UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, ~~2005~~ 2008

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-12716

KOPPERS INC.

(Exact name of registrant as specified in its charter)

Pennsylvania		25-1588399
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
(State of incorporation)		(IRS Employer Identification No.)

436 Seventh Avenue

Pittsburgh, Pennsylvania 15219

(412) 227-2001

(Address of principal executive offices)

(Registrant’s telephone number, including area code)

Pittsburgh, Pennsylvania 15219

(412) 227-2001

(Address of principal executive offices)

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

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 15(d) of the 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 ~~report~~reports) and (2) has been subject to such filing requirements for ~~at least~~ 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. x ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company. See ~~definition~~the definitions of “large accelerated filer”, “accelerated filer” and ~~large~~“smaller ~~accelerated~~reporting ~~filer~~company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x Smaller reporting company ¨

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 June 30, ~~2005~~2008, the registrant did not have a class of voting shares held by non-~~affiliates~~affliates.

~~Common~~DOCUMENTS ~~Stock,~~INCORPORATED ~~par~~BY ~~value~~REFERENCE ~~$.01 per share, outstanding at February 28, 2006 amounted to one share.~~

~~Documents~~Portions of the Proxy Statement for the 2009 Annual Meeting of Stockholders of Koppers Holdings Inc. are incorporated by reference~~: None~~ into Part III of this Annual Report on Form 10-K.

TABLE OF CONTENTS

Item	~~Item~~	Page
	PART I
Part I
1.	Business	3
1A.	Risk Factors	1411
1B.	Unresolved Staff Comments	2418
2.	Properties	2519
3.	Legal Proceedings	2620
4.	Submission of Matters to a Vote of Security Holders	2820
	PART II
Part II
5.	Market for the Registrant’s Common Equity, ~~and~~ Related Stockholder Matters and Issuer Purchases of Equity Securities	2922
6.	Selected Financial Data	3022
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3123
7A.	Quantitative and Qualitative Disclosures About Market Risk	5838
8.	Financial Statements and Supplementary Data	5839
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	5981
9A.	Controls and Procedures	5981
9B.	Other Information	5981
	PART III
Part III
10.	Directors, ~~and~~ Executive Officers ofand ~~the~~Corporate ~~Registrant~~Governance	6082
11.	Executive Compensation	6382
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	7282
13.	Certain Relationships and Related Transactions, and Director Independence	7282
14.	Principal ~~Accounting~~Accountant Fees and Services	7482
	PART IV
Part IV
15.	Exhibits and Financial Statement Schedules	7683
	SIGNATURES
Signatures
Signatures	~~Signatures~~	~~126~~88

Koppers Inc. 2008 Annual Report

FORWARD-LOOKING INFORMATION

Certain statements in this report are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and may include, but are not limited to, statements about sales levels, restructuring, profitability and anticipated expenses and cash outflows. All forward-looking statements involve risks and uncertainties. All statements contained herein that are not clearly historical in nature are forward-looking, and words such as “believe”, “anticipate”, “expect”, “estimate”, “may”, “will”, “should”, “continue”, “plans”, “intends”, “likely” or other similar words or phrases are generally intended to identify forward-looking statements. Any forward-looking statement contained herein, in press releases, written statements or other documents filed with the SEC, or in Koppers’ communications with and discussions with investors and analysts in the normal course of business through meetings, phone calls and conference calls, regarding expectations with respect to sales, earnings, cash flows, operating efficiencies, product introduction or expansion, the benefits of acquisitions and divestitures or other matters as well as financings and repurchases of debt or equity securities, are subject to known and unknown risks, uncertainties and contingencies. Many of these risks, uncertainties and contingencies are beyond our control, and may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. Factors that might affect such forward-looking statements include, among other things:

general economic and business conditions;

demand for the Company’s goods and services;

competitive conditions in the industries in which Koppers operates;

the ratings on our debt and our ability to repay or refinance our outstanding indebtedness as it matures;

our ability to operate within the limitations of our debt covenants;

interest rate fluctuations and other changes in borrowing costs;

other capital market conditions, including foreign currency rate fluctuations;

availability of and fluctuations in the prices of key raw materials, including coal tar and timber;

economic and political conditions in international markets, including governmental changes and restrictions on the ability to transfer capital across countries;

potential impairment of our goodwill and/or long-lived assets;

parties who are obligated to indemnify us for legal and environmental liabilities fail to perform under their legal obligations; and

unfavorable resolution of litigation against us.

Any forward-looking statements in this report speak only as of the date of this report, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.

PART I

~~ITEM1~~ITEM 1. ~~BUSINESS~~ BUSINESS

General

~~Koppers~~Please ~~Inc.~~note ~~(“we”~~that, ~~“Koppers”~~unless orotherwise ~~the “Company”)~~indicated isor ~~a leading integrated global provider of carbon compounds and commercial wood treatment products. Our products are used in a variety of niche applications in a diverse range of end-markets, including~~ the ~~aluminum, railroad,~~context ~~specialty~~requires ~~chemical~~otherwise, ~~utility,~~when ~~rubber~~we ~~and~~use ~~steel industries. We provide products which represent only a small portion of our customers’ costs but are essential inputs into~~ the ~~products~~terms ~~they~~“we”, ~~produce and~~ the ~~services~~“Company”, ~~they provide. We serve~~ “our ~~customers~~” ~~through~~or a“us”, ~~comprehensive~~we ~~global~~mean ~~manufacturing~~Koppers ~~and distribution network~~Inc., ~~including~~formerly 35known ~~manufacturing~~as ~~facilities~~Koppers ~~located in North America~~Industries, ~~Australasia~~Inc., ~~China, Europe~~ and ~~South~~its ~~Africa.~~subsidiaries ~~For~~on ~~the~~a ~~twelve~~consolidated ~~months ended December 31, 2005, we generated net sales of $1,030~~basis.2 ~~million and net income of $18.9 million.~~

We ~~operate~~are ~~two~~a ~~principal~~leading ~~businesses,~~integrated ~~Carbon~~global ~~Materials &~~provider ~~Chemicals~~of carbon compounds and ~~Railroad &~~commercial ~~Utility~~wood ~~Products~~treatment products. ~~Through~~Our ~~our~~products ~~Carbon~~are ~~Materials &~~used ~~Chemicals~~in ~~business~~a ~~(60%~~variety of ~~2005~~niche ~~net~~applications ~~sales),~~in wea ~~believe~~diverse ~~we are the largest distiller~~range of ~~coal~~end-markets, ~~tar~~including inthe ~~North America~~aluminum, ~~Australia~~railroad, ~~the~~specialty ~~United~~chemical, ~~Kingdom~~utility, rubber and ~~Scandinavia~~steel industries. We ~~process~~serve ~~coal~~our ~~tar~~customers ~~into~~through a ~~variety~~comprehensive ofglobal ~~products,~~manufacturing ~~including carbon pitch, creosote~~ and ~~phthalic~~distribution ~~anhydride~~network, ~~which~~with ~~are~~manufacturing ~~critical~~facilities ~~intermediate~~located ~~materials~~ in the United ~~production~~States, ~~of aluminum~~Australia, ~~the~~China, ~~pressure treatment of wood and~~ the ~~production~~United ofKingdom ~~plasticizers~~ and ~~specialty chemicals, respectively~~Denmark. ~~Through~~For ~~our~~the ~~Railroad &~~twelve ~~Utility~~months ~~Products~~ended ~~business~~December 31, ~~(40%~~2008, ofwe ~~2005~~had net sales), ~~we are the largest North American supplier~~ of ~~railroad~~ ~~crossties~~$1,364.8 ~~Our~~million ~~other~~and ~~commercial~~net ~~wood~~income ~~treatment products include the provision~~ of ~~utility~~$150.9 ~~poles to the electric and telephone utility industries~~million.

~~Our~~We ~~operations~~operate ~~are,~~two toprincipal abusinesses: ~~substantial~~Carbon ~~extent,~~Materials & ~~vertically~~Chemicals ~~integrated~~ and ~~employ~~Railroad & aUtility ~~variety~~Products. Through our Carbon Materials & Chemicals business (65 percent of ~~processes~~2008 net sales), aswe ~~illustrated~~believe inwe are the ~~following~~largest ~~flow~~distiller ~~diagram:~~of coal tar in North

We were formed in October 1988 as “Koppers Industries, Inc.” under the laws of the Commonwealth of Pennsylvania by management, Beazer, Inc. and KAP Investments, Inc. (“KAP”, a subsidiary of Koppers Australia Pty. Limited) (“Koppers Australia”) to facilitate the acquisition of certain assets of Koppers Company, Inc. in a management-led leveraged buyout that closed on December 29, 1988 (the “Acquisition”). Koppers Company, Inc., now known as Beazer East, Inc. (“Beazer East”, but referred to herein as “Old Koppers” for periods prior to the Acquisition) had been acquired in June 1988 by BNS Acquisitions, Inc., a wholly owned indirect subsidiary of Beazer PLC, now known as Beazer Limited (“Beazer Limited”). Effective February 24, 2003 we changed our name to Koppers Inc. to reflect the global and diversified nature of the Company’s businesses.

America, Australia, the United Kingdom and Scandinavia. We process coal tar into a variety of products, including carbon pitch, creosote and phthalic anhydride, which are critical intermediate materials in the production of aluminum, the pressure treatment of wood and the production of plasticizers and specialty chemicals, respectively. Through our Railroad & Utility Products business (35 percent of 2008 net sales), we are the largest North American supplier of railroad crossties. Our other commercial wood treatment products include utility poles for the electric and telephone utility industries.

We were formed in October 1988 as “Koppers Industries, Inc.” under the laws of the Commonwealth of Pennsylvania by management, Beazer, Inc. and KAP Investments, Inc. (“KAP”, a subsidiary of Koppers Australia Pty. Limited) (“Koppers Australia”) to facilitate the acquisition of certain assets of Koppers Company, Inc. in a management-led leveraged buyout that closed on December 29, 1988 (the “Acquisition”). Koppers Company, Inc., now known as Beazer East, Inc. (“Beazer East” had been acquired in June 1988 by BNS Acquisitions, Inc., a wholly owned indirect subsidiary of Beazer PLC, now known as Beazer Limited (“Beazer Limited”).

Subsidiary of Koppers Holdings Inc.

On November 12, 2004, Koppers Holdings Inc. (“Koppers Holdings”, formerly KI Holdings) was incorporated. On November 18, 2004, all of our common and preferred stock was converted into shares of common and preferred stock of Koppers Holdings and Koppers Holdings issued and sold $203.0 million aggregate principal amount at maturity ($125.5 million gross proceeds) 9 7/8% percent Senior Discount Notes due 2014 (the “~~Holdings~~Senior Discount Notes”). The Senior Discount Notes are not a direct obligation of Koppers Inc. Koppers Holdings has no direct operations and no significant assets other than our stock. It depends on dividends from the earnings of us and our subsidiaries to generate the funds necessary to meet its financial obligations, including payments of principal, interest, and other amounts on the ~~Holdings~~Senior Discount Notes. The terms of our ~~senior~~revolving ~~secured~~ credit facility prohibit us from paying dividends and otherwise transferring assets except for certain limited dividends. Further, the terms of the indenture governing our Senior Secured Notes (as described herein) significantly restrict us from paying dividends and otherwise transferring assets to ~~Koppers~~ Koppers Holdings.

Industry Overview

~~Coal~~Carbon ~~tar~~Materials & ~~is a by-product generated through the processing of coal into coke for use in~~Chemicals steel and iron manufacturing. We produce and distribute a variety of intermediate chemical products derived from the coal tar distillation process, including the co-products of the distillation process. During the distillation process, heat and vacuum are utilized to separate coal tar into three primary components: carbon pitch (approximately 50%), creosote oils (approximately 30%) and chemical oils (approximately 20%). Because all coal tar products are produced in relatively fixed proportion to carbon pitch, the level of carbon pitch consumption generally determines the level of production of other coal tar products.

WeOur ~~believe~~Carbon ~~that~~Materials & ~~demand~~Chemicals ~~for~~business ~~aluminum~~manufactures ~~and~~five ~~railroad~~principal ~~track~~products: ~~maintenance~~(a) carbon ~~substantially~~pitch, ~~drive~~used ~~growth~~in the production of aluminum and steel; (b) phthalic anhydride, used in ~~our~~the ~~two~~production ~~principal~~of ~~businesses.~~plasticizers ~~Through~~and ~~our~~polyester ~~leading~~resins; ~~market~~(c) creosote ~~positions~~ and ~~global~~carbon ~~presence~~black feedstock, weused ~~believe~~in wethe ~~are~~treatment ~~uniquely~~of ~~well-positioned~~wood toor ~~capitalize~~as ona ~~favorable~~feedstock ~~trends~~in ~~within~~the ~~our~~production ~~end-markets.~~of ~~According~~carbon toblack; (d) carbon black, used in the ~~King~~manufacture ~~Report~~of rubber tires; and (e) naphthalene, ~~worldwide~~used ~~aluminum~~primarily as a surfactant in the production ~~increased~~of 6concrete.8% toCarbon ~~31.9 million~~pitch, ~~metric~~phthalic ~~tons~~anhydride, increosote ~~2005~~(and carbon black feedstock) and ~~was~~naphthalene are produced through the distillation of ~~expected~~coal totar. ~~grow~~Coal tar is a by-product ~~4.0%~~generated through the processing of coal into coke for use in ~~2006~~steel and 5iron manufacturing.0% inWe ~~2007.~~produce ~~Carbon~~and ~~pitch~~distribute ~~requirements~~a ~~for~~variety of intermediate chemical products derived from the ~~aluminum~~coal ~~industry~~tar ~~were~~distillation 3process, including the co-products of the distillation process.~~0 million~~ ~~metric~~During ~~tons~~the indistillation ~~2005~~process, heat and vacuum are ~~expected~~utilized to ~~grow~~separate ascoal atar ~~function~~into ofthree ~~growth~~primary components: carbon pitch (approximately 50 percent), creosote oils (approximately 30 percent) and chemical oils (approximately 20 percent). Because all coal tar products are produced in ~~aluminum~~relatively fixed proportion to carbon pitch, the level of carbon pitch consumption generally determines the level of production of other coal tar products.

The North American phthalic anhydride industry has production capacity of approximately 1.2 billion pounds and is a feedstock for plasticizers, unsaturated polyester resins, alkyd resins and other miscellaneous chemicals.

The railroad crosstie business is benefiting and will likely continue to benefit from positive general economic conditions in the railroad industry and from expected increases in spending on both new track and existing track maintenance. The RTA estimates that approximately 15.0 million crossties for Class 1 railroads, were installed in the United States and Canada in 2005 and approximately 16.5 million crossties were projected to be installed in 2006.

The U.S. market for treated wood utility pole products is characterized by a large number of small producers selling into a price-sensitive industry. The utility pole market is highly fragmented domestically with over 200 investor-owned electric and telephone utilities and 2,800 smaller municipal utilities and rural electric associations.

On August 10, 2005, the President signed a federal transportation bill into law that provides $286.5 billion of funding for various projects in the transportation industry. This legislation is the most comprehensive legislation for the transportation industry since the last transportation bill expired in 2003. Although it is difficult to estimate the impact of this legislation on our business, we believe that it is likely to benefit us directly by increased sales related to projects identified in the legislation or indirectly as additional railroad capital can be reallocated to infrastructure maintenance priorities.

~~Our~~Koppers ~~Business~~Inc. 2008 ~~Strategy~~Annual Report

~~Capitalize~~The onCarbon ~~Attractive~~Materials & ~~Growth~~Chemicals ~~Opportunities. We~~business’ ~~believe~~profitability ~~our~~is ~~existing~~impacted ~~key~~by ~~end-markets~~the cost of purchasing coal tar in relation to its prices realized for carbon pitch, ~~especially~~phthalic ~~the~~anhydride, ~~aluminum~~creosote, and ~~railroad~~naphthalene. We have ~~industries~~three tar distillation facilities in the United States, one in Australia, one in China, one in Denmark and ~~geographic~~two ~~focus~~in the United Kingdom, strategically located to provide ~~attractive~~access ~~growth~~to ~~opportunities.~~coal Wetar ~~are~~and ~~well~~to ~~positioned~~facilitate better service to ~~capitalize~~our oncustomers ~~these~~with ~~opportunities~~a consistent supply of high-quality products. In ~~addition~~2009, we ~~intend~~will toadd ~~pursue~~a ~~growth~~second ~~opportunities~~tar distillation facility in ~~three~~China ~~ways~~through a 30 percent-owned company. One of our customers, Alcoa, Inc., represents greater than ten percent of our consolidated sales. For 2008, 2007 and 2006, respectively, principal products comprised the following net sales for Carbon Materials & Chemicals:

• New Regional Expansion: We intend to leverage our global reach by capitalizing on opportunities in high-growth regions such as China, the Middle East, India and Eastern Europe and expect demand for our products in these regions to grow faster than in our core markets. For example, in 1999 we entered into a joint venture with Tangshan Iron & Steel Co., or TISCO, in Tangshan, China to establish a platform in the fast growing Asian markets.


	Year Ended December 31,
	2008		2007		2006
(Dollars in millions)
Carbon Materials & Chemicals:
Carbon pitch	$	401.6	$	360.3	$	265.2
Creosote and carbon black feedstock		119.1		87.2		61.7
Phthalic anhydride		101.6		102.2		97.7
Carbon black		64.8		43.2		36.3
Naphthalene		56.9		57.4		32.9
Other products		148.0		125.8		116.8

	$	892.0	$	776.1	$	610.6

•We ~~Selective~~believe ~~Acquisitions:~~we Wehave ~~intend~~a tostrategic ~~continue~~advantage toover ~~selectively~~our ~~pursue~~competitors ~~complementary~~based ~~opportunities~~on inour ~~areas~~ability ~~that~~to ~~enable~~access uscoal totar ~~build~~from ~~upon~~many ~~our~~global suppliers ~~product~~and ~~portfolio,~~subsequently ~~expand~~blend ~~our~~such ~~customer~~coal ~~base~~tars ~~and~~to ~~leverage~~produce ~~our~~carbon ~~existing~~pitch ~~customer~~with ~~relationships.~~the ~~For~~consistent ~~example,~~quality important in ~~April~~the ~~2005,~~manufacturing weof ~~acquired~~quality anodes for the ~~business~~aluminum ~~and~~industry. ~~assets~~Our eight coal tar distillation facilities (four of ~~U.K.~~which ~~based~~have ~~Lambson~~port access) ~~Speciality~~and ~~Chemicals~~five ~~Limited.~~carbon ~~This~~pitch ~~acquisition~~terminals ~~provides~~give us ~~with~~the anability ~~opportunity~~ to ~~expand~~offer ~~and~~customers ~~enhance~~multiple ~~our~~sourcing ~~relationships~~and ~~with~~a ~~existing~~consistent ~~suppliers~~supply ~~and~~of ~~customers~~high ~~and~~quality ~~enables~~products. usIn toanticipation ~~further~~of ~~diversify~~potential ~~our~~reductions ~~product~~of ~~lines~~U.S. ~~through~~coke ~~the~~capacity, ~~production~~we ~~and~~have ~~sale~~secured ofcoal ~~various~~tar ~~specialty~~supply ~~chemicals~~through long-term contracts.

•Coal ~~Development~~tar ofis ~~New~~purchased ~~Products:~~from Wea ~~expect~~number ~~to expand many~~ of ~~our~~outside ~~product~~sources. ~~lines~~Primary ~~through~~suppliers ~~the~~are ~~development~~United ofStates ~~related~~Steel ~~products~~Corporation, toMittal ~~meet~~Steel ~~new end-use applications. For example~~USA, weTangshan Iron & ~~have~~Steel ~~introduced a coal tar and petroleum pitch blend that results in up to a 60% reduction in the regulated constituents in air emissions from aluminum smelters utilizing the Soderberg process~~Co. ~~In addition~~, ~~we have recently introduced a new carbon foam product that has wide-ranging applications in the telecommunication and transportation markets~~Ltd., WeEES ~~also~~Coke ~~have~~Battery, ~~patents~~LLC, ~~pending~~Novolipetsk ~~for~~Steel, ~~and~~AK weSteel ~~are~~Corporation, inChina ~~the~~Steel ~~developmental~~Chemical ~~stage of~~Corporation, ~~new~~Bluescope ~~pitch~~Steel ~~products~~(AIS) toPty. beLimited, ~~used~~OneSteel inManufacturing ~~friction~~Pty. ~~materials (brakes)~~Ltd., ~~carbon,~~Corus ~~graphite~~Group and ~~rubber~~Mountain ~~products~~States Carbon LLC.

~~Maximize~~Management ~~Cash Flow~~believes ~~and~~that ~~Reduce Financial Leverage. We reduced~~ our ~~financial~~ability ~~leverage~~to bysource ~~using~~coal atar ~~portion of our net proceeds from our parent company’s initial public offering which was consummated in February 2006~~ and acarbon ~~portion~~pitch ~~of cash flow~~ from ~~operations~~overseas ~~after~~markets ~~required~~through ~~capital expenditures. We will maintain a disciplined approach to~~ our ~~capital~~foreign ~~spending and working capital management in order to maximize free cash flow~~operations, ~~while~~as ~~continuing~~well toas ~~support~~ our ~~well~~research ~~maintained~~of ~~fixed~~petroleum ~~asset~~feedstocks, ~~base~~will ~~and~~assist ~~deliver~~in ~~superior~~securing ~~service~~an touninterrupted ~~our~~supply ~~customers.~~of Wecarbon ~~have~~pitch ~~historically~~feedstocks. ~~generated~~However, ~~substantial~~we ~~cash~~may ~~flow~~experience ~~from~~shortages ~~operations~~of ~~and~~coal ~~have~~tar ~~funded~~due ~~our~~to ~~capital~~unforeseen ~~expenditure and working capital requirements through internal cash flow generation~~circumstances.

~~Continue~~Our ~~Productivity~~Carbon ~~and~~Materials & ~~Cost~~Chemicals ~~Reduction Initiatives. We~~business ~~are~~manufactures ~~focused~~its onprimary ~~improving~~products and sells them directly to our ~~profitability~~customers through long-term contracts and ~~cash~~purchase ~~flows~~orders negotiated by ~~achieving~~our ~~productivity~~regional ~~enhancements~~sales personnel and bycoordinated ~~improving~~ through our ~~cost~~global ~~platform~~marketing group in the United States. ~~For~~We ~~example,~~maintain ininventories ~~2003~~at weour ~~implemented~~plant alocations ~~number~~and ofdo ~~initiatives~~not ~~to rationalize~~factor our ~~capacity,~~inventories ~~streamline~~or ~~operations~~receivables ~~and~~to ~~improve~~third ~~productivity~~parties.

During the fourth quarter of 2003 we determined that capacity rationalization was required in our U.S. Carbon Materials & Chemicals business to increase competitiveness within the North American aluminum market. Accordingly, in December 2003 we ceased production at our carbon materials facility in Woodward, Alabama. Additionally, during the fourth quarter of 2003 we concluded that our carbon materials port operation in Portland, Oregon was an impaired facility based on its current and long-term economic prospects as a result of recent negotiations with a significant customer. In September 2003, we closed our Logansport, Louisiana wood treating plant due to deteriorating local market conditions for utility products. These initiatives were completed on schedule and within budget and have improved our annual profitability by approximately $4.9 million.

~~During~~Coal ~~the~~tar distillation ~~fourth~~involves ~~quarter~~the conversion of ~~2005,~~coal wetar ~~incurred~~into ana ~~impairment~~variety ~~charge~~ of ~~$0.6~~intermediate ~~million~~chemical ~~related~~products toin ~~assets~~processes atbeginning ~~our~~with ~~wood treating facility in Superior, Wisconsin~~distillation. WeDuring ~~will~~the ~~make~~distillation aprocess, ~~determination~~heat ~~during~~and ~~the~~vacuum ~~first~~are ~~half~~utilized ~~of 2006 as~~ to ~~the~~separate ~~future~~coal oftar ~~this~~into ~~facility.~~three ~~During~~primary components: ~~2005,~~carbon wepitch ~~also~~(approximately ~~incurred~~50 ~~$0.8~~percent), ~~million~~creosote ~~related~~oils to(approximately ~~the~~30 ~~closure~~percent) ofand ~~our~~chemical ~~wood~~oils ~~treating~~(approximately ~~facility~~20 ~~in Montgomery, Alabama~~percent). The ~~ceasing~~below ofdiagram ~~production~~shows ~~and closure of~~ the ~~facility~~distillation isstreams ~~expected~~derived tofrom ~~increase~~coal ~~capacity~~tar ~~utilization~~distillation ~~at certain other wood treating plants~~ and ~~provide for improved operating efficiencies and profitability for~~ the ~~business.~~primary ~~We continually~~markets ~~review under-performing assets with the purpose of improving productivity~~ and ~~enhancing~~products ~~our~~that ~~return~~we onsell ~~invested~~to: ~~capital.~~

LOGO

Carbon ~~Materials &~~Pitch ~~Chemicals~~

~~Our~~On ~~Carbon Materials & Chemicals business manufactures five principal products: (~~a~~) carbon~~ ~~pitch,~~global ~~used in the production of aluminum and steel; (b) phthalic anhydride~~basis, ~~used~~we inproduce ~~the production of plasticizers and polyester resins; (c) creosote, used in the treatment of wood; (d)~~ carbon ~~black (and carbon black feedstock), used in the manufacture of rubber tires; and~~ ~~(e) furnace coke, used in steel production. Carbon~~ pitch, ~~phthalic anhydride, creosote and carbon black feedstock are produced~~ through the ~~distillation of coal~~ tar, adistillation ~~by-product of the transformation of coal into coke~~process. ~~The~~Sales ~~Carbon Materials &~~terms ~~Chemicals~~are ~~business’~~negotiated ~~profitability is impacted~~ by ~~its~~centralized ~~cost~~sales todepartments ~~purchase coal tar~~ in ~~relation to its prices realized for carbon pitch, phthalic anhydride, creosote and carbon black. We have three tar distillation facilities in~~ the United States, ~~one in~~ Australia, ~~one in China, one in Denmark~~ and ~~two~~Europe ~~in the United Kingdom, strategically located to provide access to coal tar~~ and toare ~~facilitate~~generally ~~better~~evidenced ~~service~~by ~~to our customers with a consistent supply of high~~long-~~quality~~term ~~products. For~~sales ~~2005,~~contracts ~~2004~~ and ~~2003,~~purchase ~~respectively,~~orders ~~principal~~which ~~products~~are ~~comprised the following percentages of net sales for Carbon Materials & Chemicals (excluding intercompany sales): (i) carbon pitch, 33%, 36% and 38%; (ii) phthalic~~coordinated ~~anhydride,~~through ~~14%,~~our ~~14%~~global ~~and~~marketing ~~12%;~~group ~~(iii) carbon~~at ~~black~~corporate ~~(and carbon black feedstock), 9%, 9% and 10%; (iv) furnace coke, 10%, 9% and 8%; and (v) creosote, 3%, 3% and 4%~~headquarters.

WeOver ~~believe~~90 wepercent ~~have~~of aour ~~strategic~~carbon ~~advantage~~pitch ~~over~~is ~~our~~sold ~~competitors~~to ~~based~~the onaluminum ~~our~~industry, ~~ability~~typically under long-term contracts ranging from three to ~~access~~five ~~coal~~years. ~~tar~~Many ~~from~~of ~~many~~these ~~global~~long-term ~~suppliers~~contracts ~~and subsequently~~have ~~blend~~provisions ~~such~~for ~~coal~~periodic ~~tars~~pricing toreviews. ~~produce~~Demand for carbon pitch generally fluctuates with ~~the~~production ~~consistent~~of ~~quality~~primary ~~important~~aluminum. Because all coal tar products are produced in relatively fixed proportion to carbon pitch, the ~~manufacturing~~level of ~~quality~~carbon ~~anodes~~pitch ~~for~~consumption generally determines the ~~aluminum~~level ~~industry.~~of ~~Our~~production ~~eight~~of other coal tar ~~distillation~~products. ~~facilities,~~The ~~four~~commercial ofcarbon ~~which~~industry, ~~have~~the ~~port~~second ~~access,~~largest ~~and~~user ~~three~~ of carbon pitch, ~~terminals~~uses ~~give~~carbon uspitch to ~~the~~produce ~~ability~~electrodes toand ~~offer~~other ~~customers~~specialty ~~multiple~~carbon ~~sourcing~~products ~~and~~for athe ~~consistent~~steel ~~supply~~industry. ofThere ~~high~~are ~~quality~~currently ~~products.~~no Inknown ~~anticipation~~viable ofsubstitutes ~~potential~~for ~~reductions~~carbon ofpitch ~~U.S.~~in ~~coke~~the ~~capacity,~~production weof ~~have~~carbon ~~secured~~anodes ~~coal~~used ~~tar~~in ~~supply~~the ~~through~~aluminum ~~long-term contracts~~production process.

Coal tar distillation involves the conversion of coal tar into a variety of intermediate chemical products in processes beginning with distillation. During the distillation process, heat and vacuum are utilized to separate coal tar into three primary components: carbon pitch (approximately 50%), creosote oils (approximately 30%) and chemical oils (approximately 20%).

~~Our~~Koppers Carbon Materials & Chemicals business manufactures its primary products and sells them directly to our customers through long-term contracts and purchase orders negotiated by our regional sales personnel and coordinated through our global marketing officer in AustraliaInc. 2008 WeAnnual ~~maintain~~Report ~~inventories at our plant locations and do not factor our inventories or receivables to third parties.~~

~~Carbon~~We ~~Pitch~~have several global competitors in the carbon pitch market, primarily in Europe and Asia. We believe we are the largest producer of carbon pitch for the aluminum industry. Competitive factors in the carbon pitch market include price, quality, service, and security of supply. We believe we have a competitive advantage based on our global presence and long-term raw material supply contracts.

WeNaphthalene & ~~produce~~Phthalic ~~carbon~~Anhydride pitch through the tar distillation process. Sales terms are negotiated by centralized sales departments in the United States, Australia and Europe and are generally evidenced by long-term sales contracts and purchase orders which are coordinated through our global marketing group at corporate headquarters and in Australia.

~~Over~~Chemical ~~75%~~oils ofare ~~our~~further ~~carbon~~processed ~~pitch is sold~~ to ~~the~~produce ~~aluminum industry~~naphthalene. ~~under~~In ~~long-term~~Australia, ~~contracts~~China ~~typically~~and ~~ranging from three to five years~~Europe, ~~many~~naphthalene ~~with~~is ~~provisions~~sold into ~~for~~the ~~periodic~~industrial ~~pricing~~sulfonate ~~reviews.~~market ~~Demand~~ for ~~carbon~~use ~~pitch~~as ~~generally~~dispersants ~~has~~or ~~fluctuated with production of primary aluminum. However, global restructuring~~ in ~~the~~ ~~electrode and aluminum markets during~~ the ~~past~~concrete ~~several~~additive ~~years~~and ~~has~~gypsum ~~resulted~~board ~~in reduced volumes in domestic~~ markets. ~~Because~~Additional ~~all~~end-uses ~~coal~~include ~~tar~~oil ~~products~~field ~~are~~additives, ~~produced~~agricultural ~~in relatively fixed proportion to carbon pitch~~emulsifiers, ~~the~~synthetic ~~level~~tanning ofagents ~~carbon~~and ~~pitch~~dyestuffs. ~~consumption generally determines the level of production of other coal~~

7In the United States, we use naphthalene as a feedstock in the manufacture of phthalic anhydride. We manufacture phthalic anhydride using both naphthalene and externally-sourced orthoxylene, which is a petroleum derivative. The primary markets for phthalic anhydride are in the production of plasticizers, unsaturated polyester resins and alkyd resins. Sales terms for phthalic anhydride are negotiated by a centralized sales department in the United States and are generally evidenced by long-term sales contracts and purchase orders.

~~Table~~On a global basis, naphthalene and orthoxylene are both used as feedstock for the production of ~~Contents~~phthalic anhydride. However, we are the only North American phthalic anhydride producer capable of utilizing both orthoxylene and naphthalene for this production. Our ability to utilize naphthalene as a by-product of coal tar distillation gives us a stable supply of feedstock. We believe that our ability to utilize our internally produced naphthalene ordinarily gives us a lower-cost feedstock for the production of phthalic anhydride because historically our cost to produce naphthalene has been lower than our cost to purchase orthoxylene. We have two primary competitors in the North American phthalic anhydride merchant market.

~~tar~~Creosote & ~~products.~~Carbon ~~The~~Black ~~commercial~~Feedstock carbon industry, the second largest user of carbon pitch, uses carbon pitch to produce electrodes and other specialty carbon products for the steel industry. There are currently no known viable substitutes for carbon pitch in the production of carbon anodes used in the aluminum production process.

Creosote

We produce creosote as a co-product of the tar distillation process. Sales terms for external creosote sales are negotiated by centralized sales departments in the United States, Australia and Europe and are generally evidenced by long-term sales contracts and purchase orders.

~~Creosote~~In the United States, creosote is used as a commercial wood treatment chemical to preserve railroad crossties and lumber, utility poles and piling. ToThe ~~the~~majority ~~extent~~of ~~that~~our wedomestically produced ~~have~~creosote ~~excess~~is sold to our Railroad & Utility Products business. In Australia, China and Europe, creosote ~~that~~ is ~~not~~ sold into the carbon black market for use as a feedstock in ~~treating~~the ~~wood~~production ~~products~~of carbon black. In Australia, ~~distillate~~the ~~oils~~majority ~~are~~of creosote generated at our tar distillation facility is sold ~~into~~to ~~the~~our carbon black ~~market~~facility. ~~rather~~In ~~than~~Europe ~~being~~and ~~blended~~China creosote is sold to ~~creosote~~wood ~~specifications~~treaters as well as various carbon black producers.

Globally, approximately ~~79%~~one-third of our total creosote production was sold tointernally ~~our~~in ~~Railroad &~~2008. ~~Utility~~Our ~~Products~~wood ~~business~~treating plants in ~~2005.~~the ~~The~~United ~~Railroad &~~States ~~Utility Products~~and ~~business~~our ~~purchases~~carbon black facility in Australia purchase substantially all of ~~its~~ their creosote ~~from~~and ~~the~~carbon ~~Carbon~~black ~~Materials &~~feedstock ~~Chemicals~~from ~~business~~our tar distillation plants. We believe we are the only major competitor in ~~this~~these ~~market~~markets that is integrated in this fashion. The remainder of our creosote and carbon black feedstock is sold to ~~railroads~~ ~~or to~~ railroads, other wood treaters and carbon black manufacturers. We have several competitors in the creosote market.

Carbon Black

~~Carbon~~We ~~black~~manufacture iscarbon ~~manufactured in~~black ~~Australia~~ at aour ~~carbon~~plant ~~black~~in ~~facility~~Australia using both petroleum oil and coal tar based feedstocks, which are subjected to heat and rapid cooling within a reactor. ~~Additionally,~~ Coal tar- based carbon black ~~feedstock~~ is ~~manufactured~~used as a co-product of the tar distillation process and can be produced at our three domestic, one Australian, one Chinese, and three European tar distillation facilities. Sales terms are negotiated by centralized sales departments in ~~Australia,~~ the ~~United~~manufacture ~~States~~of ~~and~~rubber ~~Europe~~tires ~~and are~~as ~~generally~~well ~~evidenced~~as byother ~~long-term~~specialty ~~sales contracts and purchase orders~~applications.

Phthalic Anhydride

We manufacture phthalic anhydride using both internally-sourced naphthalene, a by-product of the tar distillation process, and externally-sourced orthoxylene. Sales terms are negotiated by a centralized sales department in the United States and are generally evidenced by long-term sales contracts and purchase orders.

Chemical oils resulting from the distillation of coal tars are further refined by us into naphthalene, which is the primary feedstock used by us for the production of phthalic anhydride. The primary markets for phthalic anhydride are in the production of plasticizers, unsaturated polyester resins and alkyd resins. Naphthalene is also sold into the industrial sulfonate market for use as dispersants in the concrete additive and gypsum board markets. Additional end-uses include oil field additives, agricultural emulsifiers, synthetic tanning agents and dyestuffs.

On a worldwide basis, naphthalene and orthoxylene, a refined petroleum derivative, are both used as feedstock for the production of phthalic anhydride. We are the only North American phthalic anhydride producer capable of utilizing both orthoxylene and naphthalene for this production. Our ability to utilize naphthalene as a by-product of coal tar distillation gives us a stable supply of feedstock. We believe that our ability to utilize our internally produced naphthalene gives us a lower-cost feedstock for the production of phthalic anhydride since historically our cost to produce

naphthalene has been lower than our cost to purchase orthoxylene. However, prior to 2004 there were difficult market conditions and corresponding low operating rates for most producers. Market conditions for phthalic anhydride improved in 2004 and have remained stable.

Furnace Coke

We produce furnace coke using its primary raw material, coal. Sales terms are negotiated by a centralized sales department in the United States, and all coke is currently sold to one customer under a three year sales contract which expires December 31, 2006. The contract can be renewed for an additional two years if the parties agree by the end of the second quarter of 2006.

Furnace coke is a carbon and fuel source required in the manufacturing of steel. Coal, the primary raw material, is carbonized in oxygen-free ovens to obtain the finished product. Coke manufacturers are either an integrated part of a steel company or, as in our case, operate independently and are known as “merchant producers.”

Our coke business consists of one production facility located in Monessen, Pennsylvania, which produces furnace coke. The plant consists of two batteries with a total of 56 ovens and has a total capacity of approximately 360,000 tons of furnace coke per year. All of the ovens were rebuilt in 1980 and 1981, which, together with recent improvements, makes our Monessen facility one of the most modern coking facilities in the United States.

Before the expiration of the related tax law at December 31, 2002, our Monessen facility qualified for a tax credit based on its production of coke as a non-conventional fuel and the sale thereof to unrelated third parties. The tax credit generated per ton of coke sold was tied to a per barrel of oil equivalent determined on a BTU basis and adjusted annually for inflation. The value of this tax credit per ton of coke was approximately $28.00 in 2002. In December 1999, we entered into a transaction with a third party which resulted in substantially all tax credits generated as a result of the production and sale of coke at our Monessen facility being transferred to the third party. In 2003 and 2002, we earned $0.1 million and $9.8 million, respectively, for the transfer of tax credits (the 2003 amount was a retroactive inflation adjustment). The tax credits expired at the end of 2002. Prior to the Monessen transaction, we earned these credits.

On August 8, 2005, the President signed the Energy Policy Act of 2005 into law. Included in this legislation are non-conventional fuel tax credits earned for the production and sale of coke to a third party. These credits against federal income tax will be earned in conjunction with the coke operations at our Monessen, Pennsylvania facility. The tax credit generated per ton of coke sold is tied to a per barrel of oil equivalent on a BTU basis and adjusted annually for inflation. The credits are effective January 2006, expire December 2009 and can be carried forward for 20 years. Based on our understanding of the Energy Policy Act of 2005 and subject to final determination of an oil price range, and also further legislation with respect to non-conventional fuel tax credits expected in 2006, we have the potential to earn up to $4 million per year of credits that will reduce federal income taxes.

Other Products

WeOther ~~are~~products ~~also~~include athe ~~51%~~sale ~~owner~~ of arefined ~~timber preservation chemicals business that operates throughout Australia~~tars, ~~New~~benzole ~~Zealand, Southeast Asia~~ and ~~South~~specialty ~~Africa. Timber preservation~~ chemicals ~~are used to impart durability to timber products used in building/construction, agricultural and heavy-duty industrial markets~~. ~~The most commonly used chemicals are copper chrome arsenates, light organic solvent preservatives, copper co-biocides, sapstain control products and creosote.~~

9Acquisitions and Dispositions

In October 2008, we sold our 95 percent interest in Koppers Monessen Partners LP (“Monessen”) to ArcelorMittal S.A. Monessen is a metallurgical furnace coke facility. In July 2007, we sold our 51 percent interest in Koppers Arch Investments Pty Limited and its subsidiaries (“Koppers Arch”) to Arch Chemicals Inc. Koppers Arch is a manufacturer of timber preservation chemicals. Monessen and Koppers Arch were part of our Carbon Materials & Chemicals business segment.

~~Roofing~~In ~~pitch~~November ~~and~~2007, Tangshan ~~refined~~Koppers ~~tars~~Kailuan ~~are~~Carbon ~~also~~Chemical ~~produced~~Company inLimited ~~smaller~~(“TKK”) ~~quantities~~was established which is constructing and ~~are~~will ~~sold~~operate ~~into~~a new tar distillation facility in the ~~commercial~~Hebei ~~roofing~~Province ~~and pavement~~near ~~sealer~~the ~~markets~~Jingtang Port with a distillation capacity of 300,000 metric ~~respectively~~tons. We ~~sell~~hold ~~roofing~~a ~~warranties~~30 topercent ~~certain~~investment ~~customers~~in ~~for~~TKK ~~its~~which ~~built-up~~is ~~roofing~~expected ~~systems~~to ~~which~~commence ~~are~~production ~~installed~~in bythe ~~third~~second ~~party~~quarter ~~contractors~~of 2009. In November 2008, ~~approved~~we bycompleted usa capacity expansion of our existing 60 percent-owned tar distillation plant in Tangshan, China ~~who~~from ~~use~~150,000 ~~its~~metric ~~roofing~~tons ~~products~~to 200,000 metric tons.

The Carbon Materials & Chemicals business’ ten largest customers represented approximately 42%, 44% and 44% of the business’ net sales for 2005, 2004 and 2003, respectively. We have a number of global competitors in the carbon pitch market.

Coal tar is purchased from a number of outside sources as well as from our Monessen facility. Primary suppliers are United States Steel Corporation, Mittal Steel USA, China Steel Chemical Corporation, Bluescope Steel (AIS) Pty. Limited, OneSteel Manufacturing Pty. Ltd., Corus Group PLC and Mountain States Carbon.

Management believes that our ability to source coal tar and carbon pitch from overseas markets through our foreign operations, as well as our research of petroleum feedstocks, will assist in securing an uninterrupted supply of carbon pitch feedstocks.

In 1999, we entered into a joint venture agreement with TISCO to rehabilitate and operate a tar distillation facility in China. The joint venture, Koppers China, is 60% owned by us and began production of coal tar products in 2001. On January 1, 2004, we resumed operating control of Koppers China and began to consolidate its results in the first quarter of 2004. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Other Matters.”

Railroad & Utility Products

We market commercial wood treatment products primarily to the railroad and public utility markets, ~~primarily~~ in the United States and ~~Australasia~~Australia. The Railroad & Utility Products business’ profitability is influenced by the demand for railroad products by Class 1 railroads, demand for transmission and distribution poles by electric and telephone utilities and its cost to procure wood. For the year ended December 31, ~~2005~~2008, sales of railroad products and services ~~represented~~ represented approximately 80% percent of the Railroad & Utility Products business’ net sales. Railroad products include procuring and treating items such as crossties, switch ties and various types of lumber used for railroad bridges and crossings. Utility products include transmission and distribution poles for electric and telephone utilities and piling used in industrial foundations, beach housing, docks and piers. The Railroad & Utility Products business operates 17 15 wood treating plants, one ~~specialty trackwork facility, one~~ co-generation facility and 12 pole distribution yards located throughout the United States and Australia. Our network of plants is strategically located near timber supplies to enable us to access raw materials and service customers effectively. In addition, our crosstie treating plants typically abut railroad customers’ track lines, and our pole distribution yards are typically located near our utility customers.

