granted together with a stock option may only be granted at the time such stock option is granted.

The maximum number of stock appreciation rights, restricted shares and restricted performance shares which may be issued from the additional 1,500,000 shares added to the Plan on February 4, 2005 shall be 1,250,000, subject to adjustment and substitution as set forth in Section 6. The maximum number of shares as to which stock options (with or without stock appreciation rights) may be granted and as to which restricted performance shares may be awarded under the Plan to any one employee in any one calendar year is 200,000 shares, subject to adjustment and substitution as set forth in Section 6. For the purposes of this limitation, any adjustment or substitution made pursuant to Section 6 with respect to the maximum number of shares set forth in the preceding sentence shall also be made with respect to any shares subject to stock options or restricted or restricted performance share awards previously granted under the Plan to such employee.

Notwithstanding any other provision contained in the Plan or in any agreement referred to in Section 5(G), but subject to the last two sentences of this paragraph, the aggregate fair market value, determined as provided in Section 5(H) on the date of grant, of the shares with respect to which incentive stock options are exercisable for the first time by a grantee during any calendar year under all plans of the Company employing such grantee, any parent or subsidiary corporation of such corporation and any predecessor corporation of any such corporation shall not exceed $100,000. Any purported grants of incentive stock options in excess of such $100,000 shall be deemed to be grants of nonstatutory stock options. If the date on which one or more of such incentive stock options could first be exercised would be accelerated pursuant to any provision of the Plan or any stock option agreement, and the acceleration of such exercise date would result in a violation of the limitation set forth in the second preceding sentence, then, notwithstanding any such violation, but subject to the provisions of the next succeeding sentence, the exercise dates of such incentive stock options shall nevertheless be accelerated with the exercise dates of the incentive stock options with the lowest option prices being accelerated to the earliest such dates and with any remaining options being converted in whole or in part to nonstatutory stock options. A grantee may, with the consent of the Committee, choose not to accelerate the exercise date of any such incentive stock options which would violate the $100,000 limitation set forth in the first sentence of this paragraph by indicating his or her decision to do so in writing to the Committee within 10 days after such acceleration would have otherwise become effective.

4

Notwithstanding anything in the Plan to the contrary, without the prior approval of the stockholders of the Company, options and stock appreciation rights issued under the Plan shall not be repriced, replaced or regranted through cancellation, or by lowering the option exercise price of a previously granted award and, further with respect to stock appreciation rights, none of the foregoing shall be permitted if the same would cause the stock appreciation rights to provide for a deferral of compensation within the meaning of Section 409A of the Code.

SECTION 5

Terms and Conditions of Stock Options and

Stock Appreciation Rights

Stock options and stock appreciation rights granted under the Plan shall be subject to the following terms and conditions:

(A) The purchase price at which each stock option may be exercised (the “option price”) shall be such price as the Committee, in its discretion, shall determine but shall not be less than one hundred percent (100%) of the fair market value per share of the shares of Common Stock covered by the stock option on the date of grant, except that in the case of an incentive stock option granted to an individual who, immediately prior to such grant owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Subsidiary (a “Ten Percent Employee”), the option price shall be not less than 110% of such fair market value on the date of grant. For purposes of this Section 5(A), the fair market value of the Common Stock shall be determined as provided in Section 5(H). For purposes of this Section 5(A), an individual shall be considered as owning not only shares of Common Stock owned individually but also all shares that are at the time owned, directly or indirectly, by or for the spouse, ancestors, lineal descendants and brothers and sisters (whether by the whole or half blood) of such individual, and shall also be considered as owning proportionately any shares owned, directly or indirectly, by or for any corporation, partnership, estate or trust in which such individual shall be a shareholder, partner or beneficiary.

(B) The option price shall be payable in cash; provided, however, that in lieu of cash a grantee may, if authorized by the Committee at the time of grant, in the case of an incentive stock option, or at any time, in the case of a nonstatutory stock option, pay the option price in whole or in part by tendering to the Company shares of Common Stock owned by the grantee and having a fair market value on the date of exercise of the stock option,

5

determined as provided in Section 5(H), equal to the option price for the shares being purchased (except that (i) any portion of the option price representing a fraction of a share shall in any event be paid in cash and (ii) no shares of Common Stock which have been held for less than six months may be delivered in payment of the option price of a stock option). The option price shall be payable at such time or times as the Committee, in its discretion, shall determine. Delivery of shares, if authorized, may also be accomplished through the effective transfer to the Company of shares held by a broker or other agent. The Company will also cooperate with any person exercising a stock option who participates in a cashless exercise program of a broker or other agent under which all or part of the shares received upon exercise of the stock option are sold through the broker or other agent or under which the broker or other agent makes a loan to such person. Notwithstanding the foregoing, unless the Committee, in its discretion, shall otherwise determine at the time of grant in the case of an incentive stock option, or at any time in the case of a nonstatutory stock option, the exercise of the stock option shall not be deemed to occur and no shares of Common Stock will be issued by the Company upon exercise of the stock option until the Company has received payment of the option price in full. The date of exercise of a stock option shall be determined under procedures established by the Committee, and as of the date of exercise the person exercising the stock option shall be considered for all purposes to be the owner of the shares with respect to which the stock option has been exercised. Payment of the option price with shares shall not increase the number of shares of Common Stock which may be issued or delivered under the Plan as provided in Section 3.

(C) No nonstatutory stock option shall be exercisable after the expiration of ten years from the date of grant. No incentive stock option shall be exercisable after the expiration of ten years (five years, in the case of a Ten Percent Employee) from the date of grant. Subject to this Section 5(C) and Sections 5(F), 5(G) and 5(I), and the other provisions of the Plan, stock options may be exercised at such times, in such amounts and subject to such restrictions as shall be determined, in its discretion, by the Committee.

(D)(1) If non-alternative stock appreciation rights are granted together with a stock option, such stock appreciation rights shall entitle the person or persons who are entitled to exercise the related stock option, upon exercise of the related stock option, or any portion thereof, to receive from the Company (in addition to the shares to be received upon exercise of the related stock option) that number of shares of Common Stock having an aggregate fair market value, determined as provided in

6

Section 5(H), on the date of exercise of the related stock option equal to the excess of the fair market value of one share of Common Stock over the option price per share payable pursuant to the related stock option times the number of shares covered by the related stock option, or portion thereof, which is exercised. No fractional shares shall be issued or delivered nor shall cash be paid in lieu of any fractional shares. The Committee shall have authority, in its discretion, to determine at any time that all or any part of the obligation of the Company with respect to non-alternative stock appreciation rights (other than those granted together with incentive stock options) shall be paid in cash if and only if the payment of cash upon exercise of the stock appreciation rights would not cause the stock appreciation rights to provide for a deferral of compensation within the meaning of Section 409A of the Code.

(2) If alternative stock appreciation rights are granted together with a stock option, such stock appreciation rights shall entitle the person or persons who are entitled to exercise the related stock option to surrender unexercised the related stock option, or any portion thereof, and to receive from the Company in exchange therefor that number of shares of Common Stock having an aggregate fair market value, determined as provided in Section 5(H), on the date of exercise of the alternative stock appreciation rights equal to the excess of the fair market value of one share of Common Stock on such date of exercise over the option price per share payable pursuant to the related stock option times the number of shares covered by the related stock option, or portion thereof, which is surrendered. Alternative stock appreciation rights granted together with an incentive or non-statutory stock option shall not be exercisable, however, unless the fair market value per share of the Common Stock on the date of exercise, determined as provided in Section 5(H), exceeds the option price per share payable pursuant to such incentive stock option. No fractional shares shall be issued or delivered nor shall cash be paid in lieu of any fractional shares. The Committee shall have authority, in its discretion, to determine at any time that all or any part of the obligation of the Company with respect to alternative stock appreciation rights shall be paid in cash if and only if the payment of cash upon exercise of the stock appreciation rights would not cause the stock appreciation rights to provide for a deferral of compensation within the meaning of Section 409A of the Code.

(E) No stock option or stock appreciation rights shall be transferable by the grantee other than by Will, or if the grantee dies intestate, by the laws of descent and distribution of the state of domicile of the grantee at the

7

time of death, and each stock option and stock appreciation right shall be exercisable during the lifetime of the grantee only by the grantee.

(F) Unless otherwise determined by the Committee and provided in the stock option agreement referred to in Section 5(G) or an amendment thereto:

(i) If the employment of a grantee who is not a Disabled Grantee as defined in clause (ii) below is voluntarily terminated with the consent of the Company or a Subsidiary and the Company consents to such exercise, or if a grantee retires under any retirement plan of the Company or a Subsidiary, any then outstanding incentive stock option held by such grantee shall be exercisable (to the extent exercisable on the date of termination of employment) by such grantee at any time prior to the expiration date of such incentive stock option or within three months after the date of termination of employment, whichever is the shorter period;

(ii) If the employment of a grantee who is disabled within the meaning of Section 422(c)(6) (formerly Section 422A(c)(7)) of the Code (a “Disabled Grantee”) is voluntarily terminated with the consent of the Company or a Subsidiary, any then outstanding incentive stock option held by such Disabled Grantee shall be exercisable (to the extent exercisable on the date of termination of employment) by such Disabled Grantee at any time prior to the expiration date of such incentive stock option or within one year after the date of termination of employment, whichever is the shorter period;

(iii) If the employment of a grantee who holds a nonstatutory stock option is voluntarily terminated with the consent of the Company or a Subsidiary and the Company consents to such exercise, or if such grantee retires under any retirement plan of the Company or a Subsidiary, any then outstanding nonstatutory stock option held by such grantee shall be exercisable (to the extent exercisable on the date of termination of employment) by such grantee at any time prior to the expiration date of such nonstatutory stock option or within one year after the date of termination of employment, whichever is the shorter period; and

(iv) Following the death of a grantee, either during employment or after termination of employment during a period when a stock option is exercisable as provided in clauses (i), (ii) or (iii) above, any outstanding stock option held by the grantee at the

8

time of death shall be exercisable in whole or in part (whether or not so exercisable on the date of the death of the grantee but subject to the provisions of Section 4) by the person or persons entitled to do so under the Will of the grantee, or, if the grantee shall fail to make testamentary disposition of such stock option or shall die intestate, by the legal representative of the grantee, in either case at any time prior to the expiration date of such stock option or within one year after the date of death, whichever is the shorter period.

If the employment of a grantee terminates for any reason other than as set forth above in this Section 5(F), the rights of such grantee under any then outstanding stock option and stock appreciation rights shall terminate at the time of such termination of employment. In addition, if a grantee engages in the operation or management of a business, whether as owner, partner, officer, director, employee or otherwise, and whether during or after termination of employment by the Company or a Subsidiary, which is then in competition with the Company or a Subsidiary, the Committee may in its discretion immediately terminate all stock options and stock appreciation rights held by such grantee.

Whether termination of employment is a voluntary termination with consent of the Company or a Subsidiary and whether a grantee is disabled within the meaning of Section 422(c)(6) of the Code shall be determined in each case by the Committee and any such determination by the Committee shall be final and binding.

(G) All stock options and stock appreciation rights shall be confirmed by a stock option agreement, or amendment thereto, which shall be executed by the President or any Vice President on behalf of the Company and by the individual to whom such stock options or stock appreciation rights are granted. The provisions of such agreements need not be identical.

