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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10Q



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005



OR



| ̈ | 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 333-108853



JOHNSONDIVERSEY HOLDINGS, INC.

(Exact name of registrant as specified in its charter)



|                                                              |  |                                  
|------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                      |  | 80-0010497                       
|(State or other jurisdictionof incorporation or organization) |  | (IRS Employer Identification No.)



8310 16thStreet

Sturtevant, Wisconsin 53177-0902

(Address of Principal Executive Offices, Including Zip Code)



(262) 631-4001

(Registrants Telephone Number, Including Area Code)



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



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ̈No x



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



There is no public trading market for the registrants common stock. As of November 4, 2005, there were 3,920 outstanding shares of the
registrants class A common stock, $0.01 par value, and there were 1,960 outstanding shares of the registrants class B common stock, $0.01 par value, which is subject to put and call options.



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INDEX



|                               |  |                                                                                                                  |  |     
|------------------------------ |  | ---------------------------------------------------------------------------------------------------------------- |  | ----
|Section                        |  | Topic                                                                                                            |  | Page
|                               |  | Forward-Looking Statements                                                                                       |  | i   
|                               | 
|PART I  FINANCIAL INFORMATION |  |                                                                                                                 
|                               |  |                                                                                                                 
|Item 1                         |  | Financial Statements (unaudited)                                                                                 |  |     
|                               |  |                                                                                                                 
|                               |  | Consolidated Balance Sheets as of September 30, 2005 and December 31, 2004                                       |  | 1   
|                               |  |                                                                                                                 
|                               |  | Consolidated Statements of Operations for the three and nine months ended September 30, 2005 and October 1, 2004 |  | 2   
|                               |  |                                                                                                                 
|                               |  | Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2005 and October 1, 2004 |  | 3   
|                               |  |                                                                                                                 
|                               |  | Notes to Consolidated Financial Statements  September 30, 2005                                                  |  | 4   
|                               |  |                                                                                                                 
|Item 2                         |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                            |  | 15  
|                               |  |                                                                                                                 
|Item 3                         |  | Quantitative and Qualitative Disclosure about Market Risk                                                        |  | 32  
|                               |  |                                                                                                                 
|Item 4                         |  | Controls and Procedures                                                                                          |  | 33  
|                               | 
|PART II  OTHER INFORMATION    |  |                                                                                                                 
|                               |  |                                                                                                                 
|Item 1                         |  | Legal Proceedings                                                                                                |  | 35  
|                               |  |                                                                                                                 
|Item 5                         |  | Other Information                                                                                                |  | 35  
|                               |  |                                                                                                                 
|Item 6                         |  | Exhibits                                                                                                         |  | 36  
|                               |  |                                                                                                                 
|Signatures                     |  |                                                                                                                  |  | 37  



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Unless otherwise indicated, references to Holdings, the Company, we,
our and us in this quarterly report refer to JohnsonDiversey Holdings, Inc. and its consolidated subsidiaries, and references to JDI refer to JohnsonDiversey, Inc., a wholly owned subsidiary of Holdings.



FORWARD-LOOKING STATEMENTS



We make
statements in this Form 10Q that are not historical facts. These forward-looking statements can be identified by the use of terms such as may, intend, might, will, should,
could, would, expect, believe, estimate, anticipate, predict, project, potential, or the negative of these terms, and similar expressions.
You should be aware that these forward-looking statements are subject to risks and uncertainties that are beyond our control. Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we
undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time
to time that may cause our business not to develop as we expect, and it is not possible for us to predict all of them. Factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements
include, but are not limited to, the following:



| |  |  | our ability to execute our business strategies;
| | - |  | -----------------------------------------------



| |  |  | our ability to successfully complete integration and synergy plans, and in particular, our current restructuring program, including the achievement of cost and tax savings;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in general economic and political conditions, interest rates and currency movements, including, in particular, exposure to foreign currency risks;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the vitality of the institutional and industrial cleaning and sanitation market, and the printing and packaging, coatings and plastics markets;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | restraints on pricing flexibility due to competitive conditions in the professional and polymer markets;
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | the loss or insolvency of a significant supplier or customer;
| | - |  | -------------------------------------------------------------



| |  |  | effectiveness in managing our manufacturing processes, including our inventory, fixed assets and system of internal control;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in energy costs, the costs of raw materials and other operating expenses;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | our ability and the ability of our competitors to introduce new products and technical innovations;
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | the costs and effects of complying with laws and regulations relating to the environment and to the manufacture, storage, distribution and labeling of our products;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the occurrence of litigation or claims;
| | - |  | ---------------------------------------



| |  |  | changes in tax, fiscal, governmental and other regulatory policies;
| | - |  | -------------------------------------------------------------------



| |  |  | the effect of future acquisitions or divestitures or other corporate transactions;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | adverse or unfavorable publicity regarding us or our services;
| | - |  | --------------------------------------------------------------



| |  |  | the loss of, or changes in, executive management or other key personnel;
| | - |  | ------------------------------------------------------------------------



| |  |  | natural and manmade disasters, including acts of terrorism, hostilities or war that impact our markets;
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | conditions affecting the food and lodging industry, including health-related, political and weather-related; and
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | other factors listed from time to time in reports that we file with the Securities and Exchange Commission.
| | - |  | -----------------------------------------------------------------------------------------------------------



i



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PART I. FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------



JOHNSONDIVERSEY HOLDINGS, INC.



CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share data)



|                                                                                                                                    |  |                    |           |   |                   |   |           |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | --------- | - | ----------------- | - | --------- | -
|                                                                                                                                    |  | September 30, 2005 |           |   | December 31, 2004 |  
|                                                                                                                                    |  | (unaudited)        |           |   |                   |  
|ASSETS                                                                                                                              |  |                    |           |   |                   |   |           |  
|Current assets:                                                                                                                     |  |                    |           |   |                   |   |           |  
|Cash and cash equivalents                                                                                                           |  | $                  | 23,894    |   |                   | $ | 28,413    |  
|Accounts receivable, less allowance of $26,706 and $29,881, respectively                                                            |  |                    | 502,688   |   |                   |   | 524,669   |  
|Accounts receivable  related parties                                                                                               |  |                    | 37,048    |   |                   |   | 31,148    |  
|Inventories                                                                                                                         |  |                    | 293,106   |   |                   |   | 281,752   |  
|Deferred income taxes                                                                                                               |  |                    | 23,629    |   |                   |   | 24,458    |  
|Other current assets                                                                                                                |  |                    | 124,486   |   |                   |   | 112,390   |  
|                                                                                                                                    |  |                    |           |   |                   |   |           |  
|Total current assets                                                                                                                |  |                    | 1,004,851 |   |                   |   | 1,002,830 |  
|Property, plant and equipment, net                                                                                                  |  |                    | 495,477   |   |                   |   | 566,961   |  
|Capitalized software, net                                                                                                           |  |                    | 98,004    |   |                   |   | 112,229   |  
|Goodwill, net                                                                                                                       |  |                    | 1,170,465 |   |                   |   | 1,267,350 |  
|Other intangibles, net                                                                                                              |  |                    | 358,888   |   |                   |   | 408,433   |  
|Deferred income taxes                                                                                                               |  |                    | 121,736   |   |                   |   | 116,070   |  
|Long-term receivables  related parties                                                                                             |  |                    | 65,437    |   |                   |   | 96,269    |  
|Other assets                                                                                                                        |  |                    | 83,882    |   |                   |   | 72,540    |  
|                                                                                                                                    |  |                    |           |   |                   |   |           |  
|Total assets                                                                                                                        |  | $                  | 3,398,740 |   |                   | $ | 3,642,682 |  
|                                                                                                                                    |  |                    |           |   |                   |   |           |  
|LIABILITIES, CLASS B COMMON STOCK AND STOCKHOLDERS EQUITY                                                                          |  |                    |           |   |                   |   |           |  
|Current liabilities:                                                                                                                |  |                    |           |   |                   |   |           |  
|Short-term borrowings                                                                                                               |  | $                  | 23,565    |   |                   | $ | 92,704    |  
|Current portion of long-term debt                                                                                                   |  |                    | 6,538     |   |                   |   | 8,286     |  
|Accounts payable                                                                                                                    |  |                    | 334,255   |   |                   |   | 364,559   |  
|Accounts payable  related parties                                                                                                  |  |                    | 72,193    |   |                   |   | 65,309    |  
|Accrued expenses                                                                                                                    |  |                    | 441,686   |   |                   |   | 413,664   |  
|                                                                                                                                    |  |                    |           |   |                   |   |           |  
|Total current liabilities                                                                                                           |  |                    | 878,237   |   |                   |   | 944,522   |  
|Pension and other post-retirement benefits                                                                                          |  |                    | 272,325   |   |                   |   | 278,890   |  
|Long-term borrowings                                                                                                                |  |                    | 1,454,245 |   |                   |   | 1,525,603 |  
|Long-term payables  related parties                                                                                                |  |                    | 28,732    |   |                   |   | 28,695    |  
|Other liabilities                                                                                                                   |  |                    | 63,231    |   |                   |   | 73,637    |  
|                                                                                                                                    |  |                    |           |   |                   |   |           |  
|Total liabilities                                                                                                                   |  |                    | 2,696,770 |   |                   |   | 2,851,347 |  
|Commitments and contingencies (Note 19)                                                                                             |  |                    |          |   |                   |   |          |  
|Class B common stock subject to put and call options $0.01 par value; 3,000 shares authorized; 1,960 shares issued and
outstanding |  |                    | 596,667   |   |                   |   | 596,667   |  
|Stockholders equity:                                                                                                               |  |                    |           |   |                   |   |           |  
|Class A common stock  $0.01 par value; 7,000 shares authorized; 3,920 shares issued and outstanding                                |  |                    |          |   |                   |   |          |  
|Capital in excess of par value                                                                                                      |  |                    |          |   |                   |   |          |  
|Retained earnings (accumulated deficit)                                                                                             |  |                    | (15,868   | ) |                   |   | 2,028     |  
|Accumulated other comprehensive income                                                                                              |  |                    | 121,361   |   |                   |   | 192,981   |  
|Notes receivable from officers                                                                                                      |  |                    | (190      | ) |                   |   | (341      | )
|                                                                                                                                    |  |                    |           |   |                   |   |           |  
|Total stockholders equity                                                                                                          |  |                    | 105,303   |   |                   |   | 194,668   |  
|                                                                                                                                    |  |                    |           |   |                   |   |           |  
|Total liabilities, class B common stock and stockholders equity                                                                    |  | $                  | 3,398,740 |   |                   | $ | 3,642,682 |  
|                                                                                                                                    |  |                    |           |   |                   |   |           |  



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



1



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JOHNSONDIVERSEY HOLDINGS, INC.



CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands)



|                                                                                          |  |                    |         |   |                   |   |         |                    |  |   |                 |   |  |   |           |  
|----------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------- | ------------------ |  | - | --------------- | - |  | - | --------- | -
|                                                                                          |  | Three Months Ended |         |   | Nine Months Ended |  
|                                                                                          |  | September 30, 2005 |         |   | October 1, 2004   |   |         | September 30, 2005 |  |   | October 1, 2004 |  
|                                                                                          |  | (unaudited)        |         |   | (unaudited)       |  
|Net sales:                                                                                |  |                    |         |   |                   |   |         |                    |  |   |                 |   |  |   |           |  
|Net product and service sales                                                             |  | $                  | 811,428 |   |                   | $ | 761,430 |                    |  | $ | 2,433,528       |   |  | $ | 2,295,892 |  
|Sales agency fee income                                                                   |  |                    | 22,107  |   |                   |   | 22,508  |                    |  |   | 73,920          |   |  |   | 70,951    |  
|                                                                                          |  |                    |         |   |                   |   |         |                    |  |   |                 |   |  |   |           |  
|                                                                                          |  |                    | 833,535 |   |                   |   | 783,938 |                    |  |   | 2,507,448       |   |  |   | 2,366,843 |  
|Cost of sales                                                                             |  |                    | 487,253 |   |                   |   | 449,645 |                    |  |   | 1,469,182       |   |  |   | 1,331,569 |  
|                                                                                          |  |                    |         |   |                   |   |         |                    |  |   |                 |   |  |   |           |  
|Gross profit                                                                              |  |                    | 346,282 |   |                   |   | 334,293 |                    |  |   | 1,038,266       |   |  |   | 1,035,274 |  
|Selling, general and administrative expenses                                              |  |                    | 274,594 |   |                   |   | 271,195 |                    |  |   | 850,944         |   |  |   | 824,119   |  
|Research and development expenses                                                         |  |                    | 17,425  |   |                   |   | 18,387  |                    |  |   | 53,018          |   |  |   | 55,406    |  
|Restructuring expenses                                                                    |  |                    | 4,298   |   |                   |   | 5,604   |                    |  |   | 12,406          |   |  |   | 13,154    |  
|                                                                                          |  |                    |         |   |                   |   |         |                    |  |   |                 |   |  |   |           |  
|Operating profit                                                                          |  |                    | 49,965  |   |                   |   | 39,107  |                    |  |   | 121,898         |   |  |   | 142,595   |  
|Other (income) expense:                                                                   |  |                    |         |   |                   |   |         |                    |  |   |                 |   |  |   |           |  
|Interest expense                                                                          |  |                    | 39,318  |   |                   |   | 39,175  |                    |  |   | 132,463         |   |  |   | 119,227   |  
|Interest income                                                                           |  |                    | (2,203  | ) |                   |   | (2,250  | )                  |  |   | (6,315          | ) |  |   | (4,204    | )
|Other expense, net                                                                        |  |                    | 451     |   |                   |   | 1,544   |                    |  |   | 625             |   |  |   | 8,372     |  
|                                                                                          |  |                    |         |   |                   |   |         |                    |  |   |                 |   |  |   |           |  
|Income (loss) from continuing operations before income taxes and minority interests       |  |                    | 12,399  |   |                   |   | 638     |                    |  |   | (4,875          | ) |  |   | 19,200    |  
|Provision for income taxes                                                                |  |                    | 10,147  |   |                   |   | 1,686   |                    |  |   | 11,902          |   |  |   | 10,131    |  
|                                                                                          |  |                    |         |   |                   |   |         |                    |  |   |                 |   |  |   |           |  
|Income (loss) from continuing operations before minority interests                        |  |                    | 2,252   |   |                   |   | (1,048  | )                  |  |   | (16,777         | ) |  |   | 9,069     |  
|Minority interests in net income (loss) of subsidiaries                                   |  |                    | 39      |   |                   |   | (7      | )                  |  |   | (75             | ) |  |   | 154       |  
|                                                                                          |  |                    |         |   |                   |   |         |                    |  |   |                 |   |  |   |           |  
|Income (loss) from continuing operations                                                  |  |                    | 2,213   |   |                   |   | (1,041  | )                  |  |   | (16,702         | ) |  |   | 8,915     |  
|Income from discontinued operations, net of income taxes of $0, $11, $0 and $958 (Note 8) |  |                    |        |   |                   |   | (139    | )                  |  |   | 4,000           |   |  |   | 2,119     |  
|                                                                                          |  |                    |         |   |                   |   |         |                    |  |   |                 |   |  |   |           |  
|Net income (loss)                                                                         |  | $                  | 2,213   |   |                   | $ | (1,180  | )                  |  | $ | (12,702         | ) |  | $ | 11,034    |  
|                                                                                          |  |                    |         |   |                   |   |         |                    |  |   |                 |   |  |   |           |  



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



2



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JOHNSONDIVERSEY HOLDINGS, INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)



|                                                                                                              |  |                   |          |   |                |   |          |  
|------------------------------------------------------------------------------------------------------------- |  | ----------------- | -------- | - | -------------- | - | -------- | -
|                                                                                                              |  | Nine Months Ended |         
|                                                                                                              |  | September 30,2005 |          |   | October 1,2004 |  
|                                                                                                              |  | (unaudited)       |         
|Cash flows from operating activities:                                                                         |  |                   |          |   |                |   |          |  
|Net income (loss)                                                                                             |  | $                 | (12,702  | ) |                | $ | 11,034   |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities                      |  |                   |          |   |                |   |          |  
|Depreciation and amortization                                                                                 |  |                   | 112,986  |   |                |   | 112,350  |  
|Amortization of intangibles                                                                                   |  |                   | 24,627   |   |                |   | 27,241   |  
|Amortization and write-off of debt issuance costs                                                             |  |                   | 17,839   |   |                |   | 9,851    |  
|Interest accreted on notes payable                                                                            |  |                   | 28,099   |   |                |   | 24,943   |  
|Interest accrued on long-term receivables - related parties                                                   |  |                   | (2,719   | ) |                |   | (2,556   | )
|Deferred income taxes                                                                                         |  |                   | (5,398   | ) |                |   | (17,250  | )
|(Gain) loss on disposal of discontinued operations                                                            |  |                   | 1,198    |   |                |   | (966     | )
|Gain from divestitures                                                                                        |  |                   | (4,000   | ) |                |   | (1,791   | )
|Loss on property disposals                                                                                    |  |                   | 2,724    |   |                |   | 212      |  
|Unrealized losses on operating activities                                                                     |  |                   | 4,621    |   |                |   | 1,787    |  
|Other                                                                                                         |  |                   | 2,792    |   |                |   | 848      |  
|Changes in operating assets and liabilities, net of effects from acquisitions and divestitures of businesses |  |                   |          |   |                |   |          |  
|Accounts receivable securitization                                                                            |  |                   | 10,100   |   |                |   | (10,819  | )
|Accounts receivable                                                                                           |  |                   | (28,039  | ) |                |   | 40,600   |  
|Inventories                                                                                                   |  |                   | (30,294  | ) |                |   | (26,968  | )
|Other current assets                                                                                          |  |                   | (18,106  | ) |                |   | (12,264  | )
|Other assets                                                                                                  |  |                   | 7,432    |   |                |   | 4,327    |  
|Accounts payable and accrued expenses                                                                         |  |                   | 37,648   |   |                |   | 24,885   |  
|Other liabilities                                                                                             |  |                   | 13,338   |   |                |   | (29,611  | )
|                                                                                                              |  |                   |          |   |                |   |          |  
|Net cash provided by operating activities                                                                     |  |                   | 162,146  |   |                |   | 155,853  |  
|Cash flows from investing activities:                                                                         |  |                   |          |   |                |   |          |  
|Capital expenditures                                                                                          |  |                   | (50,713  | ) |                |   | (63,335  | )
|Expenditures for capitalized computer software                                                                |  |                   | (13,853  | ) |                |   | (21,757  | )
|Cash from property disposals                                                                                  |  |                   | 2,879    |   |                |   | 5,825    |  
|Acquisitions of businesses                                                                                    |  |                   | (4,222   | ) |                |   | (4,646   | )
|Proceeds from divestitures                                                                                    |  |                   | 23,200   |   |                |   | 48,254   |  
|                                                                                                              |  |                   |          |   |                |   |          |  
|Net cash used in investing activities                                                                         |  |                   | (42,709  | ) |                |   | (35,659  | )
|Cash flows from financing activities:                                                                         |  |                   |          |   |                |   |          |  
|Proceeds from (repayments of) short-term borrowings                                                           |  |                   | (62,730  | ) |                |   | 48,872   |  
|Repayments of long-term borrowings                                                                            |  |                   | (48,854  | ) |                |   | (120,559 | )
|Payment of debt issuance costs                                                                                |  |                   | (1,703   | ) |                |   | (1,337   | )
|Dividends paid                                                                                                |  |                   | (5,235   | ) |                |   | (10,204  | )
|                                                                                                              |  |                   |          |   |                |   |          |  
|Net cash used in financing activities                                                                         |  |                   | (118,522 | ) |                |   | (83,228  | )
|                                                                                                              |  |                   |          |   |                |   |          |  
|Effect of exchange rate changes on cash and cash equivalents                                                  |  |                   | (5,434   | ) |                |   | (21,237  | )
|                                                                                                              |  |                   |          |   |                |   |          |  
|Change in cash and cash equivalents                                                                           |  |                   | (4,519   | ) |                |   | 15,729   |  
|Beginning balance                                                                                             |  |                   | 28,413   |   |                |   | 24,543   |  
|                                                                                                              |  |                   |          |   |                |   |          |  
|Ending balance                                                                                                |  | $                 | 23,894   |   |                | $ | 40,272   |  
|                                                                                                              |  |                   |          |   |                |   |          |  
|Supplemental cash flows information                                                                           |  |                   |          |   |                |   |          |  
|Cash paid during the period:                                                                                  |  |                   |          |   |                |   |          |  
|Interest                                                                                                      |  | $                 | 64,047   |   |                | $ | 67,518   |  
|Income taxes                                                                                                  |  |                   | 18,948   |   |                |   | 14,056   |  



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



3



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##### Table of Contents

JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005

(unaudited)



|1. | Description of the Company
|-- | --------------------------



JohnsonDiversey Holdings, Inc. (Holdings or the Company) directly owns all of the shares of JohnsonDiversey, Inc.
(JDI), except for one share which is owned by S.C. Johnson & Son, Inc. (SCJ). The Company is a holding company and its sole business interest is the ownership and control of JDI and its subsidiaries. JDI is comprised
of a Professional Business and a Polymer Business. The Professional Business is a global marketer and manufacturer of commercial, industrial and institutional building maintenance and sanitation products. The Polymer Business is a global marketer
and manufacturer of polymer intermediates marketed to the printing and packaging, coatings, adhesives and related industries.



|2. | Basis of Presentation
|-- | ---------------------



The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United
States for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the
opinion of management, all normal recurring adjustments considered necessary to present fairly the financial position of the Company as of September 30, 2005 and its results of operations and cash flows for the three and nine month periods
ended September 30, 2005 have been included. The results of operations for the three and nine month periods ended September 30, 2005 are not necessarily indicative of the results to be expected for the full fiscal year. It is recommended
that the accompanying consolidated financial statements be read in conjunction with the audited consolidated financial statements and notes thereto included in the Companys annual report on Form 10-K for the fiscal year ended December 31,
2004.