Our Railroad & Utility Products business manufactures its primary products and sells them directly to our customers through long-term contracts and purchase orders negotiated by our regional sales personnel and coordinated through our marketing group at corporate headquarters. We maintain inventories at our plant locations and procurement yards and do not factor our inventories or receivables to third parties.

The Railroad & Utility Products business’ largest customer base is the North American Class 1 railroad market, which buys ~~79%~~approximately of80 percent of all crossties produced in the United States and Canada. We have also been expanding key relationships with some of the approximately 550 short-line and regional rail lines. The railroad crosstie market is a mature market with approximately 19 21.5 million replacement crossties (both wood and non-wood) purchased during ~~2005,~~2008. ~~representing~~We ancurrently ~~estimated~~supply ~~$551~~all seven of the North American Class 1 railroads and have contracts with six of the seven North American Class 1 railroads. We have enjoyed ~~million~~long-standing inrelationships ~~sales~~with this important customer base. We ~~currently~~intend ~~have~~to ~~contracts~~focus on capitalizing on our relationships with railroads by offering an expanded list of complementary product offerings that the railroads may be interested in outsourcing to us.

10We believe we are the largest supplier of railroad crossties in North America. Competitive factors in the railroad crosstie market include price, quality, service and security of supply. We believe we have a competitive advantage due to our national network of treating plants and direct access to our major customers’ rail lines, which provide for security of supply and logistics advantages for our customers.

Hardwoods, such as oak and other species, are the major raw materials in wood crossties. Hardwood prices, which account for approximately 60 percent of a finished crosstie’s cost, fluctuate with the demand from competing hardwood lumber markets, such as oak flooring, pallets and other specialty lumber products. Normally, raw material price fluctuations are passed through to the customer according to the terms of the applicable contract. Weather conditions can be a factor in the supply of raw material, as unusually wet conditions may make it difficult to harvest timber.

In the United States, hardwood lumber is procured by us from hundreds of small sawmills throughout the northeastern, midwestern and southern areas of the country. The crossties are shipped via rail car or trucked directly to one of our ten crosstie treating plants, all of which are on line with a major railroad. The crossties are either air-stacked for a period of six to twelve months or artificially dried by a process called boultonizing. Once dried, the crossties are pressure treated with creosote, a product of our Carbon Materials & Chemicals business.

Our sales to the railroad industry are coordinated through our office in Pittsburgh, Pennsylvania, and are primarily from long-term contracts from one to seven years on a minimum requirements basis. There are several principal regional competitors in this North American market.

We believe that the threat of substitution for the wood crosstie is low due to the higher cost of alternative materials. Concrete crossties, however, have been identified by the railroads as a feasible alternative to wood crossties in limited circumstances. In

~~with~~Koppers ~~six of the seven North American Class 1 railroads and have enjoyed long-standing relationships with this important customer base~~Inc. 2008 ~~These~~Annual ~~relationships~~Report have been further strengthened recently due to our ability to absorb additional treating volumes into our existing infrastructure, with such additional volumes resulting from the exit of a major competitor from the wood treating business. We intend to focus on integrating this additional treating volume while capitalizing on our relationships with railroads by offering an expanded list of complementary product offerings that the railroads may be interested in outsourcing.

~~Historically~~ 1991, ~~investment~~we ~~trends~~acquired a 50 percent interest in ~~track~~KSA ~~maintenance~~Limited byPartnership, ~~domestic~~a ~~railroads~~concrete ~~have~~crosstie ~~been linked~~manufacturing tofacility ~~general~~in ~~economic~~Portsmouth, ~~conditions~~Ohio, in ~~the~~order ~~country~~to take advantage of this growth opportunity. ~~During~~In ~~recessions~~2008, ~~the~~an ~~railroads~~estimated ~~have~~1.0 million ~~typically~~concrete ~~deferred~~crossties ~~track~~were ~~maintenance~~installed ~~until~~by ~~economic~~Class ~~conditions~~1 ~~improve. Recently~~railroads, ~~however,~~representing ~~the~~approximately five percent of total Class 1 ~~railroads~~crosstie ~~have~~insertions. ~~increased~~We ~~their~~believe ~~spending~~that onconcrete ~~track~~crossties will continue to ~~maintenance,~~command ~~which~~approximately this level of market share. While the cost of material has ~~caused~~moderated, anthe ~~increase~~cost inof ~~demand~~installation ~~for~~of ~~railroad~~a ~~crossties.~~concrete ~~Management~~crosstie ~~believes~~remains ~~this~~higher ~~increase~~than inthat ~~demand~~of ~~will~~a ~~continue~~wood ~~for~~crosstie and the ~~near~~average ~~term.~~lives of wood and concrete crossties are similar.

~~Hardwoods,~~Demand ~~such~~for asrailroad ~~oak~~crossties ~~and~~may ~~other~~decline ~~species,~~during ~~are~~winter ~~the~~months ~~major~~due ~~raw~~to ~~materials~~inclement inweather ~~wood~~conditions ~~crossties.~~which ~~Hardwood~~make ~~prices,~~it ~~which~~difficult ~~account~~to ~~for~~install ~~approximately~~railroad ~~61%~~crossties. ofAs a ~~finished~~ ~~crosstie’s cost~~result, ~~fluctuate~~operating ~~with~~results ~~the~~may ~~demand~~vary from ~~competing~~quarter ~~hardwood lumber markets, such as oak flooring, pallets and other specialty lumber products. Normally, raw material price fluctuations are passed through~~ to ~~the~~quarter ~~customer~~depending ~~according~~on to the ~~terms~~ ofseverity ~~the applicable contract. Weather conditions can be a factor in the supply~~ of ~~raw~~weather ~~material, as unusually wet~~ conditions ~~may~~and ~~make~~other itvariables ~~difficult~~affecting toour ~~harvest timber~~products.

InUtility ~~the~~poles are ~~United~~produced ~~States,~~mainly ~~hardwood lumber is procured by us~~ from ~~hundreds~~softwoods ofsuch ~~small~~as ~~sawmills~~pine ~~throughout~~in the ~~northeastern,~~United ~~midwestern~~States and ~~southern~~ ~~areas~~from hardwoods of the ~~country.~~eucalyptus ~~The~~species ~~crossties~~in ~~are~~Australia. ~~shipped~~Most ~~via~~of ~~rail~~these ~~car~~poles orare ~~trucked~~purchased ~~directly~~from tolarge ~~one~~timber ofowners ~~our~~and ~~eleven~~individual ~~crosstie~~landowners ~~treating~~and ~~plants,~~shipped ~~all~~to one of ~~which~~our pole-peeling ~~are on line with a major railroad~~facilities. ~~The~~While crossties are ~~either~~treated ~~air-stacked~~exclusively ~~for~~with acreosote, ~~period~~we oftreat ~~six~~poles ~~to twelve~~with ~~months or artificially dried by~~ a ~~process~~variety ~~called~~of ~~boultonizing. Once dried~~preservatives, ~~the~~including ~~crossties are pressure treated with creosote~~pentachlorophenol, acopper ~~product~~chrome ofarsenates ~~our~~and ~~Carbon Materials & Chemicals business~~creosote.

~~Our~~In ~~top~~the ~~ten~~United ~~Railroad &~~States ~~Utility~~the ~~Products~~market ~~accounts~~for ~~comprised~~utility ~~approximately~~pole ~~67%, 68%~~products ~~and~~is ~~70%~~characterized by a large number of ~~Railroad &~~small, ~~Utility~~highly ~~Products’~~competitive ~~net~~producers ~~sales~~selling ~~for~~into ~~2005~~a price-sensitive industry. The utility pole market is highly fragmented domestically, ~~2004~~with over 200 investor-owned electric and ~~2003,~~telephone ~~respectively~~utilities and 2,900 smaller municipal utilities and ~~many~~rural ~~are~~electric ~~serviced~~associations. ~~through~~In ~~long-term~~recent ~~contracts~~years ~~ranging~~we ~~from~~have ~~one~~seen our utility pole volumes decrease due to ~~seven~~industry ~~years~~deregulation, its impact on amaintenance ~~requirements~~programs, ~~basis~~and overcapacity in the pole treating business. ~~Our~~We ~~sales~~expect todemand ~~the~~for ~~railroad~~utility ~~industry are~~poles ~~coordinated~~to ~~through~~remain ~~our~~at ~~office~~low levels. In Australia, in ~~Pittsburgh~~addition to utility poles, ~~Pennsylvania.~~we ~~There~~market ~~are~~smaller poles ~~several~~to ~~principal~~the ~~regional~~agricultural, ~~competitors~~landscape inand ~~this~~vineyard ~~market~~markets.

WeDuring ~~believe~~2008, ~~that~~sales ~~the~~of ~~threat~~pole ofproducts ~~substitution~~accounted for ~~the~~approximately ~~wood~~20 ~~crosstie~~percent ~~is low due to the higher cost~~ of ~~alternative~~Railroad & ~~materials. Concrete crossties, however, have been~~Utility ~~identified~~Products’ bynet ~~the railroads as a feasible alternative to wood crossties in limited circumstances~~sales. InWe ~~1991,~~have weeight ~~acquired~~principal acompetitors ~~50% partnership interest~~ in ~~KSA~~the ~~Limited Partnership, a concrete crosstie manufacturing facility in Portsmouth, Ohio, in order to take advantage of this growth opportunity~~U. ~~In 2005, an estimated 1~~S.~~1 million~~ ~~concrete~~utility ~~crossties,~~products ~~or 6% of total tie insertions, were installed by Class 1 railroads~~market. WeThere ~~believe~~are ~~that~~few ~~concrete~~barriers ~~crossties will continue~~ to ~~command~~entry ~~approximately~~in ~~this level of market share. While~~ the ~~cost~~utility ofproducts ~~material~~market, ~~and~~which ~~installation~~consists ofprimarily ~~a concrete crosstie is much higher than that~~ of aregional wood ~~crosstie,~~treating ~~the~~companies ~~average~~operating ~~lives~~small ofto medium-size ~~wood~~plants and ~~concrete~~serving ~~crossties~~local ~~are similar~~markets.

~~Utility~~Equity ~~poles~~Investments are produced mainly from softwoods such as pine and fir in the United States and from hardwoods of the eucalyptus species in Australia. Most of these poles are purchased from large timber owners and individual landowners and shipped to one of our pole-peeling facilities. While crossties are treated exclusively with creosote, we treat poles with a variety of preservatives, including pentachlorophenol, copper chrome arsenates and creosote.

InKSA ~~the~~Limited Partnership, ~~United~~located ~~States~~in ~~the~~Portsmouth, ~~market~~Ohio, ~~for~~produces ~~utility~~concrete ~~pole~~crossties, ~~products~~a iscomplementary ~~characterized~~product byto aour ~~large~~wood ~~number~~treatment crosstie business. We own 50 percent of ~~small~~KSA, ~~highly~~with ~~competitive~~the ~~producers~~other ~~selling~~50 ~~into~~percent aowned ~~price-sensitive industry.~~by ~~The~~subsidiaries ~~utility~~of ~~pole~~Heidelberg ~~market~~Cement isAG. KSA Limited Partnership also provides concrete turnouts, used in rail traffic switching, and used crosstie rehabilitation.

11TKK was established in November 2007 and is constructing and will operate a new tar distillation facility in the Hebei Province near the Jingtang Port. The Company holds a 30 percent investment in TKK which is expected to commence production in the second quarter of 2009.

highly fragmented domestically, with over 200 investor-owned electric and telephone utilities and 2,800 smaller municipal utilities and rural electric associations. Approximately 2.25 million poles are purchased annually in the United States, with a smaller market in Australia. In recent years we have seen our utility pole volumes decrease due to industry deregulation, its impact on maintenance programs, and overcapacity in the pole treating business. We expect demand for utility poles to remain at low levels. In Australia, in addition to utility poles, we market smaller poles to the agricultural, landscape and vineyard markets.

During 2005, sales of pole products accounted for approximately 20% of Railroad & Utility Products’ net sales. We have nine principal competitors in the utility products market. There are few barriers to entry in the utility products market, which consists of regional wood treating companies operating small to medium-size plants and serving local markets.

Equity Investments and Related Parties

Domestic Joint Venture: KSA Limited Partnership

KSA Limited Partnership, located in Portsmouth, Ohio, produces concrete crossties, a complementary product to our wood treatment crosstie business. We own 50% of KSA, with the other 50% owned by subsidiaries of Lehigh Cement Company. KSA Limited Partnership also provides concrete turnouts, used in rail traffic switching, and used crosstie rehabilitation.

Research and Development

~~As of December 31, 2005, we had 11 full-time employees engaged in research and development and technical service activities.~~ Our research efforts are directed toward new product development regarding alternate uses for coal tar and technical service efforts to promote the use of creosote and vacuum-distilled carbon pitch. We believe the research and technical efforts provided in these areas are adequate to maintain a leadership position in the technology related to these products. Expenditures for research and development ~~for 2005, 2004 and 2003~~ were $2.8 million, $2.28 million and $2.35 million, for the years ended December 31, 2008, 2007 and 2006, respectively.

Technology and Licensing

In 1988, we acquired certain assets from Koppers Company, Inc., including the patents, patent applications, trademarks, copyrights, transferable licenses, inventories, trade secrets and proprietary processes used in the businesses acquired. The most important trademark acquired was the name “Koppers.” The association of the name with the chemical, building, wood preservation and coke industries is beneficial to our company, as it represents long-standing, high quality products. As long as we continue to use the name “Koppers” and comply with applicable registration requirements, our right to use the name “Koppers” should continue without expiration. The expiration of other intellectual property rights is not expected to materially affect our business.

~~Environmental~~Backlog ~~Matters~~

~~Our operations and properties are subject to extensive federal~~Generally, ~~state,~~Koppers ~~local~~does ~~and~~not ~~foreign~~manufacture ~~environmental~~its ~~laws~~products ~~and~~against ~~regulations~~a ~~relating to~~backlog ~~protection~~ of the environment and human health and safety, including those concerning the treatment, storage and disposal of wastes, the investigation and remediation of contaminated soil and groundwater, the discharge of effluents intoorders. ~~waterways,~~Inventory ~~the emission of substances into the air, as well as various health~~ and ~~safety~~production ~~matters.~~levels ~~Environmental laws and regulations~~ are ~~subject~~typically todriven ~~frequent~~by ~~amendment~~expectations ~~and~~of ~~have historically become more stringent. We have incurred and could incur in the~~ future ~~significant~~demand ~~costs~~based ason ~~the~~contractual ~~result~~obligations. of our failure to comply with, and liabilities under, environmental laws and regulations, including cleanup costs, civil and criminal penalties, injunctive relief and denial or loss of, or imposition of significant restrictions on,

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Seasonality environmental permits. In addition, we have been and could in the future be subject to suit by private parties in connection with alleged violations of or liabilities under environmental laws and regulations.

WeDemand ~~accrue~~ for ~~environmental liabilities~~certain ~~when~~products amay ~~determination~~decline ~~can~~during bewinter ~~made~~months ~~that~~due ~~they~~to ~~are~~weather ~~probable and reasonably estimable~~conditions. ~~Total~~As ~~environmental~~a ~~reserves at December 31~~result, 2005 and 2004 were approximately $3.8 million and $4.7 million, respectively, which include provisions primarily for environmental fines and soil remediation. For the last three years, our annual capital expenditures in connection with environmental control facilities averaged approximately $4.4 million, and annual operating ~~expenses~~results ~~for environmental~~may ~~matters,~~vary ~~excluding~~from ~~depreciation,~~quarter ~~averaged approximately $9.7 million. Management estimates that capital expenditures in connection with matters relating~~ to ~~environmental~~quarter ~~control~~depending ~~facilities will be approximately $9 million for 2006. We~~on ~~believe that we will have continuing significant expenditures associated with compliance with environmental laws and regulations and, to~~ the ~~extent~~severity ~~not~~of ~~covered~~weather byconditions ~~insurance or available recoveries under third-party indemnification arrangements, for present~~ and ~~future remediation efforts at plant sites and third-party waste sites and~~ other ~~liabilities~~variables ~~associated~~affecting ~~with environmental matters. There can be no assurance that these expenditures will not exceed current estimates and will not have a material adverse effect on~~ our ~~business, financial condition, cash flow and results of operations~~products. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Environmental and Other Liabilities Retained or Assumed by Others” and “—Other Environmental Matters.”

Segment Information~~. Information~~ regarding our segment revenues, profits, assets and geographical information is incorporated by reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations”.

~~Seasonality. Information~~Please ~~regarding~~see ~~the~~Note ~~seasonality~~9, of“Segment ~~our~~Information,” ~~businesses~~under isItem 8 ~~incorporated~~of bythis ~~reference~~Form to10-K ~~“Management’s~~for ~~Discussion~~financial ~~and~~information ~~Analysis~~relating ofto ~~Financial~~business ~~Condition and Results of Operations—Other Matters”~~segments.

Non-U.S. Operations

Koppers has a significant investment in non-U.S. operations. Therefore, we are subject to certain risks that are inherent to foreign operations, including political and economic conditions in international markets and fluctuations in foreign exchange rates. While a significant majority of our sales and income is generated by operations in the United States, the United Kingdom, Denmark and Australia, our remaining sales and income are generated from operations in developing regions, such as China and the Middle East.

Environmental Matters

Our operations and properties are subject to extensive federal, state, local and foreign environmental laws and regulations relating to protection of the environment and human health and safety, including those concerning the treatment, storage and disposal of wastes, the investigation and remediation of contaminated soil and groundwater, the discharge of effluents into waterways, the emission of substances into the air, as well as various health and safety matters. Environmental laws and regulations are subject to frequent amendment and have historically become more stringent. We have incurred and could incur in the future significant costs as the result of our failure to comply with, and liabilities under, environmental laws and regulations, including cleanup costs, civil and criminal penalties, injunctive relief and denial or loss of, or imposition of significant restrictions on, environmental permits. In addition, we have been and could in the future be subject to suit by private parties in connection with alleged violations of, or liabilities under, environmental laws and regulations.

We accrue for environmental liabilities when a determination can be made that they are probable and reasonably estimable. Total environmental reserves at December 31, 2008 and 2007 were $11.7 million and $12.5 million, respectively, which include provisions primarily for environmental fines and remediation. For the last three years, our annual capital expenditures in connection with environmental control facilities averaged approximately $6.0 million and annual operating expenses for environmental matters, excluding depreciation, averaged approximately $12.8 million. Management estimates that capital expenditures in connection with matters relating to environmental control facilities will be approximately $10.2 million for 2009. We believe that we will have continuing significant expenditures associated with compliance with environmental laws and regulations and, to the extent not covered by insurance or available recoveries under third-party indemnification arrangements, for present and future remediation efforts at plant sites and third-party waste sites and other liabilities associated with environmental matters. There can be no assurance that these expenditures will not exceed current estimates and will not have a material adverse effect on our business, financial condition, cash flow and results of operations. See Note 19 of the Notes to Consolidated Financial Statements, “Commitments and Contingent Liabilities.”

Employees and Employee Relations

As of December 31, ~~2005~~2008, we ~~employed~~had ~~691~~604 salaried employees and 1,~~335~~ 143 non-salaried employees. Listed below is a breakdown of employees by our businesses, including administration.

Business	Salaried	Non-Salaried	Total
Carbon Materials & Chemicals	~~365~~289	~~619~~444	~~984~~733
Railroad & Utility Products	~~239~~238	~~716~~695	~~955~~933
Administration	8777	04	8781
Total Employees	~~691~~604	1,~~335~~143	21,~~026~~747

Of our employees, approximately ~~57%~~ 65 percent are represented by 20approximately 15 different labor unions and are covered under numerous labor ~~contracts~~agreements. The United Steelworkers of America, or the USWA, which had represented more than 300 employees at six of our facilities, recently merged with the Paper, Allied-Industrial, Chemical & Energy Workers’ International Union, or PACE, which had represented nearly 200 employees at four of our facilities. The USWA currently ~~represents~~represent more than ~~500~~350 of our employees at ~~ten~~six of ~~our facilities~~ ~~and, therefore, represents the largest number of our unionized employees. Labor contracts that expire in 2006 cover approximately 13% of our total labor force.~~

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Koppers Inc. 2008 Annual Report

our facilities and, therefore, represent the largest number of our unionized employees. The four labor agreements that expire in 2009 cover approximately 16 percent of our total labor force.

Internet Access

Our Internet address is www.koppers.com. Our recent filings on Form 10-K, 10-Q and 8-K and any amendments to those documents can be accessed without charge on our website under Investor Relations—SEC Filings.

ITEM 1A. RISK FACTORS

You should carefully consider the risks described below before investing in our publicly traded securities. The risks described below are not the only ones facing us. Our business is also subject to the risks that affect many other companies, such as competition, technological obsolescence, labor relations, general economic conditions, geopolitical events and international operations. Additional risks not currently known to us or that we currently believe are immaterial may also impair our business operations and our liquidity.

Risks Relating to Our Business

Conditions in the global economy and global capital markets may adversely affect our results of operations, financial condition and cash flows.

Starting in 2008 and continuing in 2009, the U.S and global economy have undergone a sudden, sharp economic downturn. Global credit and capital markets have experienced unprecedented volatility and disruption, and business credit and liquidity have tightened in much of the world. Consumer confidence and spending are down significantly and the rates of unemployment and underemployment are increasing. As a result of current economic conditions, including turmoil and uncertainty in the capital markets, credit markets have tightened significantly such that the ability to obtain new capital has become more challenging and more expensive. Several large financial institutions have either recently failed or been dependent on the assistance of the U.S. federal government to continue to operate as a going concern. It is difficult to determine the breadth and duration of the economic and financial market problems and the many ways in which they may affect our suppliers, customers and business in general. Nonetheless, continuation or further worsening of these difficult financial and macroeconomic conditions could have a significant adverse effect on our sales, profitability and results of operations. Our business and operating results for 2008 were affected by these global economic issues, and we expect that trend to continue in 2009. Many of our customers have experienced (and will likely continue to experience) deterioration of their business. They may experience cash flow shortages and may have difficulty obtaining financing. As a result, our customers may delay or cancel plans to purchase our products and may not be able to fulfill their payment obligations to us in a timely fashion. Our suppliers may be experiencing similar conditions which could impact their ability to supply us with raw materials and otherwise fulfill their obligations to us. If the global economic recession continues for an extended period or deteriorates significantly, there could be a material adverse effect to our results of operations, financial condition and cash flows.

In addition, we rely on our $300.0 million revolving credit agreement with a consortium of banks to provide us with liquidity to meet our working capital needs. At December 31, 2008, we had $283.0 million of available borrowing capacity under this arrangement. Our ability to fund our liquidity needs and working capital requirements could be impacted in the event that disruptions in the credit markets result in the banks being unable to lend to us under our revolving credit agreement.

Global economic issues could prevent us from accurately forecasting demand for our products which could have a material effect on our results of operations and our financial condition.

Adverse global economic issues, market instability and volatile commodity price fluctuations make it increasingly difficult for us, our customers and our suppliers to accurately forecast future product demands, which could cause us to procure raw materials in excess of end-product demand. This could cause a material increase to our inventory carrying costs and result in significant inventory lower of cost or market charges.

We may be required to recognize impairment charges for our long-lived assets.

At December 31, 2008, the net carrying value of long-lived assets (property, plant and equipment, goodwill and other intangible assets) totaled approximately $229.6 million. In accordance with generally accepted accounting principles, we periodically assess these assets to determine if they are impaired. Significant negative industry or economic trends, disruptions to our business, unexpected significant changes or planned changes in use of the assets, divestitures and market capitalization declines may result in impairments to goodwill and other long-lived assets. Future impairment charges could significantly affect our results of operations in the periods recognized. Impairment charges would also reduce our stockholder’s equity and could affect compliance with the covenants in our debt agreements.

We may not be able to compete successfully in any or all of the industry segments in which we operate.

The markets in which we operate are highly competitive, and this competition could harm our business, results of operations, cash flow and financial condition. If we are unable to respond successfully to changing competitive conditions, the demand for our products could be affected. We believe that the most significant competitive factor for our products is selling price. Additionally, some of the purchasers of our coke are capable of supplying a portion of their needs from their own coke production as well as from suppliers outside the United States who are able to import coke into the United States and sell it at prices competitive with those of U.S. suppliers. Some of our competitors have greater financial resources and larger capitalization than we do.

Demand for our products is cyclical and we may experience prolonged depressed market conditions for our products.

Our products are sold primarily in mature markets which historically have been cyclical, such as the aluminum, specialty chemical and utility industries.

•¡ The principal consumers of our carbon pitch are primary aluminum smelters. Although the aluminum industry has experienced growth on a long-term basis, there may be cyclical periods of weak demand which could result in decreased primary aluminum production. Our pitch sales have historically declined during such cyclical periods of weak global demand for aluminum.

•¡ The principal use of our phthalic anhydride is in the manufacture of plasticizers and flexible vinyl, which are used mainly in the housing and automobile industries. Therefore, a decline in remodeling and construction or global automobile production could reduce the demand for phthalic anhydride.

•¡ ~~The~~Over ~~principal~~the ~~customers~~last ~~for~~several ~~our~~years, ~~coke~~utility ~~are~~pole ~~U.S.~~demand ~~integrated~~has ~~steel~~declined ~~producers.~~as ~~The~~utilities ~~prices~~in atthe ~~which~~United weStates ~~will~~and beAustralia ~~able~~have toreduced ~~sell~~spending ~~our~~due ~~coke~~to incompetitive ~~the~~pressures ~~future~~arising ~~will~~from bederegulation. ~~greatly~~Deregulation ~~affected~~may bycontinue ~~the~~to ~~demand~~negatively ~~for~~affect ~~coke~~both ~~from~~ the ~~steel~~new ~~industry~~ and ~~the~~replacement ~~supply~~pole ofinstallation ~~coke from the U~~markets.~~S. integrated steel producers’ own coke production and from foreign sources.~~

•We ~~Over~~are ~~the~~currently ~~last~~experiencing significant ~~several~~volatility ~~years,~~linked ~~utility~~to ~~pole~~global ~~demand~~economic ~~has~~issues ~~declined~~that aswe ~~utilities~~more infully ~~the~~discuss ~~United~~in ~~States~~Management’s Discussion and ~~Australia~~Analysis ~~have~~of ~~reduced~~Financial ~~spending~~Condition ~~due to competitive pressures arising from deregulation. Deregulation may continue to negatively affect both the new~~ and ~~replacement~~Results ~~pole~~of ~~installation markets~~Operations.

We are dependent on major customers for a significant portion of our net sales, and the loss of one or more of our major customers could result in a significant reduction in our profitability.

For the year ended December 31, ~~2005~~2008, our top ten customers accounted for approximately ~~45%~~50 percent of our net sales. During this period, our two largest customers each accounted for ~~approximately~~ten 9%percent and 8%eight percent, respectively, of our total net sales. ~~Additionally~~The permanent loss of, ~~an integrated~~or ~~steel~~a ~~company~~significant isdecrease in the ~~only~~level of purchases by, one or more of our major customers could result in a significant reduction in our profitability.

14Our largest customer has significantly reduced their purchases of carbon pitch starting in the fourth quarter of 2008. We believe that this reduction is linked to global economic issues that we more fully discuss in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

customer for our furnace coke, with a contract to take 100% of our coke production in 2006. The permanent loss of, or a significant decrease in the level of purchases by, one or more of our major customers could result in a significant reduction in our profitability.

Fluctuations in the price, quality and availability of our primary raw materials could reduce our profitability.

Our operations depend on an adequate supply of quality raw materials being available on a timely basis. The loss of a key source of supply or a delay in shipments could cause a significant increase in our operating expenses. For example, our operations are highly dependent on a relatively small number of freight transportation services. ~~Interruptions~~We inare ~~such~~also ~~freight~~dependent ~~services~~on ~~could~~utilizing ~~impair~~specialized ~~our~~ocean-going ~~ability~~transport tovessels ~~receive~~that ~~raw~~we ~~materials~~lease ~~and~~to ~~ship~~deliver ~~finished~~raw ~~products~~materials into aour ~~timely~~facilities ~~manner.~~and Wefinished ~~are~~goods ~~also exposed~~ to ~~price and quality risks associated with raw material purchases. Such risks~~ ~~include:~~

•12 The primary raw material used by our Carbon Materials & Chemicals business is coal tar, a by-product of coke production. A shortage in the supply of domestic coal tar or a reduction in the quality of coal tar could require us to increase coal tar and carbon pitch imports, as well as the use of petroleum substitutes to meet future carbon pitch demand. This could cause a significant increase in our operating expenses.

•Table Inof certain circumstances coal tar may also be used as an alternative to fuel. Recent increases in energy prices could result in higher coal tar costs which would have to be passed through to our customers. If these costs cannot be passed through, it could result in margin reductions for our coal tar based products.Contents

•Koppers ~~The availability and cost of softwood and hardwood lumber are critical elements in our production of pole products and railroad crossties, respectively~~Inc. 2008 ~~The~~Annual ~~supply~~Report of trees of acceptable size for the production of utility poles has decreased in recent years in relation to the demand, and we accordingly have been required to pay a higher price for these materials. Historically, the supply and cost of hardwood for railroad crossties have also been subject to availability and price pressures. We may not be able to source wood raw materials at economical prices in the future.

• our ~~Metallurgical~~customers. ~~coal~~Interruptions isin ~~the~~such ~~primary~~freight services could impair our ability to receive raw ~~material~~materials ~~used~~and inship ~~the~~finished ~~production~~products ofin ~~coke~~a timely manner. AnWe ~~increase~~are inalso exposed ~~the~~to price ofand ~~metallurgical~~quality ~~coal,~~risks orassociated awith ~~prolonged~~raw ~~interruption~~material inpurchases. ~~its~~Such ~~supply,~~risks ~~could~~include ~~increase~~the ~~our~~following: ~~operating expenses.~~

•¡ ~~Our~~The ~~price~~primary ~~realizations~~raw ~~and~~material ~~profit~~used ~~margins~~by ~~for~~our ~~phthalic~~Carbon ~~anhydride~~Materials ~~have~~& ~~historically~~Chemicals ~~fluctuated~~business ~~with~~is coal tar, a by-product of furnace coke production. A shortage in the ~~price~~supply of ~~orthoxylene~~domestic ~~and~~coal ~~its~~tar ~~relationship~~or toa ~~our~~reduction ~~cost~~in the quality of coal tar could require us to ~~produce~~increase ~~naphthalene;~~coal ~~however~~tar and carbon pitch imports, ~~during~~as ~~periods~~well ofas ~~excess~~the ~~supplies~~use of ~~phthalic~~petroleum ~~anhydride~~substitutes ~~margins~~to ~~may~~meet befuture ~~reduced~~carbon ~~despite~~pitch ~~high~~demand. ~~levels~~This ~~for~~could ~~orthoxylene~~cause ~~prices~~a significant increase in our operating expenses if we are unable to pass these costs on to our customers.

Currently, we are experiencing reduced receipts of coal tar as furnace coke producers have significantly reduced the production of furnace coke due to global economic issues that we more fully discuss in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In certain circumstances coal tar may also be used as an alternative to fuel. In the past, increases in energy prices have resulted in higher coal tar costs which we have attempted to pass through to our customers. If these increased costs cannot be passed through to our customers, it could result in margin reductions for our coal tar-based products.

The availability and cost of softwood and hardwood lumber are critical elements in our production of pole products and railroad crossties, respectively. The supply of trees of acceptable size for the production of utility poles has decreased in recent years in relation to the demand, and we have been required to pay a higher price for these materials. Historically, the supply and cost of hardwood for railroad crossties have also been subject to availability and price pressures. We may not be able to source wood raw materials at economical prices in the future.

Our price realizations and profit margins for phthalic anhydride have historically fluctuated with the price of orthoxylene and its relationship to our cost to produce naphthalene; however, during periods of excess supplies of phthalic anhydride, margins may be reduced despite high levels for orthoxylene prices.

If the costs of raw materials increase significantly and we are unable to offset the increased costs with higher selling prices, our profitability will decline.

Our products may be rendered obsolete or less attractive by changes in regulatory, legislative or industry requirements.

Changes in regulatory, legislative or industry requirements may render certain of our products obsolete or less attractive. Our ability to anticipate changes in these requirements, especially changes in regulatory standards, will be a significant factor in our ability to remain competitive. We may not be able to comply in the future with new regulatory, legislative and/or industrial standards that may be necessary for us to remain competitive and certain of our products may, as a result, become obsolete or less attractive to our customers.

The development of new technologies or changes in our customers’ products could reduce the demand for our products.

Our products are used for a variety of applications by our customers. Changes in our customers’ products or processes may enable our customers to reduce consumption of the products we produce or make our products unnecessary. Customers may also find alternative materials or processes that no longer require our products. For example, in 2000 our largest carbon pitch customer announced that it was actively pursuing alternative anode technology that would eliminate the need for carbon pitch as an anode binder. The potential development and implementation of this new technology could seriously impair our ability to profitably market carbon pitch and related co-products. ~~Over~~A ~~75%~~substantial portion of our carbon pitch is sold to the aluminum industry under long-term contracts typically ranging from three to five years. If a new technology were developed that replaced the need for carbon pitch in the production of carbon anodes, it is possible that these contracts would not be renewed in the future.

Hazards associated with chemical manufacturing may cause suspensions or interruptions of our operations.

Due to the nature of our business, we are exposed to the hazards associated with chemical manufacturing and the related storage and transportation of raw materials, products and wastes in our manufacturing facilities or our distribution centers, ~~such as fires, explosions and~~ accidents that could lead to an interruption or suspension of operations. Any disruption could reduce the productivity and profitability of a particular manufacturing facility or of our company as a whole. Other hazards include:

•13 ~~piping and storage tank leaks and ruptures;~~

•Table mechanicalof failure;Contents

• such ~~exposure~~as fires, explosions and accidents that could lead to ~~hazardous~~an ~~substances;~~interruption or suspension of operations. Any disruption could reduce the productivity and profitability of a particular manufacturing facility or of our company as a whole. Other hazards include the following:

•¡ ~~chemical~~piping ~~spills~~ and ~~other~~storage ~~discharges~~tank orleaks ~~releases~~and ~~of toxic or hazardous substances or gases.~~ruptures;

mechanical failure;

exposure to hazardous substances; and

chemical spills and other discharges or releases of toxic or hazardous substances or gases.

These hazards, among others, may cause personal injury and loss of life, damage to property and contamination of the environment, which could lead to government fines or work stoppage injunctions, cleanup costs and lawsuits by injured persons. While we are unable to predict the outcome of such matters, if determined adversely to us, we may not have adequate insurance to cover related costs or liabilities and, if not, we may not have sufficient cash flow to pay for such costs or liabilities. Such outcomes could harm our customer goodwill and reduce our profitability.

We are subject to extensive environmental laws and regulations and may incur significant costs as a result of continued compliance with, violations of or liabilities under environmental laws and regulations.

Like other companies involved in environmentally sensitive businesses, our operations and properties are subject to extensive federal, state, local and foreign environmental laws and regulations, including those concerning the following, among other things:

•¡ the treatment, storage and disposal of wastes;

•¡ the investigation and remediation of contaminated soil and groundwater;

•¡ the discharge of effluents into waterways;

•¡ the emission of substances into the air;

•¡ the marketing, sale, use and registration of our chemical products, such as creosote; and

•¡ other matters relating to environmental protection and various health and safety matters.

16We have incurred, and expect to continue to incur, significant costs to comply with environmental laws and as a result of remedial obligations. We could incur significant costs, including cleanup costs, fines, civil and criminal sanctions and claims by third parties for property damage and personal injury, as a result of violations of or liabilities under environmental laws and regulations. We accrue for environmental liabilities when a determination can be made that they are probable and reasonably estimable. Total environmental reserves at December 31, 2008 and December 31, 2007 were $11.7 million and $12.5 million, respectively, which include provisions primarily for environmental fines and remediation. For the last three fiscal years, our annual capital expenditures in connection with environmental control facilities averaged approximately $6.0 million, and annual operating expenses for environmental matters, excluding depreciation, averaged approximately $12.8 million. Management estimates that capital expenditures in connection with matters relating to environmental control facilities will be approximately $10.2 million for 2009. Contamination has been identified and is being investigated and remediated at many of our sites by us or other parties.

~~Table~~Actual costs and liabilities to us may exceed forecasted amounts. Moreover, currently unknown environmental issues, such as the discovery of ~~Contents~~additional contamination or the imposition of additional sampling or cleanup obligations with respect to our sites or third party sites, may result in significant additional costs, and potentially significant expenditures could be required in order to comply with future changes to environmental laws and regulations or the interpretation or enforcement thereof. We also are involved in various litigation and proceedings relating to environmental matters and toxic tort claims which are described in detail in Note 19 of the consolidated financial statements.

We have incurred, and expect to continue to incur, significant costs to comply with environmental laws and as a result of remedial obligations. We could incur significant costs, including cleanup costs, fines, civil and criminal sanctions and claims by third parties for property damage and personal injury, as a result of violations of or liabilities under environmental laws and regulations. We accrue for environmental liabilities when a determination can be made that they are probable and reasonably estimable. Total environmental reserves at December 31, 2005 and December 31, 2004 were approximately $3.8 million and $4.7 million, respectively, which include provisions primarily for environmental fines and soil remediation. For the last three years, our annual capital expenditures in connection with environmental control facilities averaged approximately $4.4 million, and annual operating expenses for environmental matters, excluding depreciation, averaged approximately $9.7 million. Management estimates that capital expenditures in connection with matters relating to environmental control facilities will be approximately $9 million for 2006. Contamination has been identified and is being investigated and remediated at many of our sites by us or other parties. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Environmental and Other Liabilities Retained or Assumed by Others” and “—Other Environmental Matters.”

Actual costs and liabilities to us may exceed forecasted amounts. Moreover, currently unknown environmental issues, such as the discovery of additional contamination or the imposition of additional cleanup obligations with respect to our sites or third party sites, may result in significant additional costs, and potentially significant expenditures could be required in order to comply with future changes to environmental laws and regulations or the interpretation or enforcement thereof. We also are involved in various litigation and proceedings relating to environmental matters and toxic tort claims. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Legal Matters” and “Business—Legal Proceedings.”

Beazer East and Beazer Limited may not continue to meet their obligations to indemnify us.

Under the terms of the asset purchase agreement between us and Koppers Company, Inc. (now known as Beazer East, Inc.) upon ~~our~~the formation of Koppers Inc. in 1988, subject to certain limitations, Beazer East and Beazer Limited assumed the liability for and indemnified us against (among other things) certain clean-up liabilities for contamination occurring prior to the ~~purchase~~ date at sites acquired from Beazer East and third-party claims arising from such contamination, which we refer to herein as the Indemnity. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Environmental and Other Liabilities Retained by Other” and “Business—Legal Proceedings.” Beazer East and Beazer Limited may not continue to meet their obligations. In addition, Beazer East could in the future choose to challenge its obligations under the Indemnity or our satisfaction of the conditions to indemnification imposed on us thereunder. In addition, the government and other third parties also have the right under applicable environmental laws to seek relief directly from us for any and all such costs and liabilities. In July 2004, we entered into an agreement with Beazer East to amend the December 29, 1988 asset purchase agreement to provide, among other things, for the continued tender of pre-closing environmental liabilities to Beazer East under the Indemnity through July 2019. As consideration for the agreement, we agreed to pay Beazer East a total of $7.0 million in four installments over three years and to share toxic tort litigation defense costs arising from any sites acquired from Beazer East. The first two payments of $2.0 million each were made in July 2004 and 2005. Qualified expenditures under the Indemnity are not subject to a monetary limit.

~~Without~~14 reimbursement under the Indemnity, the obligation to pay the costs and assume the liabilities relating to these matters would have a significant impact on our net income. Furthermore, without reimbursement, we could be required to record a contingent liability on our balance sheets with respect to environmental matters covered by the Indemnity, which could result in our having significant additional negative net worth. Finally, the Indemnity does not afford us indemnification against

~~environmental~~Koppers ~~costs~~Inc. 2008 ~~and~~Annual ~~liabilities~~Report attributable to acts or omissions occurring after the closing of the acquisition of assets from Beazer East under the asset purchase agreement, nor is the Indemnity applicable to liabilities arising in connection with other acquisitions by us after that closing.

purchase date at sites acquired from Beazer East and third-party claims arising from such contamination (the “Indemnity”). Beazer East and Beazer Limited (which are indirect subsidiaries of Heidelberg Cement AG) may not continue to meet their obligations. In addition, Beazer East could in the future choose to challenge its obligations under the Indemnity or our satisfaction of the conditions to indemnification imposed on us thereunder. In addition, the government and other third parties also have the right under applicable environmental laws to seek relief directly from us for any and all such costs and liabilities. In July 2004, we entered into an agreement with Beazer East to amend the December 29, 1988 asset purchase agreement to provide, among other things, for the continued tender of pre-closing environmental liabilities to Beazer East under the Indemnity through July 2019. As consideration for the agreement, we agreed to pay Beazer East a total of $7.0 million in four installments over three years and to share toxic tort litigation defense costs arising from any sites acquired from Beazer East. Qualified expenditures under the Indemnity are not subject to a monetary limit.

The Indemnity provides for the resolution of issues between Koppers Inc. and Beazer East by an arbitrator on an expedited basis upon the request of either party. The arbitrator could be asked, among other things, to make a determination regarding the allocation of environmental responsibilities between Koppers Inc. and Beazer East. Arbitration decisions under the Indemnity are final and binding on the parties. Periodically, issues have arisen between Koppers Inc. and Beazer East and/or other indemnitors that have been resolved without arbitration. From time to time, Koppers Inc. and Beazer East have engaged in discussions that involve, among other things, the allocation of environmental costs related to certain operating and closed facilities.

Without reimbursement under the Indemnity, the obligation to pay the costs and assume the liabilities relating to these matters would have a significant impact on our net income. Furthermore, without reimbursement, we could be required to record a contingent liability on our balance sheets with respect to environmental matters covered by the Indemnity, which could result in our having significant negative net worth. Finally, the Indemnity does not afford us indemnification against environmental costs and liabilities attributable to acts or omissions occurring after the closing of the acquisition of assets from Beazer East under the asset purchase agreement, nor is the Indemnity applicable to liabilities arising in connection with other acquisitions by us after that closing.

The insurance that we maintain may not fully cover all potential exposures.

We maintain property, casualty, general liability and workers’ compensation insurance, but such insurance may not cover all risks associated with the hazards of our business and is subject to limitations, including deductibles and maximum liabilities covered. We may incur losses beyond the limits, or outside the coverage, of our insurance policies, including liabilities for environmental compliance and remediation. In addition, from time to time, various types of insurance for companies in our industry have not been available on commercially acceptable terms or, in some cases, have not been available at all. In the future, we may not be able to obtain coverage at current levels, and our premiums may increase significantly on coverage that we maintain.