(H) Fair market value of the Common Stock shall be the mean between the following prices, as applicable, for the date as of which fair market value is to be determined as quoted in The Wall Street Journal (or in such other reliable publication as the Committee, in its discretion, may determine to rely upon): (a) if the Common Stock is listed on the New York Stock Exchange, the highest and lowest sales prices per share of the Common Stock as quoted in the NYSE Composite Transactions listing for such date, (b) if the Common Stock is not listed on such exchange, the highest and lowest sales prices per share of Common Stock for such date on (or on any composite index including) the principal United States securities exchange registered

9

under the Exchange Act on which the Common Stock is listed or (c) if the Common Stock is not listed on any such exchange, the highest and lowest sales prices per share of the Common Stock for such date on the National Association of Securities Dealers Automated Quotations System or any successor system then in use (“NASDAQ”). If there are no such sale price quotations for the date as of which fair market value is to be determined but there are such sale price quotations within a reasonable period both before and after such date, then fair market value shall be determined by taking a weighted average of the means between the highest and lowest sales prices per share of the Common Stock as so quoted on the nearest date before and the nearest date after the date as of which fair market value is to be determined. The average should be weighted inversely by the respective numbers of trading days between the selling dates and the date as of which fair market value is to be determined. If there are no such sale price quotations on or within a reasonable period both before and after the date as of which fair market value is to be determined, then fair market value of the Common Stock shall be the mean between the bona fide bid and asked prices per share of Common Stock as so quoted for such date on NASDAQ, or if none, the weighted average of the means between such bona fide bid and asked prices on the nearest trading date before and the nearest trading date after the date as of which fair market value is to be determined, if both such dates are within a reasonable period. The average is to be determined in the manner described above in this Section 5(H). If the fair market value of the Common Stock cannot be determined on the basis previously set forth in this Section 5(H) on the date as of which fair market value is to be determined, the Committee shall in good faith determine the fair market value of the Common Stock on such date. Fair market value shall be determined without regard to any restriction other than a restriction which, by its terms, will never lapse.

(I) The obligation of the Company to issue shares of the Common Stock under the Plan shall be subject to (i) the effectiveness of a registration statement under the Securities Act of 1933, as amended, with respect to such shares, if deemed necessary or appropriate by counsel for the Company, (ii) the condition that the shares shall have been listed (or authorized for listing upon official notice of issuance) upon each stock exchange, if any, on which the shares of Common Stock may then be listed and (iii) all other applicable laws, regulations, rules and orders which may then be in effect.

(J) Notwithstanding any other provision of this Section 5 or any other provision of the Plan or any stock option agreement or an amendment thereto, any grantee who has made a hardship withdrawal from the Calgon Carbon

10

Corporation Thrift/Savings Plan shall be prohibited, for a period of twelve (12) months following such hardship withdrawal, from exercising any stock option granted under the Plan in such a manner and to the extent that the exercise of such stock option would result in an employee elective contribution or an employee contribution to an employer plan within the meaning of Treasury Regulation § 1.401(k)-1(d)(2)(iii)(B)(3) or any successor regulation thereto.

Subject to the foregoing provisions of this Section 5 and the other provisions of the Plan, any stock option or stock appreciation rights granted under the Plan shall be subject to such other terms and conditions as the Committee shall deem advisable.

SECTION 5A

Terms and Conditions of Restricted and

Restricted Performance Share Awards

Restricted and restricted performance share awards shall be evidenced by a written agreement in a form prescribed by the Committee, in its discretion, which shall set forth the number of shares of the Common Stock awarded, the restrictions imposed thereon (including, without limitation, restrictions on the right of the grantee to sell, assign, transfer or encumber such shares while such shares are subject to other restrictions imposed under this Section 5A), the duration of such restrictions, events (which may, in the discretion of the Committee, include termination of employment or performance-based events) the occurrence of which would cause a forfeiture of the restricted or restricted performance shares and such other terms and conditions as the Committee in its discretion deems appropriate. Restricted and restricted performance share awards shall be effective only upon execution of the applicable restricted or restricted performance share agreement on behalf of the Company by the Chief Executive Officer (if other than the President), the President or any Vice President, and by the awardee. The provisions of such agreements need not be identical. Awards of restricted or restricted performance shares shall be effective on the date determined, in its discretion, by the Committee.

Following a restricted or restricted performance share award and prior to the lapse or termination of the applicable restrictions, the share certificates representing the restricted or restricted performance shares shall be held by the Company in escrow together with related stock powers in blank signed by the grantee. Except as provided in Section 6, the Committee, in its discretion, may determine that dividends and other distributions on the shares held in escrow shall not vest or be paid to the awardee until the lapse or termination of the applicable restrictions on such shares. Such dividends or other distributions shall not bear interest. Upon the lapse or

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termination of the applicable restrictions (and not before such time), the share certificates representing the restricted or restricted performance shares and unpaid dividends, if any, shall be delivered to the grantee. From the date a restricted or restricted performance share award is effective, the grantee shall be a shareholder with respect to all the shares represented by the share certificates for the restricted or restricted performance shares and shall have all the rights of a shareholder with respect to the restricted or restricted performance shares, including the right to vote the restricted or restricted performance shares and to receive all dividends and other distributions paid with respect to the restricted or restricted performance shares, subject only to the preceding provisions of this paragraph and the other restrictions imposed by the Committee.

Neither this Section 5A nor any other provision of the Plan shall preclude an awardee from transferring or assigning restricted or restricted performance shares to (i) the trustee of a trust that is revocable by such awardee alone, both at the time of the transfer or assignment and at all times thereafter prior to such awardee’s death or (ii) the trustee of any other trust to the extent approved in advance by the Committee in writing. A transfer or assignment of restricted or restricted performance shares from such trustee to any person other than such awardee shall be permitted only to the extent approved in advance by the Committee in writing, and restricted or restricted performance shares held by such trustee shall be subject to all of the conditions and restrictions set forth in the Plan and in the applicable agreement as if such trustee were a party to such agreement.

With respect to restricted performance shares, the Committee, in its discretion, may award restricted performance shares which shall be earned by a grantee based on the level of performance over a specified period of time by the Company, a Subsidiary or Subsidiaries, any branch, department or other portion thereof or the grantee individually, as determined by the Committee. For the purposes of the grant of restricted performance shares, the following definitions shall apply:

(i) “Performance Period” shall mean an accounting period of the Company or a Subsidiary of not less than one year, as determined by the Committee in its discretion.

(ii) “Performance Target” shall mean that level of performance established by the Committee which must be met in order for the restricted performance shares to be fully earned. The Performance Target may be expressed in terms of Common Stock fair market value, revenues, net profit and/or earnings per share, percentage of profitability which are return on assets or return on equity, asset growth or maintenance, ratio of capital to assets or such other similar level or levels of accomplishment by the

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Corporation, a Subsidiary or Subsidiaries, any division, branch, department or other portion thereof or the grantee individually as may be established or revised from time to time by the Committee.

(iii) “Minimum Target” shall mean a minimal level of performance established by the Committee which must be met before any part of the restricted performance shares is earned. The Minimum Target may be the same as or less than the Performance Target in the discretion of the Committee.

A Performance Target and/or Minimum Target will be established not later than 90 days after the commencement of the Performance Period to which it relates (or not later than after 25 percent of the Performance Period has expired, if less), provided that any such target must be established when the outcome is substantially uncertain.

A grantee shall earn the restricted performance shares in full by meeting the Performance Target for the Performance Period (in addition to any time vesting requirements determined by the Committee). If the Minimum Target has not been attained at the end of the Performance Period, no part of the restricted performance shares shall have been earned by the grantee. If the Minimum Target is attained but the Performance Target is not attained, the portion of the restricted performance shares earned by the grantee shall be such portion as is established by the Committee at the time of grant.

Shares which do not vest due to failure to meet performance targets will be forfeited. Awards of restricted performance shares by the Committee need not be made every year.

It is intended that any compensation received by grantees of restricted performance shares will qualify as performance-based compensation under Section 162(m) of the Code and this portion of Section 5A shall be interpreted consistently with that intention.

SECTION 6

Adjustment and Substitution of Shares

If a dividend or other distribution shall be declared upon the Common Stock payable in shares of Common Stock, (i) the number of shares of Common Stock then subject to any outstanding stock options, (ii) the number of shares of the Common Stock which may be issued under the Plan but are not subject to outstanding stock options and (iii) the maximum number of shares as to which stock options may be granted and as to which restricted or restricted performance shares may be awarded under the Plan to any employee under Section 4 on the date fixed for determining the stockholders entitled to receive such stock dividend or distribution shall be adjusted by adding thereto the

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number of shares which would have been distributable thereon if such shares had been outstanding on the date fixed for determining the shareholders entitled to receive such stock dividend or distribution. Shares of Common Stock so distributed with respect to any restricted or restricted performance shares held in escrow, shall also be held by the Company in escrow and shall be subject to the same restrictions as are applicable to the restricted or restricted performance shares on which they were distributed.

If the outstanding shares of Common Stock shall be changed into or exchangeable for a different number or kind of shares of stock or other securities of the Company or another corporation, whether through reorganization, reclassification, recapitalization, stock split-up, combination of shares, merger or consolidation, then there shall be substituted for each share of Common Stock subject to any then outstanding stock option or stock appreciation rights, for each share of Common Stock which may be issued or delivered under the Plan but not then subject to an outstanding stock option or stock appreciation rights and for the maximum number of shares as to which stock options may be granted and as to which restricted or restricted performance shares may be awarded under the Plan to any employee under Section 4, the number and kind of shares of stock or other securities into which each outstanding share of Common Stock shall be so changed or for which each such share shall be exchangeable. Unless otherwise determined by the Committee, in its discretion, any such stock or securities, as well as any cash or other property, into or for which any restricted or restricted performance shares held in escrow shall be changed or exchangeable in any such transaction shall also be held by the Company in escrow and shall be subject to the same restrictions as are applicable to the restricted or restricted performance shares in respect of which such stock, securities, cash or other property was issued or distributed.

In case of any adjustment or substitution as provided for in this Section 6, the aggregate option price for all shares subject to each then outstanding stock option prior to such adjustment or substitution shall be the aggregate option price for all shares of stock or other securities (including any fraction) to which such shares shall have been adjusted or which shall have been substituted for such shares. Any new option price shall be carried to at least three decimal places with the last decimal place rounded upwards to the nearest whole number.

If the outstanding shares of the Common Stock shall be changed in value by reason of any spin-off, split-off or split-up, or dividend in partial liquidation, dividend in property other than cash or extraordinary distribution to holders of the Common Stock, (i) the Committee shall make any adjustments to any then outstanding stock option or stock appreciation right which it determines are equitably required to prevent dilution or enlargement of the rights of grantees which would otherwise

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result from any such transaction and (ii) unless otherwise determined by the Committee, in its discretion, any stock, securities, cash or other property distributed with respect to any restricted or restricted performance shares held in escrow or for which any restricted or restricted performance shares held in escrow shall be exchanged in any such transaction shall also be held by the Company in escrow and shall be subject to the same restrictions as are applicable to the restricted or restricted performance shares in respect of which such stock, securities, cash or other property was distributed or exchanged.