Effective with the second quarter of 2005, the Company
reclassified additional fees related to partial terminations under the JDI Master Sales Agency Agreement from selling, general and administrative expenses to sales agency fee income to properly reflect the operating profit. Prior year amounts have
been reclassified from other (income) expense to sales agency fee income for consistency. In addition, associated intangible impairment from prior years has been reclassified from other (income) expense to selling, general and administrative
expenses. See Note 4 below.



Certain other prior period amounts
have been reclassified to conform with current period presentation.



Unless otherwise indicated, all monetary amounts, excluding share data, are stated in thousands.



|3. | New Accounting Standards
|-- | ------------------------



In May 2005, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS)
No. 154 Accounting Changes and Error Corrections. SFAS No. 154 replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3 Reporting Accounting Changes in Interim
Financial Statements and requires retrospective application to prior periods financial statements for a change in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative
effect of the change. The Company does not expect the adoption of this standard, which is effective in fiscal year 2006, to have a material impact on its consolidated financial condition, results of operations or cash flows.



In December 2004, the FASB issued SFAS No. 123 (revised 2004),
Share-Based Payments (SFAS No. 123R). SFAS No. 123R replaces SFAS No. 123, Accounting for Stock-Based Compensation, supersedes APB Opinion No. 25, Accounting for Stock
Issued to Employees, and amends FASB Statement No. 95, Statement of Cash Flows. Generally, the approach in SFAS No. 123R, which is effective for the Company in fiscal year 2006, is similar to the approach
described in SFAS No. 123. However, SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair



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##### Table of Contents

JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005

(unaudited)



values. Pro forma disclosure is no longer an alternative. As permitted by SFAS No. 123, the Company currently accounts for share-based payments to
employees using APB Opinion No. 25s intrinsic value method and, as such, generally recognizes no compensation cost for employee stock options. The Company will adopt the provisions of SFAS No. 123R using a modified prospective
application. Under the modified prospective application, SFAS No. 123R, which provides certain changes to the method for valuing stock-based compensation, among other changes, will apply to new awards and to awards that are outstanding on the
effective date and are subsequently modified or cancelled. Compensation expense for outstanding awards for which the requisite service had not been rendered as of the effective date will be recognized over the remaining service period. The Company
is in the process of determining how the new method of valuing stock-based compensation as prescribed in SFAS No. 123R will be applied to valuing stock-based awards granted after the effective date and the impact the recognition of compensation
expense related to such awards will have on its consolidated financial condition, results of operations or cash flows.



In November 2004, the FASB issued SFAS No. 151, Inventory Costs  an amendment of ARB No. 43. SFAS No. 151 requires
idle facility expenses, freight, handling costs and wasted material (spoilage) costs to be recognized as current-period charges. It also requires that allocation of fixed production overheads to the costs of conversion be based on the normal
capacity of the production facilities. The Company does not expect the adoption of this standard, which is effective in fiscal year 2006, to have a material impact on its consolidated financial condition, results of operations or cash flows.



|4. | Master Sales Agency Terminations
|-- | --------------------------------



In connection with the May 2002 acquisition of the DiverseyLever business, JDI entered into a Master Sales Agency Agreement (the Agreement)
with Unilever, whereby the Company acts as an exclusive sales agent in the sale of Unilevers consumer brand products to various institutional and industrial end-users. At acquisition, the Company assigned an intangible value to the Agreement
of $13,000.



An agency fee is paid by Unilever to JDI in
exchange for its sales agency services. An additional fee is payable by Unilever to JDI in the event that conditions for full or partial termination of the Agreement are met. JDI elected, and Unilever agreed, to partially terminate the Agreement in
several territories resulting in payment by Unilever to JDI of additional fees. In association with the partial terminations, JDI recognized sales agency fee income of $270 and $0 during the three months ended September 30, 2005 and
October 1, 2004, respectively; and $7,439 and $2,872 during the nine months ended September 30, 2005 and October 1, 2004, respectively.



In September 2005, JDI and Unilever agreed to terminate a portion of the Agreement relating to certain product lines, effective January 2006. Such
agreement was reached in anticipation of, and contingent on, the full replacement of the current Agreement with a new licensing agreement by December 2005. In conjunction with the expected termination, Unilever paid JDI $6,503 in September 2005. As
of September 30, 2005, JDI recorded the payment as deferred revenue, classified as a current liability on the consolidated balance sheet, which will be recognized in the consolidated statements of operations over the life of the relationship
with Unilever.



|5. | Lease Accounting Adjustment
|-- | ---------------------------



In the first quarter of 2005, the Company identified inconsistencies in its accounting treatment for equipment leased to a European-based customer.
Further analysis concluded that such leases should primarily be accounted for as sales-type capital leases rather than as operating leases. The cumulative impact of the correction was recorded by the Company in the three months ended April 1,
2005. The Company concluded that the impact of the accounting error was not significant to its current year, prior year and prior quarter consolidated financial position, results of operations or cash flows and, as such, does not require restatement
of prior year amounts. Below is a summary of the adjustment with increases to key measures in the consolidated statements of operations for the three months ended April 1, 2005 and the nine months ended September 30, 2005:



|                 |  |   |       
|---------------- |  | - | ------
|Net sales        |  | $ | 15,333
|Gross profit     |  |   | 5,764 
|Operating profit |  |   | 5,764 
|Net income       |  |   | 3,770 



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##### Table of Contents

JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005

(unaudited)



|6. | Long-Term Receivables
|-- | ---------------------



In September 2005, Unilever agreed to pay the Company for certain long-term receivables, including related accrued interest receivable, established
through the acquisition of the DiverseyLever business in 2002. The Company and Unilever previously expected to settle these balances at the time that Unilever no longer held an equity position in the Company. The Company received $25,359, including
interest of $4,502, and $3,576, including interest of $271, in partial settlement of the pension adjustment  fully funded and full settlement of the pension adjustment  EBITDA, respectively. The payments were recorded as reductions to
long-term receivables  related parties in the consolidated balance sheet.



|7. | Divestitures
|-- | ------------



In September 2005, the Company sold or agreed to sell its European commercial laundry operations in a two-phase transaction. In phase 1, which closed in
September 2005, the Company sold its related operations in seven countries for $15,801, resulting in a realized gain of $2,824 ($429 after-tax). Net assets sold include an allocation of goodwill and other identifiable intangible assets of $5,725 and
$1,838, respectively. In phase 2, the Company agreed to sell its remaining related operations in six additional countries not later than January 2007 for approximately $9,100. Effective September 2005, the Company designated the net assets
associated with phase 2 as held for sale, as required by SFAS No. 144, and recorded an expected net loss of $5,651 ($4,721 after-tax). Net assets held for sale include an allocation of goodwill and other identifiable intangible
assets of $6,619 and $1,329, respectively. The gross and net assets held for sale of $9,116, which include a write-down to net realizable value of $5,224, are not considered material and, as such, are not disclosed separately on the Companys
consolidated balance sheet. Net sales associated with these operations were approximately $37,264 and $23,656 for phase 1 and phase 2, respectively, for the year ended December 31, 2004.



In September 2005, the Company divested its Canadian commercial laundry
operations for proceeds of $2,810, resulting in a realized gain of $1,475 ($1,199 after-tax). Net sales associated with this business was approximately $4,821 for the year ended December 31, 2004.



The divestiture of the commercial laundry operations in Europe and Canada
were part of larger cash-flow-generating groups and do not represent separate reporting units or components as defined by SFAS No. 144. As such, the divestitures were not reported as discontinued operations. Further, the information is not
readily available to determine, with adequate precision, net sales and net income associated with the divested businesses for the periods presented in the consolidated statements of operations.



The gains and losses associated with these divestiture activities are
included as a component of selling, general and administrative expenses in the consolidated statement of operations.



|8. | Divestiture of the Whitmire Micro-Gen Business
|-- | ----------------------------------------------



In June 2004, the Company completed the sale of Whitmire Micro-Gen Research Laboratories, Inc. (Whitmire) to Sorex Holdings, Ltd.
(Sorex), a European pest-control manufacturer headquartered in the United Kingdom, for $46,000 cash and the assumption of certain liabilities. The purchase price was subject to a working capital adjustment, which was agreed and settled
in September 2004, resulting in Sorex paying $751 to the Company. As of the divestiture date, Whitmire net assets were approximately $45,000.



6



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##### Table of Contents

JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005

(unaudited)



The purchase agreement also provided for additional earnout provisions based on future Whitmire net
sales, for which the Company recorded $4,000 during the three month period ended April 1, 2005. The income is included as a component of income from discontinued operations in the consolidated statements of operations.



Income (loss), net of tax, and net sales from discontinued operations were
($139) and $0, respectively, for the three month period ended October 1, 2004, and $2,119 and $18,688, respectively, for the nine month period ended October 1, 2004.



|9. | Accounts Receivable Securitization
|-- | ----------------------------------



JDI and certain of its subsidiaries entered into an agreement (the Receivables Facility) in March 2001 whereby they sell, on a continuous
basis, certain trade receivables to JWPR Corporation (JWPRC), a wholly owned, consolidated, special purpose, bankruptcy-remote subsidiary of JDI. JWPRC was formed for the sole purpose of buying and selling receivables generated by JDI
and certain of its subsidiaries party to the Receivables Facility. JWPRC, in turn, sells an undivided interest in the accounts receivable to a nonconsolidated financial institution (the Conduit) for an amount equal to the value of all
eligible receivables (as defined under the receivables sale agreement between JWPRC and the Conduit) less the applicable reserve. As of September 30, 2005 and December 31, 2004, JDIs total potential for securitization of trade
receivables was $150,000.