Adverse weather conditions may reduce our operating results.

Our quarterly operating results fluctuate due to a variety of factors that are outside our control, including inclement weather conditions, which in the past have caused a decline in our operating results. For example, adverse weather conditions have at times negatively impacted our supply chain as wet conditions impacted logging operations, reducing our ability to procure crossties. In addition, adverse ~~weather~~ weather conditions have had a negative impact on our customers in the ~~roofing and~~ pavement sealer businesses, resulting in a negative impact on our sales of these products. Moreover, demand for many of our products declines during periods of inclement weather.

We are subject to risks inherent in foreign operations, including changes in social, political and economic conditions.

We have operations in the United States, ~~Australasia~~Australia, China, ~~Europe~~ and ~~South Africa~~Europe, and sell our products in many foreign countries. InFor ~~2005~~the ~~and~~year ~~2004~~ended December 31, 2008, net sales from ~~our~~ products sold by ~~Koppers~~our ~~Europe~~foreign ~~ApS~~subsidiaries ~~and Koppers Australia Pty Ltd.~~ accounted for approximately ~~34%~~38 percent of our total net sales ~~in both years~~. Like other global companies, we are exposed to market risks relating to fluctuations in interest rates and foreign currency exchange rates. Our international revenues could be reduced by currency fluctuations or devaluations. Changes in currency exchange rates could lower our reported revenues and could require us to reduce our prices to remain competitive in foreign markets, which could also reduce our profitability. We have not historically hedged our financial statement exposure and, as a result, we could incur unanticipated losses. We are also subject to potentially increasing transportation and shipping costs associated with international operations. ~~Furthermore,~~ we are also exposed to risks associated with changes in the laws and policies governing foreign investments in countries where we have operations as well as, to a lesser extent, changes in U.S. laws and regulations relating to foreign trade and investment.

Furthermore, we are also exposed to risks associated with changes in the laws and policies governing foreign investments in countries where we have operations as well as, to a lesser extent, changes in U.S. laws and regulations relating to foreign trade and investment.

Our strategy to selectively pursue complementary acquisitions may present unforeseen integration obstacles or costs.

Our business strategy includes the potential acquisition of businesses and entering into joint ventures and other business combinations that we expect would complement and expand our existing products and the markets where we sell our products ~~and improve our market position~~. We may not be able to successfully identify suitable acquisition or joint venture opportunities or complete any particular acquisition, combination, joint venture or other transaction on acceptable terms. We cannot predict the timing and success of our efforts to acquire any particular business and integrate the acquired business into our existing operations. Also, efforts to acquire other businesses or the implementation of other elements of this business strategy may divert managerial resources away from our business operations. In addition, our ability to engage in strategic acquisitions may depend on our ability to raise substantial capital and we may not be able to raise the funds necessary to implement our acquisition strategy on terms satisfactory to us, if at all. Our failure to identify suitable acquisition or joint venture opportunities may restrict our ability to grow our business. In addition, we may not be able to successfully integrate businesses that we acquire in the future, which could lead to increased operating costs, a failure to realize anticipated operating synergies, or both.

Litigation against us could be costly and time-consuming to defend, and due to the nature of our business and products, we may be liable for damages arising out of our acts or omissions, which may have a material adverse affect on us.

We produce chemicals that require appropriate procedures and care to be used in handling them or using them to manufacture other products. As a result of the nature of some of the products we use and produce, we may face product liability, toxic tort and other claims relating to incidents involving the handling, storage and use of and exposure to our products.

For example, we are a defendant in a significant number of lawsuits in which the plaintiffs claim they have suffered a variety of illnesses (including cancer) and/or property damage as a result of exposure to coal tar pitch, benzene, wood treatment chemicals and other chemicals, including certain cases in state and federal court relating to our Grenada, Mississippi and Somerville, Texas facilities. A further description of the material claims against us is included in Note 19 of the consolidated financial statements.

We are indemnified for certain product liability exposures under the Indemnity with Beazer East related to products sold prior to the closing of the acquisition of assets from Beazer East. Beazer East and Beazer Limited may not continue to meet their obligations under the Indemnity. In addition, Beazer East could choose to challenge its obligations under the Indemnity or our satisfaction of the conditions to indemnification imposed on us thereunder.

If for any reason (including disputed coverage or financial incapability) one or more of such parties fail to perform their obligations and we are held liable for or otherwise required to pay all or part of such liabilities without reimbursement, the imposition of such liabilities on us could have a material adverse effect on our business, financial condition, cash flows and results of operations. Furthermore, we could be required to record a contingent liability on our balance sheets with respect to such matters, which could result in us having significant additional negative net worth.

In addition to the above, we are regularly subject to legal proceedings and claims that arise in the ordinary course of business, such as workers’ compensation claims, governmental investigations, employment disputes, and customer and supplier disputes arising out of the conduct of our business. Litigation could result in substantial costs and may divert management’s attention and resources away from the day-to-day operation of our business.

Labor disputes could disrupt our operations and divert the attention of our management and may cause a decline in our production and a reduction in our profitability.

Of our employees, approximately 65 percent are represented by approximately 15 different labor unions and are covered under numerous labor agreements. The United Steelworkers of America currently represent approximately 350 of our employees at six of our facilities and, therefore, represent the largest number of our unionized employees. The four labor agreements that expire in 2009 cover approximately 16 percent of our total workforce. We may not be able to reach new agreements without union

Koppers Inc. 2008 Annual Report

action or on terms satisfactory to us. Any future labor disputes with any such unions could result in strikes or other labor protests, which could disrupt our operations and divert the attention of our management from operating our business. If we were to experience a strike or work stoppage, it may be difficult for us to find a sufficient number of employees with the necessary skills to replace these employees. Any such labor disputes could cause a decline in our production and a reduction in our profitability.

Our post-retirement obligations are currently underfunded. We expect to make significant cash payments to our pension and other post-retirement plans, which will reduce the cash available for our business.

As of December 31, 2008, our benefit obligation under our defined benefit pension plans exceeded the fair value of plan assets by approximately $63.5 million. Our pension asset funding to total pension obligation ratio was 64 percent as of December 31, 2008. The underfunding was caused, in large part, by fluctuations in the financial markets that have caused the value of the assets in our defined benefit pension plans to be significantly lower than anticipated. For example, our pension assets declined in value by $43.0 million during 2008. In addition, our obligations for other post-retirement benefit obligations are unfunded and total $13.6 million at December 31, 2008.

During the years ended December 31, 2008 and December 31, 2007, we contributed $3.3 million and $13.5 million, respectively, to our post-retirement benefit plans. In 2009, we estimate that mandatory funding obligations will be approximately $3 million for all of our post-retirement plans. With respect to our U.S. defined benefit pension plan which is our largest plan, we have no mandatory funding obligation in 2009. However, we estimate that mandatory funding for this plan will be approximately $20 million in 2010 and $30 million in 2011 unless legislative relief is granted.

Management expects that any future obligations under our post-retirement benefit plans that are not currently funded will be funded from our future cash flow from operations. If our contributions to our post-retirement benefit plans are insufficient to fund the post-retirement benefit plans adequately to cover our future obligations, the performance of the assets in our pension plans does not meet our expectations or other actuarial assumptions or mandatory funding laws are modified, our contributions to our post-retirement benefit plans could be materially higher than we expect, thus reducing the cash available for our business.

We have a substantial amount of indebtedness, which could harm our ability to operate our business, remain in compliance with debt covenants, make payments on our debt and pay dividends.

As of December 31, 2008, we and our subsidiaries had approximately $188.3 million of indebtedness (excluding trade payables and intercompany indebtedness), consisting primarily of our Senior Secured Notes.

The degree to which we are leveraged could have important consequences, including the following:

our ability to satisfy our obligations under our debt could be affected and any failure to comply with the requirements, including financial and other restrictive covenants, of any of our debt agreements could result in an event of default under the agreements governing such indebtedness;

a substantial portion of our cash flow from operations will be required to make interest and principal payments and may not be available for operations, working capital, capital expenditures, expansion, acquisitions or general corporate or other purposes;

our ability to obtain additional financing in the future may be impaired;

we may be more highly leveraged than our competitors, which may place us at a competitive disadvantage;

our flexibility in planning for, or reacting to, changes in our business and industry may be limited;

our degree of leverage may make us more vulnerable in the event of a downturn in our business, our industry or the economy in general; and

our ability to pay dividends to our shareholders may be impaired.

Furthermore, we and our subsidiaries may be able to incur substantial additional indebtedness in the future. If we incur additional indebtedness, the magnitude of the risks associated with our substantial leverage, including our ability to service our debt, would increase.

Restrictions in our debt agreements could limit our growth and our ability to respond to changing conditions and, in the event of a default, all of these borrowings become immediately due and payable.

Koppers Inc.’s revolving credit facility and the indentures governing our Senior Secured Notes contain a number of significant covenants in addition to covenants restricting the incurrence of additional debt. Among other things these covenants limit our ability to

incur or guarantee additional debt and issue certain types of preferred stock;

pay dividends on our capital stock or redeem, repurchase or retire our capital stock or subordinated debt;

make investments;

create liens on our assets;

enter into sale and leaseback transactions;

sell assets;

engage in transactions with our affiliates;

create restrictions on the ability of our restricted subsidiaries to pay dividends or make other payments to us;

consolidate, merge or transfer all or substantially all of our assets and the assets of our subsidiaries; and

transfer or issue shares of stock of subsidiaries.

In addition, Koppers Inc.’s revolving credit facility contains other and more restrictive covenants. Additionally, it requires us to maintain certain financial ratios and satisfy certain financial condition tests and require us to take action to reduce our debt or take some other action to comply with them.

These restrictions could limit our ability to obtain future financings, make needed capital expenditures, withstand a downturn in our business or the economy in general or otherwise conduct necessary corporate activities. We may also be prevented from taking advantage of business opportunities that arise because of the limitations that the restrictive covenants under Koppers Inc.’s revolving credit facility and the indentures governing our Senior Secured Notes impose on us.

A breach of any of these covenants would result in a default under the applicable debt agreement. A default, if not waived, could result in acceleration of the debt outstanding under that agreement and in a default with respect to, and acceleration of, the debt outstanding under our other debt agreements and the indentures governing our Senior Secured Notes. The accelerated debt would become immediately due and payable. If that should occur, we may not be able to pay all such debt or to borrow sufficient funds to refinance it. This would result in a significant interruption in our business operations, which would negatively impact the market price of our common stock. Even if new financing were then available, it may not be on terms that are acceptable to us.

We may incur significant charges in the event we close all or part of a manufacturing plant or facility.

We periodically assess our manufacturing operations in order to manufacture and distribute our products in the most efficient manner. Based on our assessments, we may make capital improvements to modernize certain units, move manufacturing or distribution capabilities from one plant or facility to another plant or facility, discontinue manufacturing or distributing certain products or close all or part of a manufacturing plant or facility.

We depend on our senior management team and the loss of any member could adversely affect our operations.

Our success is dependent on the management, experience and leadership skills of our senior management team. Our senior management team has an average of over 20 years of industry experience. The loss of any of these individuals or an inability to attract, retain and maintain additional personnel with similar industry experience could prevent us from implementing our business strategy. We cannot assure you that we will be able to retain our existing senior management personnel or to attract additional qualified personnel when needed.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

~~other~~Koppers ~~elements of this business strategy may divert managerial resources away from our business operations~~Inc. 2008 InAnnual ~~addition,~~Report our ability to engage in strategic acquisitions may depend on our ability to raise substantial capital and we may not be able to raise the funds necessary to implement our acquisition strategy on terms satisfactory to us, if at all. Our failure to identify suitable acquisition or joint venture opportunities may restrict our ability to grow our business. In addition, we may not be able to successfully integrate businesses that we acquire in the future, which could lead to increased operating costs, a failure to realize anticipated operating synergies or both.

~~We are the subject of ongoing investigations regarding our competitive practices, which may result in fines or other penalties~~ITEM 2. PROPERTIES

InOur ~~April~~principal ~~2005,~~fixed ~~the~~assets ~~New~~consist ~~Zealand~~of ~~Commerce~~our ~~Commission~~production, ~~or the NZCC~~treatment, ~~filed~~and storage afacilities ~~statement~~and ofour ~~claim~~transportation inand ~~the~~plant ~~High~~vehicles. ~~Court~~Our ofproduction ~~New~~facilities ~~Zealand~~consist ~~against a number~~ of ~~corporate~~12 ~~and individual~~Carbon ~~defendants,~~Materials & ~~including~~Chemicals ~~Koppers~~facilities ~~Arch Wood Protection (NZ) Limited, or KANZ,~~ and ~~Koppers~~16 ~~Arch~~Railroad & ~~Investments~~Utility ~~Pty~~Products ~~Limited, KAI~~facilities. ~~KANZ~~As ~~and~~of ~~KAI~~December 31, ~~have~~2008, ~~entered into a cooperation agreement (~~the ~~“Cooperation~~net ~~Agreement”) with the NZCC for the~~book ~~resolution~~value of ~~these proceedings pursuant to which KANZ~~vehicles, ~~KAI~~machinery and ~~the~~equipment ~~NZCC~~represented ~~have~~approximately ~~agreed~~20 topercent ~~make~~of aour ~~joint~~total ~~submission~~assets, toas ~~the~~reflected ~~court~~in ~~that~~our ~~that~~consolidated itbalance ~~would be appropriate to impose a joint aggregate penalty of approximately $2~~sheet.5 ~~million~~Generally, ~~plus~~our ~~costs~~production offacilities ~~$0.1 million~~are onsuitable ~~KANZ~~ and ~~KAI~~adequate for ~~breaches of~~ the ~~Commerce~~purposes ~~Act.~~for ~~See~~which ~~“Management’s~~they ~~Discussion~~are intended, and ~~Analysis~~overall ofhave ~~Financial~~sufficient ~~Condition~~capacity ~~and~~to ~~Results~~conduct ofbusiness ~~Operations—Legal~~in ~~Matters—Government~~the ~~Investigations~~upcoming year.” ~~Except~~The asfollowing ~~set~~chart sets forth ~~above,~~information weregarding ~~are not~~our ~~currently~~production ~~aware~~facilities: ~~of any other claims (civil or governmental) related to competitive practices in New Zealand.~~

~~Koppers~~Primary ~~Arch~~Product ~~Wood~~Line ~~Protection~~Location Description ofProperty Interest Carbon Materials & Chemicals Carbon Pitch Clairton, Pennsylvania Owned Carbon Pitch Follansbee, West Virginia Owned Carbon Pitch(~~Aust~~a) ~~Pty~~Hebei ~~Limited~~Province, orChina ~~Koppers~~Leased ~~Arch~~Carbon Black Kurnell, New South Wales, Australia Leased Carbon Pitch Longview, ~~has~~Washington ~~made~~Leased anCarbon ~~application~~Pitch ~~for~~Mayfield, ~~leniency~~New ~~under~~South ~~the~~Wales, ~~Australian~~Australia ~~Competition~~Owned ~~and~~Carbon ~~Consumer Commission’s~~Pitch Nyborg, orDenmark ~~the~~Owned/Leased ~~ACCC~~Carbon Pitch Port Clarence, ~~policy~~United ~~for~~Kingdom ~~cartel~~Owned ~~conduct.~~Carbon ~~The~~Pitch ~~ACCC~~Portland, ~~has~~Oregon ~~granted~~Leased ~~immunity~~Carbon toPitch ~~Koppers~~Scunthorpe, ~~Arch~~United Kingdom Owned Carbon Pitch, Phthalic Anhydride Stickney, Illinois Owned Carbon Pitch Tangshan, China Leased Railroad & Utility Products Utility Poles, Railroad Crossties Bunbury, Western Australia, ~~subject~~Australia toOwned/Leased ~~the~~Utility ~~fulfillment~~Poles, ofRailroad ~~certain~~Crossties ~~conditions~~Denver, ~~such~~Colorado asOwned Utility Poles, ~~but~~Railroad ~~not~~Crossties ~~limited~~Florence, toSouth Carolina Owned Utility Poles Gainesville, ~~continued~~Florida ~~cooperation.~~Owned IfRailroad ~~the~~Crossties ~~conditions~~Galesburg, ~~are~~Illinois ~~not fulfilled~~Leased Utility Poles Grafton, ~~Koppers~~New ~~Arch~~South Wales, Australia ~~may~~Owned beRailroad ~~penalized~~Crossties ~~for~~Green ~~any~~Spring, ~~violations~~West ofVirginia ~~the~~Owned ~~competition~~Utility ~~laws~~Poles, ofRailroad ~~Australia.~~Crossties WeGrenada, ~~are~~Mississippi ~~not~~Owned ~~currently~~Railroad ~~aware~~Crossties ofGuthrie, ~~any~~Kentucky ~~civil~~Owned ~~claims~~Utility ~~related~~Poles toLongford, ~~competitive~~Tasmania ~~practices~~Owned inRailroad Crossties Muncy, Pennsylvania Owned Railroad Crossties North Little Rock, Arkansas Owned Concrete Crossties(b) Portsmouth, Ohio Owned Railroad Crossties Roanoke, Virginia Owned Railroad Crossties Somerville, Texas Owned Pine Products Takura, Queensland, Australia. Leased

We(a) ~~have~~Ownership ~~reserved~~percentage ~~approximately $2.6 million for these penalties as of December 31, 2005. This amount~~ is ~~included~~30 ~~in cost of sales~~percent. ~~The amount reserved is based upon the penalties and costs set forth in the Cooperation Agreement.~~

~~KANZ and Koppers Arch Australia are majority-owned subsidiaries of Koppers Arch Investments, which is an Australian joint venture owned 51% by World-Wide Ventures Corporation~~ (~~our indirect subsidiary~~b) ~~and~~Ownership ~~49%~~percentage byis ~~Hickson~~50 ~~Nederland BV~~percent. ~~KANZ and Koppers Arch Australia manufacture and market wood preservative products throughout New Zealand and Australia, respectively.~~

WeOur corporate offices are ~~not~~located ~~currently~~in ~~aware~~approximately 60,000 ofsquare ~~any~~feet ~~other~~of ~~government~~leased ~~investigations~~office orspace ~~other~~in ~~claims related~~Pittsburgh, toPennsylvania. ~~these~~The ~~investigations~~lease ofterm ~~industry~~expires ~~competitive~~on ~~practices~~December 31, 2010.

Litigation against us could be costly and time consuming to defend, and due to the nature of our business and products, we may be liable for damages arising out of our acts or omissions.

We produce hazardous chemicals that require appropriate procedures and care to be used in handling them or using them to manufacture other products. As a result of the hazardous nature of some of the products we use and produce, we may face product liability claims relating to incidents involving the handling, storage and use of and exposure to our products. For example:

• We, along with other defendants, has been named as a defendant in 24 cases filed in state court in Pennsylvania and two cases filed in state court in Texas in which the plaintiffs claim they suffered a variety of illnesses (including cancer) as a result of exposure to coal tar pitch

~~sold by us~~ITEM 3. ~~There~~LEGAL ~~are~~PROCEEDINGS a total of approximately 82 plaintiffs in these cases. Of the 82 plaintiffs, 80 plaintiffs do not assert any specific amount of damages. These 80 plaintiffs seek compensatory and punitive damages in unspecified amounts in excess of the minimum jurisdictional limits (in most cases $25,000) of the applicable courts. Of the 82 plaintiffs, two plaintiffs (in the same case) assert damages not to exceed a combined total of $10.0 million. The cases are in the early stages of discovery. We have not provided a reserve for these lawsuits because, at this time, we cannot reasonably determine the probability of a loss, and the amount of loss, if any, cannot be reasonably estimated. Although we are vigorously defending these cases, an unfavorable resolution of these matters may result in substantial costs.

~~Grenada~~We are involved in litigation and various proceedings relating to environmental laws and regulations, toxic tort, product liability and other matters. An adverse outcome for certain of these cases could result in a material adverse effect on our business, cash flows and results of operations. The information related to legal matters set forth in Note 19 to the Consolidated Financial Statements of Koppers Inc. is hereby incorporated by reference.

~~All~~ITEM 4. ~~Cases~~SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

We, together with various co-defendants (including Beazer East), have been named as a defendant in toxic tort lawsuits in state court in Mississippi (see State Court Cases below) and in federal court in Mississippi (see Federal Court Cases below) arising from the operation of the Grenada facilityNone. The complaints allege that plaintiffs were exposed to harmful levels of various toxic chemicals, including creosote, pentachlorophenol, polycyclic aromatic hydrocarbons and dioxin, as a result of soil, surface water and groundwater contamination and air emissions from the Grenada facility and, in some cases, from an adjacent manufacturing facility operated by Heatcraft, Inc. Based on our experience in defending previous toxic tort cases, we do not believe that the damages sought by the plaintiffs in the state and federal court cases are supported by the facts of the cases. We have not provided a reserve for these lawsuits because, at this time, we cannot reasonably determine the probability of a loss, and the amount of loss, if any, cannot be reasonably estimated. Although we intend to vigorously defend these cases, there can be no assurance that an unfavorable resolution of these matters will not result in substantial cost to us.

~~Federal~~EXECUTIVE ~~Court~~OFFICERS ~~Cases~~OF THE COMPANY

~~Beck Case—~~The ~~complaint~~following intable ~~this~~sets ~~case~~forth ~~was originally filed by approximately 110 plaintiffs. Pursuant to an order granting defendants’ motion to sever,~~ the ~~court dismissed the claims of 98 plaintiffs in the Beck case without prejudice to their right to re-file their complaints. In December 2005~~names, 94ages ofand ~~the 98 plaintiffs in the Beck case whose claims were dismissed re-filed their complaints.~~positions ~~The plaintiffs in the 94 re-filed cases seek compensatory damages from us~~ of atour ~~least~~executive ~~$5.0~~officers ~~million~~as ~~for each~~ of ~~eight~~February 4, ~~counts and punitive damages of at least $10~~2009.0 ~~million~~Our ~~for~~executive ~~each~~officers ofhold ~~three~~their ~~counts~~positions ~~(in~~until ~~addition to damages for an unspecified amount for trespass and nuisance). No discovery orders have been issued with respect to~~ the 94annual ~~additional~~meeting ~~cases. The claims~~ of the 12board ~~plaintiffs whose claims were not dismissed are still pending. The 12 remaining plaintiffs seek compensatory damages from the defendants in an unspecified amount and punitive damages~~ of ~~$20.0~~directors ~~million~~or ~~for~~until ~~each~~their ofrespective ~~four~~successors ~~counts. The court ordered that the claims of the 12 remaining Beck plaintiffs must be tried separately. The first of these trials is scheduled to commence on April 17, 2006. The remaining 11 trials~~ are ~~scheduled~~elected toand ~~commence at the rate of approximately one trial per calendar quarter beginning upon the conclusion of the first trial~~qualified.

Ellis Case—There are approximately 1,130 plaintiffs in this case. Each plaintiff seeks compensatory damages from us of at least $5.0 million for each of seven counts and punitive damages of at least $10.0 million for each of three counts (in addition to damages for an unspecified amount for trespass and nuisance). The Ellis complaint also requests injunctive relief. Discovery in this case has been stayed pending the completion of the trials for the 12 plaintiffs in the Beck case.


Name	Age	Position
Walter W. Turner	62	President and Chief Executive Officer and Director
James T. Dietz	52	Vice President, European Operations
Donald E. Evans	43	Vice President, Global Marketing, Sales and Development, Carbon Materials & Chemicals
Kevin J. Fitzgerald	56	Senior Vice President, Global Carbon Materials & Chemicals
Robert J. Howard	53	Vice President, Human Resources
Leslie S. Hyde	48	Vice President, Safety and Environmental Affairs
Steven R. Lacy	53	Senior Vice President, Administration, General Counsel and Secretary
Thomas D. Loadman	54	Vice President and General Manager, Railroad Products & Services
Michael J. Mancione	42	Vice President, North American Carbon Materials & Chemicals
Mark R. McCormack	49	Vice President, Australian Operations
Brian H. McCurrie	48	Vice President and Chief Financial Officer
Louann E. Tronsberg-Deihle	45	Treasurer

Mr. Turner has been President and Chief Executive Officer and director of Koppers Inc. since February 1998.

Mr. Dietz was elected Vice President, European Operations of Koppers Inc., in November 2006 effective January 2007. He joined Koppers in 1995 and has held positions in operations and engineering. Most recently, he was Operations Manager, Carbon Materials & Chemicals of Koppers Inc., beginning in March 1999.

Mr. Evans was elected Vice President, Global Marketing, Sales and Development, Carbon Materials & Chemicals of Koppers Inc. in February 2007. From October 2004 through December 2006, Mr. Evans was Vice President for Advanced Recycling Systems (industrial equipment manufacturing). From July 1998 through September 2004, Mr. Evans had been Manager, Business Development & Strategic Planning, Carbon Materials & Chemicals of Koppers Inc.

Mr. Fitzgerald was elected Senior Vice President, Global Carbon Materials & Chemicals of Koppers Inc. in November 2006. Mr. Fitzgerald was elected Vice President and General Manager, Carbon Materials & Chemicals of Koppers Inc. in March 1998.

Mr. Howard was elected Vice President, Human Resources of Koppers Inc. in February 2009. In September 2006, Mr. Howard was appointed Vice President, Human Resources. Prior to joining Koppers Inc., Mr. Howard was Vice President, Human Resources and Administration of L.B. Foster Company Inc. (rail and piling supply and precast products) since May 2002.

Ms. Hyde was elected Vice President, Safety and Environmental Affairs of Koppers Inc. in January 2005. Prior to that date, Ms. Hyde held the position of Manager, Environmental Department of Koppers Inc. since 1999.

Mr. Lacy has been Senior Vice President, Administration, General Counsel and Secretary of Koppers Inc. since January 2004. Mr. Lacy had previously been elected Vice President, Law and Human Resources and Secretary of Koppers Inc. in July 2002.

Mr. Loadman was elected Vice President and General Manager, Railroad Products & Services of Koppers Inc. in November 1994.

~~State~~Koppers ~~Court~~Inc. 2008 ~~Cases~~Annual Report

InMr. Mancione ~~the~~was ~~state~~elected ~~court~~Vice ~~cases~~President, ~~which~~Carbon ~~currently~~Materials & ~~include a total of approximately 235 plaintiffs~~Chemicals, ~~each~~North ~~plaintiff~~America ~~seeks compensatory damages from the defendants~~ of ~~at least~~Koppers $5Inc.0 ~~million~~in ~~for~~November ~~each of up to eight counts and punitive damages of at least $10~~2006.0 ~~million for each of three counts~~Mr. Mancione ~~Certain~~was ~~plaintiffs~~Manager, ~~also~~Marketing ~~seek damages for trespass~~ and ~~private~~Sales, ~~nuisance~~Carbon inMaterials ~~unspecified~~& ~~amounts together with injunctive relief.~~Distillates ~~The state court cases which were not originally filed in Grenada County are in the process~~ of ~~being~~Koppers ~~transferred to Grenada County pursuant to an order of the Mississippi Supreme Court granting our motions for a change of venue and severance~~Inc. ~~Discovery~~, inbeginning ~~the state court cases not originally filed~~ in ~~Grenada~~November ~~County is currently stayed. After such cases have been transferred to Grenada County~~2004, ~~the~~and ~~stay~~prior ~~of discovery in such cases is expected~~ to ~~be lifted. With respect to the state court case~~ that was ~~originally~~Operations ~~filed on behalf of 95 plaintiffs in Grenada County~~Manager, ~~the~~Railroad ~~court~~Products & ~~granted~~Services ~~our motion to sever the claims~~ of ~~these~~Koppers ~~plaintiffs for improper joinder and set a period of time for the plaintiffs to re-file individual complaints or have their complaints dismissed~~Inc. ~~These~~beginning ~~plaintiffs (together with a small number of new plaintiffs) have filed their individual complaints~~ in ~~Grenada County~~2002. ~~These plaintiffs are included in the total of approximately 235 plaintiffs shown above.~~

~~For~~Mr. McCormack ~~more~~was ~~information~~elected Vice President, ~~see~~Australian ~~“Management’s~~Operations ~~Discussion~~of ~~and~~Koppers ~~Analysis~~Inc. ofin ~~Financial~~November ~~Condition~~2006. Mr. McCormack had been elected Vice President, Global Marketing, Sales and ~~Results~~Development, Carbon Materials & Chemicals of ~~Operations—Legal~~Koppers ~~Matters”~~Inc. ~~and~~in ~~“Business—Legal~~February ~~Proceedings~~2002.”

InMr. McCurrie ~~addition,~~has webeen ~~are~~Vice ~~regularly~~President ~~subject to legal proceedings~~ and ~~claims~~Chief ~~that~~Financial ~~arise~~Officer ~~in the ordinary course~~ of ~~business,~~Koppers ~~such~~Inc. assince ~~workers’~~October ~~compensation~~2003. ~~claims, governmental investigations, employment disputes, customer and supplier disputes arising out of the conduct of our business~~Mr. McCurrie ~~Litigation~~is ~~could~~a ~~result~~certified inpublic ~~substantial costs and may divert management’s attention and resources away from the day-to-day operation of our business~~accountant.

~~Labor~~Ms. Tronsberg-Deihle ~~disputes~~was ~~could~~elected ~~disrupt~~Treasurer ~~our~~of ~~operations~~Koppers ~~and~~Inc. ~~divert~~in ~~the~~August ~~attention~~2008. ofIn July 2008, Ms. Tronsberg-Deihle was appointed as our ~~management~~Treasurer. Ms. Tronsberg-Deihle was the Assistant Treasurer and ~~may~~Risk ~~cause~~Manager aof ~~decline~~WESCO inDistribution ~~our~~Inc. ~~production~~(global provider of services and aprocurement ~~reduction~~solutions) infrom ~~our profitability~~1995 to June 2008.

Of our employees, approximately 57% are represented by 20 different labor unions and are covered under numerous labor contracts. The United Steelworkers of America, or the USWA, which had represented more than 300 employees at six of our facilities, recently merged with the Paper, Allied-Industrial, Chemical & Energy Workers’ International Union, or PACE, which had represented nearly 200 employees at four of our facilities. The USWA currently represents more than 500 of our employees at ten of our facilities and, therefore, represents the largest number of our unionized employees. Labor contracts that expire in 2006 cover approximately 13% of our total labor workforce. We may not be able to reach new agreements without union action or on terms satisfactory to us. Any future labor disputes with any such unions could result in strikes or other labor protests which could disrupt our operations and divert the attention of our management from operating our business. If we were to experience a strike or work stoppage, it may be difficult for us to find a sufficient number of employees with the necessary skills to replace these employees. Any such labor disputes could cause a decline in our production and a reduction in our profitability.

Our pension obligations are currently underfunded. We may have to make significant cash payments to our pension plans, which would reduce the cash available for our business.

As of December 31, 2005, our projected benefit obligation under our defined benefit pension plans exceeded the fair value of plan assets by approximately $49.4 million. The underfunding was caused, in part, by fluctuations in the financial markets that have caused the valuation of the assets in our defined benefit pension plans to be lower than anticipated. During the year ended December 31, 2005, we contributed $11.3 million to our pension plans. Management expects that any future obligations under our pension plans that are not currently funded will be funded from our future cash flow from operations. If our contributions to our pension plans are insufficient to fund the pension plans

~~adequately~~PART toII ~~cover our future pension obligations, the performance of the assets in our pension plans does not meet our expectations or other actuarial assumptions~~ ~~are modified, our contributions to our pension plans could be materially higher than we expect, which would reduce the cash available for our business.~~

WeITEM 5. ~~have~~MARKET aFOR ~~substantial~~THE ~~amount~~REGISTRANT’S ofCOMMON ~~indebtedness~~EQUITY, ~~which~~RELATED ~~could~~STOCKHOLDER ~~harm our ability to operate our business, remain in compliance with debt covenants, make payments on~~MATTERS ~~our~~AND ~~debt~~ISSUER ~~and~~PURCHASES ~~pay~~OF ~~dividends.~~EQUITY SECURITIES

AsIn ofNovember ~~December 31~~2004, ~~2005,~~all weof ~~and~~ our ~~subsidiaries~~common ~~had~~and ~~approximately~~preferred ~~$379.5~~stock ~~million~~was ofconverted ~~indebtedness~~on ~~(excluding~~a ~~trade~~one-for-one ~~payables,~~basis ~~intercompany~~for ~~indebtedness~~shares ~~and the effect~~ of ~~redeeming~~common ~~$101.7~~and preferred ~~million~~stock of ~~our~~Koppers ~~senior~~Holdings ~~secured~~Inc., ~~notes~~our ~~using~~parent, ~~proceeds~~which ~~from~~was ~~the~~incorporated ~~proceeds~~in ofNovember ~~Koppers~~2004. ~~Holdings’ initial~~As ~~public~~a ~~offering)~~result, ~~consisting~~Koppers ~~primarily~~Holdings ofis our ~~senior~~sole ~~secured~~shareholder, ~~notes~~ and ~~$44.5~~therefore ~~million~~there ofis ~~indebtedness~~no ~~under~~public ~~our~~trading ~~senior~~market ~~secured~~for ~~credit~~our ~~facility~~common stock.

~~The~~As ~~degree~~further todescribed ~~which~~in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, we are ~~leveraged~~restricted ~~could~~in ~~have~~our ~~important~~ability ~~consequences~~to declare and pay dividends to our parent, ~~including:~~Koppers Holdings Inc. In 2008, 2007 and 2006 the Company paid cash dividends of $38.4 million, $14.7 million and $16.6 million, respectively.

•ITEM 6. ~~our~~SELECTED ~~ability~~FINANCIAL toDATA satisfy our obligations under our debt could be affected and any failure to comply with the requirements, including financial and other restrictive covenants, of any of our debt agreements could result in an event of default under the agreements governing such indebtedness;

•The ~~substantial~~following ~~portion~~table ofcontains our ~~cash~~selected ~~flow~~historical consolidated ~~from~~financial ~~operations~~data ~~will~~for bethe ~~required~~five toyears ~~make~~ended ~~interest~~December 31, ~~and~~2008. ~~principal~~The ~~payments~~selected ~~and~~historical ~~may~~consolidated ~~not~~financial bedata ~~available~~ for ~~operations,~~each ~~working~~of ~~capital~~the five years ended December 31, ~~capital~~2008, ~~expenditures~~2007, ~~expansion~~2006, ~~acquisitions~~2005 orand ~~general~~2004 ~~corporate~~have orbeen ~~other~~derived ~~purposes;~~from our audited consolidated financial statements. This selected financial data should be read in conjunction with Koppers’ Consolidated Financial Statements and related notes included elsewhere in this Annual Report on Form 10-K as well as Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations.

• our ability to obtain additional financing in the future may be impaired;


	Year ended December 31,
	2008		2007		2006		2005		2004
(Dollars in millions, except share and per share amounts)
Statement of Operations Data:
Net sales	$	1,364.8	$	1,255.6	$	1,044.2	$	913.4	$	854.3
Depreciation and amortization		30.0		29.5		29.6		28.4		29.0
Operating profit		131.9		127.1		80.1		69.8		54.4
Interest expense		23.3		30.0		46.8		38.3		36.1
Income from continuing operations		60.6		59.4		17.3		16.9		7.1
Income from discontinued operations^{(1) (2)}		4.4		8.8		7.8		2.0		4.2
Gain on sale of Koppers Arch⁽¹⁾		—		6.7		—		—		—
Gain on sale of Monessen⁽²⁾		85.9		—		—		—		—
Net income		150.9		74.9		25.1		18.9		11.3
Balance Sheet Data:
Total assets	$	637.8	$	650.2	$	635.4	$	540.7	$	551.7
Total debt		188.3		270.8		322.0		377.3		385.8
Other Data:
Capital expenditures:⁽³⁾	$	36.7	$	23.2	$	27.5	$	21.1	$	19.1

•(1) In July 2007, we ~~may~~sold beour ~~more~~51 ~~highly~~percent ~~leveraged~~interest ~~than~~in ~~our~~Koppers ~~competitors,~~Arch ~~which~~Investments ~~may~~Pty ~~place~~Limited usand atits subsidiaries (“Koppers Arch”). Koppers Arch’s results of operations have been classified as a ~~competitive~~discontinued ~~disadvantage;~~operation for all periods presented.

•(2) In October 2008, we sold our ~~flexibility~~95 percent interest in ~~planning~~Koppers ~~for,~~Monessen orPartners ~~reacting~~LP ~~to,~~(“Monessen”). ~~changes~~Monessen’s inresults ~~our~~of ~~business~~operations ~~and~~have ~~industry~~been ~~may~~classified beas ~~limited;~~a discontinued operation for all periods presented.

•(3) ~~our~~Excludes ~~degree~~capital expenditures by Koppers Arch, a discontinued operation, of ~~leverage~~$— ~~may~~0.0 ~~make~~million, us$0.1 ~~more~~million, ~~vulnerable~~$0.8 inmillion, ~~the~~$0.6 ~~event~~million ofand $1.0 million and by Koppers Monessen, a ~~downturn~~discontinued inoperation, ~~our~~of ~~business~~$0.4 million, ~~our~~$1.0 ~~industry~~million, or$0.2 million, $1.3 million and $1.1 million for the ~~economy~~years inended ~~general;~~December 31, 2008, 2007, 2006, 2005 and 2004, respectively.

• our ability to pay dividends to our shareholder.

Our senior secured credit facility and the indentures governing our senior discount notes and our senior secured notes contain a number of significant covenants in addition to covenants restricting the incurrence of additional debt. These covenants limit our ability, among other things, to:

• incur or guarantee additional debt and issue certain types of preferred stock;

• make investments;

• create liens on our assets;

•Koppers ~~enter~~Inc. 2008 ~~into~~Annual ~~sale~~Report ~~and leaseback transactions;~~

•ITEM 7. ~~sell~~MANAGEMENT’S ~~assets;~~DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

•Overview ~~engage in transactions with our affiliates;~~

•We ~~create~~are ~~restrictions~~a onleading ~~the~~integrated ~~ability~~global provider of carbon compounds and commercial wood treatment products. Our products are used in a variety of niche applications in a diverse range of end-markets, including the aluminum, railroad, specialty chemical, utility, rubber and steel industries. We serve our ~~restricted~~customers through ~~subsidiaries~~a tocomprehensive ~~pay~~global ~~dividends~~manufacturing orand ~~make~~distribution ~~other~~network, ~~payments~~which toincludes ~~us;~~manufacturing facilities located in the United States, Australia, China, the United Kingdom and Denmark.

•We ~~consolidate~~operate two principal businesses: Carbon Materials & Chemicals (“CM&C”) and Railroad & Utility Products (“R&UP”). We believe that our CM&C business is the largest distiller of coal tar in North America, ~~merge~~Australia, orthe ~~transfer~~United ~~all~~Kingdom orand ~~substantially~~Scandinavia. ~~all~~We process coal tar into a variety of ~~our~~products, ~~assets~~including carbon pitch, creosote and phthalic anhydride, which are critical intermediate materials in the ~~assets~~production of aluminum, the pressure treatment of wood and the production of plasticizers and specialty chemicals, respectively. We believe that our ~~subsidiaries;~~R&UP business is the largest North American supplier of railroad crossties. Our other commercial wood treatment products include the provision of utility poles to the electric and telephone utility industries.

•Our CM&C ~~transfer~~business orhas ~~issue~~entered ~~shares~~into a number of ~~stock~~strategic transactions during the last two years to expand and focus on its core business related to coal tar distillation and derived products. In November 2007, Tangshan Koppers Kailuan Carbon Chemical Company Limited (“TKK”) was established which is constructing and will operate a new tar distillation facility in the Hebei Province near the Jingtang Port with a distillation capacity of ~~subsidiaries~~300,000 metric tons. We hold a 30 percent investment in TKK which is expected to commence production in the second quarter of 2009. In November 2008, we completed a project to expand the capacity of our existing 60-percent owned tar distillation plant in Tangshan, China from 150,000 metric tons to 200,000 metric tons.

InOn ~~addition~~October 1, 2008, we sold our ~~senior~~95 ~~secured~~percent ~~credit~~interest ~~facility~~in ~~contains~~Koppers ~~other~~Monessen ~~and~~Partners ~~more~~LP ~~restrictive~~(“Monessen”) ~~covenants~~to ArcelorMittal S.A. for ~~Additionally~~cash of $160.0 million plus working capital of $10.4 million. Net cash proceeds, itafter ~~requires~~deduction usfor tothe ~~maintain~~limited ~~certain~~partner ~~financial~~interest, ~~ratios~~taxes and transaction costs, were approximately $100.0 million. The Company recognized an after-tax gain of $85.9 ~~satisfy~~million. ~~certain~~Monessen ~~financial~~is ~~condition~~a ~~tests~~metallurgical furnace coke facility. Effective as of the end of the second quarter of 2008, Monessen was classified as a discontinued operation in the Company’s statement of operations and ~~require~~its usassets toand ~~take~~liabilities ~~action~~were reclassified toas ~~reduce~~“held ~~our~~for ~~debt~~sale” orin ~~take~~the ~~some~~balance ~~other~~sheet. ~~action~~Accordingly toour ~~comply~~financial ~~with~~statements ~~them~~have been restated for prior periods.

~~These~~In ~~restrictions~~July 2007, ~~could~~we ~~limit~~ sold our ~~ability~~51 topercent ~~obtain~~interest ~~future~~in ~~financings,~~Koppers ~~make~~Arch ~~needed~~Investments ~~capital~~Pty ~~expenditures,~~Limited ~~withstand~~and aits ~~future~~subsidiaries ~~downturn~~(“Koppers inArch”) ~~our~~to ~~business~~Arch orChemicals ~~the~~Inc. ~~economy in~~for ~~general~~net orcash ~~otherwise~~proceeds ~~conduct~~of ~~necessary corporate activities~~$14.3 Wemillion ~~may~~and ~~also~~recognized bea ~~prevented~~gain from ~~taking~~the ~~advantage~~sale, net of ~~business~~tax, ~~opportunities~~of ~~that~~$6.7 ~~arise~~million. ~~because~~Effective as of ~~the~~this ~~limitations~~date, ~~that~~Koppers ~~the~~Arch ~~restrictive~~was ~~covenants~~classified ~~under~~as a discontinued operation in our ~~senior~~statement ~~secured~~of ~~credit~~operations ~~facility~~ and ~~the~~our ~~indenture~~financial ~~governing~~statements ~~our~~have ~~senior~~been ~~secured~~accordingly ~~notes~~restated. ~~impose~~Koppers onArch uswas a manufacturer of timber preservation chemicals.