No adjustment or substitution provided for in this Section 6 shall require the Company to issue or sell a fraction of a share or other security. Accordingly, all fractional shares or other securities which result from any such adjustment or substitution shall be eliminated and not carried forward to any subsequent adjustment or substitution. Owners of restricted or restricted performance shares held in escrow shall be treated in the same manner as owners of Common Stock not held in escrow with respect to fractional shares created by an adjustment or substitution of shares, except that, unless otherwise determined by the Committee, in its discretion, any cash or other property paid in lieu of a fractional share shall be subject to restrictions similar to those applicable to the restricted or restricted performance shares exchanged therefor.

If any such adjustment or substitution provided for in this Section 6 requires the approval of shareholders in order to enable the Company to grant incentive stock options or to comply with Section 162(m) of the Code, then no such adjustment or substitution shall be made without prior shareholder approval. Notwithstanding the foregoing, in the case of any incentive stock option, if the effect of any such adjustment or substitution would be to cause the stock option to fail to continue to qualify as an incentive stock option or to cause a modification, extension or renewal of such stock option within the meaning of Section 424 of the Code, the Committee may elect that such adjustment or substitution not be made but rather shall use reasonable efforts to effect such other adjustment of each then outstanding stock option as the Committee in its discretion shall deem equitable and which will not result in any disqualification, modification, extension or renewal (within the meaning of Section 424 of the Code) of any such incentive stock option.

SECTION 7

Effect of the Plan on the Rights of Employees and Employer

Neither the adoption of the Plan nor any action of the Board or the Committee shall be deemed to give any employee any right to be granted a stock option or stock appreciation rights or to be awarded restricted or restricted performance shares under the Plan. Nothing in the Plan, in any stock option or stock appreciation rights granted under the Plan, in any

15

restricted or restricted performance shares awarded under the Plan or in any stock option agreement shall confer any right upon any employee to continue in the employ of the Company or any Subsidiary or interfere in any way with the rights of the Company or any Subsidiary to terminate the employment of any employee at any time.

SECTION 8

Amendment and Termination

The right to amend the Plan at any time and from time to time and the right to terminate the Plan are hereby specifically reserved to the Board; provided always that no such termination shall terminate any outstanding stock options or stock appreciation rights granted or restricted or restricted performance shares awarded under the Plan and provided further that no such amendment of the Plan shall, without stockholder approval (a) increase the total number of shares which may be issued or delivered under the Plan, (b) make any changes in the class of employees eligible to receive stock options, stock appreciation rights or awards of restricted or restricted performance shares, (c) change the maximum number of shares as to which stock options may be granted and as to which restricted or restricted performance shares may be awarded to any employee under Section 4 of the Plan, (d) extend the periods set forth in this Plan during which stock options or stock appreciation rights may be granted or restricted or restricted performance shares awarded beyond January 31, 2015 or (e) be made if stockholder approval of the amendment is at the time required for stock options or restricted or restricted performance shares under the Plan to qualify for the exemption from Section 16(b) of the Exchange Act provided by Rule 16b-3 or by the rules of the New York Stock Exchange or any stock exchange on which the Common Stock may then be listed. No amendment or termination of the Plan shall, without the written consent of the holder of a stock option, stock appreciation rights or restricted or restricted performance shares theretofore granted under the Plan, adversely affect the rights of such holder with respect thereto.

Notwithstanding anything contained in the preceding paragraph or any other provision of the Plan or any stock agreement, the Board shall have the power to amend the Plan in any manner deemed necessary or advisable for stock options, stock appreciation rights or restricted shares granted under the Plan to qualify for the exemption provided by Rule 16b-3 (or any successor rule relating to exemption from Section 16(b) of the 1934 Act), and any such amendment shall, to the extent deemed necessary or advisable by the Board, be applicable to any outstanding stock options, stock appreciation rights or restricted shares theretofore granted under the Plan notwithstanding any contrary provisions contained in any stock agreement. In the event of any such amendment to the Plan, the holder of any stock options, stock appreciation rights or

16

restricted shares outstanding under the Plan shall, upon request of the Committee and as a condition to the exercisability of such stock options or stock appreciation rights, execute a conforming amendment in the form prescribed by the Committee to the stock agreement referred to in this Plan within such reasonable time as the Committee shall specify in such request.

SECTION 9

Withholding

Income, excise or employment taxes may be required to be withheld by the Company or a Subsidiary in connection with the grant or exercise of a stock option or stock appreciation right, upon a “disqualifying disposition” of the shares acquired upon exercise of an incentive stock option, at the time restricted or restricted performance shares are granted or vest or upon the receipt by the grantee of cash in payment of dividends on restricted or restricted performance shares which have not vested. Any taxes required to be withheld by the Company or any of its Subsidiaries upon the receipt by the grantee of cash in payment of dividends may be satisfied by the Company by withholding the taxes required to be withheld from the cash the grantee would otherwise receive. The Company will request that the grantee pay any additional amount required to be withheld directly to the Company in cash. If a grantee does not pay any taxes required to be withheld by the Company or any of its Subsidiaries within ten days after a request for the payment of such taxes, the Company or such Subsidiary may withhold such taxes from any compensation to which the grantee is entitled.

SECTION 10

Effective Date and Duration of Plan

The effective date and date of adoption of the Plan shall be January 10, 1985, the date of adoption of the Plan by the Board. The effective date of the most current amendment and restatement of the Plan shall be February 14, 2006, the date of the adoption of the same by the Board. The Plan was amended to prohibit repricings on April 20, 1999. No stock option or stock appreciation rights may be granted and no restricted or restricted performance shares may be awarded under the Plan subsequent to January 31, 2015.

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EX-10.2

Exhibit 10.2

CALGON CARBON CORPORATION

1999 NON-EMPLOYEE DIRECTORS’

PHANTOM STOCK UNIT PLAN

(as amended through September 13, 2005)

The purposes of the 1999 Non-Employee Directors’ Phantom Stock Unit Plan (the “Plan”) are to promote the long-term success of Calgon Carbon Corporation (the “Company”) and its Subsidiaries by creating a mutuality of interests between the non-employee Directors and the stockholders of the Company, to provide an additional inducement for such Directors to remain with the Company and to provide a means through which the Company may attract able persons to serve as Directors of the Company.

SECTION 1

Administration

The Plan shall be administered the Board of Directors of the Company (the “Board”). The Board may delegate some or all of its duties hereunder to a Committee appointed by the Board. The Board shall interpret the Plan and prescribe such rules, regulations and procedures in connection with the operations of the Plan as it shall deem to be necessary and advisable for the administration of the Plan consistent with the purposes of the Plan. All questions of interpretation and application of the Plan, or as to Units (as defined in Section 3 below) granted under the Plan, shall be subject to the determination of the Board, which shall be final and binding.

Notwithstanding the above, the selection of the Directors to whom Units are to be granted, the timing of such grants, the number of Units to be granted (including the dollar value used to calculate the Units to be granted), the time at which the Units may be exercised and the term of any Units shall be as hereinafter provided, and the Board shall have no discretion as to such matters unless and until the Plan is amended in accordance with the Plan.

SECTION 2

Units Available under the Plan

The aggregate number of Units (as defined in Section 3 below) which may be granted under the Plan is 1,000,000 Units, subject to adjustment and substitution as set forth in Section 7. If any Units granted under the Plan are cancelled by mutual consent or terminate or expire for any reason without having

been exercised in full, such number of Units shall again be available for purposes of the Plan.

SECTION 3

Eligibility and Grant of Phantom Stock Units

On the first business day following the day of each annual meeting of the stockholders of the Company, each person who is then a member of the Board and who is not then an employee of the Company or any of its subsidiaries (a “non-employee Director”) shall automatically and without further action by the Board be granted a number of phantom stock units (a “Unit” or “Units”) equal to $7,000 divided by the Fair Market Value (as defined in Section 5(H) below) of a share of Common Stock, $.01 par value, of the Company on such date, with fractional interests rounded up to the next whole share.

On the day that each person who was not prior thereto a member of the Board and who is not then an employee of the Company or any of its subsidiaries is elected to the Board, other than such person being elected at an Annual Meeting of the Company (the “Join Date”), such person shall automatically and without further action by the Board by granted a number of Units equal to the Prorated Amount (as defined below) divided by the Fair Market Value of a share of Common Stock of the Company on such Join Date, with fractional interests rounded up to the next whole share. “Prorated Amount” shall mean (i) $1,750 if the Join Date is in January, February, March or April, (ii) $3,500 if the Join Date is in October, November or December; (iii) $5,250 if the Join Date is in July, August or September; and (iv) $7,000 if the Join Date is in May or June.

SECTION 4

Value of Units

A Unit shall evidence the right to receive an amount equal to the Fair Market Value (as defined in Section 5(H) below) of a share of Common Stock as of a specified date or as of the date of occurrence of a specified event.

SECTION 5

Terms and Conditions of Units

Units granted under the Plan shall be subject to the following terms and conditions:

(A) Units shall fully vest on the date of grant.

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(B) Upon exercise of a Unit by a grantee, such grantee shall be entitled to be paid cash equal to the Fair Market Value (as defined in Section 5(H) below) of a share of Common Stock on the date of exercise, multiplied by the number of Units exercised. All Unit exercises shall be settled in cash and not in Common Stock of the Company. Amounts due upon any exercises of Units shall be paid by the Company in full on or before 30 days from the date of separation from service (as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)).

(C) Units shall only be exercisable, and shall automatically be exercised, upon a non-employee Director’s separation from service on the Board, whether due to death, disability, removal, resignation, failure to stand for re-election, failure to be re-elected or otherwise.

(D) All calculations to be performed under this Plan shall be done by the Board or its designees, in its discretion, whose determination shall be final and binding, absent manifest error.

(E) Except as may be required by law, the grantee shall not have the right to, directly or indirectly, alienate, assign, transfer, pledge, anticipate or encumber (except upon death, by Will or if the grantee dies intestate, by the laws of descent and distribution of the state of domicile of the grantee at the time of death) any amount that is or may be payable hereunder, including in respect of any liability of a grantee for alimony or other payments for the support of a spouse, former spouse, child or other dependent, prior to actually being received by the grantee hereunder, nor shall the grantee’s rights to payments under the Plan be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the grantee or to the debts, contracts, liabilities, engagements, or torts of the grantee, or transfer by operation of law in the event of bankruptcy or insolvency of the grantee, or any legal process. All Units shall be exercisable during the lifetime of the grantee only by the grantee.

(F) All Units shall be confirmed by an agreement, or an amendment thereto, which shall be executed on behalf of the Company by the Chief Executive Officer (if other than the President), the President or any Vice President and by

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the grantee. The provisions of such agreements, or amendments thereto, need not be identical.

(G) The obligation of the Company to grant or honor the exercise of Units under the Plan shall be subject to (i) the effectiveness of a registration statement under the Securities Act of 1933, as amended, with respect to such shares, if deemed necessary or appropriate by counsel for the Company, and (ii) all other applicable laws, regulations, rules and orders which may then be in effect.