As of September 30, 2005 and
December 31, 2004, the Conduit held $140,400 and $130,300, respectively, of accounts receivable that are not included in the accounts receivable balance reflected in the Companys consolidated balance sheets.



As of September 30, 2005 and December 31, 2004, JDI had a retained
interest of $130,202 and $135,404, respectively, in the receivables of JWPRC. The retained interest is included in the accounts receivable balance and is reflected in the consolidated balance sheets at estimated fair value.



|10. | Income Taxes
|--- | ------------



During the nine months ended September 30, 2005, the Company reported a negative effective income tax rate of 248.0% on losses of $4,800, the result
of certain tax reporting entities with low income tax benefit reporting losses during the first nine months of 2005 while other profitable tax reporting entities reported income tax expense generally at or near their statutory tax rate. The Company
recognized incremental income tax expense due to repatriation of earnings from international operations. An increased valuation allowance has been provided at September 30, 2005 against tax loss carryforwards of international operations which
resulted in additional income tax expense. A tax benefit could not be claimed for book goodwill considered disposed as part of divestitures occurring in the nine months ended September 30, 2005. These increases to income tax expense have been
partially offset by a tax benefit from the realization of previously un-benefited foreign tax credits.



|11. | Inventories
|--- | -----------



The components of inventories are summarized as follows:



|                             |  |                    |         |                   |   |        
|---------------------------- |  | ------------------ | ------- | ----------------- | - | -------
|                             |  | September 30, 2005 |         | December 31, 2004
|Raw materials and containers |  | $                  | 73,758  |                   | $ | 71,835 
|Finished goods               |  |                    | 219,348 |                   |   | 209,917
|                             |  |                    |         |                   |   |        
|Total inventories            |  | $                  | 293,106 |                   | $ | 281,752
|                             |  |                    |         |                   |   |        



Inventories are stated
in the consolidated balance sheets net of allowance for excess and obsolete inventory of $29,421 and $25,573 on September 30, 2005 and December 31, 2004, respectively.



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##### Table of Contents

JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005

(unaudited)



|12. | Indebtedness and Credit Arrangements
|--- | ------------------------------------



On April 8, 2005, JDI amended its senior secured credit facilities. This amendment allowed JDI to borrow additional funds under the U.S. dollar
portion of the term loan B and to repay the entire euro portion. In addition, the interest rate spread applicable to the U.S. dollar-based debt was reduced from LIBOR plus 225 basis points to LIBOR plus 175 basis points, thereby reducing JDIs
borrowing cost over the credit facilities remaining term. The amendment also changed certain financial covenants and administrative requirements to provide JDI with greater operating flexibility.



As a result of fully repaying the euro-based portion of the term loan B, the
Company recorded additional interest expense of $8,692 due to accumulated losses associated with EURIBOR-based interest swap agreements and $3,563 for the write-off of capitalized debt issuance costs. Subsequent to the repayment of the term B loan,
gains of $1,089 were recognized on the ineffective EURIBOR-based interest swap agreements.



|13. | Restructuring Liabilities
|--- | -------------------------



During fiscal years 2002 and 2003, in connection with the acquisition of the DiverseyLever business, the Company recorded liabilities for the involuntary
termination of former DiverseyLever employees and other exit costs associated with former DiverseyLever facilities (exit plans). During the nine months ended September 30, 2005, the Company paid cash of $914 representing contractual
obligations associated with involuntary terminations and lease payments on closed facilities. The restructuring reserve balances associated with the exit plans were $575 and $1,490 as of September 30, 2005 and December 31, 2004,
respectively.



Additionally, the Company developed plans to
restructure certain facilities that it owned prior to the acquisition of the DiverseyLever business, primarily for the purpose of eliminating redundancies resulting from the acquisition of the DiverseyLever business. During fiscal years 2002 and
2003, in connection with these acquisition related restructuring plans, the Company recorded liabilities for the involuntary termination of pre-acquisition employees and other restructuring costs associated with pre-acquisition facilities. The
Company recognized net liabilities of $3,246 and $5,343, for the involuntary termination of 52 and 99 additional pre-acquisition employees and $0 and $261 for additional other restructuring costs during the three months ended September 30, 2005
and October 1, 2004, respectively; and $9,379 and $12,748, for the involuntary termination of 169 and 252 additional pre-acquisition employees and $544 and $406 for additional other restructuring costs during the nine months ended
September 30, 2005 and October 1, 2004, respectively. The Companys acquisition-related restructuring plans provide for the planned termination of 794 pre-acquisition employees, of which 564 and 464 were actually terminated as of
September 30, 2005 and December 31, 2004, respectively. Net liabilities recognized by the Company in connection with such planned terminations were recorded as restructuring expenses in accordance with SFAS No. 146.



8



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JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005

(unaudited)



During the second and third quarter of 2005, the Company eliminated certain management positions and
recorded restructuring reserves of $2,483 for related severance payments in accordance with SFAS No. 146. As of September 30, 2005, after cash payments of $349, the Company had remaining restructuring reserves of $2,517. The activities do
not pertain to the acquisition-related restructuring plans and are therefore disclosed as Other Restructuring Plans in the table below.



|                                            |  |                                          |        |   |                           |   |      |       |  |   |                  |   |  |       |       |       |  |   |   |  |   |       |  
|------------------------------------------- |  | ---------------------------------------- | ------ | - | ------------------------- | - | ---- | ----- |  | - | ---------------- | - |  | ----- | ----- | ----- |  | - | - |  | - | ----- | -
|                                            |  | Acquisition- Related Restructuring Plans |        |   | Other Restructuring Plans |  
|                                            |  | Employee-Related                         |        |   | Other                     |   |      | Total |  |   | Employee-Related |   |  | Other |       | Total | 
|Liability balances as of December 31, 2004  |  | $                                        | 7,197  |   |                           | $ | 321  |       |  | $ | 7,518            |   |  | $     |      |       |  | $ |  |  | $ |      |  
|Liability recorded as restructuring expense |  |                                          | 2,904  |   |                           |   | 492  |       |  |   | 3,396            |   |  |       |      |       |  |   |  |  |   |      |  
|Cash paid1                                  |  |                                          | (2,771 | ) |                           |   | (262 | )     |  |   | (3,033           | ) |  |       |      |       |  |   |  |  |   |      |  
|                                            |  |                                          |        |   |                           |   |      |       |  |   |                  |   |  |       |       |       |  |   |   |  |   |       |  
|Liability balances as of April 1, 2005      |  | $                                        | 7,330  |   |                           | $ | 551  |       |  | $ | 7,881            |   |  | $     |      |       |  | $ |  |  | $ |      |  
|Liability recorded as restructuring expense |  |                                          | 3,229  |   |                           |   | 52   |       |  |   | 3,281            |   |  |       | 1,431 |       |  |   |  |  |   | 1,431 |  
|Cash paid1                                  |  |                                          | (4,021 | ) |                           |   | (85  | )     |  |   | (4,106           | ) |  |       | (135  | )     |  |   |  |  |   | (135  | )
|                                            |  |                                          |        |   |                           |   |      |       |  |   |                  |   |  |       |       |       |  |   |   |  |   |       |  
|Liability balances as of July 1, 2005       |  | $                                        | 6,538  |   |                           | $ | 518  |       |  | $ | 7,056            |   |  | $     | 1,296 |       |  | $ |  |  | $ | 1,296 |  
|Liability recorded as restructuring expense |  |                                          | 3,246  |   |                           |   |     |       |  |   | 3,246            |   |  |       | 1,052 |       |  |   |  |  |   | 1,052 |  
|Liability adjustments2                      |  |                                          | 7      |   |                           |   | 17   |       |  |   | 24               |   |  |       | 383   |       |  |   |  |  |   | 383   |  
|Cash paid1                                  |  |                                          | (4,643 | ) |                           |   | (358 | )     |  |   | (5,001           | ) |  |       | (214  | )     |  |   |  |  |   | (214  | )
|                                            |  |                                          |        |   |                           |   |      |       |  |   |                  |   |  |       |       |       |  |   |   |  |   |       |  
|Liability balances as of September 30, 2005 |  | $                                        | 5,148  |   |                           | $ | 177  |       |  | $ | 5,325            |   |  | $     | 2,517 |       |  | $ |  |  | $ | 2,517 |  
|                                            |  |                                          |        |   |                           |   |      |       |  |   |                  |   |  |       |       |       |  |   |   |  |   |       |  



|1 | Cash paid includes the effects of foreign exchange rates.
|- | ---------------------------------------------------------



|2 | Liability adjustments reflect revisions to previous acquisition-related restructuring plan assumptions and the reclassification of amounts previously recorded in
other liabilities.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|14. | Other (Income) Expense, Net
|--- | ---------------------------



The components of other (income) expense, net in the consolidated statements of operations are as follows:



|                                                                    |  |                    |        |   |                   |   |       |                    |  |   |                 |   |  |   |       |  
|------------------------------------------------------------------- |  | ------------------ | ------ | - | ----------------- | - | ----- | ------------------ |  | - | --------------- | - |  | - | ----- | -
|                                                                    |  | Three Months Ended |        |   | Nine Months Ended |  
|                                                                    |  | September 30, 2005 |        |   | October 1, 2004   |   |       | September 30, 2005 |  |   | October 1, 2004 |  
|Foreign currency translation (gain) loss                            |  | $                  | (2,959 | ) |                   | $ | 1,344 |                    |  | $ | 20,669          |   |  | $ | 4,185 |  
|Forward contracts (gain) loss                                       |  |                    | 3,633  |   |                   |   | (630  | )                  |  |   | (19,734         | ) |  |   | (36   | )
|Loss on hyperinflationary country foreign currency translations     |  |                    |       |   |                   |   | 896   |                    |  |   |                |   |  |   | 3,117 |  
|Loss on non-recoverable sales tax assessment related to prior years |  |                    | (50    | ) |                   |   | 137   |                    |  |   | (50             | ) |  |   | 1,109 |  
|Other, net                                                          |  |                    | (173   | ) |                   |   | (203  | )                  |  |   | (260            | ) |  |   | (3    | )
|                                                                    |  |                    |        |   |                   |   |       |                    |  |   |                 |   |  |   |       |  
|                                                                    |  | $                  | 451    |   |                   | $ | 1,544 |                    |  | $ | 625             |   |  | $ | 8,372 |  
|                                                                    |  |                    |        |   |                   |   |       |                    |  |   |                 |   |  |   |       |  



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##### Table of Contents

JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005

(unaudited)



|15. | Defined Benefit Plans and Other Post-Employment Benefit Plans
|--- | -------------------------------------------------------------