~~A breach~~Monessen ~~of any of these covenants would result in a default under the applicable debt agreement. A default, if not waived, could result in acceleration of the debt outstanding under the agreement~~ and inKoppers aArch ~~default~~were ~~with~~part ~~respect to, and acceleration~~ of~~, the~~ ~~debt outstanding under~~ our ~~other~~Carbon ~~debt~~Materials & ~~agreements~~Chemicals and the indentures governing our senior discount notes and senior secured notes. The accelerated debt would become immediately due and payable. If that should occur, we may not be able to pay all such debt or to borrow sufficient funds to refinance it. This would result in a significant interruption in our business ~~operations, which would negatively impact the market price of our common stock~~segment. ~~Even if new financing were then available, it may not be on terms that are acceptable to us.~~

~~Our~~Outlook ~~substantial negative net worth may require us to maintain additional working capital.~~

AsTrend ofOverview December 31, 2005, we had negative net worth of approximately $77.7 million, resulting primarily from the use of borrowings to fund dividends. Our negative net worth may make it difficult for us to obtain credit from suppliers, vendors and other parties. In addition, some of our suppliers and vendors may require us to prepay for services or products or may impose less advantageous terms on timing of payment. Our ability to enter into hedging transactions may also be limited by our negative net worth. As a result, we may require additional working capital, which may negatively affect our cash flow and liquidity.

WeOur ~~may~~businesses ~~incur~~and ~~significant~~results ~~charges~~of operations are impacted by various competitive and other factors including (i) the impact of global economic conditions on demand for our products both in the ~~event~~United weStates ~~close~~and ~~all~~overseas; or(ii) raw ~~part~~materials pricing and availability, in particular the amount and quality of acoal ~~manufacturing~~tar ~~plant~~available orin ~~facility~~global markets, which could be negatively impacted by reductions in steel production; (iii) volatility in oil prices, which impacts selling prices and margins for certain of our products including carbon black feedstocks and phthalic anhydride; (iv) competitive conditions in global carbon pitch markets; (v) low margins in the utility pole business; and (vi) changes in foreign exchange rates.

WeOur ~~periodically~~businesses ~~assess~~and ~~our~~results ~~manufacturing~~of operations inhave ~~order~~been toimpacted ~~manufacture~~by ~~and distribute~~the ~~our~~downturn ~~products~~ in the ~~most~~global ~~efficient~~economy ~~manner.~~in ~~Based~~late on2008 ~~our~~and ~~assessments,~~ we ~~may~~expect ~~make~~that ~~capital~~these ~~improvements~~negative totrends ~~modernize~~will ~~certain~~continue units, move manufacturing or distribution capabilities from one plant or facility to another plant or facility, discontinue manufacturing or distributing certain products or close all or part of a manufacturing plant or facility. For example, in ~~2003 we incurred $8~~2009.~~5 million in restructuring and impairment charges which included the curtailment of production~~ atCertain ~~our~~key ~~Woodward,~~end ~~Alabama~~markets ~~facility,~~have ~~the~~experienced ~~impairment~~significant ofglobal ~~assets~~reductions atin ~~our~~demand ~~Portland,~~that ~~Oregon~~will ~~facility,~~negatively ~~and~~impact the ~~closure~~demand offor our ~~Logansport, Louisiana facility~~products. ~~The~~In ~~closure~~late of2008 ~~all~~and orcontinuing ~~part~~into of2009 awe ~~manufacturing~~have ~~plant~~seen ~~or facility could result in future charges which~~ ~~could be significant.~~

We significant ~~depend~~reductions onin global production of aluminum, steel, rubber, concrete, plastics and paints, among others, that represent markets in which our ~~senior~~products ~~management~~are ~~team~~consumed. We are watching these markets very closely and believe that there will be uncertainty regarding the ~~loss~~levels of ~~any~~production ~~member~~going ~~could~~forward. ~~adversely~~Due ~~affect~~to the nature of our ~~operations.~~end markets, we could see some level of demand improvement as government stimulus is introduced.

~~Our~~In ~~success~~recent ismonths ~~dependent~~we onhave seen the ~~management,~~temporary ~~experience~~idling ~~and leadership~~or ~~skills~~closure of ~~our~~several ~~senior~~aluminum ~~management team~~smelters. ~~Our~~We ~~senior~~expect ~~management~~the trend ~~team~~of ~~has~~closing anor ~~average~~reducing ofproduction 27at ~~years~~higher ofcost ~~industry~~smelters ~~experience.~~to ~~The~~continue ~~loss~~as ofnewer, ~~any~~more ofcost ~~these~~effective ~~individuals~~smelters orcome anon ~~inability~~line toin ~~attract~~regions with lower cost energy, ~~retain~~particularly ~~and~~in ~~maintain~~the ~~additional~~Middle ~~personnel~~East. ~~with~~As ~~similar~~an example we have seen specific closures in North ~~industry~~America ~~experience~~and ~~could~~Europe ~~prevent~~that uswill ~~from~~negatively ~~implementing~~impact ~~our~~volumes ~~business~~in ~~strategy.~~those Wegeographic ~~cannot~~areas; ~~assure~~at ~~you~~this ~~that~~time we ~~will~~can benot ~~able~~predict if or when these idled smelters will return to ~~retain~~production. ~~our~~However, ~~existing~~we ~~senior~~believe ~~management~~we ~~personnel~~are orwell positioned to ~~attract~~supply ~~additional~~the ~~qualified~~new ~~personnel~~Middle ~~when~~Eastern smelters ~~needed~~due to our capacity expansions in China.

IfWe weexpect ~~are~~to ~~not~~produce ~~able~~lower tovolumes ~~implement~~in ~~the~~2009 ~~requirements~~in many of ~~Section 404~~our ofproducts which will impact the ~~Sarbanes-Oxley~~ ~~Act~~capacity ofutilization ~~2002~~at our infacilities. aLower ~~timely~~throughput ~~manner~~volumes orcombined with ~~adequate~~increasing ~~compliance,~~pressure wefor ~~may~~price bereductions ~~unable~~has led us to ~~provide~~review ~~the~~our ~~required~~capacity ~~financial~~utilization ~~information~~and has resulted in aproduction ~~timely~~cutbacks ~~and~~at ~~reliable~~certain ~~manner~~facilities, ~~and~~which will result in lower margins. If these trends continue, we may betemporarily ~~subject~~idle or permanently close facilities. Utility pole markets are expected to ~~sanctions~~continue byto ~~regulatory~~remain ~~authorities~~competitive with resulting low margins. ~~The~~We ~~perception~~will ~~of these~~continue ~~matters~~to ~~could~~review ~~cause~~underperforming ~~our~~assets ~~debt~~and ~~rating~~rationalize capacity as necessary to ~~fall~~remain competitive in this market and will reduce market share if warranted.

WeSeveral ~~are~~of ~~required under applicable law and regulations to integrate~~ our ~~systems~~products, ofparticularly ~~internal~~carbon ~~controls~~black ~~over~~feedstocks ~~financial~~and ~~reporting~~phthalic anhydride, ~~and~~have weend ~~are~~market ~~presently~~pricing ~~evaluating~~that ~~our~~is ~~existing~~linked ~~internal controls with respect~~ to ~~the~~benchmark ~~standards~~oil ~~adopted~~indices. byDuring the ~~Public~~past ~~Company~~few ~~Accounting Oversight~~years ~~Board. We cannot be certain at this time that~~ we ~~will~~have bebenefited ~~able~~in toterms ~~comply with all~~ of ~~our~~revenues ~~reporting obligations~~ and ~~successfully~~profitability ~~complete~~from the ~~procedures,~~higher ~~certification~~pricing ~~and attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 by the time that we are required to file our Annual Report on Form 10-K~~ for ~~the~~these ~~year~~products ~~ended~~as ~~December 31, 2006. If we fail to achieve and maintain~~ the ~~adequacy~~cost of ~~our~~coal ~~internal~~tar ~~controls~~has ~~and do~~ not ~~address the deficiencies identified in~~increased ~~the~~proportionally ~~letter received by our audit committee, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance~~ with ~~the Sarbanes-Oxley Act of 2002~~oil. ~~Moreover~~However, ~~effective~~ ~~internal~~when ~~controls are necessary for us to produce reliable financial reports and are important to help prevent fraud. As a result, our failure to satisfy~~ the ~~requirements~~price of ~~Section 404~~oil ondeclined ain ~~timely~~late ~~basis~~2008 ~~could~~we ~~result~~saw insignificant ~~the~~price ~~loss~~and ~~of investor~~profit ~~confidence~~declines infor ~~the~~these ~~reliability~~products ofthat ~~our~~we ~~financial~~expect ~~statements,~~will ~~which~~continue in ~~turn could harm our business and negatively impact the trading price of our senior secured notes~~2009.

The availability of a key raw material, coal tar, is linked to levels of metallurgical coke production. As the global steel industry has reduced production of steel and metallurgical coke the volumes of coal tar by-product were ~~ITEM 1B~~also reduced. ~~UNRESOLVED~~ ~~STAFF~~Our ~~COMMENTS~~ability to obtain coal tar and the price we are able to negotiate have a significant impact on the level of profitability of our business. Most notably we have continued to see price increases in North America for coal tar due to lower availability and the pricing terms in our purchasing contracts. Many of our sales contracts include provisions that allow for price increases based on increases in the price of raw materials, which has allowed us to generally maintain profit dollars in our core businesses. However, significant increases in raw material costs will result in margin dilution because only the increased cost of the raw material is passed on to the customer.

~~None~~The North American railroad market has experienced better stability than our other end markets in recent months; however, continued negative economic trends could impact the demand for crossties from the short line railroads as well as the Class 1 railroads. Additionally, lumber availability and pricing were negatively impacted in 2008 by weather conditions as well as the depressed markets for furniture and hardwood flooring caused by the dramatic decline in the U.S. housing market. While weather conditions are difficult to predict, it is likely that housing will remain depressed during 2009 and may result in continued difficulties related to cost and availability for crossties.

Net sales over the past several years have been significantly impacted by favorable foreign exchange rates in Australia, Great Britain, Europe, Denmark and China. In late 2008 and continuing into 2009 we saw those trends begin to reverse. Exchange rates for currencies in Australia, Great Britain, Europe, Denmark, and to a lesser extent, China, have changed significantly and will negatively impact sales and profits in 2009 compared to 2008. In addition, we expect continued volatility in these exchange rates that could impact our ability to accurately predict future levels of sales and profits.

Seasonality and Effects of Weather on Operations

Our quarterly operating results fluctuate due to a variety of factors that are outside of our control, including inclement weather conditions, which in the past have affected operating results. Operations at several facilities have been halted for short periods of time during the winter months. Moreover, demand for some of our products declines during periods of inclement weather. As a result of the foregoing, we anticipate that we may experience material fluctuations in quarterly operating results. Historically, our operating results have been significantly lower in the fourth and first calendar quarters as compared to the second and third calendar quarters. We expect this seasonality trend to continue in future periods.

~~ITEM 2~~Koppers Inc. ~~PROPERTIES~~2008 Annual Report

~~Our~~Results ~~principal fixed assets consist~~ of ~~our~~Operations ~~production,~~– ~~treatment,~~Comparison ~~and storage facilities and our transportation and plant vehicles. Our production facilities consist~~ of 17Years ~~Carbon~~Ended ~~Materials~~December &31, ~~Chemicals~~2008 ~~facilities~~ and ~~18 Railroad & Utility Products facilities. As of~~ December 31, ~~2005,~~2007 the net book value of vehicles, machinery and equipment represented approximately 24% of our total assets, as reflected in our consolidated balance sheet. The following chart sets forth information regarding our production facilities:

Primary Product Line	Location	Acreage	Description ofProperty Interest
Carbon Materials & Chemicals
Wood Preservation Chemicals	Auckland, New Zealand	1	Leased
Carbon Pitch	Clairton, Pennsylvania	17	Owned
Carbon Pitch, Creosote, Naphthalene	Pt. Clarence, United Kingdom	120	Owned
Wood Preservation Chemicals	Lautoka, Fiji	1	Owned
Carbon Pitch	Follansbee, West Virginia	32	Owned
Carbon Black	Kurnell, New South Wales, Australia	20	Leased
Carbon Pitch	Newcastle, New South Wales, Australia	27	26 Owned, 1 Leased
Furnace Coke	Monessen, Pennsylvania	45	Owned
Carbon Pitch	Nyborg, Denmark	36	26 Owned, 10 Leased
Wood Preservation Chemicals	Penang, Malaysia	3	Leased
Carbon Pitch	Portland, Oregon	6	Leased
Carbon Pitch	Scunthorpe, United Kingdom	27	Owned
Wood Preservation Chemicals	Port Shepstone, South Africa	1	Leased
Carbon Pitch	Tangshan, China	9	Leased
Carbon Pitch, Phthalic Anhydride	Stickney, Illinois	38	Owned
Wood Preservation Chemicals	Trentham, Victoria, Australia	24	Owned
Carbon Pitch	Woodward, Alabama	23	Owned
Railroad & Utility Products
Specialty Trackwork	Alorton, Illinois	12	6 Owned, 6 Leased
Utility Poles, Railroad Crossties	Bunbury, Western Australia, Australia	41	26 Owned, 15 Leased
Utility Poles, Railroad Crossties	Denver, Colorado	64	Owned
Utility Poles, Railroad Crossties	Florence, South Carolina	200	Owned
Utility Poles	Gainesville, Florida	86	Owned
Railroad Crossties	Galesburg, Illinois	125	Leased
Utility Poles	Grafton, New South Wales, Australia	100	Owned
Railroad Crossties	Green Spring, West Virginia	98	Owned
Utility Poles, Railroad Crossties	Grenada, Mississippi	154	Owned
Railroad Crossties	Guthrie, Kentucky	122	Owned

Consolidated Results

Net sales for the years ended December 31, 2008 and 2007 are summarized by segment in the following table:


	Year Ended December 31,				Net Change
	2008		2007		Net Change
(Dollars in millions)
Carbon Materials & Chemicals	$	892.0	$	776.1	+15	%
Railroad & Utility Products		472.8		479.5	-1	%

	$	1,364.8	$	1,255.6	+9	%

CM&C net sales increased by $115.9 million or 15 percent due to the following changes in volume, pricing and foreign exchange:


	Price		Volume		Foreign Exchange		Net Change
Carbon Materials^(a)	+4	%	+2	%	+1	%	+7	%
Distillates^(b)	+3	%	+1	%	—	%	+4	%
Coal Tar Chemicals^(c)	+1	%	-2	%	—	%	-1	%
Other^(d)	+2	%	+3	%	—	%	+5	%

Total CM&C	+10	%	+4	%	+1	%	+15	%

(a)

Includes carbon pitch and refined tar.

(b)

Includes creosote and carbon black feedstock.

(c)

Includes naphthalene and phthalic anhydride.

(d)

Includes carbon black, benzole, freight and other products.

Carbon materials’ prices increased in the U.S. and China as customer prices were increased in response to substantially higher raw material costs. An increase in carbon materials sales volume was realized primarily in Australia and Europe totaling three percent and was partially offset by decreases in China of one percent.

Distillate pricing improved due to price increases in carbon black feedstock prices in Europe and creosote prices in the U.S. totaling three percent. The increase in carbon black feedstock pricing is consistent with higher average worldwide oil prices during the year. The increase in distillate sales volume is due primarily to increased creosote sales in the U.S. totaling one percent.

For coal tar chemicals, increases in phthalic anhydride prices of one percent were partially offset by lower naphthalene prices in Europe. The decrease in coal tar chemicals volumes is due primarily to lower phthalic anhydride volumes of one percent. With respect to other products, carbon black volumes, freight, specialty chemicals and other carbon products increased five percent as compared to the prior year and were partially offset by lower commercial roofing sales. Carbon black prices experienced an increase of one percent as compared to the prior year.

In the fourth quarter of 2008, we began to experience negative pricing and volume trends due to lower commodity prices and global economic issues for most of the products listed above. We expect these trends to impact sales volumes and margins into 2009.

R&UP net sales decreased by $6.7 million or one percent due to the following changes in volume and pricing:


	Price		Volume		Net Change
Railroad Crossties^(a)	+2	%	–3	%	-1	%
TSO Crossties^(b)	+2	%	–1	%	+1	%
Distribution Poles	+1	%	–1	%	—	%
Other^(c)	+3	%	–4	%	-1	%

Total R&UP	+8	%	-9	%	-1	%

Primary Product Line	Location	Acreage	Description ofProperty Interest
Utility Poles	Longford, Tasmania	17	Owned
Railroad Crossties	N. Little Rock, Arkansas	148	Owned
Railroad Crossties	Roanoke, Virginia	91	Owned
Railroad Crossties	Somerville, Texas	244	Owned
Railroad Crossties	Superior, Wisconsin	120	Owned
Railroad Crossties	Muncy, Pennsylvania	109	Owned
Pine Products	Takura, Queensland, Australia	77	Leased
Utility Poles	Thornton, New South Wales, Australia	15	Owned

(a)

Includes treated and untreated railroad crossties.

~~Our~~(b) ~~corporate~~Includes ~~offices~~sales ~~are located in approximately 60,000 square feet of leased office space in the Koppers Building, Pittsburgh, Pennsylvania. The office space is leased~~ from ~~Axiom~~treatment ~~Real~~services ~~Estate~~only ~~Management, Inc~~(“TSO”). ~~with the lease term expiring on December 31, 2010.~~

~~ITEM~~(c) ~~3. LEGAL~~Includes ~~PROCEEDINGS~~transmission poles, pilings, creosote, freight and other treated and untreated lumber products.

WeSales ~~are~~were ~~involved~~negatively inimpacted ~~litigation~~by ~~and~~volume ~~various~~decreases ~~proceedings~~of ~~relating~~untreated railroad crossties totaling four percent for the year ended December 31, 2008 due to ~~environmental~~capital ~~laws~~purchasing ~~and~~reductions ~~regulations~~by the Class 1 railroads and ~~antitrust,~~reduced ~~toxic~~raw material ~~tort,~~availability ~~product~~due ~~liability~~to weather and ~~other~~a ~~matters~~weak timber market. ~~See~~Treated ~~“Management’s~~railroad ~~Discussion~~crossties ~~and~~pricing ~~Analysis~~increased ofby ~~Financial~~one ~~Condition~~percent for the year ended December 31, 2008 as raw material price increases were passed on to customers. The price increase in ~~and~~other ~~Results~~products ofis ~~Operations—Other~~due ~~Environmental~~primarily ~~Matters”~~to higher creosote prices and ~~“—Legal~~transmission ~~Matters~~pole prices totaling two percent.” The lower volumes in other products is due primarily to lower sales of untreated lumber products.

~~Pacific~~Cost ~~Century. On October 10, 2002, Koppers Timber Preservation Pty Ltd, a subsidiary~~ of ~~Koppers~~sales ~~Australia, was named~~ as a ~~defendant~~ inpercentage ~~a breach~~ of ~~contract~~net ~~and~~sales ~~negligence~~was ~~lawsuit~~84 ~~filed~~percent byfor ~~Pacific~~the ~~Century~~year ~~Production~~ended ~~Pty~~December 31, ~~Ltd~~2008 inas ~~the~~compared ~~Supreme~~to ~~Court~~82 ofpercent ~~Queensland,~~for ~~Australia related to~~ the ~~sale~~year ofended ~~approximately 127~~December 31,~~000~~ ~~vineyard trellis posts~~2007. ~~The Complaint claimed that~~ ~~certain posts were defective in that they had either decay or excessive bark or were less than the minimum specified size. In addition~~Overall, ~~plaintiff~~cost ~~alleged violations~~ of ~~the~~sales ~~Australian~~increased ~~Timber~~by ~~Utilization and Marketing Act. Plaintiff sought damages in the amount of~~ $4111.91 million ~~for,~~when ~~among~~compared ~~other~~to ~~things,~~ the ~~costs~~prior ofyear ~~removing~~period ~~and~~due ~~replacing~~primarily ~~the~~to ~~trellis~~higher ~~posts.~~raw ~~Plaintiff~~material also filed a lawsuit against the constructor of the vineyard trellises, which is still pending. This lawsuit against the trellis constructor was consolidated with its claim against our subsidiary. Koppers Australia has settled with Pacific Century and has withdrawn its third party claim against the constructor of the trellises, but Koppers Australia must reimburse the trellis constructor for certain court costs~~; a provision of $0~~.9 ~~million has been made for this matter, of which $0.4 million was paid in 2005.~~

~~Grenada. We,~~Depreciation ~~together~~and amortization ~~with~~for ~~various~~the ~~co-defendants,~~year ~~have~~ended ~~been~~December 31, ~~named~~2008 aswas a$0.5 ~~defendant~~million inhigher ~~toxic~~when ~~tort~~compared ~~lawsuits~~to inthe ~~various~~prior ~~state~~year ~~courts~~period ~~in Mississippi~~ and inincluded ~~toxic~~an ~~tort~~impairment ~~lawsuits~~charge inof ~~federal~~$3.7 ~~court~~million inrelated ~~Mississippi~~to ~~arising from the operations of~~ our ~~wood~~glycerine ~~treating~~refining plant in ~~Grenada,~~the ~~Mississippi~~United Kingdom.

~~Somerville. In June 2005~~Selling, wegeneral ~~were served with a putative class action lawsuit in federal court in Austin, Texas against us~~ and ~~other defendants~~administrative ~~including~~expenses ~~the~~for Burlington Northern Santa Fe Railway Company, Monsanto Company, Dow Chemical Company and Vulcan Materials Company. The lawsuit alleged that several classes of past and present property owners and residents in the ~~Somerville, Texas~~year ~~area~~ended numbering in excess of 2,500 suffered unspecified property damage and risk of personal injury as a result of exposure to various chemicals used at the Somerville, Texas wood treatment plant that is currently owned by us. On December 2331, ~~2005,~~2008 ~~plaintiffs~~were ~~filed an amended complaint dropping their class action allegations and identifying 602 individual plaintiffs~~$7.3 ~~The~~million ~~amended~~lower ~~complaint~~when ~~seeks~~compared to ~~recover~~the ~~compensatory~~prior ~~and~~year ~~punitive~~period ~~damages~~due ~~within~~primarily ~~the~~to ~~jurisdictional~~due ~~limits~~diligence ofcosts ~~the court for, among other things, bodily injuries, pain and mental anguish, emotional distress, medical monitoring, medical expenses, lost wages, loss~~ of ~~consortium and property devaluation~~$6.8 Ofmillion ~~the~~incurred ~~17 separate counts~~ in ~~the~~2007 ~~amended complaint,~~related ~~five~~to ~~counts~~a ~~allege~~potential ~~acts~~acquisition ofwhich ~~intentional~~was ~~racial discrimination by the defendants. We have~~ not ~~provided a reserve for this lawsuit because, at this time, it cannot reasonably determine the probability of a loss, and the amount of loss, if any, cannot be reasonably estimated~~consummated. ~~Although we~~

Interest expense for the year ended December 31, 2008 was $6.7 million lower when compared to the prior year period due primarily to lower average borrowings on revolving credit facilities and term debt. Lower average borrowings resulted from debt reductions funded by cash flows from operations and the net proceeds from the sale of Monessen in October 2008.

Income taxes for the year ended December 31, 2008 were $13.2 million higher when compared to the prior year period due primarily to the increase in pretax income of $12.4 million and estimated taxes on unremitted European earnings for 2008. For the year ended December 31, 2007, all European earnings were considered to be permanently reinvested and did not attract U.S. taxation. Our effective income tax rate for the year ended December 31, 2008 was 44.2 percent as compared to the prior year period of 36.2 percent. The increase in the effective tax rate is due primarily to the U.S. taxation of European earnings in 2008.

Gain on sale of Monessen for the year ended December 31, 2008 represents the gain, net of tax expense, from the sale of our 95 percent interest in Monessen to ArcelorMittal S.A. on October 1, 2008. Effective as of this date, Monessen was classified as a discontinued operation in our statement of operations.

Segment Results

Segment operating profit for the years ended December 31, 2008 and 2007 is summarized by segment in the following table:


	Year Ended December 31,						% Change
	2008			2007			% Change
(Dollars in millions)
Operating profit:
Carbon Materials & Chemicals	$	107.9		$	84.3		+28	%
Railroad & Utility Products		24.0			42.8		-44	%

	$	131.9		$	127.1		+4	%


Operating profit as a percentage of net sales:
Carbon Materials & Chemicals		12.1	%		10.9	%	+1.2	%
Railroad & Utility Products		5.1	%		8.9	%	-3.8	%

		9.7	%		10.1	%	-0.4	%

~~intend~~Koppers toInc. 2008 ~~vigorously~~Annual ~~defend~~Report ~~these cases, there can be no assurance that an unfavorable resolution of this matter will not have a material adverse effect on our business, financial condition, cash flows and results of operations.~~

~~Government~~Carbon ~~Investigations. In~~Materials & ~~late~~Chemicals ~~2002,~~net ~~we contacted the Canadian Competition Bureau, or the CCB, and offered our cooperation with respect to industry competitive practices concerning the production, supply and~~ sales ~~of coal tar pitch, naphthalene, creosote oil~~ and ~~carbon~~operating ~~black~~profit feedstock. As a result of such cooperation, in April 2003 the CCB granted us a provisional guarantee of immunity from fines under the Canadian Competition Act with respect to the supply and sale of coal tar pitch, naphthalene, creosote oil and carbon black feedstock prior to 2001. There have been no recent communications with the CCB. Similar investigations of industry competitive practices by ~~the~~geographic ~~European~~region ~~Commission~~for ~~and~~ the ~~United~~years ~~States~~ended ~~Department of Justice have been terminated. Although the CCB has not indicated that its investigation has been terminated~~December 31, ~~the~~2008 ~~Company does not currently anticipate any adverse consequences from the CCB’s investigation based on the lack of recent communications from the CCB~~ and ~~the~~2007 ~~termination~~is ofsummarized ~~the~~in ~~concurrent investigations by~~ the ~~European~~following ~~Commission~~table: ~~and the United States Department of Justice.~~

In April 2005, the New Zealand Commerce Commission, or the NZCC, filed a Statement of Claim in the High Court of New Zealand against a number of corporate and individual defendants, including Koppers Arch Wood Protection (NZ) Limited, or KANZ, Koppers Arch Investments Pty Limited, or KAI, Koppers Australia Pty Limited, or Koppers Australia, TPL Limited, Nufarm Limited, Nufarm Australia Limited, Osmose New Zealand Limited, Osmose Australia Pty Limited and a number of current and former employees of such companies. This followed an investigation by the NZCC into the competitive practices of the wood preservative industry in New Zealand. The Statement of Claim contains a number of separate causes of action relating to alleged violations of the New Zealand Commerce Act of 1986, or the Act. The statement of claim seeks, among other things, (i) pecuniary penalties for each cause of action in an unspecified amount pursuant to the Act, (ii) injunctions restraining defendants from further anticompetitive conduct, (iii) orders barring the named individual defendants from certain future corporate positions and (iv) reimbursement of legal costs. On February 23, 2006 the NZCC, KANZ, KAI and Koppers Australia executed a cooperation agreement (the “Cooperation Agreement”). The Cooperation Agreement provides, among other things, that KANZ, KAI and Koppers Australia must cooperate with the NZCC until such time as the NZCC’s investigation and any related court proceedings have been concluded. It also provides that the NZCC will discontinue all proceedings against Koppers Australia and that court approval of a penalty in the amount of approximately $2.5 million plus costs of $0.1 million will be sought with respect to KANZ and Koppers Arch Investments for breaches of the Act. Except as set forth above, we are not currently aware of any other claims (civil or governmental) related to competitive practices in New Zealand. Such other claims, if asserted and resolved unfavorably, could have a material adverse effect on the business, financial condition, cash flows and results of operations of KANZ and its interconnected companies.


	Twelve months ended December 31,						% Change
	2008			2007			% Change
(Dollars in millions)
Net sales:
North America	$	398.6		$	357.8		+11	%
Europe		259.4			226.3		+15	%
Australia		167.4			132.6		+26	%
China		77.7			70.2		+11	%
Intrasegment		(11.1	)		(10.8	)	+3	%

	$	892.0		$	776.1		+15	%


Operating profit:
North America	$	56.1		$	43.7		+28	%
Europe		25.8			15.1		+71	%
Australia		26.1			18.8		+39	%
China		(0.1	)		6.7		-101	%

	$	107.9		$	84.3		+28	%

~~Koppers~~North ~~Arch~~American ~~Australia~~CM&C ~~has~~sales ~~made~~increased anby ~~application~~$40.8 ~~for~~million ~~leniency~~due ~~under~~primarily ~~the~~to ~~Australian~~higher ~~Competition~~prices ~~and~~for ~~Consumer~~carbon ~~Commission’s~~pitch, orcreosote ~~the~~and phthalic ~~ACCC,~~anhydride ~~policy~~totaling ~~for cartel conduct~~$43.0 ~~The~~million ~~ACCC~~and ~~has~~higher ~~granted~~volumes ~~immunity to Koppers Arch Australia, subject to the fulfillment~~ of ~~certain~~creosote ~~conditions,~~and ~~such~~refined ~~as,~~tar ~~but~~totaling ~~not~~$10.4 ~~limited to, continued cooperation~~million. IfLower ~~the~~volumes ~~conditions are not fulfilled, Koppers Arch Australia may be penalized for any violations~~ of ~~the~~phthalic ~~competition~~anhydride ~~laws~~ of ~~Australia~~$10.9 ~~Such~~million ~~penalties,~~partially ifoffset ~~assessed against~~these ~~Koppers~~increases. ~~Arch~~Operating ~~Australia,~~profit ~~could~~as ~~have~~ a ~~material~~percentage ~~adverse effect on its business, financial condition, cash flows and results~~ of ~~operations.~~net Wesales increased ~~are not currently aware of any civil claims related~~ to ~~competitive~~14.1 ~~practices~~percent infrom ~~Australia~~12.2 ~~Such~~percent ~~civil claims,~~for ~~if asserted and resolved unfavorably, could have a material adverse effect on~~ the ~~business,~~prior ~~financial condition, cash flows and results of operations of Koppers Arch Australia~~period.

WeEuropean ~~have~~CM&C ~~reserved~~sales ~~approximately~~increased by $233.61 million ~~for~~due ~~these~~primarily ~~penalties~~to ashigher volumes of ~~December 31~~carbon pitch, ~~2005~~benzole and specialty chemicals totaling $14.2 ~~This~~million ~~amount~~and ishigher ~~included~~prices infor ~~cost~~carbon black feedstock and benzole totaling $18.0 million. Operating profit as a percentage of net sales increased to 9.9 ~~The~~percent ~~amount~~from ~~reserved~~6.7 ispercent ~~based~~as ~~upon~~a ~~the~~result ~~penalties~~of higher carbon pitch volumes and ~~costs~~higher ~~set~~pricing ~~forth~~for incarbon ~~the~~black ~~Cooperation~~feedstock ~~Agreement~~as a result of higher average petroleum prices.

Australian CM&C sales increased by $34.8 million due primarily to higher volumes for carbon pitch and carbon black which totaled $18.2 million. The increase in volume for carbon black is a result of the plant expansion project at the Company’s carbon black plant becoming fully operational. Increases in carbon black prices contributed higher sales of $11.2 million. Operating profit as a percentage of net sales was 15.6 percent for the as compared to 14.2 percent for the prior period.

Chinese CM&C sales increased by $7.5 million due primarily to higher volumes of carbon pitch and other products, principally distillates, totaling $10.9 million, partially offset by lower carbon pitch volumes of $5.5 million. Currency exchange rate changes contributed $6.3 million to increased sales. Operating profit as a percentage of net sales was breakeven as compared to 9.5 percent for the prior period. The decrease in operating margin is due primarily to inventory lower of cost of market writedowns and investment in sales and administrative functions in China.

CM&C operating profit margins for all geographical regions have trended downward in the fourth quarter of 2008 as the impact of the global economic recession reduced margins. This trend is expected to continue into 2009.

Railroad & Utility Products operating profit for the twelve months ended December 31, 2008 decreased by $18.8 million as compared to the prior period primarily as a result of lower sales of untreated railroad crossties and TSO crossties and lower operating profit margins. Operating profit as a percentage of net sales decreased to 5.1 percent from 8.9 percent between periods due to lower production and procurement levels for railroad crossties and the increased operating costs due to a boiler outage at one of the Company’s wood treatment plants and the unplanned outage of an electricity cogeneration unit at another of the Company’s wood treatment plants.

~~KANZ~~Results ~~and~~of Operations ~~Koppers~~– ~~Arch~~Comparison ~~Australia are majority-owned subsidiaries~~ of ~~Koppers~~Years ~~Arch~~Ended ~~Investments~~December 31, ~~which~~2007 ~~is an Australian joint venture owned 51% by World-Wide Ventures Corporation (our indirect subsidiary)~~ and ~~49% by Hickson Nederland BV. KANZ and Koppers Arch Australia manufacture and market wood preservative products throughout New Zealand and Australia~~December 31, ~~respectively.~~ 2006

~~Product~~Consolidated ~~Liability~~Results Cases. We, along with other defendants, has been named as a defendant in 24 cases filed in state court in Pennsylvania and two cases filed in state court in Texas in which the plaintiffs claim they suffered a variety of illnesses (including cancer) as a result of exposure to coal tar pitch sold by us. The first of these cases was filed in April 2000 and the most recent was filed in January 2006. There are a total of approximately 82 plaintiffs in these cases. Of the 82 plaintiffs, 80 plaintiffs do not claim any specific amount of damages. These 80 plaintiffs seek compensatory and punitive damages in unspecified amounts in excess of the minimum jurisdictional limits (in most cases $25,000) of the applicable courts. Of the 82 plaintiffs, two plaintiffs (in the same case) assert damages not to exceed a combined total of $10.0 million. The other defendants vary from case to case and include companies such as Beazer East, Inc., USX Corporation, Honeywell, Inc., Reilly Industries, Inc., Dow Chemical Company, Rust-Oleum Corporation, UCAR Carbon Company, Inc., Exxon Mobil Corporation, Crompton Corporation, SGL Carbon Corporation, Alcoa, Inc., Henkel Corporation, Univar USA, Inc. and PPG Architectural Finishes Inc. The cases are in the early stages of discovery. We have not provided a reserve for these lawsuits because, at this time, we cannot reasonably determine the probability of a loss, and the amount of loss, if any, cannot be reasonably estimated. Although we are vigorously defending these cases, an unfavorable resolution of these matters may have a material adverse effect on our business, financial condition, cash flows and results of operations.

~~Stickney. The~~Net ~~Illinois~~sales ~~Environmental~~for ~~Protection Agency, or~~ the ~~IEPA,~~years ~~has~~ended ~~requested that we conduct a voluntary investigation of soil and groundwater at its Stickney~~December 31, ~~Illinois~~2007 ~~carbon materials~~ and ~~chemicals~~2006 ~~facility.~~are ~~The~~summarized ~~IEPA~~by ~~advised~~segment ~~us that it made such request as a result of a reported release of oil-like material from our property into an adjacent river canal. We have agreed to conduct such investigation~~ in cooperation with Beazer East and intends to seek contribution and/or indemnification from third parties with respect to a portion of such costs. Koppers has not provided a reserve for this matter because, at this time, we cannot reasonably determine the ~~probability~~following oftable: ~~a loss, and the amount of loss, if any, cannot be reasonably estimated.~~

Additionally, the United States Environmental Protection Agency, or the EPA, has issued a notice of violation to the Stickney plant alleging certain violations of the Clean Air Act relating to fugitive emissions. The EPA has proposed a fine of $146,000 plus an undetermined amount of stipulated penalties for any past, similar violations. We agreed to settle with the EPA for $80,000. We had previously made a provision of $100,000 for this matter.


	Year Ended December 31,				Net Change
	2007		2006		Net Change
(Dollars in millions)
Carbon Materials & Chemicals	$	776.1	$	610.6	+27	%
Railroad & Utility Products		479.5		433.6	+11	%

	$	1,255.6	$	1,044.2	+20	%

~~Clairton. In~~CM&C ~~August~~net ~~2005,~~sales ~~the~~increased ~~Pennsylvania~~by ~~Department of Environment Protection, or PADEP, proposed a fine of~~ $1165.35 million ~~related~~or to27 ~~alleged~~percent ~~water~~due ~~discharge~~to ~~exceedances~~the ~~from~~following achanges ~~storm water sewer pipe at our tar distillation facility~~ in ~~Clairton~~volume, ~~Pennsylvania.~~pricing ~~We have proposed to undertake certain engineering steps at a cost of approximately $1.5 million to address this matter pursuant to a consent order we are currently discussing with PADEP. We intend to~~and ~~cooperate~~foreign ~~with~~exchange: PADEP to resolve this matter. We have accrued $0.3 million for this matter, which we believe is a reasonable approximation of the probable settlement based on the current status of settlement negotiations.

We are involved in various other proceedings incidental to the ordinary conduct of our business. We believe that none of these other proceedings will have a material adverse effect on our business, financial condition, cash flows and results of operations.

Price

Volume

Foreign
Exchange

Net

Change

Carbon Materials^(a)

+16

Distillates^(b)

Coal Tar Chemicals^(c)

Other^(d)

—

Total CM&C

+11

+10

+27

~~ITEM~~(a) ~~4. SUBMISSION~~Includes OFcarbon ~~MATTERS~~pitch TOand Arefined ~~VOTE OF SECURITY HOLDERS~~ tar.

~~None.~~(b) Includes creosote and carbon black feedstock.

(c)

Includes naphthalene and phthalic anhydride.

(d)

Includes carbon black, benzole, freight and other products.

Carbon materials’ prices increased in the U.S., Europe and Australasia as customer prices have been renegotiated in response to substantially higher raw material costs. The increase in carbon materials sales volume is due partially to the acquisition of certain imported carbon pitch supply contracts from Reilly Industries Inc. (“Reilly acquisition”) in April 2006 in addition to acquired domestic sales contracts related to the Reilly acquisition. These acquired import and domestic contracts resulted in a total sales volume increase for the year ended December 31, 2007 of four percent.

Overall, distillate pricing was flat for the year ended December 31, 2007 as increases in creosote prices in the U.S. were largely responsible for the total price increase of one percent. The increase in distillate sales volume is due primarily to higher European carbon black feedstock sales and higher U.S. creosote sales of two percent in total.

For coal tar chemicals, increases in worldwide naphthalene prices and U.S. phthalic anhydride prices resulted in a sales increase totaling one percent. Volume increases from naphthalene sales contributed to an increase of two percent. Changes in foreign exchange rates between the U.S. dollar and Australian and European currencies resulted in higher sales of six percent across all product lines.

R&UP net sales increased by $45.9 million or 11 percent due to the following changes in volume and pricing:

Price

Volume

Foreign
Exchange

Net

Change

Railroad Crossties^(a)

—

TSO Crossties^(b)

—

Distribution Poles

—

Other^(c)

–1

—

Total R&UP

+10

—

+11

(a)

Includes treated and untreated railroad crossties.

(b)

Includes sales from treatment services only (“TSO”).

(c)

Includes transmission poles, pilings, creosote, freight and other treated and untreated lumber products.

~~PART~~Koppers IIInc. 2008 Annual Report

Sales price increases of treated railroad crossties totaled two percent for the year ended December 31, 2007. Volume increases in treated railroad crossties of one percent were offset by volume decreases in untreated ~~ITEM~~railroad 5crossties of the same percentage. ~~MARKET~~ ~~FOR~~The ~~THE~~price ~~REGISTRANT’S~~increase ~~COMMON~~in ~~EQUITY~~other ~~AND~~products ~~RELATED~~is ~~STOCKHOLDER~~due ~~MATTERS~~primarily to higher creosote prices totaling four percent. Higher raw material costs contributed to the pricing increases realized in treated railroad crossties and creosote.

InCost ~~November~~of ~~2004,~~sales ~~all~~as ofa ~~our~~percentage ~~common~~of ~~and~~net ~~preferred~~sales ~~stock~~ was ~~converted~~82 onpercent ~~a one-~~for~~-one~~ ~~basis~~the ~~for~~year ~~shares~~ended ofDecember 31, ~~common~~2007 ~~and~~as ~~preferred~~compared ~~stock~~to of84 ~~Koppers~~percent ~~Holdings~~for ~~Inc.,~~the ~~our~~year ended ~~parent~~December 31, ~~which~~2006. ~~was~~Overall, ~~incorporated~~cost inof ~~November~~sales ~~2004~~increased by $155.5 Asmillion awhen ~~result,~~compared ~~Koppers~~to ~~Holdings~~the isprior ~~our~~year ~~sole~~period ~~shareholder,~~due ~~and~~primarily ~~therefore~~to ~~there~~higher israw nomaterial ~~public~~volumes ~~trading~~from ~~market~~the ~~for~~Reilly ~~our~~acquisition, ~~common~~higher ~~stock~~raw material costs and foreign exchange.

~~Stockholders’~~Depreciation ~~Agreement~~and amortization for the year ended December 31, 2007 was $0.1 million lower when compared to the prior year period.

~~Prior~~Selling, togeneral ~~November~~and ~~2004,~~administrative ~~the~~expenses ~~Company~~for ~~was~~the ayear ~~party~~ended toDecember 31, a2007 ~~stockholders’~~were ~~agreement~~$9.0 ~~When~~million ~~our~~higher ~~common~~when ~~and~~compared ~~preferred~~to ~~stock~~the ~~was~~prior ~~converted~~year ~~into~~period ~~common~~due ~~and~~primarily ~~preferred~~to ~~stock~~due ofdiligence ~~Koppers~~costs ~~Holdings~~of ~~Inc~~$6.,8 ~~our~~million ~~stockholders’~~related ~~agreement was amended~~ to ~~provide~~a ~~for~~potential ~~the~~acquisition ~~transfer~~which ofwas ~~the~~not ~~terms~~consummated. ~~and~~Other ~~conditions~~increases ofrelated ~~the stockholders’ agreement from us~~ to ~~Koppers Holdings Inc. The~~ management ~~investors~~incentive ~~were~~programs, astock-based ~~group~~compensation ~~of approximately~~programs, ~~120~~and ~~individual~~investment ~~stockholders~~in ~~with~~sales ~~various~~and ~~ownership~~administrative ~~interests~~functions in ~~the~~China. Partially ~~common~~offsetting ~~stock~~this ~~and~~increase ~~collectively~~was ~~comprising~~a ~~100%~~one-time ofexpense ~~the~~totaling ~~total~~$3.0 ~~outstanding~~million ~~shares~~for of the ~~common~~termination ~~stock~~ of the ~~Company.~~Saratoga ~~Each~~Partners ~~management investor was an officer~~III, ~~director,~~L.P. ~~or current~~(“Saratoga”) oradvisory ~~former~~services ~~employee~~contract ofrecognized ~~either~~in ~~Koppers~~the oryear ~~one~~ended ofDecember 31, ~~its subsidiaries~~2006.