(H) Fair market value of the Common Stock shall be the mean between the following prices, as applicable, for the date as of which fair market value is to be determined as quoted in The Wall Street Journal (or in such other reliable publication as the Committee, in its discretion, may determine to rely upon): (a) if the Common Stock is listed on the New York Stock Exchange, the highest and lowest sales prices per share of the Common Stock as quoted in the NYSE-Composite Transactions listing for such date, (b) if the Common Stock is not listed on such exchange, the highest and lowest sales prices per share of Common Stock for such date on (or on any composite index including) the principal United States securities exchange registered under the Securities Exchange Act of 1934 (the “1934 Act”) on which the Common Stock is listed, or (c) if the Common Stock is not listed on any such exchange, the highest and lowest sales prices per share of the Common Stock for such date on the National Association of Securities Dealers Automated Quotations System or any successor system then in use (“NASDAQ”). If there are no such sale price quotations for the date as of which fair market value is to be determined but there are such sale price quotations within a reasonable period both before and after such date, then fair market value shall be determined by taking a weighted average of the means between the highest and lowest sales prices per share of the Common Stock as so quoted on the nearest date before and the nearest date after the date as of which fair market value is to be determined. The average should be weighted inversely by the respective numbers of trading days between the selling dates and the date as of which fair market value is to be determined. If there are no such sale price quotations on or within a reasonable period both before and after the date as of which fair market value is to be determined, then fair market value of the Common Stock shall be the mean between the bona fide bid and asked prices per share of Common Stock as so quoted for such date on NASDAQ, or if none, the weighted average of the means between such bona fide bid and asked prices on the nearest trading date before and the

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nearest trading date after the date as of which fair market value is to be determined, if both such dates are within a reasonable period. The average is to be determined in the manner described above in this Section 5(H). If the fair market value of the Common Stock cannot be determined on the basis previously set forth in this Section 5(H) for the date as of which fair market value is to be determined, the Committee shall in good faith determine the fair market value of the Common Stock on such date. Fair market value shall be determined without regard to any restriction other than a restriction which, by its terms, will never lapse.

(I) If Units are outstanding as of the record date for determination of the stockholders of the Company entitled to receive a cash dividend on its outstanding shares of Common Stock, on the date of payment of the dividend or distribution to holders of the Common Stock, each Unit Account shall be credited with a number of shares of Common Stock (including fractional shares) equal to the number of shares of Common Stock that had been credited to such Unit Account on the date fixed for determining the stockholders entitled to receive such dividend or distribution multiplied by the amount of the dividend or distribution paid per share of Common Stock divided by the Fair Market Value of one share of the Common Stock, as defined in Section 5(H) hereof, on the date on which the dividend or distribution is paid. If the dividend or distribution is not paid in cash but is paid in property other than Common Stock, the amount of the dividend or distribution shall equal the fair market value of the property on the date on which the dividend or distribution is paid. All Units which are credited from dividends shall be paid in cash upon a grantee’s separation from service as director at the same time payment is made under Section 5(B) of the Plan.

Subject to the foregoing provisions of this Section 5 and the other provisions of the Plan, Units granted under the Plan shall be subject to such restrictions and other terms and conditions, if any, as shall be determined, in its discretion, by the Board and set forth in the agreement referred to in Section 5(F), or an amendment thereto.

SECTION 6

Nature of Units

Units are not shares of the Company. Units do not have any voting or liquidation rights. A grantee will have no

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rights of a stockholder of the Company with respect to any Units. Except as provided in Section 7 below, a grantee shall have no rights by reason of any issue by the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class.

The Plan constitutes a mere promise by the Company to make payments in the future. The Company’s obligations under the Plan shall be unfunded and unsecured promises to pay. The Company shall not be obligated under any circumstance to fund its financial obligations under the Plan. The Company may, in its discretion, set aside funds in a trust, in brokerage accounts, or in other vehicles, subject to the claims of its creditors, in order to assist it in meeting its obligations under the Plan, if such arrangement will not cause the Plan to be considered a funded deferred compensation plan under ERISA or the Code. To the extent that any grantee or other person acquires a right to receive payments under the Plan, such right shall be no greater than the right, and each such person shall at all times have the status, of a general unsecured creditor of the Company.

SECTION 7

Adjustment and Substitution of Units

If a dividend or other distribution shall be declared upon the Common Stock payable in shares of the Common Stock, the number of Units set forth in Section 2 and the number of Units then held by non-employee Directors shall be adjusted by adding thereto a number of Units equal to the number of shares which would have been distributable on such Units if such Units were shares outstanding on the date fixed for determining the stockholders entitled to receive such stock dividend or distribution.

In the event that the outstanding Common Stock shall be changed in number, class or character by reason of any split-up, change of par value, stock dividend, combination or reclassification of shares, merger, consolidation or other corporate change, or shall be changed in value by reason of any spin-off, dividend in partial liquidation or other special distribution, the Board shall make such changes as it may deem equitable in outstanding Units awarded pursuant to the Plan and the number and character of Units available for future awards.

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SECTION 8

Effect of the Plan on the

Rights of Company and Stockholders

Nothing in the Plan, in any Units granted under the Plan, or in any Unit agreement shall confer any right to any person to continue as a Director of the Company or interfere in any way with the rights of the stockholders of the Company or the Board of Directors to elect and remove Directors.

SECTION 9

Amendment and Termination

The right to alter and amend the Plan at any time and from time to time and the right to revoke or terminate the Plan are hereby specifically reserved to the Board; provided, that no amendment of the Plan shall (a) be made without stockholder approval if stockholder approval of the amendment is at the time required for Units under the Plan to qualify for the exemption from Section 16(b) of the 1934 Act provided by Rule 16b-3 or by the rules of the NASDAQ National Market System or any stock exchange on which the Common Stock may then be listed, (b) amend more than once every six months the provisions of the Plan relating to the selection of the Directors to whom Units are to be granted, the timing of such grants, the number of Units to be granted (including the dollar value used to calculate the Units to be granted), the time at which the Units may be exercised and the term of any Units other than to comport with changes in the Code or the rules and regulations thereunder or (c) otherwise amend the Plan in any manner that would cause Units under the Plan not to qualify for the exemption provided by Rule 16b-3. No alteration, amendment, revocation or termination of the Plan shall, without the written consent of the holder of Units theretofore granted under the Plan, adversely affect the rights of such holder with respect thereto.

Notwithstanding anything contained in the preceding paragraph or any other provision of the Plan or any Unit agreement, the Board shall have the power to amend the Plan in any manner deemed necessary or advisable for Units granted under the Plan to qualify for the exemption provided by Rule 16b-3 (or any successor rule relating to exemption from Section 16(b) of the 1934 Act), and any such amendment shall, to the extent deemed necessary or advisable by the Board, be applicable to any outstanding Units theretofore granted under the Plan notwithstanding any contrary provisions contained in any Unit agreement. In the event of any such amendment to the Plan, the

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holder of any Unit outstanding under the Plan shall, upon request of the Board and as a condition to the exercisability of such Unit, execute a conforming amendment in the form prescribed by the Board to the Unit agreement referred to in Section 5(F) within such reasonable time as the Board shall specify in such request.

SECTION 10

Governing Law

The Plan shall be governed by and interpreted in accordance with the laws of the Commonwealth of Pennsylvania.

SECTION 11

Effective Date and Duration of Plan

The effective date and date of adoption of the Plan shall be March 15, 1999. No Units may be granted under the Plan subsequent to March 14, 2009.

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EX-10.3

Exhibit 10.3

CALGON CARBON CORPORATION

1993 NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN

(as amended through September 13, 2005)

The purposes of the 1993 Non-Employee Directors’ Stock Option Plan (the “Plan”) are to promote the long-term success of Calgon Carbon Corporation (the “Company”) by creating a long-term mutuality of interests between the non-employee Directors and stockholders of the Company, to provide an additional inducement for such Directors to remain with the Company and to provide a means through which the Company may attract able persons to serve as Directors of the Company.

SECTION 1

Administration

The Plan shall be administered by a Committee (the “Committee”) appointed by the Board of Directors of the Company (the “Board”) and consisting of not less than two members of the Board. The Committee shall keep records of action taken at its meetings. A majority of the Committee shall constitute a quorum at any meeting, and the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by a majority of the Committee, shall be the acts of the Committee.

The Committee shall interpret the Plan and prescribe such rules, regulations and procedures in connection with the operations of the Plan as it shall deem to be necessary and advisable for the administration of the Plan consistent with the purposes of the Plan. All questions of interpretation and application of the Plan, or as to stock options granted under the Plan, shall be subject to the determination of the Committee, which shall be final and binding.

Notwithstanding the above, the selection of the Directors to whom stock options are to be granted, the timing of such grants, the number of shares subject to any stock option, the exercise price of any stock option, the vesting or forfeiture of any stock option, the periods during which any stock option may be exercised and the term of any stock option shall be as hereinafter provided, and the Committee shall have no discretion as to such matters.

SECTION 2

Shares Available under the Plan

The aggregate number of shares which may be issued or delivered and as to which grants of stock options may be made under the Plan, effective from the date of amendment and restatement of Plan, is 978,500 shares of the Common Stock, $.01 par value, of the Company (the “Common Stock”) (consisting of 434,677 shares of Common Stock reserved for outstanding stock options and 543,823 shares of Common Stock available for stock options which have not yet been granted), subject to adjustment and substitution as set forth in Section 5. If any stock option granted under the Plan is cancelled by mutual consent, is forfeited or terminates or expires for any reason without having been exercised in full, the number of shares subject thereto shall again be available for purposes of the Plan. The shares which may be issued or delivered under the Plan may be either authorized but unissued shares or reacquired shares or partly each, as shall be determined from time to time by the Board.

SECTION 3

Grant of Stock Options

On the first business day following the day of each annual meeting of the stockholders of the Company, each person who is then a member of the Board and who is not then an employee of the Company or any of its subsidiaries (a “non-employee Director”) shall automatically and without further action by the Board or the Committee be granted a “nonstatutory stock option” (i.e., a stock option which does not qualify under Sections 422 or 423 of the Internal Revenue Code of 1986 (the “Code”)) to purchase the Calculated Number (as defined below) of shares of Common Stock, subject to adjustment and substitution as set forth in Section 5. As used herein, “Calculated Number” shall mean the number of options for shares of Common Stock of the Company having a then current option value of $25,000, calculated using the Black-Scholes formula for option value (or such successor formula as may exist from time to time), with such calculation being accomplished by or on behalf of the Company on April 1 (or the next business day thereafter if April 1 is not a business day) of each year for the next succeeding option grant. If the number of shares then remaining available for the grant of stock options under the Plan is not sufficient for each non-employee Director to be granted an option for the number of shares to which such non-employee Director is entitled (or the number of adjusted or substituted shares pursuant to Section 5), then each non-employee Director shall be granted an option for a number of whole shares equal to the number of shares then remaining times a percentage obtained by dividing the number of option shares to which such non-employee Director is entitled by the total number of option shares to be granted to all non-employee Directors at such time, disregarding any fractions of a share.

On the day that each person who was not prior thereto a member of the Board and who is not then an employee of the Company or any of its subsidiaries is elected to the Board, other than such person being elected at an Annual Meeting of the Company (the “Join Date”), such person shall automatically and without further action by the Board be granted a nonstatutory stock option to purchase a pro rata share of the last Calculated Number of shares of Common Stock based upon the number of months from the Join Date until the anniversary of the last Annual Meeting, rounded to the nearest 1,000 shares (and rounded downward at 500 shares), subject to adjustment and substitution as set forth in Section 5. As an example of the foregoing, for an Annual Meeting anniversary date in April, with a new Director elected in July, such Director would be entitled to 75% of the Calculated Amount (July is nine months before April), and 9 ÷ 12 = 75%.

SECTION 4

Terms and Conditions of Stock Options

Stock options granted under the Plan shall be subject to the following terms and conditions:

(A) The purchase price at which each stock option may be exercised (the “option price”) shall be one hundred percent (100%) of the fair market value per share of the Common Stock on the date of the grant of stock options pursuant to the Plan, determined as provided in Section 4(G).