The components of net periodic benefit costs for the Companys defined benefit pension plans and other post-employment benefit plans for the three
and nine month periods ended September 30, 2005 and October 1, 2004 are as follows:



|                                       |  |                          |        |   |                   |   |        |                    |  |   |                 |   |  |   |         |  
|-------------------------------------- |  | ------------------------ | ------ | - | ----------------- | - | ------ | ------------------ |  | - | --------------- | - |  | - | ------- | -
|                                       |  | Defined Pension Benefits |       
|                                       |  | Three Months Ended       |        |   | Nine Months Ended |  
|                                       |  | September 30, 2005       |        |   | October 1, 2004   |   |        | September 30, 2005 |  |   | October 1, 2004 |  
|Service cost                           |  | $                        | 8,091  |   |                   | $ | 8,077  |                    |  | $ | 24,359          |   |  | $ | 23,246  |  
|Interest cost                          |  |                          | 8,459  |   |                   |   | 7,595  |                    |  |   | 25,378          |   |  |   | 20,896  |  
|Expected return on plan assets         |  |                          | (7,858 | ) |                   |   | (6,616 | )                  |  |   | (23,573         | ) |  |   | (16,580 | )
|Amortization of net loss               |  |                          | 2,157  |   |                   |   | 1,237  |                    |  |   | 6,472           |   |  |   | 4,565   |  
|Amortization of transition obligation  |  |                          | 63     |   |                   |   | 65     |                    |  |   | 188             |   |  |   | 190     |  
|Amortization of prior service credit   |  |                          | (71    | ) |                   |   | (132   | )                  |  |   | (212            | ) |  |   | (173    | )
|Effect of curtailments and settlements |  |                          | (2,054 | ) |                   |   | (1,130 | )                  |  |   | (2,440          | ) |  |   | (1,130  | )
|Effect of special termination benefits |  |                          | 183    |   |                   |   |       |                    |  |   | 183             |   |  |   |        |  
|                                       |  |                          |        |   |                   |   |        |                    |  |   |                 |   |  |   |         |  
|Net periodic pension cost              |  | $                        | 8,970  |   |                   | $ | 9,096  |                    |  | $ | 30,355          |   |  | $ | 31,014  |  
|                                       |  |                          |        |   |                   |   |        |                    |  |   |                 |   |  |   |         |  



|                                      |  |                                |       |                   |   |                    |  |                 |       |  |   |      
|------------------------------------- |  | ------------------------------ | ----- | ----------------- | - | ------------------ |  | --------------- | ----- |  | - | -----
|                                      |  | Other Post-Employment Benefits
|                                      |  | Three Months Ended             |       | Nine Months Ended
|                                      |  | September 30, 2005             |       | October 1, 2004   |   | September 30, 2005 |  | October 1, 2004
|Service cost                          |  | $                              | 839   |                   | $ | 576                |  | $               | 2,516 |  | $ | 2,340
|Interest cost                         |  |                                | 1,224 |                   |   | 947                |  |                 | 3,673 |  |   | 3,388
|Amortization of net loss              |  |                                | 188   |                   |   | 91                 |  |                 | 563   |  |   | 369  
|Amortization of transition obligation |  |                                | 72    |                   |   | 71                 |  |                 | 215   |  |   | 215  
|Amortization of prior service cost    |  |                                | 12    |                   |   | 18                 |  |                 | 37    |  |   | 36   
|                                      |  |                                |       |                   |   |                    |  |                 |       |  |   |      
|Net periodic benefit cost             |  | $                              | 2,335 |                   | $ | 1,703              |  | $               | 7,004 |  | $ | 6,348
|                                      |  |                                |       |                   |   |                    |  |                 |       |  |   |      



The Company made
contributions to its material defined pension benefit plans of $13,478 and $27,600, during the three months ended September 30, 2005 and October 1, 2004, respectively; and $28,634 and $62,600 during the nine months ended September 30,
2005 and October 1, 2004, respectively. During the nine months ended October 1, 2004, contributions relating to the acquisition of the DiverseyLever business were $28,600.



Certain of the Companys United Kingdom based employees participate in a pension plan sponsored by SCJ, a related
party. In March 2005, the Company and SCJ agreed to segregate the assets and liabilities of the plan resulting in the Company recording an additional minimum pension liability of approximately $4,300. At segregation, the projected benefit
obligation, accumulated benefit obligation and market value of assets associated with the plan were $21,492, $19,251 and $14,951, respectively.



|16. | Stock-Based Compensation
|--- | ------------------------



The Company has a long-term incentive plan (the Plan) that provides for the right to purchase stock of Commercial Markets Holdco, Inc.
(Holdco), the parent of the Company, for certain senior management of the Company. Prior to July 1, 2001, the Plan provided for the award of one share of restricted stock and one stock option for every four shares purchased. Shares
are acquired at a formula value, which is an estimation of fair value by the Company based on overall Holdco performance. Most restricted shares vest over a two-to-four year period from the grant date. Stock options have an exercise term of ten
years from the date of grant.



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##### Table of Contents

JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005

(unaudited)



Subsequent to June 29, 2001, the Plan was modified so that all awards granted under the Plan
were stock option grants. Newly issued stock options subsequently vest over four years and have an exercise period of seven years from the date of grant.



The Company recorded compensation expense of $240 and $398 related to restricted stock and debt forgiveness during the three months ended
September 30, 2005 and October 1, 2004, respectively; and $761 and $1,545 related to restricted stock and debt forgiveness during the nine months ended September 30, 2005 and October 1, 2004, respectively.



The pro forma impact of compensation expense if the Company had used the
fair-value method of accounting to measure compensation expense would have reduced net income, as applicable, by approximately $4,403 and $4,407 for the three months ended September 30, 2005 and October 1, 2004, respectively; and $13,562
and $11,933 for the nine months ended September 30, 2005 and October 1, 2004, respectively.



|17. | Comprehensive Income (Loss)
|--- | ---------------------------



Comprehensive income (loss) for the three and nine month periods ended September 30, 2005 and October 1, 2004 was as follows:



|                                                     |  |                    |        |   |                   |   |        |                    |  |   |                 |   |  |   |         |  
|---------------------------------------------------- |  | ------------------ | ------ | - | ----------------- | - | ------ | ------------------ |  | - | --------------- | - |  | - | ------- | -
|                                                     |  | Three Months Ended |        |   | Nine Months Ended |  
|                                                     |  | September 30, 2005 |        |   | October 1, 2004   |   |        | September 30, 2005 |  |   | October 1, 2004 |  
|Net income (loss)                                    |  | $                  | 2,213  |   |                   | $ | (1,180 | )                  |  | $ | (12,702         | ) |  | $ | 11,034  |  
|Foreign currency translation adjustments             |  |                    | 6,669  |   |                   |   | 180    |                    |  |   | (78,732         | ) |  |   | (30,994 | )
|Adjustments to minimum pension liability, net of tax |  |                    | (158   | ) |                   |   |       |                    |  |   | (3,167          | ) |  |   |        |  
|Unrealized gains on derivatives, net of tax          |  |                    | 1,294  |   |                   |   | 396    |                    |  |   | 10,279          |   |  |   | 3,122   |  
|                                                     |  |                    |        |   |                   |   |        |                    |  |   |                 |   |  |   |         |  
|Total comprehensive income (loss)                    |  | $                  | 10,018 |   |                   | $ | (604   | )                  |  | $ | (84,322         | ) |  | $ | (16,838 | )
|                                                     |  |                    |        |   |                   |   |        |                    |  |   |                 |   |  |   |         |  



|18. | Stockholders Agreement and Class B Common Stock Subject to Put and Call Options
|--- | --------------------------------------------------------------------------------



In connection with the acquisition of the DiverseyLever business, the Company entered into a stockholders agreement
with its stockholders, Holdco and Marga B.V., a subsidiary of Unilever. Under the stockholders agreement, at any time after May 3, 2007, the Company has the option to purchase, and Unilever has the right, under certain conditions, to
require the Company to purchase the shares of the Company then beneficially owned by Unilever. If, after May 3, 2010, the Company is unable to fulfill its obligations in connection with the put option, Unilever may require the Company to take
certain actions, including selling certain assets of the Company.



Under the stockholders agreement, the Company may be required to make payments to Unilever in each year from 2007 through 2010 so long as Unilever continues to beneficially own 5% or more of the Companys outstanding shares. The
amount of each payment will be equal to 25% of the amount by which the cumulative cash flows of the Company and its subsidiaries, on a consolidated basis, for the period from May 3, 2002 through the end of the fiscal year preceding the payment
(not including any cash flow with respect to which Unilever received payment in a prior year), exceeds $727,500 in 2006, $975,000 in 2007, $1,200,000 in 2008 or $1,425,000 in 2009. The aggregate amount of these payments cannot exceed $100,000.
Payment of these amounts, which may be funded with cash flows generated by the Company, is subject to compliance with the agreements relating to the Companys and JDIs senior indebtedness including, without limitation, the JDI senior
secured credit facilities, the JDI senior subordinated notes and the Companys senior discount notes.



11



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JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005

(unaudited)



|19. | Commitments and Contingencies
|--- | -----------------------------



The Company is subject to various legal actions and proceedings in the normal course of business. Although litigation is subject to many uncertainties and
the ultimate exposure with respect to these matters cannot be ascertained, the Company does not believe the final outcome of any current litigation will have a material effect on the Companys consolidated financial position, results of
operations or cash flows.



The Company has purchase commitments
for materials, supplies, and property, plant and equipment entered into in the ordinary course of business. In the aggregate, such commitments are not in excess of current market prices. Additionally, the Company normally commits to some level of
marketing related expenditures that extend beyond the fiscal period. These marketing expenses are necessary in order to maintain a normal course of business and the risk associated with them is limited. It is not expected that these commitments will
have a material effect on the Companys consolidated financial position, results of operations or cash flows.



The Company maintains environmental reserves for remediation; monitoring and related expenses at one of its domestic facilities. While the ultimate
exposure to further remediation expense at this site continues to be evaluated, the Company does not anticipate a material effect on its consolidated financial position or results of operations.



In connection with the acquisition of the DiverseyLever business, the Company
conducted environmental assessments and investigations at DiverseyLever facilities in various countries. These investigations disclosed the likelihood of soil and/or groundwater contamination, or potential environmental regulatory matters. An
estimate of costs has been made and maintained based on the expected extent of contamination and the expected likelihood of recovery for some of these costs from Unilever under the purchase agreement for the acquisition. During September 2005, in
connection with the closure of contamination and regulatory matters relative to certain sites, the Company released related reserves of $2,916 and recorded the adjustment to selling, general and administrative expenses in the consolidated statement
of operations.



