It is estimated that the 2003 global market for water treatment chemicals and services in the Institutional and Industrial Services sector was approximately $5.3 billion, excluding the approximately $1.2 billion market for water treatment chemicals included in the Energy Services and Paper Services markets. Overall, Industrial and Institutional Services' water treatment market growth rates tend to track gross domestic product, however growth rates vary by end-use segment and region. For example, it is expected that from 2003 through 2007, regional growth will range from approximately 1% to 2% in North America and Europe and from approximately 2.5% to 5% in emerging markets such as Latin America, Eastern Europe and the Pacific region.

Over the past several years, there have been a number of consolidations in the industrial and institutional segments, particularly in areas such as steel, food processing and manufacturing and hospitals. The consolidation of water treatment customers and the ensuing increase in their global reach has resulted in a rationalization of suppliers, as customers seek to source their water treatment needs to one single supplier with global distribution and service capabilities. Additionally, as these companies have grown larger, many are centralizing their purchasing decisions and are restricting their purchases to a limited number of suppliers that are capable of providing a wider array of products and services across broader geographies.

The Company offers a wide range of programs to help mining and mineral processing customers improve their operating efficiency and productivity in an environmentally responsible manner. The Company’s EN/ACT (Environmental Analysis and Chemical Treatment) programs, which help maintain water, air and soil quality, enable the Company’s customers to improve their operations while meeting strict environmental regulations. The Company also provides dust control, scale and corrosion control, liquid and solid separation, filtration aids, agglomeration aids, flotation reagents, metals removal, automated systems and an array of products and services for synthetic fuel producers and consumers. The industries the Company serves include aggregates, alumina and bauxite, coal, copper, kaolin, phosphate, precious metals and synthetic fuels.

The Company provides manufacturing companies worldwide with customized programs and services that focus on metalworking, paint finishing and related post-treatment processes. The Company’s fabrication product line includes metalworking fluids, drawing compounds, stamping lubricants and rust preventatives and a line of synthetic, semi-synthetic and soluble oil coolants. Pre-treatment products include cleaners, conversion coatings, final seals and plastic pretreatments. Post-treatment programs include paint strippers, specialty coatings as well as products to enhance wastewater clarification and paint de-tackification. The automotive, fastener and other durable goods manufacturers are key industry segments for these technologies.

Gross profit, defined as the difference between net sales and costs of products sold, of $720.0 million for the six months ended June 30, 2004 increased by $22.2 million, or 3.2%, over the $697.8 million reported for the six months ended June 30, 2003.

Selling, administrative and research expenses for the six months ended June 30, 2004 of $527.8 million decreased by $3.3 million, or 0.6%, from the same period last year.

Other income (expense), net was an expense of $5.3 million and $0.2 million for the six months ended June 30, 2004 and 2003, respectively.