(B) The option price for each stock option shall be paid in full upon exercise and shall be payable in cash in United States dollars (including check, bank draft or money order), which may include cash forwarded through a broker or other agent-sponsored exercise or financing program; provided, however, that in lieu of such

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cash the person exercising the stock option may pay the option price in whole or in part by delivering to the Company shares of the Common Stock having a fair market value on the date of exercise of the stock option, determined as provided in Section 4(G), equal to the option price for the shares being purchased; except that (i) any portion of the option price representing a fraction of a share shall in any event be paid in cash and (ii) no shares of the Common Stock which have been held for less than one year may be delivered in payment of the option price of a stock option. If the person exercising a stock option participates in a broker or other agent-sponsored exercise or financing program, the Company will cooperate with all reasonable procedures of the broker or other agent to permit participation by the person exercising the stock option in the exercise or financing program. Notwithstanding any procedure of the broker or other agent-sponsored exercise or financing program, if the option price is paid in cash, the exercise of the stock option shall not be deemed to occur and no shares of the Common Stock will be issued or delivered until the Company has received full payment in cash (including check, bank draft or money order) for the option price from the broker or other agent. The date of exercise of a stock option shall be determined under procedures established by the Committee, and as of the date of exercise the person exercising the stock option shall be considered for all purposes to be the owner of the shares with respect to which the stock option has been exercised. Payment of the option price with shares shall not increase the number of shares of the Common Stock which may be issued or delivered under the Plan as provided in Section 2.

(C) Stock options granted hereunder shall vest and be exercisable six months following the date of grant, except in the case of death as provided in Section 4(E); provided, however, that the stock options granted in 1997 shall vest and be exercisable in accordance with the Plan prior to its amendment and restatement. Subject to the terms of Section 4(E) providing for earlier termination of a stock option, no stock option shall be exercisable after the expiration of ten years from the date of grant. A stock option to the extent exercisable at any time may be exercised in whole or in part.

(D) No stock option shall be transferable by the grantee otherwise than by Will, or if the grantee dies intestate, by the laws of descent and distribution of the state of domicile of the grantee at the time of death. All stock options shall be exercisable during the lifetime of the grantee only by the grantee or the grantee’s guardian or legal representative.

(E) If a grantee ceases to be a Director of the Company, any outstanding stock options held by the grantee shall vest and be exercisable and shall terminate, according to the following provisions:

(i) If a grantee ceases to be a Director of the Company for any reason other than resignation, removal for cause or death, any then outstanding stock option held by such grantee shall be exercisable by the grantee (but only to the extent that such stock option is vested and exercisable by the grantee immediately prior to ceasing to be a Director) at any time prior to the expiration date of such stock option or within one year after the date the grantee ceases to be a Director, whichever is the shorter period;

(ii) If during his term of office as a Director a grantee resigns from the Board or is removed from office for cause, any then outstanding stock option held by such grantee shall be exercisable by the grantee (but only to the extent that such stock option is vested and exercisable by the grantee immediately prior to ceasing to be a Director) at any time prior to the expiration date of such

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stock option or within 90 days after the date of resignation or removal, whichever is the shorter period;

(iii) Following the death of a grantee during service as a Director of the Company, any outstanding stock option held by the grantee at the time of death (whether or not vested and exercisable by the grantee immediately prior to death) shall vest and be exercisable by the person entitled to do so under the Will of the grantee, or, if the grantee shall fail to make testamentary disposition of the stock option or shall die intestate, by the legal representative of the grantee at any time prior to the expiration date of such stock option or within one year after the date of death, whichever is the shorter period;

(iv) Following the death of a grantee after ceasing to be a Director (but only to the extent that such stock option is vested and exercisable by the grantee immediately prior to ceasing to be a Director), any outstanding stock option held by the grantee at the time of death shall vest and be exercisable by such person entitled to do so under the Will of the grantee or by such legal representative at any time prior to the expiration date of such stock option or within one year after the date of death, whichever is the shorter period.

(F) All stock options shall be confirmed by an agreement, or an amendment thereto, which shall be executed on behalf of the Company by the Chief Executive Officer (if other than the President), the President or any Vice President and by the grantee.

(G) Fair market value of the Common Stock shall be the mean between the following prices, as applicable, for the date as of which fair market value is to be determined as quoted in The Wall Street Journal (or in such other reliable publication as the Committee, in its discretion, may determine to rely upon): (a) if the Common Stock is listed on the New York Stock Exchange, the highest and lowest sales prices per share of the Common Stock as quoted in the NYSE-Composite Transactions listing for such date, (b) if the Common Stock is not listed on such exchange, the highest and lowest sales prices per share of Common Stock for such date on (or on any composite index including) the principal United States securities exchange registered under the Securities Exchange Act of 1934 (the “1934 Act”) on which the Common Stock is listed, or (c) if the Common Stock is not listed on any such exchange, the highest and lowest sales prices per share of the Common Stock for such date on the National Association of Securities Dealers Automated Quotations System or any successor system then in use (“NASDAQ”). If there are no such sale price quotations for the date as of which fair market value is to be determined but there are such sale price quotations within a reasonable period both before and after such date, then fair market value shall be determined by taking a weighted average of the means between the highest and lowest sales prices per share of the Common Stock as so quoted on the nearest date before and the nearest date after the date as of which fair market value is to be determined. The average should be weighted inversely by the respective numbers of trading days between the selling dates and the date as of which fair market value is to be determined. If there are no such sale price quotations on or within a reasonable period both before and after the date as of which fair market value is to be determined, then fair market value of the Common Stock shall be the mean between the bona fide bid and asked prices per share of Common Stock as so quoted for such date on NASDAQ, or if none, the weighted average of the means between such bona fide bid and asked prices on the nearest trading date before and the nearest trading date after the date as of which fair market value is to be determined, if both such dates are within a reasonable period. The average is to be determined in the manner described above in

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this Section 4(G). If the fair market value of the Common Stock cannot be determined on the basis previously set forth in this Section 4(G) for the date as of which fair market value is to be determined, the Committee shall in good faith determine the fair market value of the Common Stock on such date. Fair market value shall be determined without regard to any restriction other than a restriction which, by its terms, will never lapse.

(H) The obligation of the Company to issue or deliver shares of the Common Stock under the Plan shall be subject to (i) the effectiveness of a registration statement under the Securities Act of 1933, as amended, with respect to such shares, if deemed necessary or appropriate by counsel for the Company, (ii) the condition that the shares shall have been listed (or authorized for listing upon official notice of issuance) upon each stock exchange, if any, on which the Common Stock shares may then be listed and (iii) all other applicable laws, regulations, rules and orders which may then be in effect.

Subject to the foregoing provisions of this Section 4 and the other provisions of the Plan, any stock option granted under the Plan may be subject to such restrictions and other terms and conditions, if any, as shall be determined, in its discretion, by the Committee and set forth in the agreement referred to in Section 4(F), or an amendment thereto.

SECTION 5

Adjustment and Substitution of Shares

If a dividend or other distribution shall be declared upon the Common Stock payable in shares of the Common Stock, the number of shares of the Common Stock set forth in Section 3, the number of shares of the Common Stock then subject to any outstanding stock options and the number of shares of the Common Stock which may be issued or delivered under the Plan but are not then subject to outstanding stock options shall be adjusted by adding thereto the number of shares of the Common Stock which would have been distributable thereon if such shares had been outstanding on the date fixed for determining the stockholders entitled to receive such stock dividend or distribution.

If the outstanding shares of the Common Stock shall be changed into or exchangeable for a different number or kind of shares of stock or other securities of the Company or another corporation, whether through reorganization, reclassification, recapitalization, stock split-up, combination of shares, merger or consolidation, then there shall be substituted for each share of the Common Stock set forth in Section 3, for each share of the Common Stock subject to any then outstanding stock option, and for each share of the Common Stock which may be issued or delivered under the Plan but which is not then subject to any outstanding stock option, the number and kind of shares of stock or other securities into which each outstanding share of the Common Stock shall be so changed or for which each such share shall be exchangeable.

In case of any adjustment or substitution as provided for in this Section 5, the aggregate option price for all shares subject to each then outstanding stock option prior to such adjustment or substitution shall be the aggregate option price for all shares of stock or other securities (including any fraction) to which such shares shall have been adjusted or which shall have been substituted for such shares. Any new option price per share shall be carried to at least three decimal places with the last decimal place rounded upwards to the nearest whole number.

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No adjustment or substitution provided for in this Section 5 shall require the Company to issue or deliver or sell a fraction of a share or other security. Accordingly, all fractional shares or other securities which result from any such adjustment or substitution shall be eliminated and not carried forward to any subsequent adjustment or substitution.

SECTION 6

Effect of the Plan on the Rights of Company and Stockholders

Nothing in the Plan, in any stock option granted under the Plan, or in any stock option agreement shall confer any right to any person to continue as a Director of the Company or interfere in any way with the rights of the stockholders of the Company or the Board of Directors to elect and remove Directors.

SECTION 7

Amendment and Termination

The right to amend the Plan at any time and from time to time and the right to terminate the Plan at any time are hereby specifically reserved to the Board; provided always that no such termination shall terminate any outstanding stock options granted under the Plan; and provided further that no amendment of the Plan shall (a) be made without stockholder approval if stockholder approval of the amendment is at the time required for stock options under the Plan to qualify for the exemption from Section 16(b) of the 1934 Act provided by Rule 16b-3 or by the rules of the NASDAQ National Market System or any stock exchange on which the Common Stock may then be listed, (b) amend more than once every six months the provisions of the Plan relating to the selection of the Directors to whom stock options are to be granted, the timing of such grants, the number of shares subject to any stock option, the exercise price of any stock option, the periods during which any stock option may be exercised and the term of any stock option other than to comport with changes in the Code or the rules and regulations thereunder or (c) otherwise amend the Plan in any manner that would cause stock options under the Plan not to qualify for the exemption provided by Rule 16b-3. No amendment or termination of the Plan shall, without the written consent of the holder of a stock option theretofore awarded under the Plan, adversely affect the rights of such holder with respect thereto.

Notwithstanding anything contained in the preceding paragraph or any other provision of the Plan or any stock option agreement, the Board shall have the power to amend the Plan in any manner deemed necessary or advisable for stock options granted under the Plan to qualify for the exemption provided by Rule 16b-3 (or any successor rule relating to exemption from Section 16(b) of the 1934 Act), and any such amendment shall, to the extent deemed necessary or advisable by the Board, be applicable to any outstanding stock options theretofore granted under the Plan notwithstanding any contrary provisions contained in any stock option agreement. In the event of any such amendment to the Plan, the holder of any stock option outstanding under the Plan shall, upon request of the Committee and as a condition to the exercisability of such option, execute a conforming amendment in the form prescribed by the Committee to the stock option agreement referred to in Section 4(F) within such reasonable time as the Committee shall specify in such request.