~~The~~Interest ~~stockholders’~~expense ~~agreement had set forth supermajority voting requirements~~ for the ~~Board~~year ofended ~~Directors for certain matters~~December 31, ~~including~~2007 ~~the~~was ~~issuance~~$16.8 ofmillion ~~additional~~lower ~~stock,~~when ~~mergers,~~compared ~~consolidations,~~to ~~acquisitions,~~the ~~significant~~prior ~~asset sales, and~~year ~~the~~period ~~incurrence~~due ofprimarily ~~material~~to ~~indebtedness.~~costs ~~Majority~~incurred ~~owner~~in ~~Saratoga~~the ~~Partners~~year ~~III,~~ended ~~L.P.~~December 31, or2006 ~~Saratoga,~~related ~~was entitled~~ to ~~nominate~~our ainitial ~~majority~~public ~~of the Board of Directors~~offering. ~~Prior~~The toproceeds ~~February 27,~~from ~~2004~~ the ~~stockholders’~~offering ~~agreement~~were ~~required~~used us to redeem ~~shares~~ ~~upon~~$101.7 amillion ~~management~~of ~~investor’s~~the ~~ceasing~~9 7/8 ~~for~~percent Senior ~~any~~Secured ~~reason~~Notes todue be2013 ~~employed by us. On February 27, 2004~~ (the ~~stockholders’~~“Senior ~~agreement~~Secured ~~was~~Notes”) ~~amended~~which toresulted ~~make~~in ~~the~~expenses ~~redemption~~totaling of$14.4 ~~common~~million ~~stock~~for ~~from~~call ~~such~~premiums, ~~management~~bond ~~investors~~consent atfees ~~our~~and ~~option after~~ the write-off ~~effective date~~ of ~~the~~deferred ~~amendment~~financing costs.

AsIncome ~~further~~taxes for ~~described~~the inyear ~~Item~~ended 7December 31, ~~“Management’s~~ ~~Discussion~~2007 ~~and~~were ~~Analysis~~$20.4 ofmillion ~~Financial~~higher ~~Condition~~when ~~and~~compared ~~Results~~to ofthe ~~Operations”,~~prior year weperiod ~~are~~due ~~restricted~~primarily to the increase in ~~our~~pretax ~~ability~~income toof ~~declare~~$63.6 ~~and~~million. Our ~~pay~~effective ~~dividends~~income totax ~~our~~rate ~~parent,~~for ~~Koppers~~the ~~Holdings.~~year Inended ~~2005~~December 31, ~~2004~~2007 ~~and~~was ~~2003~~36.2 percent as compared to the ~~Company~~prior ~~paid~~year ~~cash dividends~~period of ~~$16~~44.01 ~~million, $33~~percent.4 ~~million,~~The ~~and~~decrease ~~$48.1~~in ~~million,~~the effective ~~respectively~~tax rate is due primarily to the smaller impact (in proportion to pretax book income) from foreign earnings and permanent items.

Gain on sale of Koppers Arch for the year ended December 31, 2007 represents the gain, net of tax expense, from the sale of our 51 percent interest in Koppers Arch to Arch Chemicals on July 5, 2007. Effective as of this date, Koppers Arch was classified as a discontinued operation in our statement of operations.

Segment Results

Segment operating profit for the years ended December 31, 2007 and 2006 is summarized by segment in the following table:


	Year Ended December 31,						% Change
	2007			2006			% Change
(Dollars in millions)
Operating profit:
Carbon Materials & Chemicals	$	84.3		$	56.3		+50	%
Railroad & Utility Products		42.8			23.9		+79	%
Corporate		—			(0.1	)

	$	127.1		$	80.1		+59	%


Operating profit as a percentage of net sales:
Carbon Materials & Chemicals		10.9	%		9.2	%	+1.7	%
Railroad & Utility Products		8.9	%		5.5	%	+3.4	%

		10.1	%		7.7	%	+2.4	%

Carbon ~~ITEM~~Materials ~~6. SELECTED~~& ~~FINANCIAL~~Chemicals ~~DATA~~net sales and operating profit by geographic region for the years ended December 31, 2007 and 2006 is summarized in the following table:

The following table contains our selected historical consolidated financial data for the five years ended December 31, 2005. The selected historical consolidated financial data for each of the five years ended December 31, 2005, 2004, 2003, 2002 and 2001 have been derived from our audited consolidated financial statements. This selected financial data should be read in conjunction with Koppers’ Consolidated Financial Statements and related notes included elsewhere in this Annual Report on Form 10-K as well as the section herein titled Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.


	Twelve months ended December 31,						% Change
	2007			2006			% Change
(Dollars in millions)
Net sales:
North America	$	357.8		$	283.9		+26	%
Europe		226.3			180.6		+25	%
Australia		132.6			119.8		+11	%
China		70.2			46.4		+51	%
Intrasegment		(10.8	)		(20.1	)	-46	%

	$	776.1		$	610.6		+27	%


Operating profit:
North America	$	43.7		$	28.2		+55	%
Europe		15.1			10.6		+42	%
Australia		18.8			12.8		+47	%
China		6.7			4.7		+43	%

	$	84.3		$	56.3		+50	%

	Year ended December 31,
	2005			2004			2003			2002			2001
Statement of Operations Data:
Net sales	$	1,030.2		$	952.5		$	842.9		$	776.5		$	753.7
Operating expenses:
Cost of sales		857.4			798.4			726.0			659.5			631.4
Depreciation and amortization (1)		32.3			32.9			33.7			28.7			30.4
Selling, general and administrative		65.7			56.4			55.6			44.0			46.3
Restructuring and impairment charges (2)		—			—			8.5			—			3.3
Total operating expenses		955.4			887.7			823.8			732.2			711.4
Operating profit		74.8			64.8			19.1			44.3			42.3
Equity in earnings (losses) of affiliates (3)		0.4			0.3			(0.1	)		—			0.3
Other income (4)		—			—			0.1			9.8			8.2
Interest expense		38.9			36.4			37.7			22.9			24.5
Income (loss) before income tax provision (benefit) and minority interest		36.3			28.7			(18.6	)		31.2			26.3
Income tax provision (benefit)		15.3			14.0			(1.3	)		13.8			12.1
Minority interest		2.1			3.4			1.7			0.9			0.9
Net income (loss) before cumulative effect of accounting change		18.9			11.3			(19.0	)		16.5			13.3
Cumulative effect of change in accounting principle (5)		—			—			(18.1	)		—			—
Net income (loss)	$	18.9		$	11.3		$	(37.1	)	$	16.5		$	13.3
Balance Sheet Data:
Working capital	$	131.1		$	115.4		$	86.3		$	63.5		$	89.2
Total assets		540.7			551.7			514.0			463.8			455.2
Total debt		379.5			385.8			340.7			261.7			269.0
Common stock subject to redemption (6)		—			—			13.2			23.1			22.3
Common equity (deficit) (7)		(77.7	)		(72.6	)		(89.1	)		(0.8	)		(1.9	)
Other Data:
Operating cash flows	$	58.8		$	18.9		$	12.4		$	46.0		$	59.5
Investing cash flows		(28.3	)		(20.4	)		(18.5	)		(18.3	)		(18.3	)
Financing cash flows		(19.2	)		6.2			5.0			(24.6	)		(41.6	)
Capital expenditures		23.0			21.2			19.3			19.7			14.6
Acquisitions (8)		5.8			—			—			—			6.4

North American CM&C sales increased $73.9 million due primarily to improved prices for carbon pitch, refined tar and creosote of $39.5 million. In addition, incremental volumes of carbon pitch, refined tar and creosote sales related to sales contracts assumed in the Reilly acquisition contributed increased sales of $23.0 million. Operating profit as a percentage of net sales increased to 12.2 percent from 9.9 percent between periods reflecting an increase in pricing for carbon materials, creosote and phthalic anhydride due primarily to higher raw material costs and realized operating efficiencies related to the Reilly acquisition. Operating profit for 2007 and 2006 includes charges of $6.8 million and $1.5 million related to due diligence fees and the termination fee for the Saratoga advisory services contract, respectively.

~~(1)~~European ~~The~~CM&C ~~2005,~~sales ~~2004,~~increased ~~2003~~$45.7 ~~and~~million ~~2002~~due ~~amounts~~primarily doto ~~not~~higher ~~include~~prices ~~goodwill~~for ~~amortization~~naphthalene asand acarbon ~~result~~pitch oftotaling ~~the~~$14.2 ~~adoption~~million ofand ~~SFAS~~higher ~~No.~~volumes ~~142,~~of ~~Goodwill~~naphthalene and carbon ~~Other~~black ~~Intangible~~feedstock ~~Assets~~totaling $9.7 ~~Goodwill~~million. ~~amortization~~In ~~amounted~~addition, tochanges in foreign exchange rates contributed $117.5 million ~~for~~of ~~2001~~increased sales. Operating profit as a percentage of net sales increased slightly to 6.7 percent from 5.9 percent between periods.

~~(2)~~Australian ~~Represents~~and ~~the~~Chinese ~~2003~~CM&C ~~charges~~sales ~~related~~increased a combined $36.6 million due primarily to ~~(i)~~higher ~~the~~prices ~~curtailment~~for ofcarbon ~~production~~pitch atand ~~our~~naphthalene totaling $9.2 million and higher volumes for carbon ~~materials~~pitch, ~~facility~~naphthalene inand ~~Woodward~~carbon black feedstock totaling $15.4 million. In addition, ~~Alabama;~~changes ~~(ii)~~in ~~the~~foreign ~~impairment~~exchange rates contributed $17.1 million of ~~our~~increased ~~carbon~~sales. ~~materials~~Combined ~~port~~operating ~~facility~~profit as a percentage of net sales increased to 12.6 percent from 10.5 percent between periods reflecting an increase in ~~Portland~~pricing for carbon pitch, naphthalene and carbon black feedstock due primarily to higher raw material costs.

Railroad & Utility Products operating profit for the year ended December 31, 2007 increased by $18.9 million as compared to the prior period. Operating profit as a percentage of net sales increased to 8.9 percent from 5.5 percent between periods due to higher prices for treated railroad crossties, crosstie treatment services, distribution poles and creosote in addition to the mix impact of higher volumes of treated railroad crossties. Operating profit was also negatively impacted for the year ended December 31, 2006 by R&UP’s share of the Saratoga advisory services contract buyout expense of $1.5 million in addition to the loss on the sale of our specialty trackwork business and other plant closure costs totaling $1.9 million.

Cash Flow

Net cash provided by operating activities was $51.9 million for the year ended December 31, 2008 as compared to net cash provided by operating activities of $65.7 million for the year ended December 31, 2007. Net cash provided by operating activities for 2008 includes income taxes paid in connection with the Monessen transaction of approximately $50.0 million. Excluding this amount, net cash flow from operating activities increased by approximately $36 million between periods due to improved working capital and lower interest payments.

~~Oregon~~Koppers as the result of negotiations with a significant customer; (iii) the impairment of certain storage tanks which have been permanently idled; and (iv) the closure of our wood treating facility in Logansport, LouisianaInc. 2008 ~~The~~Annual ~~2001~~Report ~~charges were related to the closure of our facility in Feather River, California.~~

~~(3)~~Net ~~January~~cash 1provided by operating activities was $65.7 million for the year ended December 31, ~~2004~~2007 weas ~~changed~~compared ~~our~~to ~~method~~net cash provided by operating activities of ~~accounting~~$30.7 million for ~~Koppers~~the ~~China~~year ~~from~~ended December 31, 2006. The cash flow for the ~~equity~~prior ~~method~~period toincluded ~~consolidation~~payments ~~due~~associated towith ~~our~~the ~~resumption~~initial ofpublic ~~operating~~offering ~~control~~totaling $14.2 ~~See~~million ~~“Management’s~~for ~~Discussion~~call premiums on the Senior Secured Notes, bond consent fees and ~~Analysis~~the buyout of ~~Financial~~the ~~Condition~~Saratoga ~~and~~advisory ~~Results~~services contract in addition to the payment of ~~Operations~~a legal settlement totaling $2.”6 million. Excluding these amounts, net cash flow from operating activities increased by $18.2 million between periods due to improved net income partially offset by increased working capital requirements.

~~(4)~~Net ~~Other~~cash ~~income~~provided ~~consists~~by ~~primarily~~investing ofactivities ~~proceeds~~was ~~from~~$120.7 million for the ~~monetization~~year ofended ~~tax~~December 31, ~~credits~~2008 ~~relating~~as compared to ~~coke~~net ~~production~~cash ~~and~~used ~~sales~~in atinvesting activities ~~our~~of ~~facility~~$16.5 inmillion ~~Monessen,~~for ~~Pennsylvania.~~the Inyear ~~December~~ended ~~1999~~December 31, we2007. ~~entered~~Net ~~into~~cash anproceeds ~~agreement~~from ~~with~~divestitures aand ~~third~~asset ~~party~~sales toprimarily ~~transfer~~represent ~~substantially~~the ~~all~~net ofcash proceeds from the ~~energy~~sale ~~tax~~of ~~credits~~Monessen. ~~from~~Increased ~~our~~capital ~~facility~~spending in ~~Monessen,~~2008 ~~Pennsylvania~~primarily ~~for~~related ~~cash.~~to our Inplant ~~2003,~~expansion ~~2002~~in China and ~~2001,~~increased weenvironmental ~~earned~~improvement ~~$0.1~~spending ~~million,~~at $9our U.8S. ~~million,~~wood ~~and~~treating $8plants.2 ~~million,~~Acquisition ~~respectively,~~expenditures ~~for~~in ~~the~~2008 ~~transfer~~ of ~~tax credits~~$2.9 ~~These~~million ~~tax~~relate ~~credits~~to ~~expired~~capital oncontributions ~~December~~to ~~31,~~Tangshan ~~2002;~~Koppers ~~the~~Kailuan ~~2003~~Carbon ~~amount~~Chemical isCompany Limited, aour ~~retroactive~~30 ~~inflation~~percent-owned ~~adjustment.~~coal ~~Other~~tar ~~income~~distillation ~~for~~joint ~~2005~~venture ~~consists~~in ~~of interest income~~China.

(Net cash used in investing activities was $16.5) ~~Effective~~million ~~January~~for 1,the ~~2003~~year ended December 31, we2007 ~~changed~~as ~~our~~compared ~~method~~to of$71.2 ~~accounting~~million for ~~asset~~the ~~retirement~~year ~~obligations~~ended inDecember 31, ~~accordance~~2006 ~~with~~which ~~FASB~~included ~~Statement No~~$45.1 ~~143,~~million ~~Accounting~~ for ~~Asset~~the ~~Retirement~~Reilly ~~Obligations~~acquisition. ~~Previously,~~Acquisition weexpenditures ~~had~~in ~~not~~2007 ~~been~~of ~~recognizing~~$4.1 ~~amounts~~million ~~related~~relate to ~~asset~~deferred ~~retirement~~purchase ~~obligations.~~price ~~Under~~payments ~~the~~for Lambson ~~new~~Speciality ~~accounting~~Chemicals ~~method~~Limited, wewhich ~~now~~was ~~recognize~~acquired ~~asset~~in ~~retirement~~2006 ~~obligations~~and incapital ~~the~~contributions ~~period~~to inTangshan ~~which~~Koppers ~~they~~Kailuan ~~are~~Carbon ~~incurred~~Chemical ifCompany aLimited, ~~reasonable~~our ~~estimate~~30 ofpercent-owned acoal ~~fair~~tar ~~value~~distillation ~~can~~joint beventure ~~made~~in China. ~~The~~Net ~~associated~~cash proceeds from divestitures and asset ~~retirement~~sales ~~costs~~of ~~are~~$11.9 ~~capitalized~~million asin ~~part~~2007 ofprimarily represents the ~~carrying~~cash ~~amount~~proceeds, net of cash transferred to the ~~long-lived~~acquirer, ~~asset~~of Koppers Arch.

~~(6)~~Net ~~For~~cash used ~~years~~in ~~prior~~financing activities was $123.0 million for the year ended December 31, 2008 as compared to ~~2004~~net cash used in financing activities of $58.3 million for the year ended December 31, ~~represented~~2007. Net repayments of debt totaled $83.3 million in the ~~amount~~year ~~necessary~~ended toDecember 31, ~~redeem~~2008, ~~stock~~as ~~held~~a byresult ~~management~~of ~~investors~~higher ~~upon~~cash ~~termination~~provided from the sale of ~~their~~Monessen ~~employment~~and ~~with~~from ~~Koppers~~operating ~~pursuant~~activities to(after adjustment for the ~~Company’s~~cash ~~stockholders’~~taxes ~~agreement~~paid on Monessen).

(Net cash used by financing activities was $58.3 million for the year ended December 31, 2007 as compared to net cash provided by financing activities of $36.6 million for the year ended December 31, 2006. The cash flow for the prior period included capital contributions by Koppers Holdings of $110.1 million partially offset by the redemption of the Senior Secured Notes of $101.7) ~~Total~~million. ~~stockholders~~Additionally, term loan borrowings of $50.0 million under Koppers Inc.’s ~~(deficit)~~senior ~~refers~~secured credit facility were used to ~~total~~provide ~~assets~~for ~~less~~the ~~total~~Reilly ~~liabilities~~acquisition. ~~less~~Net ~~minority~~repayments ~~interest~~of debt totaled $44.8 million in the year ended December 31, 2007, as a result of higher cash provided by operating activities and the proceeds from the sale of Koppers Arch.

~~(8)~~Dividends ~~Acquisitions~~paid ~~include~~were ~~the~~$38.4 ~~acquisition~~million ofin the ~~business~~year ~~and~~ended ~~assets~~December 31, of2008 ~~Lambson~~as compared ~~Speciality~~to ~~Chemicals~~dividends ~~Limited,~~paid ~~a subsidiary~~ of ~~Lambson~~$14.7 ~~Group~~million ~~Limited,~~for inthe ~~April~~year ~~2005~~ended ~~and~~December 31, ~~the~~2007. ~~purchase~~Dividends ofpaid in the ~~remaining~~year ~~50%~~ended ofDecember 31, ~~our~~2008 ~~equity~~primarily ~~ownership~~reflect ina ~~the~~dividend ~~European~~paid ~~operations~~to ofKoppers ~~Tarconord~~Holdings ~~A/S,~~to ~~now~~repurchase ~~known~~common asstock ~~Koppers~~under ~~Europe~~its ~~ApS,~~common instock repurchase ~~May 2000~~program.

~~ITEM~~On February ~~7. MANAGEMENT’S~~4, ~~DISCUSSION~~2009, ~~AND~~the ~~ANALYSIS~~board OFof ~~FINANCIAL~~directors ~~CONDITION~~of ~~AND~~Koppers ~~RESULTS~~Inc OFdeclared ~~OPERATIONS~~a quarterly dividend of 22 cents per common share of Koppers Holdings common stock, payable on April 1, 2009 to Koppers Holdings.

~~The~~Liquidity ~~following discussion~~ and ~~analysis~~Capital ofResources our financial condition and results of operations should be read in conjunction with the Selected Financial Data and our Consolidated Financial Statements and the related notes included elsewhere in this Annual Report on Form 10-K. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements due to many factors, including but not limited to those under the headings “Risk Factors” and “Forward-Looking Information.”

WeRestrictions ~~are~~on aDividends ~~leading~~to ~~integrated~~Koppers ~~global~~Holdings provider of carbon compounds and commercial wood treatment products. Our products are used in a variety of niche applications in a diverse range of end-markets, including the aluminum, railroad, specialty chemical, utility, rubber and steel industries. We serve our customers through a comprehensive global manufacturing and distribution network, including 35 manufacturing facilities located in North America, Australasia, China, Europe and South Africa. For the year ended December 31, 2005, we generated net sales of $1,030.2 million and net income of $18.9 million.

WeKoppers ~~operate two~~Holdings, ~~principal~~the ~~businesses~~parent company of Koppers Inc., ~~Carbon~~depends ~~Materials &~~on ~~Chemicals~~the ~~and~~dividends ~~Railroad &~~from ~~Utility~~the ~~Products~~earnings of Koppers Inc. ~~Through~~and its subsidiaries to generate the funds necessary to meet our ~~Carbon~~financial ~~Materials~~obligations, including payments of principal, interest and other amounts on the 9 &7/8 ~~Chemicals~~percent Senior ~~business~~Discount Notes due 2014 (~~60%~~the “Senior Discount Notes”). The terms of ~~2005~~Koppers ~~net~~Inc.’s ~~sales),~~revolving wecredit ~~believe~~facility weas ~~are~~well as the ~~largest~~terms ~~distiller~~ of ~~coal~~the ~~tar~~indenture ~~in North~~governing ~~America,~~the ~~Australia,~~Senior ~~the~~Secured ~~United~~Notes ~~Kingdom~~significantly restrict Koppers Inc. from paying dividends and otherwise ~~Scandinavia~~transferring assets to Koppers Holdings. WeThe ~~process~~amount ~~coal~~of ~~tar~~permitted ~~into~~dividends under both debt facilities is governed by a ~~variety~~formula based on 50 percent of ~~products~~consolidated net income, ~~including~~among ~~carbon~~other ~~pitch,~~things. ~~creosote~~Cash ~~and~~equity ~~phthalic~~contributions ~~anhydride,~~from the sale of Koppers Holdings’ common stock increase the amount available for dividends. At the time of the payment of the dividend, no event of default shall have occurred or be continuing under the indenture or the revolving credit facility.

Under the indenture relating to the Senior Secured Notes, Koppers Inc. must have an EBITDA (as defined in the indenture) to consolidated interest expense ratio of at least 2.0 to 1.0. Additionally, the revolving credit facility requires compliance with all

~~which~~financial ~~are~~covenants ~~critical~~and ~~intermediate~~availability ~~materials~~of inat ~~the~~least ~~production~~$35.0 ofmillion ~~aluminum,~~and ~~the~~leverage ~~pressure~~ratio ~~treatment~~less ofthan ~~wood~~2.0 ~~and~~times under the ~~production~~revolving ofcredit facility ~~plasticizers~~after ~~and~~giving ~~specialty~~effect ~~chemicals, respectively~~to any proposed dividend. ~~Through~~Significant ~~our~~reductions ~~Railroad &~~in ~~Utility~~net ~~Products~~income, ~~business~~or ~~(40%~~increases ofto ~~2005~~indebtedness ~~net~~affecting ~~sales),~~compliance wewith ~~are~~financial covenants or availability under the ~~largest~~revolving ~~North~~credit ~~American~~facility ~~supplier~~would ofrestrict ~~railroad~~Koppers Inc.’s ~~crossties~~ability to pay dividends. ~~Our~~As ~~other~~of ~~commercial~~December 31, ~~wood~~2008, ~~treatment~~dividends ~~products~~available ~~include~~to ~~the~~be ~~provision~~declared ofbased ~~utility~~on ~~poles~~covenant to restrictions under the ~~electric~~Senior ~~and~~Secured ~~telephone~~Notes ~~utility~~amounted ~~industries~~to $124.8 million.

~~Trend Overview. Our~~Liquidity businesses and results of operations are impacted by various competitive and other factors including (i) raw materials pricing and availability, in particular the amount and quality of coal tar available in global markets, which could be negatively impacted by the relative increase in the value of coal tar as a fuel source as a result of higher fuel prices; (ii) global restructuring in the Carbon Materials & Chemicals business, including the curtailment of aluminum production in the Northwestern U.S. in part as a result of historically high energy prices; (iii) competitive conditions in global carbon pitch markets, particularly the United States and European carbon pitch markets; and (iv) low margins in the utility pole business.

~~Raw~~The ~~materials~~Koppers ~~pricing~~Inc. ~~has~~revolving ~~escalated~~credit ~~over~~facility ~~the past several years~~agreement, ~~including~~as ~~our~~amended ~~primary~~and ~~feedstocks~~restated, provides ~~coal~~for ~~tar,~~a ~~coal~~revolving ~~and~~credit ~~lumber.~~facility ~~Many~~ of ~~our~~up ~~sales~~to ~~contracts~~$300.0 ~~include~~million ~~provisions~~at ~~which~~variable ~~allow~~rates. ~~for~~The ~~price~~revolving ~~increases~~credit ~~based~~facility onreplaced ~~increases in~~ the ~~price~~Senior ~~of raw~~Secured ~~materials,~~Revolving ~~which~~Credit ~~has~~Facility ~~allowed~~on usOctober 31, ~~to generally maintain profit margins in our core businesses~~2008. WeBorrowings ~~believe~~under ~~that~~ the ~~global~~revolving ~~restructuring~~credit offacility ~~the~~are secured ~~Carbon~~by ~~Materials &~~a ~~Chemicals~~first ~~business~~priority ~~has~~lien ~~stabilized~~on ~~with~~substantially ~~respect~~all toof ~~the~~Koppers ~~North~~Inc.’s ~~American and European markets~~assets, ~~and~~including ~~that~~the ~~future~~assets ~~expansion~~ of ~~the~~certain ~~aluminum~~significant ~~(and carbon pitch) markets will be primarily in Asian and Middle Eastern countries~~subsidiaries. WeThe ~~expect~~credit tofacility ~~expand~~contains ~~into~~certain ~~these~~covenants ~~markets to the extent~~ that ~~the~~limit ~~economics~~capital ~~justify~~expenditures ~~such~~by ~~expansion~~Koppers Inc. ~~Utility~~and ~~pole~~restrict ~~markets~~its ~~are~~ability ~~expected~~ to ~~continue~~incur toadditional ~~remain~~indebtedness, ~~competitive~~create ~~with~~liens ~~resulting~~on ~~low~~its ~~margins;~~assets, weenter ~~will~~into ~~continue~~leases, topay ~~review~~dividends ~~under-performing assets~~ and ~~rationalize~~make ~~capacity~~investments asor ~~necessary~~acquisitions. toIn ~~remain~~addition, ~~competitive~~such incovenants ~~this~~give ~~market~~rise ~~and~~ to ~~reduce~~events ~~market~~of ~~share~~default ~~if warranted.~~upon ~~Net sales over~~ the ~~past~~failure ~~several years have been significantly impacted~~ by ~~favorable~~Koppers ~~exchange~~Inc. ~~rates;~~to meet incertain ~~the~~financial ~~event this trend reverses, net sales could decline significantly if volumes do not increase~~ratios.

~~Prior~~As toof ~~2004~~December 31, ~~our gross margins~~2008, ~~operating~~the ~~margins,~~Company ~~net~~had ~~income and operating cash flows deteriorated~~$283.0 ~~This~~million ~~deterioration~~of ~~resulted~~unused ~~primarily~~revolving ~~from~~credit ~~changes~~availability infor ~~the~~working ~~U.S.~~capital ~~economy~~purposes after ~~that~~restrictions ~~have~~by ~~negatively~~various ~~affected~~debt ~~our~~covenants ~~business, including (i) reduced consumption resulting in excess capacity in the U.S. carbon materials~~ and ~~chemicals businesses,~~certain ~~due~~letter ~~in part to the idling~~ of ~~aluminum~~credit ~~smelters in the Northwestern U~~commitments.S. asAs ~~a result~~ of ~~higher energy costs; (ii)~~December an31, ~~increase~~2008, in$17.0 ~~imports~~million of ~~furnace~~commitments ~~coke~~were ~~resulting~~utilized inby ~~reduced~~outstanding ~~pricing~~letters ~~and profitability for our coke business; and (iii) highly competitive conditions in the utility pole business partly as the result~~ of ~~deregulation, resulting in reduced margins for us~~credit.

~~However,~~The ~~during the past two years we have benefited from the~~ following: ~~(i) the~~table ~~rationalization~~summarizes ofKoppers ~~capacity~~estimated inliquidity ~~our U.S. carbon materials facilities, which has resulted in lower operating costs; (ii) the resumption of operating control of our Chinese joint venture~~ as of ~~January~~December 131, ~~2004;~~2008 (~~iii) a~~dollars ~~contract~~ in ~~2004 to sell 100% of our coke production for a three-year term, resulting in higher pricing for furnace coke in 2004 and 2005, which has resulted in increased profitability in our coke business; (iv~~millions) ~~the~~: exit from the wood treating business of our largest competitor in the railroad crosstie business, which has resulted in increased volumes of railroad crossties for us in 2004 and 2005 and has provided us with higher profits; and (v) increases in pricing for phthalic anhydride and carbon black feedstock.


Cash and cash equivalents	$	63.1
Amount available under revolving credit facility		283.0
Amount available under other credit facilities		6.6

Total estimated liquidity	$	352.7

Our estimated liquidity was $116.2 million at December 31, 2007. The increase in estimated liquidity from that date is due primarily to an increase in availability under the new revolving credit facility and the increase in cash as a result of the Monessen transaction.

Our need for cash in the next twelve months relates primarily to contractual obligations which include debt service, purchase commitments and operating leases, as well as for working capital, capital maintenance programs and mandatory defined benefit plan funding. We may also use cash to pursue potential strategic acquisitions. Capital expenditures in 2009, excluding acquisitions, are expected to total approximately $23 million. We believe that our cash flow from operations and available borrowings under the revolving credit facility will be sufficient to fund our anticipated liquidity requirements for at least the next twelve months. In the event that the foregoing sources are not sufficient to fund our expenditures and service our indebtedness, we would be required to raise additional funds.

Cash Flows from Discontinued Operations

The cash flows related to Monessen and Koppers Arch for the three years ended December 31, 2008 have not been restated in the consolidated statement of cash flows. Excluding cash proceeds from the sales of Monessen and Koppers Arch, the net cash inflows (outflows) of discontinued operations totaled $0.7 million, $(1.9) million and $(0.4) million for the years ended December 31, 2008, 2007 and 2006, respectively.

With respect to the Monessen sale, in February 2009 the acquirer filed a notice of objection in connection with the determination of certain assumed liabilities and has requested an adjustment to the purchase price of approximately $2.0 million. Based upon the nature of the objections cited by the acquirer, at this time, we do not believe that the purchase price should be adjusted by a material amount and accordingly, we have not provided for any adjustment to the purchase price as of December 31, 2008.

In connection with the sale of our 51 percent interest in Koppers Arch, we have provided an indemnity to the buyer for our share of liabilities, if any, arising from certain litigation and claims existing at July 5, 2007. Our financial exposure pursuant to this indemnity is capped at a monetary limit and is subject to time limitations.

~~Results~~Koppers ofInc. 2008 ~~Operations~~Annual Report

~~The~~Schedule ~~following table sets forth certain sales and operating data, net~~ of ~~all~~Certain ~~intersegment~~Contractual ~~transactions,~~Obligations ~~for our businesses for the periods indicated:~~

	Year ended December 31,
	2005			2004			2003
Net sales (in millions):
Carbon Materials & Chemicals	$	613.6		$	553.4		$	484.1
Railroad & Utility Products		416.6			399.1			358.8
Total	$	1,030.2		$	952.5		$	842.9
Segment sales as percentage of total net sales:
Carbon Materials & Chemicals		59.6	%		58.1	%		57.4	%
Railroad & Utility Products		40.4	%		41.9	%		42.6	%
Total		100.0	%		100.0	%		100.0	%
Gross margin by segment (after depreciation and amortization):
Carbon Materials & Chemicals		15.1	%		15.1	%		10.9	%
Railroad & Utility Products		11.4	%		9.3	%		8.9	%
Total		13.6	%		12.7	%		9.8	%
Operating margin by segment:
Carbon Materials & Chemicals		7.8	%		8.1	%		1.6	%
Railroad & Utility Products		6.3	%		4.9	%		3.6	%
Total		7.3	%		6.8	%		2.3	%

The following table details our projected payments for our significant contractual obligations as of December 31, 2008. The table is based upon available information and certain assumptions we believe to be reasonable.

Comparison of Results of Operations for the Years Ended December 31, 2005 and 2004.


	Payments Due by Period
	Total		2009		2010-2011		2012-2013		Later years
(in millions)
Long-term debt (including swap)	$	187.8	$	—	$	—	$	187.8	$	—
Interest on debt		188.2		20.7		76.8		73.0		17.7
Operating and capital leases		105.3		33.9		47.1		21.7		2.6
Purchase commitments⁽¹⁾		1,060.2		244.7		302.6		192.4		320.5

Total contractual cash obligations	$	1,541.5	$	299.3	$	426.5	$	474.9	$	340.8

~~Net Sales. Net~~(1) ~~sales~~Consists ~~for the year ended December 31, 2005 were higher than 2004 due~~ primarily ~~to higher sales for Carbon Materials & Chemicals. Net sales for Carbon Materials & Chemicals increased due primarily to pricing increases for phthalic anhydride~~ of ~~$15.9~~raw ~~million,~~materials orpurchase ~~26%, furnace coke of $11~~contracts.8 ~~million,~~These orare ~~24%,~~typically ~~and~~not ~~carbon~~fixed black feedstock of $7.1 million, or 39%, and volume increases for carbon pitch of $3.4 million, or 1%, naphthalene of $3.2 million, or 11%, and carbon black feedstock of $2.7 million, or 14%, partially offset by lower phthalic anhydride volumes of $3.7 million, or 6%, due to European capacity rationalization. The price ~~increase~~arrangements; ~~for furnace coke was due primarily to higher raw material costs, and~~ the ~~carbon black feedstock price was favorably impacted by higher oil~~ prices. ~~The~~are ~~price increase for phthalic anhydride was due primarily to higher costs for orthoxylene, which is a petroleum~~ based ~~feedstock~~on ~~used by all domestic competitors, but which is supplemented in our domestic operations by~~ the ~~use~~prevailing ofmarket internally produced naphthalene. Additionally, the impact of foreign exchange rates increased sales by $1.8 million, and sales from the Lambson’s acquisition amounted to $11.2 million. Net sales for Railroad & Utility Products increased compared to the prior year due primarily to a $5.5 million or 10% increase in prices ~~for railroad crossties and a $10~~.1 ~~million,~~As ~~or 11% increase in volumes for treated crossties, plus an increase in volumes for crosstie treating services of $4.9 million, or 11%, which more than offset~~ a ~~$6.5 million or 11% reduction in volumes for distribution utility poles. The increase in prices for railroad crossties was due to rising raw material prices as a~~ result ~~of higher demand for housing lumber~~, ~~the~~we ~~increase~~generally inexpect ~~volumes~~to ~~for~~be ~~crossties~~able ~~and crosstie treating services was due~~ to ~~the~~hedge ~~exit from~~ the ~~business~~purchases ofwith asales ~~major~~at ~~competitor,~~those ~~and~~future ~~the reduction in volumes for utility poles is the result of targeting higher margin business~~prices.

~~Gross~~Pension ~~Margin~~and ~~after~~other ~~Depreciation~~employee ~~and~~benefit ~~Amortization~~plan funding obligations (for defined benefit plans) are not included in the table above. ~~Gross~~ ~~profit~~We ~~after~~expect ~~depreciation~~defined ~~and~~benefit ~~amortization~~plan ~~increased~~contributions to total approximately $~~140~~3 million in 2009.4 Although asset values in our pension plan trusts declined significantly in 2008, under current law we do not expect to be required to make mandatory contributions in 2009 to our U.S. qualified defined benefit plan, our largest defined benefit plan. However, without legislative relief, we estimate that mandatory funding for this plan will be approximately $20 million ~~from~~in 2010 and $~~121.2~~30 million in 2011. Estimated funding obligations are determined by asset performance, workforce and retiree demographics, tax and employment laws and other actuarial assumptions which may change the ~~prior~~annual funding ~~year~~obligations. AsThe afunded ~~percent~~status of ~~net~~our ~~sales,~~defined benefit plans is disclosed in Note 16 of the Consolidated Financial Statements.

Schedule of Certain Other Commercial Commitments

The following table details our projected payments for other significant commercial commitments as of December 31, 2008. The table is based upon available information and certain assumptions we believe to be reasonable.


	Payments Due by Period
	Total		2009		2010-2011		2012-2013		Later years
(in millions)
Lines of credit (unused)	$	289.6	$	6.6	$	—	$	283.0	$	—
Standby letters of credit		14.7		14.7		—		—		—

Total other commercial commitments	$	304.3	$	21.3	$	—	$	283.0	$	—

Debt Covenants

The covenants that affect availability of the revolving credit facility and which may restrict the ability of Koppers Inc. to pay dividends include the following financial ratios:

The fixed charge coverage ratio, calculated as of the end of each fiscal quarter for the four fiscal quarters then ended, is not permitted to be less than 1.10. The fixed charge coverage ratio at December 31, 2008 was 3.2.

The leverage ratio, calculated as of the end of each fiscal quarter for the four fiscal quarters then ended, is not permitted to exceed 2.75. The leverage ratio at December 31, 2008 was 0.84.

The domestic interest coverage ratio, calculated as of the end of each fiscal quarter for the four fiscal quarters then ended, is not permitted to be less than 3.0. The domestic interest coverage ratio at December 31, 2008 was 6.7.

We are currently in compliance with all covenants in the credit agreement governing the revolving credit facility.

At December 31, 2008, Koppers Inc. had $185.9 million outstanding of Senior Secured Notes (excluding adjustment for a related interest rate swap). The Senior Secured Notes include customary covenants that restrict, among other things, our ability

gross profit after depreciation and amortization increased in total as a result of higher margins in Railroad & Utility Products. Gross profit after depreciation and amortization for Carbon Materials & Chemicals increased to ~~$92.5~~incur ~~million~~additional ~~from~~debt, ~~$83.3 million~~pay individends ~~the~~or ~~prior~~make ~~year.~~certain ~~Gross~~other ~~margin~~restricted ~~for Carbon Materials & Chemicals remained steady as the price increases for phthalic anhydride~~payments, ~~furnace~~incur ~~coke and carbon black feedstock~~liens, ~~$0.8~~merge ~~million~~or ofsell ~~profit~~all ~~from~~or ~~changes in estimated cash flows for asset retirement obligations, plus $1.1 million of additional profit realized as a result of insurance reserve reversals in the U.S.~~substantially ~~which~~all ~~resulted from favorable loss trends in our most recent actuarial valuation were offset by $2.6 million~~ of ~~charges related to~~ the ~~anti-trust~~assets ~~investigation~~or inenter ~~New~~into ~~Zealand~~various ~~and~~transactions ~~$0.7 million of additional environmental reserves for clean up costs associated~~ with ~~contamination in Australia~~affiliates. ~~Gross~~We ~~profit~~are ~~after~~currently ~~depreciation and amortization for Railroad & Utility Products increased to $47.6 million from $37.1 million~~ in ~~the~~compliance prior year. Gross margin for Railroad & Utility Products increased due to $1.7 million of insurance reserve reversals in the U.S. which resulted from favorable loss trends in our most recent actuarial valuation, along with aall ~~reduction~~covenants in the ~~ratio~~indentures ofgoverning ~~low margin untreated crossties to higher margin crosstie treating services due to weather-related difficulties in procuring raw materials in~~ the ~~first~~Senior ~~quarter~~Secured ~~of 2005~~Notes. Gross margin was negatively impacted by $1.4 million of impairment, accelerated depreciation, and severance charges related to the closure of the Montgomery, Alabama facility and the impairment of the Superior, Wisconsin facility.

~~Depreciation~~Subsidiary ~~and~~Pledges Amortization. Depreciation and amortization for 2005 decreased compared to the prior year as $1.4 million of depreciation and amortization for the Lambson’s acquisition was more than offset by the effect of certain assets becoming fully depreciated during 2004.

~~Selling,~~The ~~General~~terms ~~and~~of ~~Administrative~~the ~~Expense. Selling,~~Senior ~~general~~Secured ~~and~~Notes ~~administrative~~provide ~~expense~~that the collateral securing the Senior Secured Notes will never include the securities of any subsidiary to the extent the par value, book value as acarried ~~percent~~by us or the market value of ~~net~~the ~~sales~~securities ~~increased~~(the ~~due~~“Applicable Value”) is equal to or greater than 20 percent of the aggregate principal amount of the Senior $6Secured Notes outstanding (the “Collateral Threshold”). Rule 3-16 ~~million~~of Regulation S-X under the Securities Act of ~~increased~~1933 ~~legal~~requires the presentation of a subsidiary’s stand-alone, audited financial statements if the subsidiary’s capital stock secures an issuer’s notes and ~~consulting~~the ~~expenses~~par value, ~~primarily~~book asvalue aor ~~result~~market value of the ~~New~~securities ~~Zealand~~equals ~~anti-trust~~or ~~investigation~~exceeds the Collateral Threshold. The indenture governing the Senior Secured Notes and the ~~Grenada~~security ~~toxic~~documents ~~tort~~provide ~~litigation~~that ~~and~~the collateral ~~costs~~will ~~related~~never include the capital stock of any subsidiary to ~~Sarbanes-Oxley~~the ~~Act~~extent ~~compliance.~~the ~~See~~Applicable ~~“Legal~~Value ~~Matters~~of the securities is equal to or greater than the Collateral Threshold.” As a result, Koppers will not be required to present separate financial statements of any of its subsidiaries under Rule 3-16.

~~Interest~~As ~~Expense. Interest~~a ~~expense~~result of the provisions in the indenture and security documents relating to subsidiary securities, ~~increased~~holders ~~due~~of the Senior Secured Notes may at any time in the future lose a portion of their security interest in the securities of any of our other subsidiaries if the Applicable Value of that stock were to ~~higher~~become ~~average~~equal ~~debt~~to ~~levels~~or ~~primarily~~greater than the Collateral Threshold. As stated above, Applicable Value is defined as the greatest of book value, par value and market value of a ~~result~~subsidiary’s securities. Currently, all of ~~borrowings~~the ~~related~~capital tostock of all of our domestic subsidiaries other than World-Wide Ventures Corp., Koppers Australia Holding Company Pty Ltd., Koppers Australia Pty Ltd., Koppers Delaware, Inc., and all of our subsidiaries other than 35 percent of the ~~Lambson~~voting ~~acquisition~~capital instock ~~2005~~of Koppers Europe ApS constitute collateral for the Senior Secured Notes.

~~Income~~We ~~Taxes. Our~~have ~~effective~~based ~~income~~our ~~tax~~determination ~~rate~~of ~~decreased~~which ~~due~~subsidiary’s ~~primarily~~capital tostock ~~the~~currently ~~effect~~constitutes ofcollateral upon the ~~composition~~book ofvalue, ~~earnings~~par ~~among U.S. and~~value ~~foreign~~and ~~operations~~estimated ~~(as~~market avalue ~~result~~ of the ~~earnings~~capital stock of ~~U.S.~~each ~~operations~~of ~~increasing~~its ~~relative~~subsidiaries toas ~~foreign~~of ~~earnings~~December 31, ~~other~~2008 ~~than~~and ~~China,~~the inoperations ~~which~~of wethese ~~benefited~~subsidiaries ~~from~~since athat ~~tax holiday)~~date. ~~This~~The ~~was~~Applicable ~~partially~~Value ~~offset~~for by the ~~non-deductibility~~capital stock of ~~the~~each ~~proposed~~of ~~NZCC~~our ~~penalty (see~~subsidiaries ~~note~~is 7the togreater of the ~~Consolidated~~book ~~Financial~~value ~~Statements).~~and ~~The~~estimated ~~permanent~~market ~~unfavorable~~value, ~~tax~~as ~~impact~~the value of ~~the~~each ~~penalty~~subsidiary’s ~~for~~capital ~~the~~stock ~~year~~is ~~ended~~nominal ~~December 31,~~and ~~2005~~therefore ~~was~~has ~~$1.2~~not ~~million~~impacted our calculation of Applicable Value. ~~Additionally,~~The ~~the~~Net ~~unfavorable~~Fair ~~effect~~Value ofand ~~deferred~~Net ~~tax~~Book onValue ~~foreign~~calculations ~~earnings~~each ~~not~~include an ~~permanently~~allocation ~~reinvested~~of ~~abroad~~corporate ~~was~~debt ~~offset~~to bythe asubsidiaries. ~~release~~Set offorth ain ~~portion~~the oftable abelow ~~valuation~~is ~~allowance~~the ~~related~~Applicable toValue ~~certain~~of ~~state~~each ~~net~~subsidiary’s ~~operating~~capital ~~loss~~stock ~~carryforwards.~~as of December 31, 2008:

Net Income. Net income for 2005 increased due primarily to an increase in pricing for phthalic anhydride, an increase in volumes for crosstie treating services, and $2.8 million of additional profit realized as a result of insurance reserve reversals in the U.S. which resulted from favorable loss trends, and a lower effective tax rate. These increases were partially offset by $13.8 million of additional interest expense, $2.6 million of charges related to the anti-trust investigation in New Zealand, $6.1 million of additional legal and consulting expenses due primarily to the New Zealand investigation and the Grenada litigation, $1.4 million of impairment, restructuring and related charges in the U.S. Railroad & Utility business, and $0.7 million of additional environmental reserves for clean up costs associated with contamination in Australia.