In August 2005, the Company and Unilever agreed
to settle an indemnification claim relating to the Auto-Chlor business. The claim was made by the Company under the purchase agreement pursuant to which the Company acquired the DiverseyLever business. The settlement amount of $2,500, in respect of
litigation costs, was paid by Unilever to JDI in August 2005 and was recorded as a reduction to selling, general and administrative expenses in the consolidated statement of operations. The indemnified costs were previously recorded as selling,
general and administrative expenses in the consolidated statement of operations, substantially in various prior years.



12



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JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005

(unaudited)



|20. | Segment Information
|--- | -------------------



Business segment information is summarized as follows. Statement of operations measures include results from continuing operations only.



|                                                              |  |                                             |           |         |   |                    |  |   |               |   |  |   |          
|------------------------------------------------------------- |  | ------------------------------------------- | --------- | ------- | - | ------------------ |  | - | ------------- | - |  | - | ---------
|                                                              |  | Three Months Ended as of September 30, 2005
|                                                              |  | Professional                                |           | Polymer |   | Eliminations/Other |  |   | Total Company
|Net sales                                                     |  | $                                           | 747,378   |         | $ | 91,543             |  | $ | (5,386        | ) |  | $ | 833,535  
|Operating profit                                              |  |                                             | 39,913    |         |   | 10,053             |  |   | (1            | ) |  |   | 49,965   
|Depreciation and amortization                                 |  |                                             | 39,835    |         |   | 2,420              |  |   |              |   |  |   | 42,255   
|Interest expense                                              |  |                                             | 30,551    |         |   | 106                |  |   | 8,661         |   |  |   | 39,318   
|Interest income                                               |  |                                             | 2,185     |         |   | 914                |  |   | (896          | ) |  |   | 2,203    
|Total assets                                                  |  |                                             | 3,278,950 |         |   | 248,604            |  |   | (128,814      | ) |  |   | 3,398,740
|Goodwill, net                                                 |  |                                             | 1,154,799 |         |   | 2,054              |  |   | 13,612        |   |  |   | 1,170,465
|Capital expenditures, including capitalized computer software |  |                                             | 21,242    |         |   | 1,643              |  |   |              |   |  |   | 22,885   
|                                                              | 
|                                                              |  | Three Months Ended as of October 1, 2004   
|                                                              |  | Professional                                |           | Polymer |   | Eliminations/Other |  |   | Total Company
|Net sales                                                     |  | $                                           | 706,893   |         | $ | 82,187             |  | $ | (5,142        | ) |  | $ | 783,938  
|Operating profit                                              |  |                                             | 31,815    |         |   | 7,292              |  |   |              |   |  |   | 39,107   
|Depreciation and amortization                                 |  |                                             | 44,533    |         |   | 2,421              |  |   |              |   |  |   | 46,954   
|Interest expense                                              |  |                                             | 30,732    |         |   | 145                |  |   | 8,298         |   |  |   | 39,175   
|Interest income                                               |  |                                             | 2,251     |         |   | 338                |  |   | (339          | ) |  |   | 2,250    
|Total assets                                                  |  |                                             | 3,348,405 |         |   | 225,394            |  |   | (118,874      | ) |  |   | 3,454,925
|Goodwill, net                                                 |  |                                             | 1,163,948 |         |   | 2,100              |  |   | 13,612        |   |  |   | 1,179,660
|Capital expenditures, including capitalized computer software |  |                                             | 32,535    |         |   | 717                |  |   |              |   |  |   | 33,252   
|                                                              | 
|                                                              |  | Nine Months Ended as of September 30, 2005 
|                                                              |  | Professional                                |           | Polymer |   | Eliminations/Other |  |   | Total Company
|Net sales                                                     |  | $                                           | 2,249,739 |         | $ | 275,016            |  | $ | (17,307       | ) |  | $ | 2,507,448
|Operating profit                                              |  |                                             | 93,532    |         |   | 28,443             |  |   | (77           | ) |  |   | 121,898  
|Depreciation and amortization                                 |  |                                             | 130,178   |         |   | 7,435              |  |   |              |   |  |   | 137,613  
|Interest expense                                              |  |                                             | 105,981   |         |   | 438                |  |   | 26,044        |   |  |   | 132,463  
|Interest income                                               |  |                                             | 6,256     |         |   | 2,286              |  |   | (2,227        | ) |  |   | 6,315    
|Total assets                                                  |  |                                             | 3,278,950 |         |   | 248,604            |  |   | (128,814      | ) |  |   | 3,398,740
|Goodwill, net                                                 |  |                                             | 1,154,799 |         |   | 2,054              |  |   | 13,612        |   |  |   | 1,170,465
|Capital expenditures, including capitalized computer software |  |                                             | 61,064    |         |   | 3,502              |  |   |              |   |  |   | 64,566   
|                                                              | 
|                                                              |  | Nine Months Ended as of October 1, 2004    
|                                                              |  | Professional                                |           | Polymer |   | Eliminations/Other |  |   | Total Company
|Net sales                                                     |  | $                                           | 2,136,204 |         | $ | 246,730            |  | $ | (16,091       | ) |  | $ | 2,366,843
|Operating profit                                              |  |                                             | 111,748   |         |   | 30,847             |  |   |              |   |  |   | 142,595  
|Depreciation and amortization                                 |  |                                             | 132,435   |         |   | 7,156              |  |   |              |   |  |   | 139,591  
|Interest expense                                              |  |                                             | 94,435    |         |   | 395                |  |   | 24,397        |   |  |   | 119,227  
|Interest income                                               |  |                                             | 4,170     |         |   | 778                |  |   | (744          | ) |  |   | 4,204    
|Total assets                                                  |  |                                             | 3,348,405 |         |   | 225,394            |  |   | (118,874      | ) |  |   | 3,454,925
|Goodwill, net                                                 |  |                                             | 1,163,948 |         |   | 2,100              |  |   | 13,612        |   |  |   | 1,179,660
|Capital expenditures, including capitalized computer software |  |                                             | 81,894    |         |   | 3,198              |  |   |              |   |  |   | 85,092   



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JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005

(unaudited)



|21. | Subsequent Event
|--- | ----------------



On November 7, 2005, the Companys Board of Directors approved a restructuring program, which is expected to take two to three years, and
includes a redesign of the Companys organization structure, the closure of a number of manufacturing and other facilities and a workforce reduction of approximately 10%, not including planned divestitures. The Company is also considering the
potential divestiture of or exit from certain non-core or underperforming businesses. The businesses being considered for divestiture, in the aggregate and if fully realized, have accounted for in excess of $500 million in net sales in the most
recent twelve months, and include our Johnson Polymer operations.



The implementation of the restructuring program is expected to result in cumulative, pre-tax restructuring and other non-recurring period cash charges totaling between $345 and $370 million, including approximately $20 to $30 million in the
fourth quarter of fiscal year 2005 and $150 to $175 million in fiscal year 2006. Over the duration of the restructuring program, the Company expects to incur approximately $195 to $210 million (pre-tax) in employee-related costs, including
severance, pension and other termination benefits and approximately $150 to $160 million (pre-tax) in other associated costs, including facility closures, contract termination fees and costs related to the execution of the restructuring program. In
addition, the Company expects to incur approximately $60 to $75 million (pre-tax) in non-cash asset write-downs and require capital expenditures of approximately $50 to $65 million, primarily for certain new manufacturing facilities supporting
supply chain optimization and expansion in developing markets, and investment in continued ERP roll-out, business intelligence and customer-facing systems.



In connection with this program, the Company has requested the consent of its lenders to amend the senior secured credit facilities to provide financial
flexibility and liquidity to execute its strategy. The proposed amendment may include changes to certain covenants, pricing, terms and conditions.



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##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------



Executive Overview



We operate our business through Holdings sole subsidiary, JDI, and its subsidiaries. We are a leading global marketer and manufacturer of cleaning,
hygiene and appearance products, equipment and related services for the institutional and industrial cleaning and sanitation market. We are also a leading global supplier of environmentally compliant, water-based acrylic polymer resins for the
industrial printing and packaging, coatings and plastics markets. We sell our products in more than 140 countries through our direct sales force, wholesalers and third-party distributors. Our sales are balanced geographically, with our principal
markets being Europe, North America and Japan. For financial statement reporting purposes, our business is comprised of two operating segments: professional and polymer.



In the three and nine months ended September 30, 2005, net sales increased by $49.6 million and $141 million,
respectively, from the same periods in the prior year. As indicated in the following table, excluding the impact of foreign currency exchange rates and acquisitions and divestitures, our net sales increased by 5.0% and 3.1%, respectively, for the
three and nine months ended September 30, 2005, as compared to the same periods in the prior year.



|                              |  |                    |         |   |                 |   |         |                   |  |     |                    |  |   |                 |   |  |        |           |   |  |     |  
|----------------------------- |  | ------------------ | ------- | - | --------------- | - | ------- | ----------------- |  | --- | ------------------ |  | - | --------------- | - |  | ------ | --------- | - |  | --- | -
|                              |  | Three Months Ended |         |   |                 |   |         | Nine Months Ended |  |     |                    | 
|(dollars in thousands)        |  | September 30, 2005 |         |   | October 1, 2004 |   |         | Change            |  |     | September 30, 2005 |  |   | October 1, 2004 |   |  | Change |          
|Net sales                     |  | $                  | 833,535 |   |                 | $ | 783,938 |                   |  | 6.3 | %                  |  | $ | 2,507,448       |   |  | $      | 2,366,843 |   |  | 5.9 | %
|Variance due to:              |  |                    |         |   |                 |   |         |                   |  |     |                    |  |   |                 |   |  |        |           |   |  |     |  
|Foreign currency exchange     |  |                    |        |   |                 |   | 11,073  |                   |  |     |                    |  |   |                 |   |  |        | 69,046    |   |  |     |  
|Acquisitions and divestitures |  |                    | (480    | ) |                 |   | (1,916  | )                 |  |     |                    |  |   | (2,668          | ) |  |        | (6,781    | ) |  |     |  
|                              |  |                    |         |   |                 |   |         |                   |  |     |                    |  |   |                 |   |  |        |           |   |  |     |  
|                              |  |                    | (480    | ) |                 |   | 9,157   |                   |  |     |                    |  |   | (2,668          | ) |  |        | 62,265    |   |  |     |  
|                              |  |                    |         |   |                 |   |         |                   |  |     |                    |  |   |                 |   |  |        |           |   |  |     |  
|                              |  | $                  | 833,055 |   |                 | $ | 793,095 |                   |  | 5.0 | %                  |  | $ | 2,504,780       |   |  | $      | 2,429,108 |   |  | 3.1 | %
|                              |  |                    |         |   |                 |   |         |                   |  |     |                    |  |   |                 |   |  |        |           |   |  |     |  