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SECTION 8

Effective Date and Duration of Plan

The effective date and date of adoption of the Plan shall be February 11, 1993, the date of adoption of the Plan by the Board, such Plan having been thereafter also approved by the stockholders of the Company, and the effective date and date of adoption of the amendment and restatement of the Plan shall be February 4, 2005, the date of adoption of the same by the Board, provided that the amendment and restatement is approved by the stockholders at a meeting of stockholders duly called, convened and held on or prior to January 31, 2006, at which a quorum representing a majority of the outstanding voting stock of the Company is, either in person or by proxy, present and voting on the Plan. No stock option granted under the Plan on or after February 4, 2005 may be exercised until after such approval; provided, that the foregoing shall not apply to stock options granted with shares which were available under the Plan prior to the amendment and restatement of the Plan on February 4, 2005. No stock option may be granted under the Plan subsequent to January 31, 2015.

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EX-10.4

Exhibit 10.4

CALGON CARBON CORPORATION

1997 DIRECTORS’ FEE PLAN

(as amended through January 1, 2005)

SECTION 1

PURPOSE; RESERVATION OF SHARES

The purposes of the 1997 Directors’ Fee Plan (the “Plan”) are to provide each Director of Calgon Carbon Corporation (the “Corporation”) who is not also an employee of the Corporation or its Subsidiaries (a “Director”) with payment alternatives for retainer (but not meeting) fees payable for future services as a member of the Board of Directors of the Corporation (hereinafter referred to as the “Board”) or as the Chairman of any committee thereof (“Director Fees”) and to increase the identification of interests between such Directors and the stockholders of the Corporation by providing Directors the opportunity to elect to receive payment of Director Fees in shares of Common Stock, par value $.01 per share, of the Corporation (“Common Stock”). For purposes of the Plan, the term “Subsidiary” means any corporation in an unbroken chain of corporations beginning with the Corporation, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in the chain. The aggregate number of shares of Common Stock which may be issued under Current Stock Elections or credited to Deferred Stock Compensation Accounts for subsequent issuance under the Plan is limited to 100,000 shares, subject to adjustment and substitution as set forth in Section 4(b).

SECTION 2

ELIGIBILITY

Any non-employee Director of the Corporation who is separately compensated in the form of Director Fees for services on the Board or as the Chairman of any committee of the Board shall be eligible to participate in the Plan.

SECTION 3

DIRECTOR FEES; ELECTIONS

(a) Payment Date. Director Fees shall be paid by the Corporation on the twentieth day (or the next business day thereafter, if such day is not a business day) after the annual meeting of the Corporation in each calendar year. If a Director dies or otherwise ceases service as a Director prior to the above-stated payment date, no such payment shall be made to the Director.

(b) Director Fee Payment Alternatives. For each calendar year beginning January 1, 1998, a Director may elect any one of the following alternatives for the payment of Director Fees:

(1) to receive current payment in cash, on the date on which the Director Fees are payable, of all Director Fees in such calendar year;

(2) to receive current payment in shares of Common Stock, on the date on which the Director Fees are payable, of all Director Fees in such calendar year (a “Current Stock Election”);

(3) to defer payment of all the Director Fees in such calendar year for subsequent payment in shares of Common Stock (a “Stock Deferral Election”).

(c) Filing and Effectiveness of Elections. The election by a Director to receive payment of Director Fees other than in cash on the date on which the Director Fees are otherwise payable is made by filing with the Secretary of the Corporation a Notice of Election in the form prescribed by the Corporation (an “Election”). In order to be effective for any calendar year, an Election must be received by the Secretary of the Corporation on or before December 31 of the preceding calendar year, except that if a Director files a Notice of Election on or before five days subsequent to the Director’s initial election to the office of Director, or any subsequent re-election if immediately prior thereto such person was not serving as a Director, the Election shall be effective on the date of filing with respect to Director Fees payable for any portion of the calendar year which remains at the date of such filing. An Election may not be modified or terminated after the beginning of a calendar year for which it is effective. Unless modified or terminated by filing a new Notice of Election on or before December 31 immediately preceding the calendar year for which such modification or termination is effective, an Election shall be effective for and apply to Director Fees payable for each subsequent calendar year. Director Fees earned at any time for which an Election is not effective shall be paid in cash on the date when the Director Fees are otherwise payable. Any Election shall terminate on the date a Director ceases to be a member of the Board.

(d) Current Stock Elections. During the period a Current Stock Election is effective, all Director Fees payable shall be paid by the issuance to the Director of a number of whole shares of Common Stock equal to (x) the cash amount of the Director Fees payable divided by (y) the Fair Market Value of one share of the Common Stock, as defined in Section 10 hereof, on the date on which such Director Fees are payable. Any fractional shares shall be rounded down to the next whole share. The Corporation shall issue share certificates to the Director for the shares of Common Stock acquired. As of the date on which the Director Fees are payable in shares of Common Stock, the Director shall be a stockholder of the Corporation with respect to such shares.

(e) Stock Deferral Elections. Director Fees deferred pursuant to a Stock Deferral Election shall be deferred and paid as provided in Sections 4 and 5. A Stock Deferral Election shall apply to all Director Fees otherwise payable with respect to a calendar year, or portion thereof, for which such Stock Deferral Election is effective.

SECTION 4

DEFERRED STOCK COMPENSATION ACCOUNT

(a) General. The amount of any Director Fees deferred in accordance with a Stock Deferral Election shall be credited to a deferred stock compensation account maintained by the Corporation in the name of the Director (a “Deferred Stock Compensation Account”). A separate Deferred Stock Compensation Account shall be maintained for each calendar year for which a Director has elected a different number of payment installments or as otherwise determined by the Board. On each date on which Director Fees are otherwise payable and a Stock Deferral Election is effective for a Director, the Director’s Deferred Stock Compensation Account for that calendar year shall be credited with a number of shares of Common Stock (including fractional shares) equal to (x) the cash amount of the Director Fees payable divided by (y) the Fair Market Value of one share of the Common Stock, as defined in Section 10 hereof, on the date on which such Director Fees are payable. If a dividend or distribution is paid on the Common Stock in cash or property other than Common Stock, on the date

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of payment of the dividend or distribution to holders of the Common Stock each Deferred Stock Compensation Account shall be credited with a number of shares of Common Stock (including fractional shares) equal to the number of shares of Common Stock credited to such Account on the date fixed for determining the stockholders entitled to receive such dividend or distribution times the amount of the dividend or distribution paid per share of Common Stock divided by the Fair Market Value of one share of the Common Stock, as defined in Section 10 hereof, on the date on which the dividend or distribution is paid. If the dividend or distribution is paid in property, the amount of the dividend or distribution shall equal the fair market value of the property on the date on which the dividend or distribution is paid. The Deferred Stock Compensation Account of a Director shall be charged on the date of distribution with any distribution of shares of Common Stock made to the Director from such Account pursuant to Section 4(c) hereof.

(b) Adjustment and Substitution. The number of shares of Common Stock credited to each Deferred Stock Compensation Account, and the number of shares of Common Stock available for issuance or crediting under the Plan in each calendar year in accordance with Section 1 hereof, shall be proportionately adjusted to reflect any dividend or other distribution on the outstanding Common Stock payable in shares of Common Stock or any split or consolidation of the outstanding shares of Common Stock. If the outstanding Common Stock shall, in whole or in part, be changed into or exchangeable for a different class or classes of securities of the Corporation or securities of another corporation or cash or property other than Common Stock, whether through reorganization, reclassification, recapitalization, merger, consolidation or otherwise, the Board shall adopt such amendments to the Plan as it deems necessary to carry out the purposes of the Plan, including the continuing deferral of any amount of any Deferred Stock Compensation Account.

(c) Manner of Payment. The balance of a Director’s Deferred Stock Compensation Account will be paid in shares of Common Stock to the Director or, in the event of the Director’s death, to the Director’s designated beneficiary, in accordance with the Stock Deferral Election. A Director may elect at the time of filing of the Notice of Election for a Stock Deferral Election to receive payment of the shares of Common Stock credited to the Director’s Deferred Stock Compensation Account in annual installments rather than a lump sum, provided that the payment period for installment payments shall not exceed ten years following the Payment Commencement Date as described in Section 5 hereof. The number of shares of Common Stock distributed in each installment shall be determined by multiplying (i) the number of shares of Common Stock in the Deferred Stock Compensation Account on the date of payment of such installment, by (ii) a fraction, the numerator of which is one and the denominator of which is the number of remaining unpaid installments, and by rounding such result down to the nearest whole number of shares. The balance of the number of shares of Common Stock in the Deferred Stock Compensation Account shall be appropriately reduced in accordance with Section 4(a) hereof to reflect the installment payments made hereunder. Shares of Common Stock remaining in a Deferred Stock Compensation Account pending distribution pursuant to this Section 4(c) shall continue to be credited with respect to dividends or distributions paid on the Common Stock pursuant to Section 4(a) hereof and shall be subject to adjustment pursuant to Section 4(b) hereof. If a lump sum payment or the final installment payment hereunder would result in the issuance of a fractional share of Common Stock, such fractional share shall not be issued and cash in lieu of such fractional share shall be paid to the Director based on the Fair Market Value of a share of Common Stock, as defined in Section 10 hereof, on the date immediately preceding the date of such payment. The Corporation shall issue share certificates to the Director, or the Director’s designated beneficiary, for the shares of Common Stock distributed hereunder. As of the date on which the Director is entitled to receive payment of shares of Common Stock, a Director shall be a stockholder of the Corporation with respect to such shares.

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SECTION 5

PAYMENT COMMENCEMENT DATE

Payment of amounts in a Deferred Stock Compensation Account shall commence on March 30 (or if March 30 is not a business day, on the first preceding business day) of the calendar year following the calendar year during which the Director ceases to be a member of the Board for any reason, including death or disability.

SECTION 6

BENEFICIARY DESIGNATION

A Director may designate, in the Beneficiary Designation form prescribed by the Corporation, any person to whom payments of shares of Common Stock are to be made if the Director dies before receiving payment of all amounts due hereunder. A beneficiary designation will be effective only after the signed beneficiary designation form is filed with the Secretary of the Corporation while the Director is alive and will cancel all beneficiary designations signed and filed earlier. If the Director fails to designate a beneficiary, or if all designated beneficiaries of the Director die before the Director or before complete payment of all amounts due hereunder, any remaining unpaid amounts shall be paid in one lump sum to the estate of the last to die of the Director or the Director’s designated beneficiaries, if any.

SECTION 7

NON-ALIENABILITY OF BENEFITS

Neither the Director nor any beneficiary designated by the Director shall have the right to, directly or indirectly, alienate, assign, transfer, pledge, anticipate or encumber (except by reason of death) any amount that is or may be payable hereunder, nor shall any such amount be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Director or the Director’s designated beneficiary or to the debts, contracts, liabilities, engagements, or torts of any Director or designated beneficiary, or transfer by operation of law in the event of bankruptcy or insolvency of the Director or any beneficiary, or any legal process.

SECTION 8

NATURE OF DEFERRED ACCOUNTS

Any Deferred Stock Compensation Account and any cash fractional amount accumulated under Section 3(d) shall be established and maintained only on the books and records of the Corporation, and no assets or funds of the Corporation or the Plan or shares of Common Stock of the Corporation shall be removed from the claims of the Corporation’s general or judgment creditors or otherwise made available until such amounts are actually payable to Directors or their designated beneficiaries as provided herein. The Plan constitutes a mere promise by the Corporation to make payments in the future. The Directors and their designated beneficiaries shall have the status of, and their rights to receive a payment of cash or shares of Common Stock under the Plan shall be no greater than the rights of, general unsecured creditors of the Corporation. No person shall be entitled to any voting rights with respect to shares credited to a Deferred Stock Compensation Account and not yet payable to a Director or the Director’s designated beneficiary. The Corporation shall not be obligated under any circumstance to fund its financial obligations under the Plan, and the Plan is intended to constitute an unfunded plan for tax purposes. However, the Corporation may, in its discretion, set aside funds in a trust or other vehicle, subject to the claims of its creditors, in order to assist it in

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meeting its obligations under the Plan, if such arrangement will not cause the Plan to be considered a funded deferred compensation plan under the Internal Revenue Code of 1986, as amended.