Subsidiary	Applicable Value as of December 31, 2008			Net Fair Value as of December 31, 2008			Net Book Value as of December 31, 2008

(Dollars in millions)
World-Wide Ventures Corp.⁽¹⁾	$	299.9		$	299.9		$	80.9
Koppers Australia Holding Company Pty Ltd.⁽²⁾		186.3			186.3			59.8
Koppers Australia Pty Ltd.		186.3			186.3			59.8
Koppers Redemption, Inc.		—			—			—
Koppers Delaware, Inc.		82.9			51.9			82.9
Koppers Assurance, Inc.		(13.1	)		(13.1	)		(36.3	)
Koppers Concrete Products, Inc.		0.1			(0.1	)		0.1
Concrete Partners, Inc.		6.6			(4.7	)		6.6
Koppers Europe ApS		113.6			113.6			21.0

~~Comparison~~(1) ofThe ~~Results~~assets of ~~Operations~~World-Wide ~~for~~Ventures Corp. include the ~~Years~~stock ~~Ended~~of ~~December 31,~~Koppers ~~2004~~Europe ApS and ~~2003~~ Koppers Australia Holding Company Pty Ltd. and, therefore, include the Applicable Value, net fair value and net book value of Koppers Europe ApS and Koppers Australia Holding Company Pty Ltd.

~~Net~~(2) ~~Sales~~The assets of Koppers Australia Holding Company Pty Ltd. ~~Net~~ ~~sales~~include ~~for~~the stock of Koppers Australia Pty Ltd. and, therefore, the ~~year~~ ~~ended~~Applicable ~~December 31~~Value, ~~2004~~net ~~were~~fair ~~higher~~value ~~than~~and ~~2003~~net asbook ~~both~~value ~~business~~of ~~segments~~Koppers ~~reported~~Australia ~~sales~~Holding ~~increases~~Company Pty Ltd. ~~Net~~include ~~sales~~the ~~for~~Applicable ~~Carbon~~Value, ~~Materials &~~net ~~Chemicals~~fair ~~increased~~value and net book value of Koppers Australia Pty Ltd.

Based upon the foregoing, the Applicable Value of the capital stock of Worldwide Ventures Corp., Koppers Australia Holding Company Pty Ltd., Koppers Australia Pty Ltd., Koppers Delaware, Inc. and Koppers Europe ApS exceeded the Collateral Threshold of $43.7 million as of December 31, 2008. Further, we believe that, based upon the significant differences between the Applicable Value of the capital stock of Worldwide Ventures Corp., Koppers Australia Holding Company Pty Ltd., Koppers Australia Pty Ltd., Koppers Delaware, Inc., Koppers Europe ApS and the Collateral Threshold as of December 31, 2008 (there

~~due in part to approximately $27.4 million in sales from Australian and European operations as a result of the strength of these foreign currencies relative to the dollar. Also, the consolidation of~~ Koppers ~~China as of January 1, 2004 resulted in incremental sales of $25~~Inc.5 2008 ~~million~~Annual ~~compared~~Report to the prior year. Additionally, sales pricing for phthalic anhydride and furnace coke increased by $15.3 million and $9.7 million, or 27% and 25%, respectively. These increases were partially offset by reductions in volumes and prices for carbon pitch amounting to $4.4 million and $2.1 million, respectively. The increase in prices for phthalic anhydride is due to the fact that the primary feedstock is a petroleum derivative which reflects higher oil prices. The increase in prices for furnace coke is related to a reduction in Asian imports as a result of higher demand for steel in Asian markets due to economic expansions in China and other Asian nations. Net sales for Railroad & Utility Products increased compared to the prior year due primarily to increases of $6.3 million and $8.2 million, or 3% and 7%, in volumes and prices, respectively, for railroad crossties. In addition, other products and services including utility poles resulted in volume increases amounting to $8.5 million. Ancillary crosstie products and services revenues also increased by approximately $12.5 million in conjunction with the increased crosstie volumes. The increase in volumes for railroad crossties was due in part to the exit from the wood treating business of our largest competitor.

~~Gross Margin After Depreciation and Amortization. As a~~ ~~percentage~~have ofbeen ~~net~~no ~~sales,~~significant ~~gross~~changes ~~profit~~in ~~after~~the ~~depreciation~~operations ~~and~~of ~~amortization~~Worldwide ~~increased~~Ventures ~~for both Carbon Materials & Chemicals and Railroad & Utility Products~~Corp., ~~Gross~~Koppers ~~profit~~Australia ~~after~~Holding ~~depreciation~~Company ~~and~~Pty ~~amortization for Carbon Materials & Chemicals increased to $83~~Ltd.3, ~~million~~Koppers ~~from~~Australia ~~$51.9~~Pty ~~million in the prior year~~Ltd., ~~Gross~~Koppers Delaware, ~~margin for Carbon Materials & Chemicals increased due to $4~~Inc.7 ~~million~~and ofKoppers ~~charges~~Europe ~~for~~ApS ~~asset~~since ~~retirement~~that ~~obligations~~date), inwe ~~2003~~have ~~due~~determined ~~to restructuring,~~that ~~coupled~~the ~~with~~Applicable ~~$1.7~~Value ~~million~~ of ~~gains~~the oncapital ~~settlements~~stock of ~~asset~~Worldwide ~~retirement~~Ventures ~~obligations during 2004~~Corp., ~~Gross~~Koppers ~~margin~~Australia ~~for~~Holding ~~Carbon~~Company ~~Materials &~~Pty ~~Chemicals~~Ltd., ~~also~~Koppers ~~increased~~Australia ~~due~~Pty toLtd., ~~the~~Koppers ~~increases~~Delaware, inInc. ~~pricing for phthalic anhydride~~ and ~~furnace~~ ~~coke~~Koppers ~~noted~~Europe ~~above,~~ApS ~~lower~~currently ~~costs~~exceed ~~due~~the toCollateral ~~restructuring~~Threshold. ~~initiatives~~As ~~and~~a ~~higher~~result, ~~margins as~~ the ~~result~~pledges of ~~the~~capital ~~consolidation~~stock of ~~Koppers~~Worldwide ~~China~~Ventures Corp., ~~These~~Koppers ~~increases~~Australia ~~more~~Holding ~~than~~Company ~~offset~~Pty ~~a $0~~Ltd.5, ~~million~~Koppers ~~charge~~Australia ~~for~~Pty ~~the~~Ltd., ~~settlement~~Koppers ofDelaware, ~~a contract dispute with a customer~~Inc. ~~Gross~~ ~~profit after depreciation~~ and ~~amortization~~Koppers ~~for~~Europe ApS ~~Railroad &~~are ~~Utility~~automatically ~~Products~~reduced ~~increased~~ to ~~$37.1~~the ~~million~~extent ~~from~~that ~~$32.0 million in~~ the ~~prior~~Applicable ~~year.~~Value ~~Gross~~exceeds ~~margin~~the ~~for~~Collateral ~~Railroad & Utility Products increased due primarily to higher volumes for railroad crossties~~Threshold.

~~Depreciation~~In ~~and~~respect of Koppers Assurance, Inc., Koppers Delaware, ~~Amortization~~Inc. ~~Depreciation~~, Koppers Concrete Products, Inc. and ~~amortization~~Concrete ~~for~~Partners, ~~2004~~Inc., ~~decreased~~the ~~compared~~Applicable toValue ~~2003~~of ~~due~~their ~~primarily~~common tostock ~~restructuring~~was ~~activities~~based inupon ~~2003~~book ~~which~~value. ~~reduced~~Book ~~depreciation~~value ~~expense~~of ~~that~~a ~~would~~subsidiary’s ~~have~~capital ~~been~~stock ~~incurred~~is oncalculated ~~impaired~~as ~~assets~~of byeach preceding period end and represents the ~~approximately~~original ~~$1.2~~purchase ~~million~~price inof ~~2004~~the subsidiary’s capital stock plus any income earned less any losses and any transfers of assets.

~~Selling,~~In ~~General~~respect ~~and~~of World-Wide Ventures ~~Administrative~~Corp., ~~Expense~~Koppers Australia Holding Company Pty Ltd. ~~Selling~~, ~~general~~Koppers Australia Pty Ltd. and ~~administrative~~Koppers ~~expense~~Europe asApS, athe ~~percentage~~Applicable Value of ~~net~~their ~~sales~~common ~~decreased~~stock ~~primarily~~was asbased aupon ~~result~~estimated market value. We have calculated the estimated market value of ~~higher~~our subsidiaries’ ~~sales~~capital instock by determining the ~~current~~earnings ~~year~~before interest, ~~plus~~taxes, ~~$1.4~~depreciation ~~million~~and amortization, or EBITDA, of ~~bad~~each ~~debt~~subsidiary ~~write-offs~~for the twelve months ended December 31, 2008, and ~~$1.1 million~~multiplying ofthis ~~severance~~EBITDA ~~charges~~by ina multiple used by Koppers Holdings for the ~~prior~~initial ~~year,~~public ~~which~~offering ~~offset~~price anin ~~increase~~February of2006, ~~$3.0~~based ~~million~~on asthe afact ~~result~~that the value of ~~foreign~~Koppers ~~exchange~~Holdings’ ~~rates~~shares ~~and~~were anbased ~~increase~~upon the performance of $2its wholly owned subsidiary, Koppers Inc.6 ~~million~~The ofCompany ~~management~~determined ~~incentive~~that using this multiple continues to be a reasonable and ~~restricted~~appropriate ~~stock~~means ~~compensation~~for ~~expense~~determining infair ~~the~~value ~~current~~of ~~year~~our subsidiaries’ capital stock.

~~Restructuring~~As ~~and~~described ~~Impairment Charges. During~~above, ~~the~~we ~~fourth~~have ~~quarter~~used EBITDA of ~~2003~~each weof ~~determined~~our ~~that~~subsidiaries ~~capacity~~solely ~~rationalization~~for ~~was~~purposes ~~required~~of indetermining ~~our~~the ~~U.S.~~estimated ~~Carbon~~market ~~Materials &~~value ~~Chemicals~~of ~~business~~the capital stock to ~~increase~~determine ~~competitiveness.~~whether ~~Accordingly,~~that incapital ~~December~~stock ~~2003~~is ~~we ceased~~included ~~production~~in atthe ~~our~~collateral. ~~carbon~~EBITDA ~~materials~~is ~~facility~~not ina ~~Woodward,~~recognized ~~Alabama,~~financial ~~resulting~~measure inunder aU.S. ~~restructuring~~GAAP and ~~charge~~does not purport to ~~fourth~~be ~~quarter~~an ~~pre-tax~~alternative to operating income ofas ~~$3.1~~an ~~million.~~indicator ~~Additionally,~~of ~~during~~operating ~~the~~performance ~~fourth~~or ~~quarter~~to ofcash ~~2003~~flows wefrom ~~concluded~~operating ~~that~~activities ~~our~~as ~~carbon~~a ~~materials port~~measure ~~operation~~of inliquidity. ~~Portland~~Additionally, ~~Oregon~~EBITDA ~~was~~has anlimitations ~~impaired~~as ~~facility~~an ~~based~~analytical ontool ~~its current~~ and ~~long-term~~should ~~economic~~not ~~prospects.~~be considered ~~The~~in ~~impairment~~isolation ~~charge~~or ~~for~~as ~~this~~a ~~facility~~substitute ~~resulted~~for inanalysis aof ~~charge~~our toconsolidated ~~fourth~~results ~~quarter~~as ~~pre-tax~~reported ~~income~~under ~~of $3~~U.1S. ~~million~~GAAP. WeBecause ~~also~~not ~~incurred~~all acompanies ~~$1.0 million~~use ~~charge~~identical ~~for~~calculations, the ~~impairment~~presentation of ~~certain~~EBITDA ~~storage~~also ~~tanks~~may ~~which~~not ~~were~~be ~~permanently~~comparable ~~idled due~~ to ~~reduced~~other ~~demand~~similarly ~~for~~titled measures ~~carbon~~of ~~materials~~other ~~products in U~~companies.S. ~~markets.~~An Inevaluation ~~September~~should ~~2003,~~be wemade ~~closed~~of ~~our~~the ~~Logansport,~~adjustments ~~Louisiana~~and ~~wood~~the ~~treating~~reasons ~~plant~~we ~~due~~consider ~~to deteriorating~~them ~~local~~appropriate ~~market~~for ~~conditions.~~analysis ~~The~~for ~~closure~~determining ~~resulted~~estimated inmarket avalue ~~$1.3~~of ~~million~~the ~~restructuring~~capital ~~charge~~stock inof ~~the~~our ~~third quarter~~subsidiaries. We

A change in the Applicable Value of the capital stock of any of our subsidiaries could result in a subsidiary’s capital stock that was previously excluded from collateral becoming part of the collateral or a subsidiary’s capital stock that was previously included in collateral being excluded. The following table reflects the amount by which the Applicable Value of each subsidiary’s capital stock as of December 31, 2008 would have to change in order for a portion of that subsidiary’s capital stock to no longer constitute collateral or, in the case of World-Wide Ventures Corp., Koppers Australia Holding Company Pty. Ltd., Koppers Australia Pty Ltd., Koppers Delaware, Inc., and Koppers Europe ApS would have to decrease in order for the capital stock of each of World-Wide Ventures Corp., Koppers Australia Holding Company Pty Ltd., Koppers Australia Pty Ltd., Koppers Delaware, Inc., and Koppers Europe ApS that is currently not collateral to become collateral:


Subsidiary	Change in Applicable Value

(Dollars in millions)
World-Wide Ventures Corp.	$	(256.2	)
Koppers Australia Holding Company Pty Ltd.		(142.6	)
Koppers Australia Pty Ltd.		(142.6	)
Koppers Delaware, Inc.		(39.2	)
Koppers Europe ApS		(69.9	)
Concrete Partners, Inc.		37.1
Koppers Concrete Products, Inc.		43.5
Koppers Redemption, Inc.		43.7
Koppers Assurance, Inc.		56.8

~~believe~~Other ~~the U.S. market for wood treated utility poles suffers from overcapacity, and will continue to evaluate future productivity and cost reduction initiatives in~~Matters ~~this and all of our other businesses.~~

Interest ~~Expense. Interest~~ ~~expense~~Rate ~~increased~~Swap due to higher debt levels in 2004 which more than offset $14.2 million of additional interest expense in 2003 due to the refinancing of our debt. The additional interest expense in 2003 from the refinancing included a call premium, the write-off of deferred financing costs, and additional interest for the period between the receipt of proceeds from our $320 million 9 7/8% senior secured notes due 2013, or the Senior Secured Notes, and the redemption of the $175 million 9 7/8% senior subordinated notes due 2007.

~~Income~~In ~~Taxes~~January 2004, Koppers Inc. ~~Our~~ ~~effective income~~entered ~~tax~~into an interest rate swap agreement for $50.0 million of the ~~year~~Senior Secured Notes in order to protect a portion of the debt against changes in fair value due to changes in the benchmark interest rate. The agreement is designed to receive fixed 9 7/8 percent and pay floating six-month LIBOR rates plus a spread of 5.395 percent with semiannual settlements through October 2013. Changes in the fair value of the interest rate swap are expected to offset changes in the fair value of the Senior Secured Notes. The impact on the years ended December 31, ~~2004~~2008, ~~increased~~2007 ~~due~~and ~~primarily~~2006 was to ~~the~~increase ~~composition~~(decrease) ofinterest ~~earnings~~expense ~~among~~by U$(0.S3) million, $0.5 million and ~~foreign~~$0.3 ~~operations~~million, respectively. The fair value of the swap agreement at December 31, 2008 was an asset of approximately $1.9 million.

~~Cumulative~~Foreign ~~Effect~~Operations ofand ~~Accounting~~Foreign ~~Change. Effective~~Currency ~~January 1,~~Transactions 2003, we changed our method of accounting for asset retirement obligations in accordance with SFAS No. 143, Accounting for Asset Retirement Obligations. Previously, we had not been recognizing amounts related to asset retirement obligations. Under the new accounting method, we now recognize asset retirement obligations in the period in which they are incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The cumulative effect of the change on prior years resulted in a charge to income of $18.1 million, net of income taxes of $11.7 million.

~~Net~~We ~~Income. Net~~are ~~income~~subject ~~for~~to ~~2004~~foreign ~~compared~~currency totranslation ~~2003~~fluctuations ~~increased~~ due ~~primarily~~ to ~~the~~our ~~January 1,~~foreign ~~2003~~operations. ~~adoption~~For the ofyears ~~SFAS~~ended ~~No.~~December ~~143~~31, ~~Accounting~~ ~~for~~2008, ~~Asset~~2007 ~~Retirement~~and ~~Obligations~~2006, ~~which~~exchange rate fluctuations resulted in aan ~~cumulative~~increase ~~effect~~(decrease) ~~adjustment~~to ~~for~~comprehensive ~~2003~~income of $(29.1) ~~Additionally~~million, ~~net~~$11.0 ~~income~~million ~~before~~and ~~the~~$10.3 million, ~~cumulative~~respectively. ~~effect~~Foreign ofcurrency ~~accounting~~transaction ~~change~~gains and ~~was~~losses ~~higher~~result infrom ~~2004~~transactions ~~due~~denominated toin ~~higher~~a ~~volumes~~currency ~~and~~which ~~pricing~~is ofdifferent ~~certain products,~~from ~~$2.7~~the ~~million~~currency ofused ~~net~~by ~~income~~the ~~from~~entity ~~the~~to ~~consolidation~~prepare ofits ~~China~~financial ~~which~~statements. ~~included~~Foreign ~~improved~~currency ~~operating~~transaction ~~results~~gains ~~and~~(losses) were $1.78 million, of$0.4 ~~net~~million ~~income~~and as$(0.8) million afor ~~result~~the ofyears ~~higher~~ended ~~exchange rates~~December 31, ~~while net income in 2003 was adversely affected due to certain restructuring~~2008, ~~impairment~~2007 and ~~related~~2006, ~~charges~~respectively.

~~Carbon~~Recently ~~Materials &~~Issued ~~Chemicals Geographic~~Accounting ~~Review~~Guidance

	Year ended December 31,
	2005			2004			2003
Net sales (in millions):
North America	$	292.9		$	256.9		$	219.3
Australasia including China		175.8			168.6			135.8
Europe		144.9			127.9			129.0
Total	$	613.6		$	553.4		$	484.1
Sales as percentage of total net sales:
North America		47.7	%		46.4	%		45.3	%
Australasia including China		28.7	%		30.5	%		28.1	%
Europe		23.6	%		23.1	%		26.6	%
Total		100.0	%		100.0	%		100.0	%
Operating margin:
North America		7.7	%		5.5	%		(7.8	)%
Australasia including China		10.3	%		13.9	%		13.3	%
Europe		5.2	%		5.6	%		5.2	%
Total		7.8	%		8.1	%		1.6	%

The information related to recently-issued accounting guidance set forth in Note 3 to the consolidated financial statements is hereby incorporated by reference.

Critical Accounting Policies

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to use judgment in making estimates and assumptions that affect the reported amounts of revenues and expenses, assets and liabilities, and the disclosure of contingent liabilities. The following accounting policies are based on, among other things, judgments and assumptions made by management that include inherent risks and uncertainties. Our management’s estimates are based on the relevant information available at the end of each period.

Revenue Recognition. We recognize revenue from product sales at the time of shipment or when title passes to the customer. We recognize revenue related to the procurement of certain untreated railroad crossties upon transfer of title, which occurs upon delivery to our plant and acceptance by the customer. Service revenue, consisting primarily of wood treating services, is recognized at the time the service is provided. Our recognition of revenue with respect to untreated crossties meets all the recognition criteria of the Securities and Exchange Commission’s Staff Accounting Bulletin Topic 13A3, including transfer of title and risk of ownership, the existence of fixed purchase commitments and delivery schedules established by the customer and the completion of all performance obligations by us.

Accounts Receivable. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. In circumstances where we become aware of a specific customer’s inability to meet its financial obligations, a specific reserve for bad debts is recorded against amounts due. If the financial conditions of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Inventories. In the United States, CM&C and R&UP inventories are valued at the lower of cost, utilizing the last-in, first-out (“LIFO”) basis, or market. Inventories outside the United States are valued at the lower of cost, utilizing the first-in, first-out basis (“FIFO”), or market. Market represents replacement cost for raw materials and net realizable value for work in process and finished goods. LIFO inventories constituted approximately 63 percent and 53 percent of the FIFO inventory value at December 31, 2008 and 2007, respectively.

Long-Lived Assets. Our management periodically evaluates the net realizable value of long-lived assets, including property, plant and equipment, based on a number of factors including operating results, projected future cash flows and business plans.

~~Comparison~~Koppers ofInc. 2008 ~~Results~~Annual ofReport ~~Operations for the Years Ended December 31, 2005 and 2004.~~

~~Net Sales. North American sales increased by 14% due~~ ~~primarily~~We torecord ~~price~~long-lived ~~increases~~assets ~~(driven~~at inthe ~~part~~lower ~~by higher raw material costs)~~ of ~~$30.1~~cost ~~million~~or ~~for~~fair ~~phthalic anhydride~~value, ~~furnace~~with ~~coke~~fair ~~and~~value ~~carbon~~based ~~pitch.~~on ~~Australasian~~assumptions ~~sales~~concerning ~~increased~~the byamount ~~4% due primarily to a favorable exchange rate impact of $3.8 million~~ and ~~$7.2~~timing ~~million for price increases for carbon black and carbon pitch and price and volume increases for carbon black feedstock, offset by volume decreases~~ of ~~$6.2~~estimated ~~million~~future ~~for~~cash ~~carbon black and carbon pitch~~flows. ~~European sales increased by 13% due~~ ~~primarily~~Since tojudgment ~~$11.2~~is ~~million~~involved ofin ~~sales~~determining ~~from~~ the ~~Lambson~~fair ~~acquisition~~value ~~and volume increases~~ of ~~$9.6~~fixed ~~million~~assets, ~~for~~there ~~naphthalene~~is ~~and~~a ~~carbon~~risk ~~pitch~~that ~~combined~~the ~~with~~carrying ~~price~~value ~~increases~~ of ~~$5.3~~our ~~million~~long-lived ~~for~~assets ~~carbon~~may ~~black~~be ~~feedstock, offset by price decreases of $8~~overstated.~~2 million~~ ~~for naphthalene and carbon pitch and $2.0 million of unfavorable exchange rate impact.~~

~~Operating Margin~~Goodwill. ~~North~~ Goodwill ~~American~~is ~~operating~~not ~~margin~~amortized ~~increased~~but ~~due~~is toassessed ~~the~~for ~~price~~impairment ~~increases~~at ~~noted~~least ~~above~~on asan ~~well~~annual ~~as $1~~basis.1 ~~million~~In ofmaking ~~additional~~this ~~profit~~assessment, ~~realized~~management asrelies aon ~~result~~various offactors, ~~insurance~~including ~~reserve~~operating ~~reversals~~results, ~~which~~ ~~resulted~~estimated ~~from~~future ~~favorable~~cash ~~loss trends in our most recent actuarial valuation. Additionally~~flows, and ~~$0.8~~business ~~million of income was realized due to LIFO inventory decrements~~plans. ~~Operating~~There ~~margin~~are ~~for~~inherent ~~Australasia~~uncertainties ~~decreased~~related ~~due~~ to ~~$4.9~~these ~~million~~factors ~~of penalties~~ and ~~legal~~ ~~expenses~~in ~~related~~our tomanagement’s ~~the~~judgment ~~anti-trust investigation~~ in ~~New~~applying ~~Zealand~~them ~~and~~to ~~$0.7~~the ~~million~~analysis of ~~additional~~goodwill ~~environmental~~impairment. ~~reserves~~Because ~~for~~management’s ~~cleanup~~judgment ~~costs~~is ~~associated~~involved ~~with contamination~~ in ~~Australia.~~performing ~~Operating~~goodwill impairment ~~margin~~analyses, ~~for~~there ~~Europe~~is ~~was~~risk ~~lower~~that ~~than~~ the ~~prior~~carrying ~~year period~~value ~~due~~of ~~primarily~~goodwill tois ~~higher prices for raw materials~~overstated.

~~Comparison~~Goodwill ofvaluations ~~Results~~are performed using an average of actual and projected ~~Operations~~operating ~~for~~results of the ~~Years~~relevant ~~Ended~~reporting ~~December 31~~units. Changes in economic and operating conditions impacting these assumptions could result in goodwill impairments in future periods. Additionally, ~~2004~~disruptions to our business such as prolonged recessionary periods or unexpected significant declines in operating results of the relevant reporting units could result in charges for goodwill and ~~2003~~other asset impairments in future periods.

~~Net~~Deferred ~~Sales~~Tax Assets. ~~North~~ At ~~American~~December 31, ~~sales~~2008 ~~increased~~our bybalance ~~17%~~sheet ~~due~~included ~~primarily to price increases (driven in part by higher raw material costs) of~~ $2562.13 million ~~for~~of ~~phthalic~~deferred ~~anhydride~~tax ~~and~~assets. ~~furnace~~We ~~coke,~~have ~~and~~determined ~~volume~~that ~~increases~~a valuation allowance of $104.62 million is required for ~~carbon~~these ~~pitch,~~deferred ~~phthalic~~tax ~~anhydride~~assets, ~~and~~based ~~furnace~~on ~~coke.~~future ~~Australasian~~earnings ~~sales~~projections. ~~increased~~To bythe ~~24%~~extent ~~due~~that ~~primarily~~we toencounter aunexpected ~~favorable~~difficulties ~~exchange~~in ~~rate~~market ~~impact~~conditions, ofadverse ~~$15.5~~changes ~~million,~~in ~~$25.5~~regulations ~~million~~affecting ofour ~~sales~~businesses ~~from~~and ~~Koppers China~~operations, adverse ~~and~~outcomes ~~volume~~in ~~increases~~legal ofand ~~$1.3 million~~environmental ~~for~~matters, ~~naphthalene.~~or ~~These~~any ~~increases~~other ~~were~~unfavorable ~~partially~~conditions, ~~offset~~the byprojections ~~price~~for ~~decreases~~future oftaxable ~~$4.9~~income ~~million~~may ~~for~~be ~~naphthalene~~overstated and ~~carbon~~we ~~pitch.~~may ~~European~~be ~~sales~~required ~~decreased~~to ~~slightly~~record asan aincrease ~~favorable~~in ~~exchange~~the ~~rate~~valuation ~~impact~~allowance ofrelated ~~$11.9~~to ~~million~~these ~~was~~deferred tax ~~offset~~assets bywhich ~~volume~~could ~~decreases of~~have ~~$13.8~~a ~~million~~material ~~for~~adverse ~~carbon~~effect ~~pitch~~on ~~and~~income ~~phthalic~~in ~~anhydride~~the future.

~~Operating Margin~~Accrued Insurance. ~~North~~ We ~~American~~are ~~operating~~insured ~~margin~~for ~~increased~~property, ~~due~~casualty ~~to the price~~ and workers’ ~~volume~~compensation ~~increases~~insurance ~~noted~~up ~~above,~~to asvarious ~~well~~stop asloss ~~$1.7~~amounts ~~million~~after ofmeeting ~~gains~~required onretention ~~settlements~~levels. ofLosses ~~asset~~are ~~retirement~~accrued ~~obligations,~~based inupon ~~contrast~~estimates ~~to $11.9 million~~ of ~~restructuring~~ ~~and~~the ~~related~~liability ~~charges~~for in the ~~prior~~related ~~year.~~retentions ~~Operating margin~~ for ~~Australasia~~claims ~~increased~~incurred ~~due~~using tocertain ~~the~~actuarial ~~volume~~assumptions followed ~~increases~~in ~~noted~~the ~~above~~insurance industry and ~~the~~based ~~consolidation~~on ofour ~~Koppers China~~experience. ~~Operating~~In ~~margin~~the ~~for~~event ~~Europe~~we ~~was~~incur ~~higher~~a ~~than~~significant ~~the~~number ~~prior~~of ~~year~~losses ~~period~~beyond ~~due primarily~~the tocoverage ~~lower~~retention ~~selling~~limits, ~~general~~additional ~~and administrative~~ expense asbeyond athe ~~result~~actuarial ofprojections ~~workforce~~would ~~reductions~~be ~~and lower legal and consulting costs~~required.

~~Liquidity~~Asset Retirement Obligations. We measure asset retirement obligations based upon the applicable accounting guidance, using certain assumptions including estimates regarding the recovery of residues in storage tanks. In the event that operational or regulatory issues vary from our estimates, we could incur additional significant charges to income and ~~Capital~~increases ~~Resources~~in cash expenditures related to the disposal of those residues.

~~Subsidiary~~Pension and Postretirement Benefits. Accounting for pensions and other postretirement benefits involves estimating the cost of ~~Koppers~~benefits ~~Holdings~~to ~~Inc~~be provided far into the future and allocating that cost over the time period each employee works. This calculation requires extensive use of assumptions regarding inflation, investment returns, mortality, medical costs, employee turnover and discount rates. In determining the expected return on plan assets assumptions, we evaluate long-term actual return information, the mix of investments that comprise plan assets and estimates of future investment returns. In selecting rates for current and long-term health care assumptions, we take into consideration a number of factors including our actual health care cost increases, the design of our benefit programs, the characteristics of our active and retiree populations and expectations of inflation rates. Because these items require our management’s judgment, the related liabilities currently recorded by us could be lower or higher than amounts ultimately required to be paid.

~~On November~~Litigation ~~12,~~& ~~2004, Koppers Holdings Inc~~Contingencies. ~~(“Koppers Holdings”, formerly KI Holdings) was incorporated. On November~~ ~~18,~~We ~~2004,~~record ~~all~~liabilities ofrelated ~~our~~to ~~common and~~legal ~~preferred~~matters ~~stock~~when ~~was~~an ~~converted~~adverse ~~into~~outcome ~~shares~~is ofprobable ~~common~~ and ~~preferred~~reasonably ~~stock of Koppers Holdings and Koppers Holdings issued and sold $203~~estimable.0 ~~million~~To ~~aggregate principal amount at maturity ($125.5 million gross proceeds) 9 7/8% Senior Discount~~the ~~Notes~~extent ~~due~~we ~~2014~~anticipate ~~(the~~favorable ~~“Holdings~~outcomes ~~Notes”). A portion of the cash proceeds was used~~ to ~~pay~~these amatters ~~$95~~which ~~million~~ultimately ~~dividend~~result toin ~~Koppers~~adverse ~~Holdings’~~outcomes, ~~stockholders.~~we ~~Koppers~~could ~~Holdings~~incur ~~has~~material noadverse ~~direct~~impacts ~~operations and no significant assets other than our stock. It depends~~ on ~~dividends from the~~ earnings ~~of us~~ and ~~our~~cash ~~subsidiaries~~flows. toBecause ~~generate~~such ~~the~~matters ~~funds~~require ~~necessary~~significant tojudgments ~~meet~~on ~~its~~the ~~financial~~part ~~obligations, including payments~~ of ~~principal~~management, ~~interest, and other amounts on~~ the ~~Holdings~~recorded ~~Notes.~~liabilities ~~The~~could ~~terms~~be oflower ~~our~~than ~~senior secured~~what ~~credit~~is ~~facility~~ultimately ~~prohibit~~required. ~~us from~~

Environmental Liabilities. We are subject to federal, state, local and foreign laws and regulations and potential liabilities relating to the protection of the environment and human health and safety, including, among other things, the cleanup of contaminated sites, the treatment, storage and disposal of wastes, the discharge of effluent into waterways, the emission of substances into the air and various health and safety matters. We expect to incur substantial costs for ongoing compliance with such laws and regulations. We may also incur costs as a result of governmental or third-party claims, or otherwise incur costs, relating to cleanup of, or for injuries resulting from, contamination at sites associated with past and present operations. We accrue for environmental liabilities when a determination can be made that they are probable and reasonably estimable.

~~paying dividends and otherwise transferring assets except for certain limited dividends~~ITEM 7A. ~~Further,~~QUANTITATIVE ~~the~~AND ~~terms~~QUALITATIVE ofDISCLOSURES ~~the~~ABOUT ~~indenture~~MARKET ~~governing~~RISK ~~our Senior Secured Notes (as described herein) significantly restrict us from paying dividends and otherwise transferring assets to Koppers Holdings.~~

~~Koppers~~Like ~~Holdings~~other ~~completed~~global ~~an initial public offering on February 6~~companies, ~~2006,~~we ~~resulting~~are ~~in the issuance of 8,700,000 additional common shares at a price of $14.00~~exposed ~~per~~to ~~share.~~market ~~Koppers~~risks ~~Holdings~~relating ~~received~~to ~~approximately~~fluctuations ~~$111.8~~in ~~million~~interest ofrates ~~net proceeds (after $10.0 million of estimated expenses) from the issuance~~ and ~~sale~~foreign ofcurrency ~~8,700,000~~exchange ~~shares, which proceeds were used to redeem $101~~rates.7 ~~million~~The ~~principal~~objective ~~amount~~ of our ~~senior~~ ~~secured~~financial ~~notes~~risk onmanagement ~~March 9,~~is ~~2006, and pay a related a call premium of $10.1 million. We incurred $3.2 million of deferred financing cost write-offs related~~ to ~~the~~minimize ~~buyback of~~ the ~~notes.~~negative Weimpact ~~also incurred $3.0 million for the termination~~ of ~~the~~ ~~Saratoga~~interest ~~advisory~~rate ~~services agreement, $1.3 million for bond~~ and ~~bank~~foreign ~~consent~~exchange ~~fees,~~rate ~~and~~fluctuations ~~paid~~on ~~Koppers Holdings a post-IPO dividend of $7.0 million~~our earnings, ~~all~~cash offlows ~~which~~and ~~were financed through revolver borrowings~~equity.

InTo ~~February~~manage ~~2006,~~the weinterest ~~amended~~rate ~~and~~risks, ~~restated~~we ~~our~~use ~~senior~~a ~~secured~~combination ~~credit~~of ~~facility~~fixed toand ~~provide for~~variable anrate ~~additional term loan of $10~~debt.0 ~~million~~This ~~and~~reduces ~~to extend~~ the ~~term~~impact of ~~the~~short-term fluctuations ~~credit agreement. The senior secured credit facility expires~~ in ~~December~~interest ~~2009,~~rates. ~~and~~To ~~the~~manage ~~loans~~foreign ~~are~~currency ~~secured~~exchange byrate ~~substantially all of our assets. In August 2005~~risks, we ~~amended~~enter ~~and restated~~into ~~our~~foreign ~~senior~~currency ~~secured~~debt ~~credit~~instruments ~~facility~~that ~~to,~~are ~~among~~held ~~other~~by ~~things,~~our ~~provide~~foreign ~~for~~subsidiaries. aThis ~~revolving~~reduces ~~credit~~the ~~facility~~impact of upfluctuating tocurrencies ~~$115.0~~on ~~million~~net income and ~~for a term loan of $10~~equity.0 ~~million.~~We also ~~The~~use ~~senior~~forward ~~secured~~exchange ~~credit~~contracts ~~facility~~to ishedge ~~for~~firm acommitments ~~period~~up ofto ~~over~~twelve ~~four~~months ~~years,~~ and ~~the loans~~all ~~are~~such ~~secured~~contracts byare ~~substantially~~marked ~~all~~to ofmarket ~~our assets,~~ with ~~revolving credit availability based on receivables and inventory as well as~~ the ~~attainment~~recognition of ~~certain~~a ~~ratios~~gain ~~and~~or ~~covenants.~~loss Weat ~~incurred~~each ~~$0.5~~reporting ~~million of fees related to the amendment~~period.

The ~~covenants~~following ~~that~~analyses ~~affect~~present ~~availability~~the sensitivity of the ~~revolving~~market ~~credit~~value, ~~facility~~ earnings and ~~which~~cash ~~may~~flows ~~restrict~~of our ~~ability~~financial instruments and foreign operations to ~~pay~~hypothetical ~~dividends~~changes ~~include~~in interest and exchange rates as if these changes occurred at December 31, 2008 and 2007. The range of changes chosen for these analyses reflects our view of changes which are reasonably possible over a one-year period. Market values are the ~~following~~present values of projected future cash flows based on the interest rate and exchange rate assumptions. These forward-looking statements are selective in nature and only address the potential impacts from financial ~~ratios:~~instruments and foreign operations. They do not include other potential effects that could impact our business as a result of these changes.

•Interest ~~The~~Rate ~~fixed~~and ~~charge~~Debt ~~coverage~~Sensitivity Analysis. Our ~~ratio,~~exposure ~~calculated~~to asmarket ofrisk ~~the~~for ~~end~~changes ofin ~~each~~interest ~~fiscal~~rates ~~quarter~~relates ~~for~~primarily ~~the~~to ~~four~~our ~~fiscal~~debt ~~quarters~~obligations. ~~then~~We ~~ended,~~have ~~shall~~both ~~not~~fixed beand ~~less~~variable ~~than~~rate 1debt to manage interest rate risk and to minimize borrowing costs.05 In January 2004, we also entered into an interest rate swap arrangement with respect to 1notional $50.0 million of the Senior Secured Notes. (See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources”.) The ~~fixed~~fair ~~charge~~market ~~coverage~~value ~~ratio~~of atthe ~~December~~interest ~~31,~~rate ~~2005~~swap was an asset of $1.799 tomillion 1at December 31, 2008.0.

•At ~~The~~December 31, ~~total~~2008 ~~leverage~~we ~~ratio~~had $136.4 million of fixed rate debt and $50.0 million of variable rate debt, ~~calculated~~and asat December 31, 2007, we had $168.4 million of ~~the~~fixed ~~end~~rate debt and $102.9 million of ~~each~~variable ~~fiscal~~rate ~~quarter~~debt (for both years, including the ~~four~~swap). ~~fiscal~~Our ~~quarters~~ratio ~~then~~of ~~ended~~variable rate debt to fixed rate debt at December 31, ~~shall~~2008, ~~not~~including ~~exceed~~the interest rate swap referred to above, was approximately 28 percent, reflecting a decrease in the ~~ratios~~ratio ~~set~~from ~~forth~~38 ~~below~~percent ~~for~~in the ~~periods~~previous ~~specified~~period ~~below:~~due to the decrease in variable rate borrowings under our senior secured credit facility. For fixed rate debt, interest rate changes affect the fair market value but do not impact earnings or cash flows. For variable rate debt, interest rate changes generally do not affect the fair market value but do impact future earnings and cash flows, assuming other factors are held constant.

Fiscal Quarters Ended		Ratio
August 15, 2005 through March 31, 2008		5.0 to 1.0
June 30, 2008 and thereafter		4.5 to 1.0

Holding other variables constant (such as debt levels and foreign exchange rates), a one percentage point decrease in interest rates at December 31, 2008 and 2007 would have increased the unrealized fair market value of the fixed rate debt by approximately $8.1 million and $10.1 million, respectively. The earnings and cash flows for the next year assuming a one percentage point increase in interest rates would decrease approximately $0.5 million, holding other variables constant. With respect to the interest rate swap, a ten percent decrease in interest rates at December 31, 2008 would have increased the unrealized fair market value of the interest rate swap by approximately $0.2 million to an asset of $2.1 million. A ten percent increase in interest rates at December 31, 2008 would have decreased the unrealized fair market value of the interest rate swap by approximately $0.2 million to an asset of $1.7 million.

•Exchange ~~The~~Rate Sensitivity ~~total~~Analysis. Our ~~leverage~~exchange ~~ratio~~rate atexposures ~~December~~result primarily from our investment and ongoing operations in Australia, Denmark and the United Kingdom. Holding other variables constant, if there were a ten percent reduction in all relevant exchange rates, the effect on our earnings, based on actual earnings from foreign operations for the years ended December 31, ~~2005~~2008 ~~was~~and 2007, would be reductions of approximately $3.797 tomillion 1and $2.05 million, respectively.

On October 15, 2003 we issued $320.0 million aggregate principal amount of 9 7/8% Senior Secured Notes due 2013, or the Senior Secured Notes. Interest is payable semiannually in arrears on April 15 and October 15 of each year. The Senior Secured Notes are guaranteed, jointly and severally, on a senior secured basis by some of our current and future subsidiaries.

The Senior Secured Notes include customary covenants that restrict, among other things, the ability to incur additional debt, pay dividends or make certain other restricted payments, incur liens, merge or sell all or substantially all of the assets or enter into various transactions with affiliates.

We are currently in compliance with all covenants in the indenture governing the Senior Secured Notes and the agreement governing the senior secured credit facility.

Subsidiary Pledges. The terms of the Senior Secured Notes provide that the collateral securing the Senior Secured Notes will never include the securities of any subsidiary to the extent the par value, book value as carried by the Company or the market value of the securities (the “Applicable Value”) is equal to or greater than 20% of the aggregate principal amount of the Senior Secured Notes

~~outstanding~~Koppers ~~(the “Collateral Threshold”)~~Inc. 2008 ~~Rule~~Annual ~~3-16~~Report of Regulation S-X under the Securities Act of 1933 requires the presentation of a subsidiary’s stand-alone, audited financial statements if the subsidiary’s capital stock secures an issuer’s notes and the par value, book value or market value of the securities equals or exceeds the Collateral Threshold. The indenture governing the Senior Secured Notes and the security documents provide that the collateral will never include the capital stock of any subsidiary to the extent the Applicable Value of the securities is equal to or greater than the Collateral Threshold. As a result, Koppers will not be required to present separate financial statements of any of its subsidiaries under Rule 3-16.

As a result of the provisions in the indenture and security documents relating to subsidiary securities, holders of the Senior Secured Notes may at any time in the future lose a portion of their security interest in the securities of any of the Company’s other subsidiaries if the Applicable Value of that stock were to become equal to or greater than the Collateral ThresholdITEM 8. AsFINANCIAL ~~stated~~STATEMENTS ~~above,~~AND ~~Applicable Value~~SUPPLEMENTARY isDATA defined as the greatest of book value, par value and market value of a subsidiary’s securities. Currently, all of the capital stock of all of the Company’s domestic subsidiaries and all of the Company’s subsidiaries other than 35% of the voting capital stock of Koppers Europe ApS constitute collateral for the Senior Secured Notes.