We have continued to
show net sales growth, primarily due to price increases taking hold in all business sectors and global geographic areas, expansion of developing markets in Asia Pacific, Latin America, Central and Eastern Europe, Africa and the Middle East and
partial terminations of JDIs Master Sales Agency agreements with Unilever.



| |  |  | In North America, one of our largest markets, net sales showed a strong improvement of 8.1% for the third quarter (3.9% for the year-to-date) compared to the prior year periods,
reversing the recent trend of flat to declining revenues. The North America sales growth was primarily attributable to key customer wins and pricing actions and has more than offset regional challenges of industry consolidation and changes in
customer purchase practices. The price increases were introduced globally late in 2004 and continued into the first nine months of 2005 in direct response to rising raw material costs.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In our Europe, Africa and Middle East regions, net sales increased by 1.9% and 0.9% for the quarter and year-to-date, respectively, primarily due to growth in developing countries
in Central and Eastern Europe, Africa and the Middle East and a correction in accounting treatment for certain equipment leases which increased Europes first quarter 2005 net sales by $15.3 million compared to the same period in the prior
year. These favorable factors were partially offset by softening economies in key countries and continuing consolidation in key market sectors, including distribution, building service contractors and food and beverage.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In Asia Pacific, net sales increased by 6.3% and 5.9% for the quarter and year-to-date, respectively, primarily due to growth in China and India.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In Latin America, net sales increased by 10.0% and 10.6% for the quarter and year-to-date, respectively, primarily due to improved economic conditions and growth in distributor
markets, the food and beverage business and the lodging sector.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | In Japan, net sales have increased by 2.8% and 0.7% for the quarter and year-to-date, respectively, despite significant economic pressures. Sales in our polymer segment increased
11.9% and 10.4% for the quarter and year-to-date, respectively, primarily due to the aforementioned price increases.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In the nine-month period, we recognized a $4.6 million increase in partial termination fees associated with JDIs Master Sales Agency Agreement with Unilever in certain
European territories.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our gross profit
percentages have improved slightly in fiscal year 2005, but remain below prior year levels as recent pricing actions have not been able to fully offset the unprecedented increases in key raw material costs and transportation costs. Our gross profit
percentages for the five most recent fiscal quarters are set forth below:



|             |  |                    |   |  |              |   |  |               |   |  |                   |   |  |                 |  
|------------ |  | ------------------ | - |  | ------------ | - |  | ------------- | - |  | ----------------- | - |  | --------------- | -
|             |  | Three Months Ended |  
|             |  | September 30, 2005 |   |  | July 1, 2005 |   |  | April 1, 2005 |   |  | December 31, 2004 |   |  | October 1, 2004 |  
|Consolidated |  | 41.5               | % |  | 41.8         | % |  | 40.8          | % |  | 39.6              | % |  | 42.6            | %
|             |  |                    |   |  |              |   |  |               |   |  |                   |   |  |                 |  
|Professional |  | 43.3               | % |  | 43.7         | % |  | 42.5          | % |  | 41.4              | % |  | 44.5            | %
|Polymer      |  | 26.2               | % |  | 24.9         | % |  | 26.3          | % |  | 22.4              | % |  | 25.3            | %



The professional
segment gross profit percentage for the third quarter of fiscal year 2005 was flat as compared to the second quarter of fiscal year 2005, but has improved over the fourth quarter of fiscal year 2004 and the first quarter of fiscal year 2005
primarily due to the impact of targeted price increases. The reductions in professional segment gross profit for the third quarter of fiscal year 2005 compared to the third quarter of fiscal year 2004 were primarily due to the continuing impact of
increased crude oil and natural gas costs on our raw material costs. We also experienced escalating freight and transportation costs in North America, which are attributable to the rise in crude oil prices and changes in U.S. transportation
legislation that have reduced carrier availability.



The
polymer segment gross profit percentage for the third quarter of fiscal year 2005 increased 130 basis points compared to the second quarter of fiscal year 2005, and has also improved over the first half of fiscal year 2005. The impact of targeted
price increases has largely offset the impact of higher crude oil and natural gas costs on key fuel feedstocks, and supply and demand imbalances for certain other raw materials which has negatively affected our costs.



We continue to be confronted with rising raw material costs and, in response,
we continue to implement a mix of general and selective price increases to recover these costs, to the extent possible, and pursue further cost reduction initiatives.



A strong cash flow performance during the third quarter of fiscal year 2005 enabled us to pay down term borrowings under the
JDI senior secured credit facilities. Total debt at September 30, 2005 decreased by $145 million compared to July 1, 2005, including $109 million in short-term borrowings. Improved cash flow generation from our operations was supplemented
by cash proceeds from the divestiture of our European and Canadian commercial laundry businesses ($18.6 million) and through payments from Unilever to settle and/or partially settle pension adjustments related to the May 2002 acquisition of
DiverseyLever ($28.9 million). In addition, JDI received a $6.5 million prepayment representing compensation for the termination of certain consumer packs under JDIs Master Sales Agency Agreement with Unilever, which is expected to occur in
January 2006.



In mid to late 2004, our industry and others
began to be materially impacted by rapid increases in crude oil and natural gas costs. This trend has continued into 2005. In response to these structural changes in the raw materials market that have led to significant increases in our input costs,
on November 7, 2005, our Board of Directors concluded that an operational restructuring of the Company is required and approved a restructuring program. This program, which is expected to take two to three years, includes a redesign of our
organization structure, the closure of a number of manufacturing and other facilities and a workforce reduction of approximately 10%, not including planned divestitures.



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We are also considering the potential divestiture of or exit from certain non-core or underperforming
businesses. The businesses being considered for divestiture, in the aggregate and if fully realized, have accounted for in excess of $500 million in net sales in the most recent twelve months, and include our Johnson Polymer operations. At the
appropriate time, and as we progress through our Restructuring Program, we expect to implement additional growth initiatives focusing on our core businesses.



The implementation of the restructuring program is expected to result in cumulative, pre-tax restructuring and other non-recurring period cash charges
totaling between $345 and $370 million, including approximately $20 to $30 million in the fourth quarter of fiscal year 2005 and $150 to $175 million in fiscal year 2006. Over the duration of the restructuring program, we expect to incur
approximately $195 to $210 million (pre-tax) in employee-related costs, including severance, pension and other termination benefits and approximately $150 to $160 million (pre-tax) in other associated costs, including facility closures, contract
termination fees and costs related to the execution of the restructuring program. In addition, we expect to incur approximately $60 to $75 million (pre-tax) in non-cash asset write-downs and require capital expenditures of approximately $50 to $65
million, primarily for certain new manufacturing facilities supporting our supply chain optimization and expansion in developing markets, and investment in continued ERP roll-out, business intelligence and customer-facing systems.



Annual savings associated with this restructuring program are expected to be
approximately $150 to $175 million by the end of fiscal year 2008. There can be no assurance, however, that we will achieve anticipated cost savings.



In connection with our restructuring program, JDI has requested the consent of its lenders to amend its senior secured credit facilities to provide
financial flexibility and liquidity to execute our strategy. The proposed amendment may include changes to certain covenants, pricing, terms and conditions. See the Liquidity and Capital Resources section for additional information.



Critical Accounting Policies



The preparation of our financial statements in conformity with accounting
principles generally accepted in the United States (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of
the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results may differ from these estimates under different assumptions or conditions. We believe the accounting policies that are
most critical to our financial condition and results of operations and that involve managements judgment and/or evaluation of inherent uncertain factors are as follows:



Revenue Recognition. We recognize revenue on product sales when risk of loss and title to the product is transferred
to the customer, substantially all of which occurs at the time shipment is made. We record an estimated reduction to revenue for customer discount programs and incentive offerings, including allowances and other volume-based incentives. If market
conditions were to decline, we may take actions to increase customer incentive offerings, possibly resulting in a reduction of gross profit margins in the period during which the incentive is offered.



In arriving at net sales, we estimate the amounts of sales deductions likely
to be earned by customers in conjunction with incentive programs such as volume rebates and other discounts. Such estimates are based on written agreements and historical trends and are reviewed periodically for possible revision based on changes in
facts and circumstances.



Estimating Reserves and
Allowances. We estimate inventory reserves based on periodic reviews of our inventory balances to identify slow-moving or obsolete items. This determination is based on a number of factors, including new product introductions, changes in
customer demand patterns and historic usage trends.



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We estimate the allowance for doubtful accounts by analyzing accounts receivable balances by age,
applying historical trend rates, analyzing market conditions and specifically reserving for identified customer balances, based on known facts, which are deemed probable as uncollectible. For larger accounts greater than 90 days past due, an
allowance for doubtful accounts is recorded based on the customers ability and likelihood to pay and based on managements review of the facts and circumstances. For other customers, we recognize an allowance based on the length of time
the receivable is past due based on historical experience.



We
accrue for losses associated with litigation and environmental claims based on managements best estimate of future costs when such losses are probable and reasonably able to be estimated. We record those costs based on what management believes
is the most probable amount of the liability within the ranges or, where no amount within the range is a better estimate of the potential liability, at the minimum amount within the range. The accruals are adjusted as further information becomes
available or circumstances change.



Pension and
Post-Retirement Benefits. We sponsor pension and post-retirement plans in various countries, including the United States, which are separately funded. Several statistical and judgmental factors, which attempt to anticipate future events, are
used in calculating the expense and liability related to the plans. These factors include assumptions about the discount rate, expected return on plan assets, rate of future compensation increases and healthcare cost trends, as determined by us and
our actuaries. In addition, our actuarial consultants also use subjective factors, such as withdrawal and mortality rates, to estimate these factors. The actuarial assumptions used by us may differ materially from actual results due to changing
market and economic conditions, higher or lower withdrawal rates, longer or shorter life spans of participants and changes in actual costs of healthcare. Actual results may significantly affect the amount of pension and other post-retirement benefit
expenses recorded by us.