SECTION 9

ADMINISTRATION OF PLAN; HARDSHIP WITHDRAWAL

Full power and authority to construe, interpret, and administer the Plan shall be vested in the Board. Decisions of the Board shall be final, conclusive, and binding upon all parties. Notwithstanding the terms of a Stock Deferral Election made by a Director hereunder, the Board may, in its sole discretion, permit the withdrawal of shares credited to a Deferred Stock Compensation Account with respect to Director Fees previously payable, upon the request of a Director or the Director’s representative, or following the death of a Director upon the request of a Director’s beneficiary or such beneficiary’s representative, if such Board determines that the Director or the Director’s beneficiary, as the case may be, is confronted with an unforeseeable emergency. For this purpose, an unforeseeable emergency is a severe financial hardship of the Director or beneficiary resulting from an illness or accident of the Director or beneficiary, the Director’s or beneficiary’s spouse, or the Director’s or beneficiary’s dependent (as defined in section 152(a) of the Code); loss of the Director’s or beneficiary’s property due to casualty; or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Director or beneficiary. The Director or the Director’s beneficiary shall provide to such Board such evidence as the Board, in its discretion, may require to demonstrate that such emergency exists and financial hardship would occur if the withdrawal were not permitted. The withdrawal shall be limited to the number of shares necessary to meet the emergency plus amounts necessary to pay taxes as a result of the distribution. Cash needs arising from foreseeable events, such as the purchase or building of a house or education expenses, will not be considered to be the result of an unforeseeable financial emergency. Further, a hardship shall not be deemed to exist if it may be relieved (i) through reimbursement or compensation by insurance or otherwise, (ii) by liquidation of the Director’s assets (to the extent such liquidation would not cause severe financial hardship to the Director) or (iii) by ceasing deferrals under the Plan. Payment shall be made as soon as practicable after the Board approves the payment and determines the number of shares which shall be withdrawn, in a single lump sum from the portion of the Deferred Stock Compensation Account with the longest number of installment payments first. No Director shall participate in any decision of the Board regarding such Director’s request for a withdrawal under this Section 9.

SECTION 10

FAIR MARKET VALUE

Fair market value of the Common Stock shall be the mean between the following prices, as applicable, for the date as of which fair market value is to be determined as quoted in The Wall Street Journal (or in such other reliable publication as the Board or its delegate, in its discretion, may determine to rely upon): (a) if the Common Stock is listed on the New York Stock Exchange, the highest and lowest sales prices per share of the Common Stock as quoted in the NYSE-Composite Transactions listing for such date, (b) if the Common Stock is not listed on such exchange, the highest and lowest sales prices per share of Common Stock for such date on (or on any composite index including) the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended (the “1934 Act”) on which the Common Stock is listed, or (c) if the Common Stock is not listed on any such exchange, the highest and lowest sales prices per share of the Common Stock for such date on the National Association of Securities Dealers Automated Quotations System or any successor system then in use (“NASDAQ”). If there are no such sale price quotations for the date as of which fair market value is to be determined but there are such sale price quotations within a reasonable period both before and after such date, then fair market value shall be

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determined by taking a weighted average of the means between the highest and lowest sales prices per share of the Common Stock as so quoted on the nearest date before and the nearest date after the date as of which fair market value is to be determined. The average should be weighted inversely by the respective numbers of trading days between the selling dates and the date as of which fair market value is to be determined. If there are no such sale price quotations on or within a reasonable period both before and after the date as of which fair market value is to be determined, then fair market value of the Common Stock shall be the mean between the bona fide bid and asked prices per share of Common Stock as so quoted for such date on NASDAQ, or if none, the weighted average of the means between such bona fide bid and asked prices on the nearest trading date before and the nearest trading date after the date as of which fair market value is to be determined, if both such dates are within a reasonable period. The average is to be determined in the manner described above in this Section 10. If the fair market value of the Common Stock cannot be determined on the basis previously set forth in this Section 10 on the date as of which fair market value is to be determined, the Board or its delegate shall in good faith determine the fair market value of the Common Stock on such date. Fair market value shall be determined without regard to any restriction other than a restriction which, by its terms, will never lapse.

SECTION 11

SECURITIES LAWS; ISSUANCE OF SHARES

The obligation of the Corporation to issue or credit shares of Common Stock under the Plan shall be subject to (i) the effectiveness of a registration statement under the Securities Act of 1933, as amended, with respect to such shares, if deemed necessary or appropriate by counsel for the Corporation, (ii) the condition that the shares shall have been listed (or authorized for listing upon official notice of issuance) upon each stock exchange, if any, on which the Common Stock shares may then be listed and (iii) all other applicable laws, regulations, rules and orders which may then be in effect. If, on the date on which any shares of Common Stock would be issued pursuant to a Current Stock Election or credited to a Deferred Stock Compensation Account, sufficient shares of Common Stock are not available under the Plan or the Corporation is not obligated to issue shares pursuant to this Section 11, then no shares of Common Stock shall be issued or credited but rather cash shall be paid if a Director has made Current Stock Election, and cash shall be credited to a deferral account if a Director has made a Stock Deferral Election. The Board shall adopt appropriate rules and regulations to carry out the intent of the immediately preceding sentence if the need for such rules and regulations arises.

SECTION 12

GOVERNING LAW

The provisions of this Plan shall be interpreted and construed in accordance with the laws of the Commonwealth of Pennsylvania.

SECTION 13

EFFECT OF THE PLAN ON THE RIGHTS

OF CORPORATION AND STOCKHOLDERS

Nothing in the Plan shall confer any right to any person to continue as a Director of the Corporation or interfere with the rights of the stockholders of the Corporation or the Board to elect and remove Directors.

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SECTION 14

AMENDMENT AND TERMINATION

The right to amend the Plan at any time and from time to time and the right to terminate the Plan at any time are hereby specifically reserved to the Board; provided that no amendment of the Plan shall (a) be made without stockholder approval if stockholder approval of the amendment is at the time required by the rules of the New York Stock Exchange or any other stock exchange on which the Common Stock may then be listed, or (b) otherwise amend the Plan in any manner that would cause the shares of Common Stock issued or credited under the Plan not to qualify for the exemption from Section 16(b) of the 1934 Act provided by Rule 16b-3. No amendment or termination of the Plan shall, without the written consent of the holder of shares of Common Stock issued or credited under the Plan, adversely affect the rights of such holder with respect thereto.

Notwithstanding anything contained in the preceding paragraph or any other provision of the Plan, the Board shall have the power to amend the Plan in any manner deemed necessary or advisable for shares of Common Stock issued or credited under the Plan to qualify for the exemption provided by Rule 16b-3 (or any successor rule relating to exemption from Section 16(b) of the 1934 Act), and any such amendment shall, to the extent deemed necessary or advisable by the Board, be applicable to any outstanding shares of Common Stock theretofore issued or credited under the Plan.

SECTION 15

EFFECTIVE DATE

The effective date and date of adoption of the Plan shall be December 8, 1997, the date of adoption of the Plan by the Board.

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EX-10.7

Exhibit 10.7

EXECUTION VERSION

AMENDMENT NO. 1 TO AMENDED AND RESTATED CREDIT AGREEMENT

THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 23, 2006 (this “Amendment”), among the following:

(i) CALGON CARBON CORPORATION, a Delaware corporation (herein, together with its successors and assigns, the “Borrower”);

(ii) the lending institutions signatory hereto (herein, together with its or their successors and assigns, each a “Lender” and collectively, the “Lenders”); and

(iii) NATIONAL CITY BANK OF PENNSYLVANIA, a national banking association, as a Lender, a Letter of Credit Issuer, the Swing Line Lender, as the lead arranger and book manager, as the Administrative Agent (in such capacity, the “Administrative Agent”), and the Collateral Agent.

PRELIMINARY STATEMENTS:

A. The Borrower, the Lenders, the Swing Lender and the Administrative Agent entered into the Amended and Restated Credit Agreement, dated as of January 30, 2006 (as the same may from time to time be amended, restated, amended and restated or otherwise modified, the “Credit Agreement,” with the terms defined therein, or the definitions of which are incorporated therein, being used herein as so defined).

B. The parties hereto desire to amend certain terms and provisions of the Credit Agreement, as more fully set forth below.

NOW, THEREFORE, the parties hereby agree as follows:

1. AMENDMENTS. Effective on and as of the Amendment Effective Date (as defined in Section 4 of this Amendment):

1.1 Amended Annex. Annex XI to the Credit Agreement shall be amended and restated in its entirety as set forth on Exhibit 1 attached hereto.

1.2 Amended Section. Section 10.8 of the Credit Agreement shall be amended and restated in its entirety to read as follows:

“10.9 Fixed Charge Coverage Ratio. The Borrower will not at any time permit its Fixed Charge Coverage Ratio to be less than 1.10 to 1.00 for any Testing Period; provided, however, that for any Testing Period ending December 31, 2005, March 31, 2006, June 30, 2006 or September 30, 2006, the Borrower’s Fixed Charge Coverage Ratio shall be calculated excluding from Consolidated Capital Expenditures the amount of Consolidated Reimbursable Capital Expenditures paid in cash during the applicable Testing Period; provided, further, that to the extent the Borrower does not receive casualty and/or business interruption

1

insurance proceeds in the full amount of such Consolidated Reimbursable Capital Expenditures by September 30, 2006, the Borrower’s Fixed Charge Coverage Ratio for the Testing Period ending September 30, 2006 shall be calculated to include in Consolidated Capital Expenditures the amount of Consolidated Reimbursable Capital Expenditures paid in cash for such Testing Period to the extent casualty and/or business interruption insurance proceeds have not been received.”

1.3 New Definition. Section 1.1 of the Credit Agreement shall be amended to add the following definition in the appropriate alphabetical order:

““Consolidated Reimbursable Capital Expenditures” shall mean, for any period, the aggregate of all Consolidated Capital Expenditures made or incurred by the Borrower and its Subsidiaries during that period and that have been, or the Borrower believes in good faith will be no later than September 30, 2006, reimbursed with proceeds of casualty and/or business interruption insurance.”

1.4 New Section. Section 9.1 of the Credit Agreement shall be amended to add the following section (k) thereto:

“(k) As soon as available and in any event within 45 days after the close of each of the quarterly accounting periods ending March 31, 2006, June 30, 2006 and September 30, 2006, a written report, in reasonable detail for such applicable period, setting forth the amount of Consolidated Reimbursable Capital Expenditures made or incurred in such period and the amount of casualty and/or business interruption insurance proceeds received during such period.”

2. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants to the Lenders, the Swing Line Lender, each Letter of Credit Issuer, the Administrative Agent and the Collateral Agent as follows:

2.1 Authorization and Validity of Amendment, etc. This Amendment has been duly authorized by all necessary corporate action on the part of the Borrower, has been duly executed and delivered by a duly authorized officer of the Borrower and constitutes the valid and binding agreement of the Borrower, enforceable against the Borrower in accordance with its terms.