~~The~~Koppers Company has based its determination of which subsidiary’s capital stock currently constitutes collateral upon the book value, par value and estimated market value of the capital stock of each of its subsidiaries as of December 31, 2005 and the operations of these subsidiaries since that dateInc. The Applicable Value for the capital stock of each of the Company’s subsidiaries is the greater of the book value and estimated market value, as the value of each subsidiary’s capital stock is nominal and therefore has not impacted the Company’s calculation of Applicable Value. The Net Fair Value and Net Book Value calculations each include an allocation of corporate debt to the subsidiaries. Set forth in the table below is the Applicable Value of each subsidiary’s capital stock as of December 31, 2005:

Subsidiary	Applicable Valueas of December 31, 2005			Net Fair Value as ofDecember 31, 2005			Net Book Value as of December 31, 2005
	(in millions)
World-Wide Ventures Corp. (1)	$	43.7		$	43.7		$	(6.5	)
Koppers Australia Holding CompanyPty Ltd. (2)		42.8			42.8			10.8
Koppers Australia Pty Ltd.		42.8			42.8			10.8
Koppers Redemption, Inc.		—			—			—
Koppers Delaware, Inc.		25.4			22.5			25.4
Koppers Assurance, Inc.		(27.3	)		(27.3	)		(42.1	)
Koppers Concrete Products, Inc.		0.1			(0.1	)		0.1
Concrete Partners, Inc.		2.6			(4.2	)		2.6
Koppers Europe ApS		5.4			5.4			(12.2	)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

(1) The assets of World-Wide Ventures Corp. include the stock of Koppers Europe ApS and Koppers Australia Holding Company Pty Ltd. and, therefore, include the Applicable Value, net fair value and net book value of Koppers Europe ApS and Koppers Australia Holding Company Pty Ltd.


		Page
Koppers Inc.

Management’s Report on Internal Control Over Financial Reporting		40

Report of Independent Registered Public Accounting Firm		41

Consolidated Statement of Operations for the years ended December 31, 2008, 2007 and 2006		42

Consolidated Statement of Comprehensive Income for the years ended December 31, 2008, 2007 and 2006		42

Consolidated Balance Sheet as of December 31, 2008 and 2007		43

Consolidated Statement of Cash Flows for the years ended December 31, 2008, 2007 and 2006		44

Consolidated Statement of Stockholder’s Equity for the years ended December 31, 2008, 2007 and 2006		45

Notes to Consolidated Financial Statements		46

(2) The assets of Koppers Australia Holding Company Pty Ltd. include the stock of Koppers Australia Pty Ltd. and, therefore, the Applicable Value, net fair value and net book value of Koppers Australia Holding Company Pty Ltd. include the Applicable Value, net fair value and net book value of Koppers Australia Pty Ltd.

The Applicable Value of the capital stock of the Company’s subsidiaries did not exceed the Collateral Threshold as of December 31, 2005. Further, as there have been no significant changes in the operations of each of these subsidiaries since December 31, 2005, the Company has determined that the Applicable Value of the capital stock of each of these subsidiaries currently remains below the Collateral Threshold.

~~In respect of Koppers Delaware, Inc., Koppers Concrete Products, Inc. and Concrete Partners, Inc., the Applicable Value of their common stock was based upon book value. Book value of a subsidiary~~MANAGEMENT’sS ~~capital~~REPORT ~~stock~~ON isINTERNAL ~~calculated~~CONTROL asOVER ofFINANCIAL ~~each~~REPORTING ~~preceding period end and represents the original purchase price of the subsidiary’s capital stock plus any income earned less any losses and any transfers of assets.~~

InThe ~~respect~~management of ~~World-Wide~~ ~~Ventures Corp.,~~ Koppers ~~Australia Holding Company Pty Ltd., Koppers Australia Pty Ltd., Koppers Redemption,~~ Inc., ~~Koppers~~is ~~Assurance,~~responsible ~~Inc.~~for establishing and ~~Koppers~~maintaining ~~Europe~~adequate ~~ApS,~~internal ~~the~~control ~~Applicable~~over ~~Value~~financial ofreporting. ~~their~~Internal ~~common~~control ~~stock~~over ~~was~~financial ~~based~~reporting ~~upon~~is ~~estimated market~~a ~~value.~~process ~~The~~designed ~~Company~~to ~~has~~provide ~~calculated~~reasonable ~~the~~assurance ~~estimated~~regarding ~~market value of its subsidiaries’ capital stock by determining~~ the ~~earnings~~reliability ~~before interest, taxes, depreciation and amortization, or EBITDA,~~ of ~~each~~financial ~~subsidiary~~reporting ~~for the year ended December 31, 2005,~~ and ~~multiplying this EBITDA by a multiple used by~~ the ~~Company~~preparation ~~for purposes~~ of ~~valuing~~financial ~~the~~statements ~~common~~for ~~stock~~external ofreporting ~~its parent, Koppers Holdings Inc. during 2005. Prior to the consummation of its initial public offering in February 2006, Koppers Holdings Inc. retained an independent appraisal firm for~~ purposes ~~of calculating the market value of its common stock annually on a going concern basis, as provided for~~ in ~~the~~accordance ~~Company’s~~with ~~former~~accounting ~~stockholders’~~principles ~~agreement,~~generally ~~and~~accepted in ~~connection~~ ~~with determining equity-based compensation, and~~ the ~~Company has used the midpoint of the range used by such firm, based on the fact that the value of Koppers Holdings Inc. shares were based upon the performance of its wholly owned~~United ~~subsidiary,~~States ~~Koppers Inc. The Company determined that using this multiple is a reasonable and appropriate means for determining fair value~~ of ~~its subsidiaries’ capital stock~~America.

AsBecause ~~described~~of ~~above,~~its ~~the~~inherent ~~Company~~limitations, ~~has~~internal ~~used~~control ~~EBITDA~~over offinancial ~~each~~reporting ofmay ~~its~~not ~~subsidiaries~~prevent ~~solely~~or ~~for~~detect ~~purposes~~misstatements. ofManagement ~~determining~~has assessed the ~~estimated~~effectiveness ~~market value~~ of ~~the~~Koppers ~~capital stock to determine whether that capital stock is included in the collateral~~Inc.’s ~~EBITDA~~internal iscontrol ~~not~~over ~~a recognized~~ financial ~~measure~~reporting ~~under U.S. GAAP and does not purport to be an alternative to operating income~~ as ~~an indicator~~ of ~~operating performance~~December 31, or2008. toIn ~~cash~~making ~~flows~~this ~~from operating activities as a measure of liquidity. Additionally~~assessment, ~~EBITDA~~management has ~~limitations~~utilized asthe ancriteria ~~analytical~~set ~~tool~~forth ~~and~~by ~~should~~the ~~not~~Committee beof ~~considered~~Sponsoring inOrganizations ~~isolation or as a substitute for analysis~~ of the ~~Company’s consolidated~~Treadway ~~results~~Commission as(COSO) ~~reported~~in ~~under~~Internal ~~U.S.~~Control-Integrated ~~GAAP~~Framework. ~~Because~~Management ~~not~~concluded ~~all~~that ~~companies~~based ~~use~~on ~~identical~~its ~~calculations~~assessment, ~~the~~Koppers ~~presentation of EBITDA also may not be comparable to other similarly titled measures of other companies~~Inc.’s Aninternal ~~evaluation~~control ~~should~~over befinancial ~~made~~reporting ofwas ~~the~~effective ~~adjustments and~~as ~~the reasons the Company considers them appropriate for analysis for determining estimated market value~~ of ~~the~~December 31, ~~capital stock of the Company’s subsidiaries~~2008.

AThis ~~change~~annual inreport ~~the~~does ~~Applicable~~not ~~Value~~include ofan ~~the~~attestation ~~capital~~report ~~stock~~ of ~~any~~Koppers ~~of the Company~~Inc.’s ~~subsidiaries~~registered ~~could~~public ~~result~~accounting infirm aregarding ~~subsidiary’s capital~~internal ~~stock~~control ~~that~~over ~~was~~financial ~~previously excluded from collateral becoming part of the collateral or a subsidiary~~reporting. Management’s ~~capital~~report ~~stock that~~ was ~~previously~~not ~~included~~subject into ~~collateral~~attestation ~~being~~by ~~excluded~~Koppers Inc.’s ~~The~~registered ~~following~~public ~~table~~accounting ~~reflects~~firm ~~the~~pursuant ~~amount~~to bytemporary ~~which~~rules ~~the Applicable Value~~ of ~~each~~the ~~subsidiary’s~~Securities ~~capital~~and ~~stock~~Exchange asCommission ofthat ~~December 31,~~permit ~~2005~~Koppers ~~would~~Inc. ~~have~~ to ~~increase~~provide inonly ~~order for a portion of that subsidiary~~management’s ~~capital~~report in ~~stock~~this toannual noreport. ~~longer constitute collateral:~~

Subsidiary	Change inApplicableValue
	(in millions)
World-Wide Ventures Corp.	$	20.3
Koppers Australia Holding Company Pty Ltd.		21.2
Koppers Australia Pty Ltd.		21.2
Koppers Redemption, Inc.		64.0
Koppers Delaware, Inc.		38.6
Koppers Assurance, Inc.		91.3
Koppers Concrete Products, Inc.		63.9
Concrete Partners, Inc.		61.4
Koppers Europe ApS		58.6

February 18, 2009

/s/ WALTER W. TURNER

Walter W. Turner

President and Chief Executive Officer

/s/ BRIAN H. MCCURRIE

Brian H. McCurrie

Vice President and Chief Financial Officer

Koppers Holdings depends on the dividends from the earnings of us and our subsidiaries to generate the funds necessary to meet its financial obligations, including payments of principal, interest and other amounts on the Senior Discount NotesInc. 2008 ~~The~~Annual ~~terms~~Report of our senior secured credit facility as well as the terms of the indenture governing the Senior Secured Notes significantly restrict us from paying dividends and otherwise transferring assets to Koppers Holdings. The amount of permitted dividends under both debt facilities is governed by a formula based on 50% of consolidated net income, among other things. Cash equity contributions from the sale of stock increase the amount available for dividends. At the time of the payment of the dividend, no event of default shall have occurred or be continuing under the indenture or the senior secured credit facility. Under the Senior Secured Note indenture we. must have an EBITDA (as defined in the indenture governing the Senior Secured Notes) to consolidated interest expense ratio of at least 2.0 to 1.0. Additionally the senior secured credit facility requires compliance with all financial covenants and availability of at least $15 million under the revolving credit facility after giving effect to the dividend. Significant reductions in net income or increases to indebtedness affecting compliance with financial covenants or availability under the revolving credit line would restrict our ability to pay dividends. We were able to pay a $13 million dividend to Koppers Holdings in August 2005. As of December 31, 2005 and December 31, 2004, dividends available to be declared based on covenant restrictions under the Senior Secured Notes amounted to $8.1 million and $14.0 million, respectively. Immediately following the closing of Koppers Holdings’ initial public offering, based on the equity contribution to us to reduce the outstanding amount of the Senior Secured Notes, the then available basket was increased by $101.7 million.

~~Our~~REPORT ~~liquidity~~OF ~~needs~~INDEPENDENT ~~are~~REGISTERED ~~primarily~~PUBLIC ~~for~~ACCOUNTING ~~our~~FIRM estimated contractual obligations totaling approximately $240.9 million for 2006 which include debt service, purchase commitments and operating leases, as well as for working capital, capital maintenance and acquisitions. We believe that our cash flow from operations and available borrowings under our senior secured credit facility will be sufficient to fund our anticipated liquidity requirements for at least the next twelve months. In the event that the foregoing sources are not sufficient to fund our expenditures and service our indebtedness, we would be required to raise additional funds.

AsTo ofthe ~~December 31,~~Board ~~2005, we had $25.3 million~~ of ~~cash~~ ~~and~~Directors ~~cash equivalents~~ and ~~$65.2~~Stockholder ~~million~~ of ~~unused~~Koppers ~~revolving credit availability for working capital purposes after restrictions by various debt covenants and certain letter of credit commitments~~Inc. ~~As of December 31, 2005, $17.7 million of~~: ~~commitments were utilized by outstanding standby letters of credit ($2.9 million of which relates to Australia and does not reduce revolver availability).~~

InWe ~~August~~have ~~2005~~audited the accompanying consolidated balance sheets of Koppers Inc. and subsidiaries as of December 31, we2008 ~~paid~~and 2007, and the related consolidated statements of operations, comprehensive income, stockholder’s equity, and cash flows for each of the three years in the period ended December 31, 2008. Our audits also included the financial statement schedule listed in the Index at Item 15(a). ~~dividend~~These financial statements and schedule are the responsibility of ~~$13~~the Company’s management.0 ~~million~~Our responsibility is to ~~Koppers~~express ~~Holdings~~an ~~which~~opinion ~~was~~on ~~borrowed~~these ~~under~~financial ~~the~~statements ~~revolving~~and ~~credit~~schedule ~~facility~~based on our audits.

InWe ~~December~~conducted ~~2005,~~our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we ~~paid~~plan aand ~~dividend~~perform the audit to obtain reasonable assurance about whether the financial statements are free of $3material misstatement.0 ~~million~~We were not engaged to ~~Koppers~~perform ~~Holdings~~an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our ~~February~~opinion, ~~2006~~the consolidated financial statements referred to above present fairly, wein ~~paid~~all amaterial ~~dividend~~respects, the consolidated financial position of $7Koppers Inc.0 ~~million~~and tosubsidiaries ~~Koppers~~at ~~Holdings~~December 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects, the information set forth therein.

~~Overview~~As ofdiscussed in ~~Operating~~Note ~~Cash~~16 ~~Flows. From fiscal~~to ~~2002~~the ~~through~~consolidated ~~fiscal~~financial ~~2004~~statements, ~~operating~~effective ~~cash~~December 31, ~~flows~~2006, ~~declined~~Koppers ~~by $27~~Inc.5 ~~million.~~and ~~The~~subsidiaries ~~primary~~adopted ~~reasons~~the ~~for~~funded ~~this~~status ~~decline~~recognition ~~were~~provisions anof ~~increase~~Statement ~~in inventories~~ of ~~$19.4~~Financial ~~million~~Accounting ~~and~~Standards ~~an increase in pension funding of $7~~No.9 158, ~~million. Although we expect that~~Employers’ ~~inventory~~Accounting ~~levels~~for ~~will~~Defined ~~not~~Benefit ~~return~~Pension ~~to 2002 levels,~~ and ~~that~~Other ~~pension~~Postretirement ~~contributions~~Plans, ~~will~~an ~~remain~~amendment atof ~~high~~FASB ~~levels~~Statements ~~for the next several years~~No. 87,88,106 weand do132(R). ~~not~~As ~~believe~~discussed ~~the deterioration~~ in ~~our~~Notes ~~operating~~8 ~~cash flows between 2002~~ and ~~2004~~16, isrespectively, ~~a trend which will continue prospectively. Pension funding is expected~~ to ~~stabilize~~the orconsolidated ~~decline~~financial asstatements, aeffective January 1, ~~result~~2007, ofKoppers ~~an amendment to our U~~Inc.S. ~~salaried~~and ~~pension~~subsidiaries ~~plan~~adopted ~~which~~FASB ~~reduced~~Interpretation ~~benefits; our calendar year 2005 funding was approximately $11~~No.~~3 million after contributing $14.7 million in 2004~~ 48, ~~and~~Accounting wefor ~~expect~~Uncertainty ~~to contribute $12.3 million~~ in ~~2006.~~Income ~~Additionally~~Taxes, ~~inventory~~an atinterpretation ~~December 31,~~of ~~2005~~FASB ~~was~~Statement ~~$14~~No.~~5 million lower than at December~~ ~~31,~~109 ~~2004~~and ~~partly~~the asmeasurement adate ~~result~~provisions of ~~our~~Statement ~~efforts~~of Financial toAccounting ~~improve~~Standards ~~cash flow~~No. 158, WeEmployers’ ~~believe~~Accounting ~~our overall~~for ~~efforts~~Defined toBenefit ~~improve~~Pension ~~cash~~and ~~flow~~Other ~~are~~Postretirement ~~reflected~~Plans, inan ~~the~~amendment ~~increase in cash flow from operations~~ of ~~$39.9~~FASB ~~million~~Statements ~~for the year ended December~~No. 3187,88,106 ~~2005~~and ~~compared to 2004~~132(R).

/s/ ERNST & YOUNG LLP

Pittsburgh, Pennsylvania

February 18, 2009

~~Net~~KOPPERS cash provided by operating activities for the year ended December 31, 2005 increased compared to the prior year due primarily to higher non-cash interest expense and a decrease in working capital in 2005 of $5INC.1 million compared to an increase in working capital in 2004 of $18.1 million. Net cash provided by operating activities increased for full year 2004 as compared to the prior year as higher net income before cumulative effect of accounting change and an increase in the utilization of deferred taxes were partially offset by an increase in working capital in 2004 of $18.1 million compared to an increase in working capital in 2003 of $7.5 million, an $8.6 million increase in pension funding in 2004, and a $2.0 million payment for the extension of the indemnity agreement with Beazer. See “—Environmental and Other Liabilities Retained or Assumed by Others”.

~~Net~~CONSOLIDATED ~~cash~~STATEMENT ~~used~~OF inOPERATIONS investing activities for the year ended December 31, 2005 increased primarily as a result of the acquisition in the United Kingdom described herein and related capital expenditures. Capital expenditures were higher in calendar 2004 than in 2003 due primarily to an increase in capital expenditures in the U.S. carbon materials business.

Planned expansion at our carbon black facility in Australia is expected to result in capital expenditures of $8-10 million in 2006. Additionally capital expenditures may be incurred in the future due to growth opportunities in existing markets in China.


	Year Ended December 31,
	2008		2007		2006
(Dollars in millions, except share and per share amounts)
Net sales	$	1,364.8	$	1,255.6	$	1,044.2
Cost of sales (excluding items below)		1,140.1		1,028.9		873.4
Depreciation and amortization		30.0		29.5		29.6
Selling, general and administrative expenses		62.8		70.1		61.1

Operating profit		131.9		127.1		80.1
Other income		1.2		0.3		0.5
Interest expense		23.3		30.0		46.8

Income before income taxes and minority interest		109.8		97.4		33.8
Income taxes		48.5		35.3		14.9
Minority interest		0.7		2.7		1.6

Income from continuing operations		60.6		59.4		17.3
Income from discontinued operations, net of tax benefit of $(3.0), $(2.8) and $(3.6)		4.4		8.8		7.8
Gain on sale of Koppers Arch, net of tax expense of $4.3		—		6.7		—
Gain on sale of Monessen, net of tax expense of $50.4		85.9		—		—

Net income		150.9		74.9		25.1

~~Net~~CONSOLIDATED ~~cash~~STATEMENT ~~used~~OF inCOMPREHENSIVE ~~financing activities~~INCOME for the year ended December 31, 2005 was related to the payment of $16.0 million in dividends and debt repayments on the revolving credit facility and the China and Monessen term loans, offset by new borrowing in the United Kingdom for the acquisition of Lambson’s. Net cash provided by financing activities in 2004 related to revolver borrowings of $49.9 million to provide for the payment of $33.4 million in dividends, the repayment of $8.0 million of the term loan, the purchase of $1.5 million of common stock, and the payment of $1.4 million of deferred financing costs. Net cash provided by financing activities in 2003 related to the issuance of $320 million of our Senior Secured Notes to provide for the redemption of $175 million of notes due in 2007, a reduction in the amount of bank debt, payment of $48.1 million of dividends, $9.0 million of purchases of stock from retirees, and the payment of $16.1 million of deferred financing costs.

Koppers Holdings used the majority of the net proceeds of the initial public offering to redeem $101.7 million of the aggregate principal amount of our Senior Secured Notes in March 2006. We plan to use cash from operations for growth opportunities, dividends and debt reduction.


	Year Ended December 31,
	2008			2007			2006
(Dollars in millions)
Net income	$	150.9		$	74.9		$	25.1
Other comprehensive income (loss):
Currency translation adjustment		(29.1	)		11.0			10.3
Minimum pension liability, net of tax of $–, $– and $3.3		—			—			5.0
Unrecognized pension transition asset, net of tax of $(0.1), $(0.2) and $–		(0.3	)		(0.5	)		—
Unrecognized pension prior service cost, net of tax of $(0.1), $(0.5) and $–		(0.1	)		(0.7	)		—
Unrecognized pension net gain (loss), net of tax of $(19.4), $5.7 and $–		(30.5	)		9.3			—

Other comprehensive income (loss), net of tax		(60.0	)		19.1			15.3

Comprehensive income	$	90.9		$	94.0		$	40.4

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

We are involved in litigation and various proceedings relating to environmental laws and regulations and antitrust, toxic tort, product liability and other matters.

Government Investigations. In late 2002, we contacted the Canadian Competition Bureau, or the CCB, and offered its cooperation with respect to industry competitive practices concerning the production, supply and sales of coal tar pitch, naphthalene, creosote oil and carbon black feedstock. As a result of such cooperation, in April 2003 the CCB granted us a provisional guarantee of immunity from fines under the Canadian Competition Act with respect to the supply and sale of coal tar pitch, naphthalene, creosote oil and carbon black feedstock prior to 2001. There have been no recent communications with the CCB. Similar investigations of industry competitive practices by the European Commission and the United States Department of Justice have been terminated. Although the CCB has not indicated that its investigation has been terminated, we do not currently anticipate any adverse consequences from the CCB’s investigation based on the lack of recent communications from the CCB and the termination of the concurrent investigations by the European Commission and the United States Department of Justice.

~~In April 2005, the NZCC, filed a Statement of Claim in the High Court of New Zealand against a number of corporate and individual defendants, including KANZ, KAI,~~ Koppers ~~Australia, TPL Limited, Nufarm Limited, Nufarm Australia Limited, Osmose New Zealand Limited, Osmose Australia Pty Limited and a number of current and former employees of such companies~~Inc. 2008 ~~This followed~~Annual anReport investigation by the NZCC into the competitive practices of the wood preservative industry in New Zealand. The Statement of Claim contains a number of separate causes of action relating to alleged violations of the New Zealand Commerce Act of 1986, or the Act. The statement of claim seeks, among other things, (i) pecuniary penalties for each cause of action in an unspecified amount pursuant to the Act, (ii) injunctions restraining defendants from further anticompetitive conduct, (iii) orders barring the named individual defendants from certain future corporate positions and (iv) reimbursement of legal costs. On February 23, 2006 the NZCC, KANZ, KAI and Koppers Australia executed the Cooperation Agreement. The Cooperation Agreement provides, among other things, that KANZ, KAI and Koppers Australia must cooperate with the NZCC until such time as the NZCC’s investigation and any related court proceedings have been concluded. It also provides that the NZCC will discontinue all proceedings against Koppers Australia and that court approval of a joint aggregate penalty in the amount of approximately $2.5 million plus costs of $0.1 million will be sought with respect to KANZ and Koppers Arch Investments for breaches of the Act. Except as set forth above, we are not currently aware of any other claims (civil or governmental) related to competitive practices in New Zealand. Such other claims, if asserted and resolved unfavorably, could have a material adverse effect on the business, financial condition, cash flows and results of operations of KANZ and its interconnected companies.

~~Koppers~~KOPPERS ~~Arch Australia has made an application for leniency under the Australian Competition and Consumer Commission’s, or the ACCC, policy for cartel conduct~~INC. The ACCC has granted immunity to Koppers Arch Australia, subject to the fulfillment of certain conditions, such as, but not limited to, continued cooperation. If the conditions are not fulfilled, Koppers Arch Australia may be penalized for any violations of the competition laws of Australia. Such penalties, if assessed against Koppers Arch Australia, could have a material adverse effect on its business, financial condition, cash flows and results of operations. We are not currently aware of any civil claims related to competitive practices in Australia. Such civil claims, if asserted and resolved unfavorably, could have a material adverse effect on the business, financial condition, cash flows and results of operations of Koppers Arch Australia.

WeCONSOLIDATED ~~have~~BALANCE ~~reserved approximately~~SHEET ~~$2.6 million for these penalties as of December 31, 2005. This amount is included in cost of sales. The amount reserved is based upon the penalties and costs set forth in the Cooperation Agreement.~~

KANZ and Koppers Arch Australia are majority-owned subsidiaries of Koppers Arch Investments, which is an Australian joint venture owned 51% by World-Wide Ventures Corporation (our indirect subsidiary) and 49% by Hickson Nederland BV. KANZ and Koppers Arch Australia manufacture and market wood preservative products throughout New Zealand and Australia, respectively.


	December 31,
	2008			2007
(Dollars in millions, except share and per share amounts)
Assets
Current assets:
Cash and cash equivalents	$	63.1		$	13.7
Short-term investments		1.7			2.1
Restricted cash		4.2			3.1
Accounts receivable, net of allowance of $0.5 and $0.2		112.1			140.0
Receivable from Parent		1.1			0.1
Inventories, net		171.8			171.9
Deferred tax assets		2.6			18.5
Assets of discontinued operations held for sale		—			21.6
Other current assets		16.9			22.3

Total current assets		373.5			393.3
Equity in non-consolidated investments		6.0			4.2
Property, plant and equipment, net		144.8			145.2
Goodwill		58.4			62.5
Deferred tax assets		34.6			23.3
Other assets		20.5			21.7

Total assets	$	637.8		$	650.2

Liabilities
Current liabilities:
Accounts payable	$	82.0		$	103.6
Accrued liabilities		61.8			63.7
Payable to Parent		5.7			3.8
Liabilities of discontinued operations held for sale		—			6.8
Short-term debt and current portion of long-term debt		0.2			21.3

Total current liabilities		149.7			199.2
Long-term debt		188.1			249.5
Accrued postretirement benefits		75.7			27.8
Other long-term liabilities		36.1			37.4

Total liabilities		449.6			513.9
Commitments and contingent liabilities (Note 19)
Minority interest		8.0			9.4
Stockholder’s Equity
Preferred Stock, $0.01 par value per share; 10,000,000 shares authorized; no shares issued		—			—
Common Stock, $0.01 par value per share; 40,000,000 shares authorized; one share issued		—			—
Additional paid-in capital		126.4			125.1
Receivable from Director for purchase of Common Stock		—			(0.6	)
Retained earnings (deficit)		101.2			(10.2	)
Accumulated other comprehensive income (loss)		(47.4	)		12.6

Total stockholder’s equity		180.2			126.9

Total liabilities and stockholder’s equity	$	637.8		$	650.2

Pacific Century. On October 10, 2002, Koppers Timber Preservation Pty Ltd, a subsidiary of Koppers Australia, was named as a defendant in a breach of contract and negligence lawsuit filed by Pacific Century Production Pty Ltd in the Supreme Court of Queensland, Australia related to the sale of approximately 127,000 vineyard trellis posts. The ~~Complaint~~accompanying ~~claimed~~notes ~~that~~are ~~certain~~an ~~posts~~integral ~~were~~part ~~defective in that they had either decay or excessive bark or were less than the minimum specified size. In addition, plaintiff alleged violations~~ of ~~the~~these Australian Timber Utilization and Marketing Act. Plaintiff sought damages in the amount of $4.9 million for, among other things, the costs of removing and replacing the trellis posts. Plaintiff also filed a lawsuit against the constructor of the vineyard trellises, which is still pending. This lawsuit against the trellis constructor was consolidated ~~with~~financial ~~its claim against our subsidiary~~statements. Koppers Australia has settled with Pacific Century and has withdrawn its third party claim against the constructor of the trellises but Koppers Australia must reimburse the trellis constructor for certain court costs; a provision of $0.9 million has been made for this matter, of which $0.4 million was paid in 2005.

~~Product~~KOPPERS ~~Liability Cases~~INC. ~~We,~~ along with other defendants, have been named as a defendant in 24 cases filed in state court in Pennsylvania and two cases filed in state court in Texas in which the plaintiffs claim they suffered a variety of illnesses (including cancer) as a result of exposure to coal tar pitch sold by us. The first of these cases was filed in April 2000 and the most recent was filed in January 2006. There are a total of approximately 82 plaintiffs in these cases. Of the 82 plaintiffs, 80 plaintiffs do not claim any specific amount of damages. These 80 plaintiffs seek compensatory and punitive damages in unspecified amounts in excess of the minimum jurisdictional limits (in most cases $25,000) of the applicable courts. Of the 82 plaintiffs, two plaintiffs (in the same case) assert damages not to exceed a combined total of $10 million. The other defendants vary from case to case and include companies such as Beazer East, Inc., USX Corporation, Honeywell, Inc., Reilly Industries, Inc., Dow Chemical Company, Rust-Oleum Corporation, UCAR Carbon Company, Inc., Exxon Mobil Corporation, Crompton Corporation, SGL Carbon Corporation, Alcoa, Inc., Henkel Corporation, Univar USA, Inc. and PPG Architectural Finishes Inc. The cases are in the early stages of discovery. We have not provided a reserve for these lawsuits because, at this time, we cannot reasonably determine the probability of a loss, and the amount of loss, if any, cannot be reasonably estimated. Although we are vigorously defending these cases, an unfavorable resolution of these matters may have a material adverse effect on our business, financial condition, cash flows and results of operations.

~~Grenada. We,~~CONSOLIDATED ~~together~~STATEMENT ~~with~~OF ~~various~~CASH ~~co-defendants,~~FLOWS have been named as a defendant in toxic tort lawsuits in various state courts in Mississippi and in toxic tort lawsuits in federal court in Mississippi arising from the operations of our wood treating plant in Grenada, Mississippi.

Somerville. In June 2005, we were served with a putative class action lawsuit in federal court in Austin, Texas against us and other defendants including the Burlington Northern Santa Fe Railway Company, Monsanto Company, Dow Chemical Company and Vulcan Materials Company. The lawsuit alleged that several classes of past and present property owners and residents in the Somerville, Texas area numbering in excess of 2,500 suffered unspecified property damage and risk of personal injury as a result of exposure to various chemicals used at the Somerville, Texas wood treatment plant that is currently owned by us. On December 23, 2005, plaintiffs filed an amended complaint dropping their class action allegations and identifying 602 individual plaintiffs. The amended complaint seeks to recover compensatory and punitive damages within the jurisdictional limits of the court for, among other things, bodily injuries, pain and mental anguish, emotional distress, medical monitoring, medical expenses, lost wages, loss of consortium and property devaluation.


	Year Ended December 31,
	2008			2007			2006
(Dollars in millions)
Cash provided by (used in) operating activities:
Net income	$	150.9		$	74.9		$	25.1
Adjustments to reconcile net cash provided by operating activities:
Depreciation and amortization		32.2			34.3			33.4
(Gain) loss on sale of assets		(141.7	)		(11.1	)		1.0
Deferred income taxes		19.0			8.8			2.4
Write-offs of deferred financing costs		—			—			3.2
Equity income of affiliated companies, net of dividends received		0.8			0.3			0.3
Change in other liabilities		—			(6.9	)		(7.8	)
Minority interest		0.7			1.1			2.4
Stock-based compensation		2.7			1.4			0.4
Other		1.4			(0.5	)		4.0
(Increase) decrease in working capital:
Accounts receivable		18.9			(17.9	)		(18.1	)
Inventories		(15.1	)		(28.6	)		(21.7	)
Accounts payable		(16.8	)		16.2			19.5
Accrued liabilities and other working capital		(1.1	)		(6.3	)		(13.4	)

Net cash provided by operating activities		51.9			65.7			30.7
Cash provided by (used in) investing activities:
Capital expenditures		(37.1	)		(24.3	)		(28.5	)
Acquisitions		(2.9	)		(4.1	)		(45.1	)
Net cash proceeds from divestitures and asset sales		160.7			11.9			2.4

Net cash provided by (used in) investing activities		120.7			(16.5	)		(71.2	)
Cash provided by (used in) financing activities:
Borrowings of revolving credit		203.7			318.0			286.4
Repayments of revolving credit		(225.0	)		(342.0	)		(275.6	)
Borrowings on long-term debt		—			—			53.1
Repayments on long-term debt		(62.0	)		(20.8	)		(120.2	)
Excess tax benefit from employee stock plans		0.8			1.2			0.4
Capital contributions by Parent		0.6			—			110.1
Payment of deferred financing costs		(2.7	)		—			(1.0	)
Dividends paid		(38.4	)		(14.7	)		(16.6	)

Net cash provided by (used in) financing activities		(123.0	)		(58.3	)		36.6
Effect of exchange rates on cash		(0.8	)		2.1			(0.1	)

Net increase (decrease) in cash and cash equivalents		48.8			(7.0	)		(4.0	)
Add: Cash of assets held for sale at beginning of year		0.6			2.5			2.9
Less: Cash of assets held for sale at end of year		—			(0.6	)		(2.5	)
Cash and cash equivalents at beginning of year		13.7			18.8			22.4

Cash and cash equivalents at end of year	$	63.1		$	13.7		$	18.8

Supplemental disclosure of cash flows information:
Cash paid during the year for:
Interest	$	22.0		$	29.1		$	43.7
Income taxes		74.0			25.0			8.4
Noncash investing and financing activities:
Acquisitions – liabilities assumed	$	—		$	—		$	3.3
Capital contributions from Parent		1.3			1.6			1.5
Capital leases		0.5			—			—

~~Stickney.~~ The ~~Illinois~~accompanying ~~Environmental~~notes ~~Protection~~are Agency, or the IEPA, has requested that we conduct a voluntary investigation of soil and groundwater at its Stickney, Illinois carbon materials and chemicals facility. The IEPA advised us that it made such request as a result of a reported release of oil-like material from our property into an ~~adjacent~~integral ~~river~~part ~~canal. We have agreed to conduct such investigation in cooperation with Beazer East and intends to seek contribution and/or indemnification from third parties with respect to a portion~~ of ~~such~~ ~~costs.~~these Weconsolidated ~~have~~financial ~~not provided a reserve for this matter because, at this time, it cannot reasonably determine the probability of a loss, and the amount of loss, if any, cannot be reasonably estimated~~statements.

Other Matters

Plant Closure/Impairment. During 2005, we incurred $0.8 million related to the closure of our wood treating facility in Montgomery, Alabama. Of this amount, $0.3 million was for accelerated

~~depreciation~~Koppers ~~of fixed assets, $0~~Inc.2 2008 ~~million~~Annual ~~was~~Report for severance charges, and $0.3 million was for impairment charges. The total charges of $0.8 million are due to the facility ceasing production in September 2005. The closure of the facility is expected to increase capacity utilization at certain other wood treating plants and provide for improved operating efficiencies and profitability for the business.

~~Additionally,~~KOPPERS ~~in the fourth quarter of 2005 we made a determination that assets at our Superior, Wisconsin wood treating facility were impaired, resulting in a charge to cost of sales of $0~~INC.6 ~~million. We are currently evaluating whether to close this facility, and expect to complete our evaluation in the first half of 2006.~~

~~During~~CONSOLIDATED ~~2005~~STATEMENT ~~and~~OF ~~2004,~~STOCKHOLDER’S weEQUITY recorded gains on settlements of asset retirement obligations of $1.9 million and $1.7 million, respectively. A charge of $4.7 million of additional asset retirement obligations was recorded in 2003 due to a restructuring.

Acquisition of Specialty Chemicals Business. On April 14, 2005, our subsidiary located in the United Kingdom entered into an agreement to purchase the specialty chemical business and certain related assets of Lambson Specialty Chemicals Limited. The purchased assets consist primarily of certain assets related to production (excluding land), customer contracts and a non-compete agreement. The purchase price was approximately $10.6 million plus contingent consideration based on earnings of the business over the next two years. The purchase, which was financed by a loan from a lending institution in the United Kingdom, was completed during the second quarter of 2005. The initial purchase price allocation resulted in approximately $6.3 million of property, plant and equipment and $4.9 million of intangible assets, most of which are being amortized over a three year period. Additionally, approximately $0.6 million of liabilities were assumed. Bank loans related to this purchase amounted to $6.4 million, and the purchase price also includes $4.5 million of seller financing. Approximately $0.3 million of acquisition costs were incurred prior to 2005. Operating results are included in the statement of operations from the acquisition date forward. Net sales and net income for the year ended December 31, 2005 amounted to $11.2 million and $0.0 million, respectively.


	Year Ended December 31,
	2008			2007			2006
(Dollars in millions)
Preferred Stock
Balance at beginning and end of year	$	—		$	—		$	—

Common Stock
Balance at beginning and end of year	$	—		$	—		$	—

Additional paid-in capital
Balance at beginning of year	$	125.1		$	123.5		$	11.5
Capital contributions by Parent		1.3			1.6			112.0

Balance at end of year	$	126.4		$	125.1		$	123.5

Receivable from Director
Balance at beginning of year	$	(0.6	)	$	(0.6	)	$	(0.6	)
Repayment		0.6			—			—

Balance at end of year	$	—		$	(0.6	)	$	(0.6	)

Retained earnings (deficit)
Balance at beginning of year	$	(10.2	)	$	(68.9	)	$	(73.8	)
Net income		150.9			74.9			25.1
Common Stock dividends		(39.5	)		(16.0	)		(20.2	)
Adoption of SFAS No. 158 and EITF 06-2		—			(0.2	)		—

Balance at end of year	$	101.2		$	(10.2	)	$	(68.9	)

Accumulated other comprehensive loss
Currency translation adjustment:
Balance at beginning of year	$	26.6		$	15.6		$	5.3
Change in currency translation adjustment		(29.1	)		11.0			10.3

Balance at end of year		(2.5	)		26.6			15.6
Additional minimum pension liability:
Balance at beginning of year		—			—			(20.1	)
Change in pension liability, net of tax		—			—			5.0
Adoption of SFAS No. 158, net of tax of $12.6		—			—			15.1

Balance at end of year		—			—			—
Unrecognized pension transition asset:
Balance at beginning of year		1.2			1.7			—
Change in unrecognized pension asset, net of tax		(0.3	)		(0.5	)		—
Adoption of SFAS No. 158, net of tax of $0.7		—			—			1.7

Balance at end of year		0.9			1.2			1.7
Unrecognized pension prior service cost:
Balance at beginning of year		(0.3	)		0.4			—
Change in unrecognized pension prior service cost, net of tax		(0.1	)		(0.7	)		—
Adoption of SFAS No. 158, net of tax of $0.3		—			—			0.4

Balance at end of year		(0.4	)		(0.3	)		0.4
Unrecognized pension net loss:
Balance at beginning of year		(14.9	)		(24.2	)		—
Change in unrecognized pension net loss, net of tax		(30.5	)		9.3			—
Adoption of SFAS No. 158, net of tax of $13.6		—			—			(24.2	)

Balance at end of year		(45.4	)		(14.9	)	$	(24.2	)

Total balance at end of year	$	(47.4	)	$	12.6		$	(6.5	)

Total stockholder’s equity – end of year	$	180.2		$	126.9		$	47.5

Stock Purchases by Directors/Restricted Stock Grants to Senior Management. In August 2004 three members of our board of directors, Robert Cizik, David M. Hillenbrand and Clayton A. Sweeney, each purchased 19,900 shares of the Company’s common stock at the then current fair value of $3.30 per share. Additionally, in August 2004 we also granted a total of 537,287 restricted stock units with a fair value of $3.30 per share to Walter W. Turner, Steven R. Lacy, Brian H. McCurrie, Kevin J. Fitzgerald, Thomas D. Loadman, Mark R. McCormack, M. Claire Schaming and Robert H. Wombles, of which 20% vested August 31, 2004 and 20% vested August 31, 2005. The ~~remaining~~accompanying ~~units~~notes ~~will~~are ~~vest~~an ~~annually~~integral atpart ~~a rate~~ of ~~20% per~~these ~~year.~~consolidated ~~We recorded~~financial $0statements.3 ~~million of compensation expense for the vesting of restricted stock grants during 2005 and $0.5 million of compensation expense for the vesting of restricted stock.~~

Pension Funding. We contributed approximately $11.3 million to our U.S. defined benefit pension plans in 2005. Our estimates of our defined benefit pension plan contributions reflect the provisions of the Pension Funding Equity Act of 2004, which was enacted in April 2004. We anticipate contributions of approximately $12.3 million during 2006.

Consolidation of Koppers China. In 1999, we entered into a joint venture agreement with TISCO to rehabilitate and operate a tar distillation facility in China. Koppers China is 60% owned by us and began production of coal tar products in 2001. Contributions of cash, engineering services and acquisition costs for the joint venture total $10.5 million to date. In June 2001, we entered into an agreement with TISCO whereby TISCO assumed control of Koppers China through December 31, 2003. We chose to delay development of the carbon pitch export market due to the restructuring of the North American aluminum smelting capacity. In the interim, TISCO assumed responsibility for the joint

~~venture~~KOPPERS ~~to develop the domestic Chinese market~~INC. During this period, TISCO bore all responsibility for the operations and management of the facility, as well as the net income or loss, except for our pro rata share of depreciation, amortization and income taxes of the joint venture. Accordingly, we changed our method of accounting from consolidation to the equity method effective June 2001 to reflect this change in our ability to control Koppers China.

OnNOTES ~~January 1, 2004, we~~TO ~~resumed~~CONSOLIDATED ~~control~~FINANCIAL ofSTATEMENTS Koppers China, which resulted in the consolidation of Koppers China in our financial statements beginning in the first quarter of 2004. For the years ended December 31, 2005 and 2004 our consolidated results include sales of $24.5 million and $25.5 million, respectively, and net income of $4.0 million and $2.7 million, respectively, for Koppers China. We anticipate that the profitability of Koppers China will be negatively impacted by the slowing of the Chinese economy, higher raw material costs and lower selling prices for certain products in the near term.

Interest Rate Swap. In January 2004, we entered into an interest rate swap agreement for $50.0 million of the Senior Secured Notes in order to protect a portion of the debt against changes in fair value due to changes in the benchmark interest rate. The agreement is designed to receive fixed 9.875% and pay floating six-month LIBOR rates plus a spread of 5.395% with semiannual settlements through October 2013. Changes in the fair value of the interest rate swap are expected to offset changes in the fair value of the Senior Secured Notes. The impact on the twelve months ended December 31, 2005 and 2004 was to lower interest expense by approximately $0.5 million and $1.~~3 million, respectively. The fair value of the swap agreement at December~~ ~~31,~~Description ~~2005 and 2004 was a liability~~ of ~~$2.2~~Business ~~million and $0.9 million, respectively.~~

~~Stock~~Business description ~~Redemptions~~– Koppers Inc. ~~For~~ (the ~~years~~“Company”) ~~ended~~is ~~December 31,~~a ~~2005~~global ~~and~~integrated ~~2004,~~producer ~~stock~~of ~~redemptions~~carbon ~~for~~compounds ~~terminated~~and ~~management~~treated ~~investors~~wood products for ~~which~~ weuse ~~were~~in ~~not~~a ~~contractually~~variety ~~obligated~~of tomarkets ~~redeem~~including ~~shares~~the aluminum, ~~including retirees~~railroad, ~~totaled~~specialty ~~$0.3~~chemical, ~~million and $1.3 million~~utility, ~~respectively. On February 27~~rubber, ~~2004 the Stockholders’ Agreement was amended to make the redemption of common stock from~~and ~~the~~steel ~~Management~~industries. ~~Investors~~The atCompany’s ~~our~~business ~~option~~is ~~after~~managed ~~the~~as ~~effective~~two ~~date~~business ofsegments, ~~the~~Carbon ~~amendment.~~Materials & ~~See~~Chemicals ~~“Certain Relationships~~ and ~~Related~~Railroad & ~~Party~~Utility ~~Transactions—Stockholders’ Agreement~~Products.”