2.2 Representations and Warranties. The representations and warranties of the Borrower contained in the Credit Agreement or in the other Credit Documents are true and correct in all material respects on and as of the date hereof as though made on and as of the date hereof, except to the extent that such representations and warranties expressly relate to an earlier specified date, in which case such representations and warranties are hereby reaffirmed as true and correct in all material respects as of the date when made.

2.3 No Event of Default. No condition or event has occurred or exists which constitutes or which, after notice or lapse of time or both, would constitute a Default or an Event of Default.

2.4 No Claims. Neither the Borrower nor any Subsidiary has any claim or offset against, or defense or counterclaim to, any of Borrower’s or any Subsidiary’s obligations or liabilities under the Credit Agreement or any other Credit Document.

2

2.5 Compliance. The Borrower is in full compliance with all covenants and agreements contained in the Credit Agreement, as amended hereby, and the other Credit Documents to which it is a party; and without limitation of the foregoing, each Subsidiary of the Borrower which, as of the date hereof, is required to be a Subsidiary Guarantor, has on or prior to the date hereof, become a Subsidiary Guarantor under the Subsidiary Guaranty.

3. RATIFICATIONS. Except as expressly modified and superseded by this Amendment, the terms and provisions of the Credit Agreement and each other Credit Document are ratified and confirmed and shall continue in full force and effect.

4. EFFECTIVENESS. The Amendments shall become effective on the date (the “Amendment Effective Date”) the following conditions shall have been satisfied:

(a) This Amendment shall have been executed by the Borrower, the Lenders and the Administrative Agent, and counterparts hereof as so executed shall have been delivered to the Administrative Agent;

(b) The Borrower shall have caused the Subsidiary Guarantors to have executed, and shall deliver to the Administrative Agent, the Guarantor Acknowledgement attached hereto; and

(c) The Borrower shall have delivered to the Administrative Agent a written report, in reasonable detail for the quarterly accounting period ending December 31, 2005, setting forth the amount of Consolidated Reimbursable Capital Expenditures made or incurred in such period and the amount of casualty and/or business interruption insurance proceeds received during such period.

Upon the satisfaction of the foregoing conditions precedent, this Amendment shall be binding upon and inure to the benefit of the Borrower, each Lender, the Swing Line Lender, each Letter of Credit Issuer, the Administrative Agent and the Collateral Agent and their respective permitted successors and assigns. After this Amendment becomes effective, the Administrative Agent shall furnish a copy of this Amendment to each Lender and the Borrower.

5. MISCELLANEOUS.

5.1 Survival of Representations and Warranties. All representations and warranties made in this Amendment shall survive the execution and delivery of this Amendment, and no investigation by the Administrative Agent or any Lender or any subsequent Loan shall affect the representations and warranties or the right of the Administrative Agent or any Lender to rely upon them.

5.2 Reference to Credit Agreement. The Credit Agreement and any and all other agreements, instruments or documentation now or hereafter executed and delivered pursuant to the terms of the Credit Agreement as amended hereby, are hereby amended so that any reference therein to the Credit Agreement shall mean a reference to the Credit Agreement as amended hereby.

5.3 Expenses. As provided in the Credit Agreement, but without limiting any terms or provisions thereof, the Borrower shall pay on demand all reasonable costs and expenses incurred by the Administrative Agent in connection with the preparation, negotiation, and execution of this Amendment, including, without limitation, the reasonable costs and fees of the Administrative Agent’s special legal counsel, regardless of whether this Amendment becomes effective in accordance with the terms hereof, and all reasonable costs and expenses incurred by the Administrative Agent, the Collateral Agent, or any

3

Lender or Letter of Credit Issuer in connection with the enforcement or preservation of any rights under the Credit Agreement, as amended hereby.

5.4 Severability. Any term or provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment, and the effect thereof shall be confined to the term or provision so held to be invalid or unenforceable.

5.5 Applicable Law. This Amendment shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to principles of conflicts of laws.

5.6 Headings. The headings, captions and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.

5.7 Entire Agreement. This Amendment is specifically limited to the matters expressly set forth herein. This Amendment and all other instruments, agreements and documentation executed and delivered in connection with this Amendment embody the final, entire agreement among the parties hereto with respect to the subject matter hereof and supersede any and all prior commitments, agreements, representations and understandings, whether written or oral, relating to the matters covered by this Amendment, and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto. There are no oral agreements among the parties hereto relating to the subject matter hereof or any other subject matter relating to the Credit Agreement.

5.8 Counterparts. This Amendment may be executed by the parties hereto separately in one or more counterparts and by facsimile signature, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement.

5.9 JURY TRIAL WAIVER. EACH OF THE PARTIES TO THIS AMENDMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AMENDMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HERETO HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AMENDMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

[Signatures follow.]

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IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as of the date first above written.

CALGON CARBON CORPORATION
By:	/s/ Leroy M. Ball
Name:	Leroy M. Ball
Title:	Vice President and Chief Financial Officer

NATIONAL CITY BANK OF PENNSYLVANIA, as a Lender, and as a Letter of Credit Issuer, the Swing Line Lender, the Administrative Agent and the Collateral Agent
By:	/s/ Ervin M. Geiger III
Name:	Ervin M. Geiger III
Title:	Senior Vice President

PNC BANK, NATIONAL ASSOCIATION
By:	/s/ Meredith S. Heavner
Name:	Meredith S. Heavner
Title:	Vice President

HARRIS N.A.
By:	/s/ Patrick McDonnell
Name:	Patrick McDonnell
Title:	Managing Director

FIRST COMMONWEALTH BANK
By:	/s/ C. Forrest Tefft
Name:	C. Forrest Tefft
Title:	Senior Vice President

FIRST NATIONAL BANK OF PENNSYLVANIA
By:	/s/ John L. Hayes IV
Name:	John L. Hayes IV
Title:	Vice President

Exhibit I

See attached.

GUARANTOR ACKNOWLEDGMENT

Each of the undersigned (collectively, the “Subsidiary Guarantors” and, individually, each a “Subsidiary Guarantor”) consents and agrees to and acknowledges the terms of the foregoing Amendment No. 1 to Amended and Restated Credit Agreement, dated as of March 23, 2006 (the “Amendment”). Each Subsidiary Guarantor specifically acknowledges the terms of and consents to the waivers, including the jury trial waiver, set forth in the Amendment. Each Subsidiary Guarantor further agrees that its obligations pursuant to the Subsidiary Guaranty that it executed in connection with the Credit Agreement shall remain in full force and effect and be unaffected hereby.

Each Subsidiary Guarantor hereby represents and warrants that there exists no claim or offset against, or defense or counterclaim to, any of its obligations or liabilities under the Credit Agreement or any other Credit Document to which it is a party.

IN WITNESS WHEREOF, this Guarantor Acknowledgment has been duly executed and delivered as of the date of the Amendment.

CALGON CARBON INVESTMENTS INC.
By:	/s/ Leroy M. Ball
Name:	Leroy M. Ball
Title:	Vice President and Chief Financial Officer
BSC COLUMBUS, LLC
By:	/s/ Leroy M. Ball
Name:	Leroy M. Ball
Title:	Vice President and Chief Financial Officer
CCC COLUMBUS, LLC
By:	/s/ Leroy M. Ball
Name:	Leroy M. Ball
Title:	Vice President and Chief Financial Officer
CCC DISTRIBUTION, LLC
By:	/s/ Leroy M. Ball
Name:	Leroy M. Ball
Title:	Vice President and Chief Financial Officer

CALGON CARBON CORPORATION,

as the Borrower

THE LENDING INSTITUTIONS NAMED HEREIN,

as Lenders

NATIONAL CITY BANK OF PENNSYLVANIA

as a Lender, a Letter of Credit Issuer, the Swing Line Lender

and as Administrative Agent and Collateral Agent

AMENDMENT NO. 1

dated as of

March 23, 2006

to

AMENDED AND RESTATED

CREDIT AGREEMENT

dated as of

January 30, 2006

EX-13

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 Framework issued 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)	Common Shares Issued	Common Shares		Additional Paid-In Capital		Retained Earnings			Deferred Compensation			Accumulated Other Comprehensive Income			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 thousands except 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:

	Weighted Average Amortization Period	December 31, 2005								December 31, 2004
		Gross Carrying Amount		Foreign Exchange			Accumulated Amortization			Gross Carrying Amount		Foreign Exchange			Accumulated Amortization
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 Carbon and Service Segment			Equipment Segment		Consumer Segment		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- Average Exercise Price		Shares		Weighted- Average Exercise Price		Shares		Weighted- Average Exercise 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	Number Outstanding	Weighted- Average Remaining Contractual Life	Weighted- Average Exercise Price		Number Exercisable	Weighted- Average Exercise 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- Average Exercise Price		Shares	Weighted- Average Exercise 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	Number Outstanding	Weighted- Average Remaining Contractual Life	Weighted- Average Exercise Price		Number Exercisable	Weighted- Average Exercise 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.

	Target Allocation		Percentage of Plan Assets 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:

	Target Allocation		Percentage of Plan Assets 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 the Fair Value of Plan’s Assets				Accumulated Benefit Obligation Exceeds the Fair 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)

	Currency Translation Adjustment			Minimum Pension Liability			Other			Accumulated Other Comprehensive Income (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)	1st Quarter			2nd Quarter		3rd Quarter			4th Quarter			1st Quarter			2nd Quarter		3rd Quarter		4th Quarter
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

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statements No. 33-34019, 333-01019 and 333-52199 on Form S-8 of our reports dated March 24, 2006 relating to the financial statements and financial statement schedules of Calgon Carbon Corporation and our report on the effectiveness of internal controls over financial reporting dated March 24, 2006 (which expresses an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of a material weakness) appearing in and incorporated by reference in this Annual Report on Form 10-K of Calgon Carbon Corporation for the year ended December 31, 2005.

DELOITTE & TOUCHE LLP

Pittsburgh, Pennsylvania

March 30, 2006

EX-31.1

Exhibit 31.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

CERTIFICATION

I, John S. Stanik, certify that:

1. I have reviewed this annual report on Form 10-K of Calgon Carbon Corporation.

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

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

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

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

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting; and

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

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

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

Date: March 30, 2006

/s/ John S. Stanik
Name:	John S. Stanik
Title:	Chief Executive Officer

EX-31.2

Exhibit 31.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

CERTIFICATION

I, Leroy M. Ball certify that:

1. I have reviewed this annual report on Form 10-K of Calgon Carbon Corporation.

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

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

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

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

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting; and

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

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

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

Date: March 30, 2006

/s/ Leroy M. Ball
Name:	Leroy M. Ball
Title:	Chief Financial Officer

EX-32.1

Exhibit 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

In connection with the Annual Report of Calgon Carbon Corporation (the “Company”) on Form 10-K for the period ending December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John S. Stanik, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial conditions and result of operations of the Company for the periods presented therein.

/s/ John S. Stanik

Chief Executive Officer

March 30, 2006

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

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

EX-32.2

Exhibit 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

In connection with the Annual Report of Calgon Carbon Corporation (the “Company”) on Form 10-K for the period ending December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Leroy M. Ball, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial conditions and result of operations of the Company for the periods presented therein.

/s/ Leroy M. Ball

Chief Financial Officer

March 30, 2006

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

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