~~Foreign~~The ~~Operations~~Company’s ~~and~~Carbon ~~Foreign~~Materials & ~~Currency~~Chemicals ~~Transactions. We~~segment ~~are~~is ~~subject~~primarily toa ~~foreign~~supplier ~~currency~~of ~~translation fluctuations~~carbon ~~due~~pitch, tophthalic ~~our foreign operations. For the year ended December 31~~anhydride, ~~2005 and 2004~~creosote, ~~exchange~~carbon ~~rate~~black ~~fluctuations~~and ~~resulted~~carbon inblack afeedstock. ~~decrease~~Carbon topitch ~~comprehensive~~is ~~income~~used ofprimarily ~~$8.3 million~~by ~~and~~the analuminum ~~increase~~industry toas ~~comprehensive income of $5.6 million,~~a ~~respectively.~~binder ~~We economically hedge certain firm commitments denominated~~ in ~~foreign currencies for periods up to twelve months, depending on~~ the ~~anticipated~~manufacture ~~settlement dates~~ of ~~the related transactions~~anodes. ~~Forward~~Phthalic ~~exchange~~anhydride ~~contracts~~is ~~are~~used ~~utilized~~in ~~to hedge these transactions, and all such contracts are marked to market with~~ the ~~recognition~~manufacture of aplasticizers, ~~gain~~unsaturated orpolyester ~~loss at each reporting period. Therefore~~resins, atalkyd ~~December 31,~~resins ~~2005~~ and ~~2004~~dye ~~there were no deferred gains or losses on hedging of foreign currencies~~making. ~~The~~Creosote ~~fair value of these derivatives at December 31, 2005 and 2004 was $0.0 million and $0.1 million respectively, and~~ is ~~included~~used in ~~other~~the ~~current~~protection ~~assets.~~of ~~For~~timber ~~the~~products ~~years~~against ~~ended December 31~~insects, ~~2005~~fungal ~~and~~decay ~~2004 there were no net gains~~and orweathering. ~~losses~~Carbon onblack ~~forward exchange contracts,~~ and, ~~for~~carbon ~~the~~black ~~year~~feedstock ~~ended December 31, 2003 $0.2 million of losses on forward exchange contracts~~ are ~~included~~used in ~~cost of sales. Realized foreign exchange gains for~~ the ~~years~~production ~~ended~~of ~~December 31,~~rubber ~~2005, 2004 and 2003 amounted to $0~~tires.1 ~~million, $0.4 million and $0.3 million, respectively.~~

~~Seasonality;~~The ~~Effects~~Company’s ofRailroad & ~~Weather. Our~~Utility ~~quarterly~~Products ~~operating~~segment provides ~~results~~various ~~fluctuate~~products ~~due~~and services to arailroads, ~~variety~~including ofcrossties ~~factors~~(both ~~that~~wood ~~are~~and ~~outside our control~~concrete), ~~including~~track ~~inclement~~panels ~~weather~~and ~~conditions,~~switch ~~which~~pre-assemblies inand ~~the~~disposal ~~past have affected operating results~~services. ~~Operations~~The atsegment ~~several~~also ~~facilities~~supplies ~~have~~treated ~~been~~wood ~~halted~~poles ~~for~~to ~~short~~electric ~~periods~~and oftelephone ~~time~~utilities ~~during~~and provides ~~the~~products ~~winter months. Moreover~~to, ~~demand~~and ~~for~~performs ~~some~~various ofwood ~~our~~treating ~~products~~services ~~declines~~for ~~during~~construction ~~periods~~and ofother ~~inclement~~commercial ~~weather~~applications. ~~As a result of the foregoing, we anticipate that we may experience material fluctuations in quarterly operating results.~~

Wholly-owned subsidiary of Koppers Holdings Inc.– Koppers Holdings Inc., formerly known as KI Holdings Inc., was incorporated on November 12, 2004. On November 18, 2004, all of the common and preferred stock of Koppers Inc. was converted into shares of common and preferred stock of Koppers Holdings Inc. (“Koppers Holdings”). Koppers Holdings and Koppers Inc. are separate and distinct legal entities. Koppers Holdings has no direct operations and no significant assets other than the stock of Koppers Inc. as of December 31, 2008. It depends on the dividends from the earnings of Koppers Inc. and its subsidiaries to generate the funds necessary to meet its financial obligations, including payments of principal, interest, and other amounts on the Koppers Holdings’ Senior Discount Notes due 2014. The terms of Koppers Inc.’s revolving credit facility prohibit Koppers Inc. from paying dividends and otherwise transferring assets except for certain limited dividends. Further, the terms of the indenture governing the Koppers Inc.’s Senior Secured Notes significantly restrict Koppers Inc. from paying dividends and otherwise transferring assets to Koppers Holdings.

Initial public offering of Koppers Holdings – Koppers Holdings completed an initial public offering (“IPO”) on February 6, 2006, resulting in the issuance of 8,700,000 additional common shares at a price of $14.00 per share, and the conversion of 2,288,481 shares of preferred stock into 9,107,926 shares of common stock. Of such converted shares, 2,800,000 were sold by the Koppers Holdings shareholders in connection with the IPO and the related over-allotment option. Koppers Holdings received approximately $111.1 million of net proceeds (after $10.7 million of expenses) from the issuance and sale of 8,700,000 shares, which proceeds were used to redeem $101.7 million principal amount of the Senior Secured Notes due 2013 (the “Senior Secured Notes”) and pay a related call premium of $10.1 million. The Company wrote off $3.2 million of deferred financing costs related to the buyback of the notes and incurred $1.1 million of bond consent fees. The call premium, write-off of deferred financing costs, and consent fees were recorded as interest expense. The Company also incurred $3.0 million for the termination of the Saratoga Partners III, L.P. (“Saratoga”) advisory services contract, which was recorded in selling, general and administrative expense. A post-IPO dividend to Koppers Holdings of $7.0 million, the consent fees and the Saratoga termination fee were financed through borrowings under the senior secured credit agreement.

2. Summary of Significant Accounting Policies

Principles of consolidation – The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries for which the Company is deemed to exercise control over its operations. All significant intercompany transactions have been eliminated. The Company’s investments in 20 percent to 50 percent-owned companies in which it has the ability to exercise significant influence over operating and financial policies are accounted for using the equity method of accounting. Accordingly, the Company’s share of the earnings of these companies is included in the accompanying consolidated statement of operations.

Use of estimates – Accounting principles generally accepted in the U.S. require management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies on the date of the financial

~~Schedule~~Koppers ofInc. 2008 ~~Certain~~Annual ~~Contractual~~Report ~~Obligations~~

~~The~~ statements ~~following~~as ~~table~~well ~~details~~as ~~our~~the ~~projected~~reported ~~payments~~amounts ~~for~~of ~~our~~revenues ~~significant~~and ~~contractual~~expenses ~~obligations~~during asthe ofreporting ~~December 31, 2005~~period. ~~The~~Estimates ~~table is~~have ~~based~~been ~~upon~~prepared on the basis of the most current and best available information and ~~certain~~actual ~~assumptions~~results wecould ~~believe~~differ ~~are~~materially ~~reasonable~~from these estimates.

	Payments Due by Period
	Total		Less than1 year		1-3years		4-5years		After5 years
	(in millions)
Long-Term Debt	$	379.5	$	10.5	$	7.9	$	35.4	$	325.7
Operating Leases		70.2		18.5		28.2		19.7		3.8
Legal settlements		2.6		2.6		—		—		—
Beazer Indemnity Extension		3.0		2.0		1.0		—		—
Interest on Debt		260.7		35.1		69.5		66.4		89.7
Pension Funding (1)		12.3		12.3		—		—		—
Purchase Commitments (2)		563.1		158.7		246.8		152.7		4.9
Stock Liability (3)		1.2		1.2		—		—		—
Total Contractual Cash Obligations	$	1,292.6	$	240.9	$	353.4	$	274.2	$	424.1

Foreign currency translation – For consolidated entities outside of the U.S. that prepare financial statements in currencies other than the U.S. dollar, results of operations and cash flows are translated at average exchange rates during the period, and asset and liabilities are generally translated at end-of-period exchange rates. Cumulative translation adjustments are included as a separate component of accumulated other comprehensive income (loss) in stockholder’s equity. Currency translation gains released to income totaled $2.8 million for the year ended December 31, 2007 and related to the sale of Koppers Arch Investments Pty Limited and its subsidiaries.

Foreign currency transaction gains and losses result from transactions denominated in a currency which is different than the currency used by the entity to prepare its financial statements. Foreign currency transaction gains (1losses) ~~Based~~were on$1.8 ~~projected~~million, ~~contribution~~$0.4 ~~requirement~~million and $(0.8) million for the years ended December 31, 2008, 2007 and 2006, respectively.

~~(2)~~Revenue ~~Consists~~recognition ~~primarily~~– ofThe ~~raw~~Company ~~materials~~recognizes ~~purchase~~revenue ~~contracts.~~when ~~These~~the ~~are~~risks ~~typically~~and ~~not~~rewards of ~~fixed~~ownership ~~price~~and ~~arrangements;~~title to the ~~prices~~product ~~are~~have ~~based~~transferred onto the ~~prevailing~~customer. ~~market~~Revenue ~~prices.~~recognition Asgenerally aoccurs ~~result~~at wethe ~~generally~~point ~~expect~~of toshipment; behowever ~~able~~in tocertain ~~hedge~~circumstances ~~the~~as ~~purchases~~shipping ~~with~~terms ~~sales~~dictate, revenue is recognized at ~~those~~the ~~future~~point ~~prices~~of destination. Shipping and handling costs are included as a component of cost of sales.

~~(3)~~The ~~Represents~~Company ~~commitments~~recognizes revenue related to ~~purchase~~the ~~common~~procurement ~~stock~~of atcertain ~~December~~untreated 31railroad crossties upon transfer of title to the customer, ~~2005.~~which Onoccurs ~~February~~upon 27delivery to the Company’s plant and acceptance by the customer. Service revenue, ~~2004~~consisting primarily of wood treating services, is recognized at the ~~stockholders~~time the service is provided. Payment on sales of untreated railroad crossties and wood treating services are generally due within 30 days of the invoice date. The Company’s ~~agreement~~recognition ~~was~~of ~~amended~~revenue with respect to ~~make~~untreated crossties meets all the ~~redemption~~recognition criteria of ~~common~~SEC ~~stock~~Staff ~~from~~Accounting ~~the~~Bulletin ~~Management~~Topic ~~Investors~~13.A.3., atincluding ~~our~~transfer ~~option~~of title and risk of ownership, ~~after~~the existence of fixed purchase commitments and delivery schedules established by the ~~effective~~customer, ~~date~~and the completion of all performance obligations by the ~~amendment~~Company. Revenue recognized for untreated crosstie sales for the years ended December 31, 2008, 2007 and 2006 amounted to $98.9 million, $111.1 million and $113.0 million, respectively.

~~Schedule~~Research & ofdevelopment ~~Certain~~– ~~Other~~Research ~~Commercial~~and ~~Commitments~~development costs are expensed as incurred and are included in selling, general and administrative expenses. These costs totaled $2.8 million in 2008, $2.8 million in 2007 and $2.5 million in 2006.

~~The following~~Cash ~~table~~and ~~details~~cash ~~our~~equivalents ~~projected~~– ~~payments~~Cash ~~for~~and ~~other~~cash ~~significant~~equivalents ~~commercial~~include ~~commitments~~cash ason ofhand and ~~December 31,~~on ~~2005.~~deposit ~~The~~and ~~table~~investments isin ~~based~~highly ~~upon~~liquid ~~available~~investments ~~information~~with ~~and~~an ~~certain~~original ~~assumptions~~maturity weof ~~believe~~90 ~~are~~days ~~reasonable~~or less.

	Payments Due by Period
	Total		Less than1 year		1-3years		4-5years		After 5years
	(in millions)
Lines of Credit (Unused)	$	70.0	$	65.2	$	—	$	—	$	4.8
Standby Letters of Credit		17.7		17.7		—		—		—
Total Other Commercial Commitments	$	87.7	$	82.9	$	—	$	—	$	4.8

Restricted cash – Restricted cash includes cash that is required to be held on deposit by a bank and is not available for immediate withdrawal.

~~Critical~~Accounts ~~Accounting~~receivable ~~Policies~~– The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to Koppers, a specific reserve for bad debts is recorded against amounts due. If the financial condition of the Company’s customers were to deteriorate, resulting in an inability to make payments, additional allowances may be required. The allowance for doubtful accounts was $0.5 million and $0.2 million as of December 31, 2008 and 2007, respectively.

~~The~~Inventories ~~preparation~~– ofInventories ~~financial~~are carried ~~statements~~at inlower ~~conformity~~of ~~with~~cost ~~GAAP~~or ~~requires~~market ~~management to~~on ~~use~~a ~~judgment~~worldwide inbasis. ~~making~~In ~~estimates~~the ~~and~~U.S., ~~assumptions~~inventory ~~that~~cost ~~affect~~(excluding ~~the~~miscellaneous ~~reported~~types ~~amounts~~ of ~~revenues~~inventory) ~~and~~is ~~expenses,~~determined ~~assets~~primarily ~~and~~utilizing ~~liabilities~~the last-in, ~~and~~first-out ~~the~~(“LIFO”) ~~disclosure~~basis. ofInventory ~~contingent~~cost ~~liabilities~~outside the U.S. ~~The~~is determined ~~following~~utilizing ~~accounting~~the ~~policies~~first-in, ~~are~~first-out ~~based~~(“FIFO”) ~~on,~~basis. ~~among~~Market ~~other~~represents ~~things, judgments~~replacement ~~and~~cost ~~assumptions~~for ~~made~~raw bymaterials ~~management~~and ~~that~~net ~~include~~realizable ~~inherent~~value ~~risks~~for work in process and ~~uncertainties~~finished goods. ~~Our~~LIFO ~~management’s~~inventories ~~estimates~~constituted ~~are~~approximately ~~based~~63 onpercent and 53 percent of the ~~relevant~~FIFO ~~information~~inventory ~~available~~value at ~~the~~December 31, ~~end~~2008 ofand ~~each~~2007, ~~period~~respectively.

~~Long-Lived~~Property, ~~Assets. Our~~plant & ~~management~~equipment ~~periodically~~– ~~evaluates~~Property, plant and ~~the~~equipment ~~net~~are ~~realizable~~recorded ~~value~~at purchased cost and include improvements which significantly increase capacities or extend useful lives of ~~long~~existing plant and equipment. Depreciation expense is calculated by applying the straight-~~lived~~line ~~assets,~~method ~~including~~over ~~property,~~estimated useful ~~plant~~lives. Estimated useful lives for buildings generally range from 10 to 20 years and depreciable lives for machinery and equipment, ~~based~~generally onrange afrom ~~number~~3 ofto ~~factors~~10 ~~including~~years. ~~operating~~Net gains and losses related to asset disposals are recognized in earnings in the period in which the disposal occurs. Routine repairs, replacements and maintenance are expensed as incurred.

The Company ~~results,~~periodically ~~projected~~evaluates ~~future~~whether ~~cash~~current ~~flows~~facts and ~~business~~circumstances ~~plans.~~indicate Wethat ~~record long-lived assets at~~ the ~~lower~~carrying value of ~~cost~~its ordepreciable ~~fair~~long-lived ~~value,~~assets ~~with~~may ~~fair~~not ~~value~~be ~~based~~recoverable. onIf ~~assumptions concerning~~an ~~the~~asset, ~~amount~~or ~~and~~logical ~~timing~~grouping of ~~estimated~~assets, ~~future~~is ~~cash~~determined ~~flows.~~to ~~Since~~be ~~judgment~~impaired, isthe ~~involved~~asset inis written ~~determining~~down ~~the~~to its fair value ofusing ~~fixed~~discounted ~~assets,~~future ~~there~~cash isflows aand, ~~risk~~if ~~that~~available, ~~the~~quoted ~~carrying~~market ~~value of our long-lived assets may be overstated~~prices.

Goodwill~~. Effective January~~ 1,& ~~2002,~~other weintangible ~~adopted~~assets ~~SFAS~~– ~~No. 142,~~ Goodwill and ~~Other~~other ~~Intangible~~purchased ~~Assets,~~intangible ~~under~~assets ~~which~~are ~~goodwill~~included isin nothe ~~longer~~identifiable ~~amortized~~assets ~~but~~of isthe ~~assessed~~business ~~for~~segment ~~impairment~~to atwhich ~~least~~they onhave anbeen ~~annual basis~~assigned. InThe ~~making~~Company ~~this~~performs ~~assessment,~~impairment ~~management~~tests ~~relies~~annually onfor ~~various factors~~goodwill, ~~including~~and ~~operating results,~~more ~~estimated~~often ~~future~~as ~~cash flows, and business plans~~circumstances require. ~~There~~When ~~are~~it ~~inherent~~is ~~uncertainties~~determined ~~related~~that toimpairment ~~these~~has ~~factors~~occurred, ~~and~~an inappropriate ~~our~~charge ~~management’s~~to ~~judgment~~earnings inis ~~applying~~recorded. ~~them~~The toCompany ~~the~~performed ~~analysis~~its ofannual ~~goodwill~~ impairment. ~~Since~~test ~~management’s~~in ~~judgment~~the ~~is involved~~fourth inquarters ~~performing~~of ~~goodwill~~2008 ~~impairment~~and ~~analyses,~~2007 ~~there~~and isdetermined ~~risk~~there ~~that~~was ~~the~~no ~~carrying~~impairment ~~value~~ of goodwill ~~is overstated~~.

~~Goodwill~~Identifiable ~~valuations~~intangible ~~are~~assets, ~~performed~~other ~~using~~than ~~an average of actual and projected operating results of the relevant reporting units. Changes in economic and operating conditions impacting these assumptions could result in~~ goodwill, ~~impairments~~are inrecorded ~~future~~at ~~periods~~cost. ~~Additionally,~~Identifiable ~~disruptions~~intangible toassets ~~our~~that ~~business~~do ~~such~~not ashave ~~prolonged~~indefinite ~~recessionary~~lives ~~periods~~are oramortized ~~unexpected~~on ~~significant declines in operating results of the relevant~~a ~~reporting~~straight-line ~~units~~basis ~~could~~over ~~result~~their inestimated ~~charges~~useful ~~for goodwill and other asset impairments in future periods~~lives.

~~Revenue~~Deferred ~~Recognition. We~~income ~~recognize~~taxes ~~revenue~~– ~~from~~Deferred ~~product~~tax ~~sales~~assets atand ~~the~~liabilities ~~time~~are ofrecognized ~~shipment~~for orfuture ~~when~~tax consequences ~~title~~attributable ~~passes~~ to ~~the~~differences ~~customer.~~between ~~We recognize~~the ~~revenue~~financial ~~related~~statement tocarrying ~~the~~amounts ~~procurement~~ of ~~certain~~existing ~~untreated~~assets ~~railroad~~and ~~crossties~~liabilities ~~upon~~and ~~transfer~~their ofrespective ~~title,~~tax ~~which~~bases. ~~occurs~~The ~~upon~~effect ~~delivery~~on todeferred ~~our~~tax ~~plant~~assets and ~~acceptance~~liabilities byof ~~the~~a ~~customer.~~change ~~Service~~in ~~revenue,~~tax ~~consisting~~laws ~~primarily~~is ofrecognized ~~wood treating services, is~~in ~~recognized~~earnings atin the ~~time~~period the ~~service~~new islaws ~~provided~~are enacted. ~~Our~~A ~~recognition~~valuation ofallowance ~~revenue~~is ~~with~~recorded ~~respect~~ to ~~untreated~~reduce ~~crossties meets all~~ the ~~recognition~~carrying ~~criteria~~amounts of ~~SAB~~deferred ~~Topic~~tax ~~13A3,~~assets ~~including~~unless ~~transfer~~it ofis ~~title~~more ~~and~~likely ~~risk~~than ofnot ~~ownership,~~that ~~the~~such ~~existence~~assets ofwill ~~fixed~~be ~~purchase commitments~~realized. ~~and~~Deferred ~~delivery~~tax ~~schedules~~liabilities ~~established~~have bynot ~~the customer and the completion of all performance obligations by us. Revenue~~ been recognized for ~~untreated crosstie sales for~~ the ~~years~~undistributed ~~ended~~earnings ~~December 31,~~of ~~2005,~~certain ~~2004~~foreign ~~and~~subsidiaries ~~2003~~because ~~amounted~~management intends to ~~$100.9 million,~~permanently ~~$103.0~~reinvest ~~million~~such ~~and~~earnings ~~$96.6~~in ~~million,~~foreign ~~respectively~~operations.

~~Inventories. In~~Insurance ~~the~~– ~~United~~The ~~States~~Company is self-insured for property, ~~Carbon~~casualty ~~Materials &~~and ~~Chemicals~~workers’ ~~(excluding~~compensation ~~furnace~~exposures ~~coke)~~up ~~and~~to ~~Railroad &~~various ~~Utility~~stop-loss ~~Products~~coverage ~~inventories~~amounts. Losses are ~~valued~~accrued atbased upon the ~~lower~~Company’s estimates of ~~cost,~~the ~~utilizing~~liability for the ~~last-in, first-out~~related ~~basis,~~deductibles orof ~~market~~claims incurred. ~~Inventories~~Such ~~outside~~estimates ~~the~~utilize ~~United~~actuarial ~~States~~methods ~~are~~based ~~valued~~on atvarious ~~the~~assumptions, ~~lower~~which ofinclude ~~cost,~~but ~~utilizing~~are ~~the~~not ~~first~~limited into, ~~first-out~~the ~~basis,~~Company’s orhistorical ~~market.~~loss ~~Market~~experience ~~represents~~and ~~replacement~~projected ~~cost~~loss ~~for~~development ~~raw~~factors. ~~materials~~In 2008 and ~~net~~2007, ~~realizable~~the ~~value~~Company ~~for~~reversed ~~work~~$2.0 inmillion ~~process~~ and ~~finished goods~~$1.7 ~~Last-in~~million, ~~first-out~~respectively, ~~inventories~~of ~~constituted~~insurance ~~approximately~~loss ~~46%~~reserves ~~and~~as ~~48%~~a result of ~~the~~favorable ~~first~~loss trends related to self-insured claims. Such reversals increased operating profit in, ~~first-out~~both ~~inventory~~periods. ~~value~~Insurance loss reserves accrued at December 31, ~~2005~~2008 and ~~2004,~~2007 ~~respectively~~totaled $11.9 million at both dates.

~~Accrued~~Derivative ~~Insurance. We~~financial ~~are~~instruments ~~insured~~– ~~for~~The ~~property,~~Company ~~casualty~~uses ~~and~~forward exchange ~~workers’~~contracts ~~compensation~~to ~~insurance~~hedge upexposure to ~~various~~ ~~stop~~currency ~~loss~~exchange ~~amounts~~rate ~~after~~changes ~~meeting~~on ~~required~~transactions ~~retention~~and ~~levels~~other commitments denominated in a foreign currency. ~~Losses~~Contracts are ~~accrued~~generally ~~based~~written ~~upon~~on ~~estimates~~a ofshort-term ~~the~~basis ~~liability~~and ~~for~~are ~~the~~not ~~related~~held ~~retentions~~ for ~~claims~~trading ~~incurred~~or ~~using~~speculative purposes. ~~certain~~The ~~actuarial~~Company ~~assumptions~~recognizes ~~followed~~the infair value of the ~~insurance~~forward ~~industry~~contracts ~~and based~~as onan ~~our~~asset ~~experience~~or liability at each reporting date. InBecause the ~~event~~Company wehas ~~incur~~not aelected ~~significant~~to ~~number~~designate ofthe ~~losses~~forward ~~beyond~~exchange ~~the~~contracts ~~coverage~~for ~~retention~~hedge ~~limits~~accounting treatment, ~~additional~~changes ~~expense~~in ~~beyond~~the fair value of the ~~actuarial~~forward ~~projections~~exchange ~~would~~contracts beare ~~required~~recognized immediately in earnings.

~~Pension~~During ~~and~~2004, ~~Postretirement~~the ~~Benefits. Accounting~~Company ~~for~~entered ~~pensions~~into ~~and~~an ~~other~~interest ~~postretirement~~rate ~~benefits~~swap ~~involves estimating~~agreement to convert the ~~cost~~fixed rate on a portion ($50.0 million) of ~~benefits~~the Senior Secured Notes to bea ~~provided~~floating ~~far~~rate ~~into~~based ~~the~~on ~~future~~six-month LIBOR rates plus a specified spread. The swap agreement matures in October 2013 and ~~allocating~~requires ~~that~~semiannual ~~cost~~cash ~~over~~settlements of interest paid or received. The differential between the ~~time~~interest ~~period~~paid ~~each~~or ~~employee~~interest ~~works.~~received ~~This~~from ~~calculation~~semi-annual ~~requires~~settlements ~~extensive~~are ~~use~~recorded as an adjustment to interest expense. The effect of ~~assumptions~~the ~~regarding~~swap ~~inflation,~~for ~~investment~~the ~~returns,~~year ~~mortality~~ended December 31, ~~medical~~2008 was a decrease in interest ~~costs~~expense of approximately $0.3 million and for the years ended December 31, ~~employee~~2007 ~~turnover~~and 2006 was an increase in interest expense of approximately $0.5 million and ~~discount~~$0.3 ~~rates~~million, respectively. InThe ~~determining~~swap hedges the ~~expected~~Company’s ~~return~~exposure related to changes in interest rates on ~~plan~~the ~~assets~~fair ~~assumptions~~value of the Company’s fixed rate debt. The swap is accounted for as a fair value hedge and has been determined to have no ineffectiveness as the critical terms of the swap are aligned with the hedged item. Any changes in the fair value of the swap are offset by an equal and opposite change in the fair value of the hedged item, wetherefore ~~evaluate~~there ~~long-term~~is ~~actual~~no ~~return~~net ~~information~~impact on reported earnings. Accordingly, the ~~mix~~principal amount of ~~investments~~the ~~that~~Senior ~~comprise~~Secured ~~plan~~Notes ~~assets~~subject to ~~and~~the ~~estimates~~interest rate swap is adjusted to fair value. The fair value of ~~future~~the ~~investment~~swap ~~returns~~agreement at December 31, 2008 was an asset of $1.9 million which is recorded in other assets in the balance sheet. The fair value of the swap agreement at InDecember 31, ~~selecting~~2007 ~~rates~~was ~~for~~a ~~current~~liability ~~and~~of $0.5 million which is recorded in other long-term ~~health~~liabilities ~~care~~in ~~assumptions,~~the webalance ~~take~~sheet. ~~into~~

Asset retirement obligations – Asset retirement obligations are initially recorded at fair value and are capitalized as part of the cost of the related long-lived asset when sufficient information is available to estimate fair value. The capitalized costs are subsequently charged to depreciation expense over the estimated useful life of the related long-lived asset. The fair value of the obligation is determined by calculating the discounted value of expected future cash flows and accretion expense is recorded each month to ultimately increase this obligation to full value.

~~consideration~~Koppers ~~a number of factors including our actual health care cost increases, the design of our benefit programs, the characteristics of our active and retiree populations and expectations of inflation rates~~Inc. 2008 ~~Since~~Annual ~~these~~Report ~~items require our management’s judgment, the related liabilities currently recorded by us could be lower or higher than amounts ultimately required to be paid.~~

~~Accounts~~The ~~Receivable. We~~Company ~~maintain~~recognizes ~~allowances~~asset ~~for~~retirement ~~doubtful accounts~~obligations for ~~estimated~~the ~~losses~~removal ~~resulting~~and ~~from~~disposal ~~the~~of ~~inability~~residues; dismantling of ~~our~~certain ~~customers~~tanks ~~to make~~ required ~~payments.~~by Ingovernmental ~~circumstances~~authorities; ~~where~~cleaning weand ~~become~~dismantling ~~aware~~costs offor aowned ~~specific~~rail ~~customer’s~~cars; ~~inability~~and cleaning tocosts ~~meet its financial obligations, a specific reserve~~ for ~~bad~~leased ~~debts is~~rail ~~recorded~~cars ~~against~~and ~~amounts due~~barges. ~~If the financial conditions of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.~~

~~Environmental~~Litigation & ~~Liabilities. We~~contingencies ~~are~~– ~~subject~~Amounts toassociated ~~federal, state,~~with ~~local~~litigation and ~~foreign~~contingencies ~~laws~~are and regulations and potential liabilities relating to the protection of the environment and human health and safety, including, among other things, the cleanup of contaminated sites, the treatment, storage and disposalaccrued ofwhen ~~wastes~~management, ~~the~~after ~~discharge~~taking ~~of effluent~~ into ~~waterways,~~consideration the ~~emission~~facts ~~of substances into the air~~ and ~~various~~circumstances ~~health and safety matters. We expect to incur substantial costs for ongoing compliance with such laws and regulations. We may also incur costs as a result~~ of ~~governmental~~each ormatter ~~third-party~~including ~~claims,~~any orsettlement ~~otherwise incur costs~~offers, ~~relating~~has todetermined ~~cleanup~~that ~~of,~~it oris ~~for~~probable ~~injuries~~that ~~resulting~~a ~~from,~~liability ~~contamination~~has atbeen ~~sites~~incurred ~~associated with past~~ and ~~present~~the ~~operations.~~amount Weof ~~accrue~~loss ~~for environmental liabilities when a determination~~ can be ~~made that they are probable and~~ reasonably ~~estimable~~estimated. ~~Total environmental reserves at December 31, 2005 and 2004 were approximately $3.8 million and $4.7 million, respectively, which include provisions primarily for~~ ~~environmental fines and remediation matters.~~

Environmental ~~Reserves~~liabilities – The Company accrues for remediation costs and penalties when the responsibility to remediate is probable and the amount of ~~Rollforward~~related cost is reasonably estimable. If only a range of potential liability can be estimated and no amount within the range is more probable than another, the accrual is recorded at the low end of that range. Remediation liabilities are discounted if the amount and timing of the cash disbursements are readily determinable.

	Year EndedDecember 31, 2005			Year EndedDecember 31, 2004			Year EndedDecember 31, 2003
	(in millions)
Beginning balance	$	4.7		$	7.5		$	11.3
Expense (income)		1.1			—			(0.6	)
Cash expenditures including penalties		(1.6	)		(2.9	)		(4.0	)
Foreign exchange		(0.4	)		0.1			0.8
Ending balance	$	3.8		$	4.7		$	7.5

Deferred revenue from extended product warranty liabilities – The Company defers revenues associated with extended product warranty liabilities based on historical loss experience and sales of extended warranties on certain products. The following table describes changes to the Company’s deferred revenue at December 31, 2008 and 2007:

Expense for 2005 included $0.7 million for estimated soil remediation costs at the coal tar plant in Newcastle, Australia. This amount is based on our current estimate of the expected remediation costs to achieve compliance with the requirements of local governmental agencies. An additional $0.4 million of expense was for estimated settlement costs at the Clairton, Pennsylvania and Stickney, Illinois coal tar plants. Additional expenses totaling $0.3 million related to waste disposal and remediation costs at plants in Australia and the United Kingdom were offset by the reversal to profit of $0.3 million of reserves in our Danish operations as the result of the completion of a waste disposal project.


	2008			2007
(Dollars in millions)
Deferred revenue at beginning of year	$	8.2		$	8.4
Deferred revenue for sales of extended warranties – current year		0.5			0.9
Revenue earned		(1.2	)		(1.1	)

Deferred revenue at end of year	$	7.5		$	8.2

~~Income~~Stock-based ~~for~~compensation ~~2003~~– ~~was~~Koppers ~~primarily~~Holdings Inc, the ~~result~~parent company of ~~the~~Koppers ~~reversal~~Inc. tohas ~~profit~~sponsored ofvarious stock-based ~~$0.~~employee compensation plans which are described more fully in Note 7. ~~million~~Employees of ~~reserves~~Koppers ~~based~~Inc. onparticipate ain ~~reassessment~~these plans and receive common stock of ~~exposure~~Koppers atHoldings Inc. The Company records compensation cost over the vesting ~~our~~period ~~Monessen,~~for ~~Pennsylvania~~share-based ~~coke~~payments ~~facility~~to employees at an amount equivalent to the grant date fair value of the stock award. ~~There~~No ~~are~~compensation ~~currently~~cost nois ~~environmental~~recognized ~~reserves~~for ~~related~~any tostock ~~this~~awards ~~facility~~that ~~based~~are onforfeited ~~our~~in ~~current~~the ~~environmental~~event ~~assessment~~the recipient fails to meet the vesting requirements.

~~Other~~Reclassifications ~~remaining~~– ~~unsettled~~Certain ~~environmental~~amounts ~~matters~~in ~~are~~the ~~not~~prior ~~probable~~years’ ~~and~~consolidated ~~estimable~~financial statements have been reclassified to conform to the current year presentation, including the reclassification of restricted cash from cash and ~~therefore~~cash doequivalents ~~not~~of ~~currently~~$3.1 ~~have~~million ~~amounts~~at ~~accrued~~December 31, 2007 and 2006.

~~Legal Matters~~3. We New ~~record~~Accounting ~~liabilities~~Guidance ~~related to legal matters when an adverse outcome is probable and reasonably estimable. To the extent we anticipate favorable outcomes to these matters~~

In December 2007 the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 160, Noncontrolling Interests in Consolidated Financial Statements. SFAS 160 changes the classification of noncontrolling, or minority, interests on the balance sheet and the accounting for and reporting of transactions between the reporting entity and holders of such noncontrolling interests. Under the new standard, noncontrolling interests are considered equity and are to be reported as an element of stockholder’s equity rather than within the mezzanine or liability sections of the balance sheet. In addition, the current practice of reporting minority interest expense or benefit also will change. Under the new standard, net income will encompass the total income before minority interest expense or benefit. The income statement will include separate disclosure of the attribution of income between controlling and noncontrolling interests. Increases and decreases in the noncontrolling ownership interest amount are to be accounted for as equity transactions. SFAS 160 is effective for fiscal years beginning after December 15, 2008 and earlier application is prohibited.

~~which ultimately result in adverse outcomes, we could incur material adverse impacts on earnings and cash flows~~4. ~~Since such matters require significant judgments on~~ Accounting ~~the~~Changes ~~part of management, the recorded liabilities could be lower than what is ultimately required.~~

~~Legal~~In ~~Reserves~~September ~~Rollforward~~2006, the FASB issued SFAS 157, Fair Value Measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007 for financial assets and liabilities, and for fiscal years beginning after November 15, 2008 for other non-recurring non-financial assets and liabilities. The Company adopted SFAS 157 as of January 1, 2008, with the exception of the application of the statement to non-recurring nonfinancial assets and nonfinancial liabilities. Non-recurring nonfinancial assets and nonfinancial liabilities for which we have not applied the provisions of SFAS 157 include those measured at fair value in goodwill impairment testing, indefinite lived intangible assets measured at fair value for impairment testing, asset retirement obligations initially measured at fair value, and those initially measured at fair value in a business combination.

	Year EndedDecember 31, 2005			Year EndedDecember 31, 2004		Year EndedDecember 31, 2003
	(in millions)
Beginning balance	$	0.8		$	0.3	$	—
Expense (income)		2.7			0.5		0.3
Cash expenditures		(0.4	)		—		—
Ending balance	$	3.1		$	0.8	$	0.3

SFAS 157 establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

~~Expense~~At ~~for~~December 31, ~~2005~~2008, ~~consisted~~the ~~of $2.6~~Company ~~million~~had ~~for~~an ~~estimated~~interest ~~penalties~~rate ~~related~~swap tovalued ~~the~~at ~~New~~$1.9 ~~Zealand~~million and ~~anti-trust~~cash ~~litigation~~surrender ~~and~~values on insurance policies totaling $0.1.3 million. ofBoth ~~expected~~assets ~~settlement~~are ~~amounts~~classified ~~related~~as toLevel ~~the~~2 ~~Pacific~~in ~~Century~~the ~~litigation.~~valuation ~~These~~hierarchy ~~estimates~~and are ~~based~~measured onfrom ~~our~~quotes ~~current~~and ~~expectations~~values ofreceived ~~final settlement~~from ~~regarding~~financial ~~these matters~~institutions.

~~Expense for 2004 and 2003 consisted of $0.~~5. Business ~~million~~Dispositions and ~~$0.3~~Plant ~~million,~~Closures ~~respectively, for estimated settlement costs for the Pacific Century litigation.~~

~~Other~~Sale ~~remaining~~of ~~unsettled~~Koppers ~~litigation~~Monessen ~~matters~~Partners ~~are~~LP ~~not probable and estimable and therefore do not currently have amounts accrued.~~

~~Asset~~On ~~Retirement~~October 1, ~~Obligations~~2008, Koppers Inc. We ~~measure~~and ~~asset~~a ~~retirement~~limited partner sold Koppers Monessen Partners LP (“Monessen”) to ArcelorMittal S.A. for cash of $160.0 million ~~obligations~~plus ~~based~~working ~~upon~~capital of $10.4 million. Net cash proceeds, after deduction for the ~~applicable~~limited ~~accounting~~partner ~~guidance~~interest, ~~using~~taxes ~~certain~~and ~~assumptions~~transaction ~~including~~costs, ~~estimates~~were ~~regarding~~approximately ~~the~~$100.0 ~~recovery~~million. The Company recognized an after-tax gain of ~~residues~~$85.9 inmillion. ~~storage~~Monessen ~~tanks~~is a metallurgical furnace coke facility that was 95 percent-owned by Koppers Inc. In(which served as the ~~event~~general ~~that~~partner) ~~operational~~and orfive ~~regulatory~~percent ~~issues~~owned ~~vary~~by ~~from~~a ~~our~~limited ~~estimates~~partner. Effective as of the end of the second quarter of 2008, weMonessen ~~could~~was ~~incur~~classified as a ~~additional~~discontinued ~~significant~~operation ~~charges~~in tothe ~~income~~Company’s statement of operations and ~~increases~~its assets and liabilities were reclassified as “held for sale” in ~~cash~~the ~~expenditures~~balance ~~related~~sheet. toAccordingly, the ~~disposal~~Company’s financial statements have been restated for prior periods. Monessen was part of ~~those~~the ~~residues~~Carbon Materials & Chemicals business segment.

~~Deferred~~In ~~Tax~~February ~~Assets. At December 31~~2009, ~~2005~~the ~~our~~acquirer ~~balance~~filed ~~sheet~~a ~~included~~notice ~~$51.9 million~~ of ~~deferred~~objection ~~tax~~in connection ~~assets.~~with Wethe ~~have~~determination ~~determined that reserves~~ of ~~$7.2~~certain ~~million~~assumed ~~are~~liabilities ~~required~~and ~~for~~has ~~these~~requested ~~deferred~~an ~~tax~~adjustment ~~assets,~~to ~~based on future earnings projections. To~~ the ~~extent~~purchase ~~that~~price weof ~~encounter~~approximately ~~unexpected~~$2.0 ~~difficulties~~million. inBased ~~market~~upon ~~conditions,~~the ~~adverse~~nature ~~changes~~of inthe ~~regulations~~objections ~~affecting~~cited ~~our~~by ~~businesses~~the ~~and operations~~acquirer, ~~adverse~~at ~~outcomes~~this ~~in legal and environmental matters~~time, orthe ~~any~~Company ~~other~~does ~~unfavorable~~not believe ~~conditions,~~that the ~~projections~~purchase ~~for~~price ~~future~~should ~~taxable income may~~ be ~~overstated~~adjusted and weaccordingly, ~~may~~no beadjustment ~~required~~ to ~~record an increase in~~ the ~~valuation~~purchase ~~allowance~~price ~~related~~has ~~to these~~been ~~deferred~~provided ~~tax~~as ~~assets~~of ~~which~~December 31, ~~could have a material adverse effect on income in the future~~2008.

~~Recently~~Sale ~~Issued~~of Koppers ~~Accounting~~Arch ~~Guidance~~

InOn ~~May~~July 5, ~~2005~~2007, the ~~Financial~~ ~~Accounting~~Company ~~Standards~~sold ~~Board~~its ~~issued~~51 ~~SFAS~~percent ~~No. 154,~~interest ~~Accounting~~in ~~Changes~~Koppers ~~and~~Arch ~~Error~~Investments ~~Corrections,~~Pty orLimited ~~SFAS 154. SFAS 154 replaces APB Opinion No. 20, Accounting Changes,~~ and ~~SFAS~~its ~~No. 3,~~subsidiaries ~~Reporting Accounting Changes~~(“Koppers inArch”) ~~Interim~~to ~~Financial~~Arch ~~Statements,~~Chemicals ~~and~~Inc. ~~changes the requirements~~ for ~~the~~net ~~accounting~~cash ~~for~~proceeds ~~and reporting~~ of ~~a change in accounting principle~~$14.3 ~~SFAS~~million ~~154~~and ~~applies~~recognized toa ~~all~~gain ~~voluntary~~from ~~changes~~the ~~in accounting principle~~sale, ~~and~~net ~~requires retrospective application to prior periods’ financial statements~~ of ~~changes in accounting principle~~tax, ~~unless it is impracticable to determine either the period-specific effects or the cumulative effect~~ of ~~the~~$6.7 ~~change~~million. ~~SFAS~~Effective ~~154~~as ~~is effective for accounting changes and corrections~~ of ~~errors~~this ~~made in fiscal years beginning after December 15~~date, ~~2005,~~Koppers ~~and~~Arch ~~early~~was ~~adoption~~classified isas ~~permitted~~a ~~for~~discontinued ~~accounting~~operation ~~changes and corrections of errors made~~ in ~~fiscal years beginning after~~ the ~~date SFAS 154 is issued. SFAS 154 does not~~Company’s ~~change~~statement ~~the transition provisions~~ of ~~any~~operations ~~existing~~and ~~accounting~~the ~~pronouncements,~~Company’s ~~including~~financial ~~those~~statements ~~that~~have ~~are~~been inaccordingly arestated. ~~transition~~Koppers ~~phase~~Arch aswas part of the ~~effective~~Carbon ~~date~~Materials & ofChemicals ~~SFAS~~business ~~154~~segment.

Net sales and operating profit from discontinued operations for the three years ended December 31, 2008 consist of the following amounts:


	Years Ended December 31,
	2008		2007		2006
Net sales	$	50.2	$	99.4	$	115.3
Operating profit		1.4		6.8		5.7

InKoppers ~~April 2005, the FASB issued Interpretation No~~Inc. ~~47,~~ 2008 ~~Accounting~~Annual ~~for~~Report Conditional Asset Retirement Obligations, or FIN No. 47. FIN No. 47 clarifies that the term conditional obligation as used in SFAS 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. FIN No. 47 requires that the uncertainty about the timing and (or) method of settlement of a conditional asset retirement obligation be factored into the measurement of the liability when sufficient information exists. FIN No. 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN No. 47 is effective for fiscal years ending after December 15, 2005. The adoption of FIN No. 47 did not have a material effect on our financial statements.

InThe ~~December~~following ~~2004,~~table summarizes the

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Filing Compare · KOPPERS INC