Goodwill and Long-Lived
Assets. We periodically review long-lived assets, including non-amortizing intangible assets and goodwill, for impairment and assess whether significant events or changes in business circumstances indicate that the carrying value of the assets
may not be recoverable. An impairment loss is recognized when the carrying amount of an asset exceeds the anticipated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. The amount of the
impairment loss to be recorded, if any, is calculated by the excess of the assets carrying value over its estimated fair value. We also periodically reassess the estimated remaining useful lives of our amortizing intangible assets and our
other long-lived assets. Changes to estimated useful lives would impact the amount of depreciation and amortization expense recorded in our consolidated financial statements. We annually complete a fair value impairment analysis of goodwill and
non-amortizing intangible assets. Moreover, where indicators of impairment are identified for long-lived assets, we would prepare a future undiscounted cash flows analysis, determine any impairment impact and record, if necessary, a reduction in the
affected asset(s). There were no known impairments or indicators of impairment identified during the three- and nine-month periods ended September 30, 2005 or October 1, 2004 that had a material impact on our financial position, results of
operations or cash flows.



Three Months Ended September 30, 2005
Compared to Three Months Ended October 1, 2004



Net Sales:



|                               |  |                    |         |                 |   |         |  |   |            |   |  |      |  
|------------------------------ |  | ------------------ | ------- | --------------- | - | ------- |  | - | ---------- | - |  | ---- | -
|                               |  | Three Months Ended |         | Change          |  
|(dollars in thousands)         |  | September 30, 2005 |         | October 1, 2004 |   | Amount  |  |   | Percentage |  
|Net product and service sales: |  |                    |         |                 |   |         |  |   |            |   |  |      |  
|Professional                   |  | $                  | 725,271 |                 | $ | 684,385 |  | $ | 40,886     |   |  | 6.0  | %
|Polymer (1)                    |  |                    | 86,157  |                 |   | 77,045  |  |   | 9,112      |   |  | 11.8 | %
|                               |  |                    |         |                 |   |         |  |   |            |   |  |      |  
|                               |  |                    | 811,428 |                 |   | 761,430 |  |   | 49,998     |   |  | 6.6  | %
|Sales agency fee income        |  |                    | 22,107  |                 |   | 22,508  |  |   | (401       | ) |  | -1.8 | %
|                               |  |                    |         |                 |   |         |  |   |            |   |  |      |  
|                               |  | $                  | 833,535 |                 | $ | 783,938 |  | $ | 49,597     |   |  | 6.3  | %
|                               |  |                    |         |                 |   |         |  |   |            |   |  |      |  



|(1) | Excludes inter-segment sales to the professional segment.
|--- | ---------------------------------------------------------



18



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##### Table of Contents

| |  |  | The strengthening of the euro and certain other foreign currencies against the U.S. dollar contributed $10.6 million to the increase in net product and service sales, primarily
attributed to the professional segment.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Excluding the impact of foreign currency exchange rates and acquisitions and divestitures, consolidated net sales increased 5.0% compared to the same period in the prior year.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Excluding the foreign currency impact and sales agency fee income, professional segment net sales increased 4.3% compared to the same period in the prior year. The net sales growth
was primarily due to price increases taking hold in all business sectors and global geographic areas, and expansion of developing markets in Asia Pacific, Latin America, Central and Eastern Europe, Africa and the Middle East.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In North America, net sales showed a strong improvement of 8.1% for the third quarter compared to the prior year period, continuing a trend of recent growth. The increase in net
sales was primarily attributable to key customer wins and pricing actions, which have more than offset regional challenges of industry consolidation and changes in customer purchase practices.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In our Europe, Africa and Middle East region, net sales increased by 1.9% for the third quarter compared to the prior year period, primarily due to growth in developing countries in
Central and Eastern Europe, Africa and the Middle East, partially offset by softening economies in key countries and continuing consolidation in key market sectors, including distribution, building service contractors and food and beverage.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In Asia Pacific, net sales increased by 6.3% for the third quarter compared to the prior year period, primarily due to growth in China and India.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In Latin America, net sales increased by 10.0% for the third quarter compared to the prior year period, primarily due to improved economic conditions and growth in distributor
markets, the food and beverage business and the lodging sector.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In Japan, net sales increased by 2.8% for the third quarter despite significant economic pressures.
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | Excluding the foreign currency impact, polymer segment net sales increased by $9.2 million, or 11.9%, compared to the prior year period, primarily due to price increases in response
to the significant rise in raw material costs experienced over the past year.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Excluding a $0.4 million increase from the strengthening of the euro and certain other foreign currencies against the U.S. dollar, net sales under JDIs Master Sales Agency
Agreement with Unilever decreased by $0.8 million, or 3.7%, as compared to the prior year period
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Gross Profit:



|                                           |  |                    |         |   |                 |   |         |        |  |            |        |  |      |  
|------------------------------------------ |  | ------------------ | ------- | - | --------------- | - | ------- | ------ |  | ---------- | ------ |  | ---- | -
|                                           |  | Three Months Ended |         |   | Change          |  
|                                           |  | September 30, 2005 |         |   | October 1, 2004 |   |         | Amount |  | Percentage |       
|Professional                               |  | $                  | 323,708 |   |                 | $ | 314,769 |        |  | $          | 8,939  |  | 2.8  | %
|Polymer                                    |  |                    | 22,574  |   |                 |   | 19,524  |        |  |            | 3,050  |  | 15.6 | %
|                                           |  |                    |         |   |                 |   |         |        |  |            |        |  |      |  
|                                           |  |                    | 346,282 |   |                 |   | 334,293 |        |  |            | 11,989 |  | 3.6  | %
|                                           |  |                    |         |   |                 |   |         |        |  |            |        |  |      |  
|Gross profit as a percentage of net sales: |  |                    |         |   |                 |   |         |        |  |            |        |  |      |  
|Professional                               |  |                    | 43.3    | % |                 |   | 44.5    | %      |  |            |        |  |      |  
|Polymer                                    |  |                    | 26.2    | % |                 |   | 25.3    | %      |  |            |        |  |      |  
|                                           |  |                    |         |   |                 |   |         |        |  |            |        |  |      |  
|                                           |  |                    | 41.5    | % |                 |   | 42.6    | %      |  |            |        |  |      |  
|                                           |  |                    |         |   |                 |   |         |        |  |            |        |  |      |  



| |  |  | The strengthening of the euro and certain other foreign currencies against the U.S. dollar increased gross profit by $5.0 million compared to the prior year period, primarily
attributable to the professional segment.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The reductions in professional segment gross profit for the third quarter of fiscal year 2005 compared to the third quarter of fiscal year 2004 were primarily due
to the impact of increased crude oil and natural gas costs which negatively affected our floorcare business where acrylic based polymers are common in product formulations. The segment was also adversely impacted by higher freight and transportation
costs,
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



19



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##### Table of Contents

| | primarily attributable to the rise in crude oil prices and changes in U.S. transportation legislation that has affected driver hours and carrier
availability. To a lesser extent, gross profit has been impacted by a change in product and services mix, reflecting a relative increase in lower margin sales to our food and beverage sector, which is not expected to continue, and a strategic shift
towards increased solutions selling, which has a different business model than most of our operations.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The polymer segment quarter gross profit percentage for the third quarter of fiscal year 2005 increased 90 basis points compared to the third quarter of fiscal year 2004. The impact
of targeted price increases has largely offset the impact of higher crude oil and natural gas costs on key fuel feedstocks, as well as industry cyclical factors that caused demand to outstrip supply for certain raw materials. Polymer products are
formulated from solvents, acrylates and resins that include propylene, ethylene and benzene, costs for all of which are partially dependent on the price of crude oil and natural gas. Costs for styrene, a key raw material in our polymer business, are
currently at or near their peak levels and are expected to remain in this cost range in the near future. In addition, as costs have increased, the polymer segment has also moved towards a change in product mix, with customers substituting lower
margin products for specialty polymers.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We continue to be confronted with rising raw material costs and, in response, we continue to implement a mix of general and selective price increases to recover these costs, to the
extent possible, and pursue further cost reduction initiatives.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Operating Expenses:



|                                             |  |                    |         |   |                 |   |         |        |  |   |            |   |  |       |  
|-------------------------------------------- |  | ------------------ | ------- | - | --------------- | - | ------- | ------ |  | - | ---------- | - |  | ----- | -
|                                             |  | Three Months Ended |         |   | Change          |  
|(dollars in thousands)                       |  | September 30, 2005 |         |   | October 1, 2004 |   |         | Amount |  |   | Percentage |  
|Selling, general and administrative expenses |  | $                  | 274,594 |   |                 | $ | 271,195 |        |  | $ | 3,399      |   |  | 1.3   | %
|Research and development expenses            |  |                    | 17,425  |   |                 |   | 18,387  |        |  |   | (962       | ) |  | -5.2  | %
|Restructuring expenses                       |  |                    | 4,298   |   |                 |   | 5,604   |        |  |   | (1,306     | ) |  | -23.3 | %
|                                             |  |                    |         |   |                 |   |         |        |  |   |            |   |  |       |  
|                                             |  | $                  | 296,317 |   |                 | $ | 295,186 |        |  | $ | 1,131      |   |  | 0.4   | %
|                                             |  |                    |         |   |                 |   |         |        |  |   |            |   |  |       |  
|As a percentage of net sales:                |  |                    |         |   |                 |   |         |        |  |   |            |   |  |       |  
|Selling, general and administrative expenses |  |                    | 32.9    | % |                 |   | 34.6    | %      |  |   |            |   |  |       |  
|Research and development expenses            |  |                    | 2.1     | % |                 |   | 2.4     | %      |  |   |            |   |  |       |  
|Restructuring expenses                       |  |                    | 0.5     | % |                 |   | 0.7     | %      |  |   |            |   |  |       |  
|                                             |  |                    |         |   |                 |   |         |        |  |   |            |   |  |       |  
|                                             |  |                    | 35.5    | % |                 |   | 37.7    | %      |  |   |            |   |  |       |  
|                                             |  |                    |         |   |                 |   |         |        |  |   |            |   |  |       |  



| |  |  | The strengthening of the euro and certain other foreign currencies against the U.S. dollar increased operating expenses by $3.8 million compared to the prior year period.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Selling, general and administrative expenses as a percentage of net sales improved 170 basis points compared to the same period in the prior year. Excluding the impact of foreign
currency, selling, general and administrative expenses increased $0.2 million compared to the prior year period. The impact from cost containment and reduction programs, a settlement with Unilever related to indemnified legal costs ($2.5 million)
and a change in estimate for environmental reserves ($2.9 million) based on updated exposure studies have offset general inflationary pressures, a loss on divestiture of the European and Canadian commercial laundry businesses ($1.4 million), certain
employee separation costs ($3.6 million) and partial contract termination fees ($3.0 million).
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Excluding the impact of foreign currency, restructuring expenses decreased $1.3 million compared to the prior year period, primarily due to the timing of employee severance and exit
cost payments and the wind-down of activity related to the DiverseyLever acquisition integration.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



20



---

##### Table of Contents

Restructuring and Integration:



A summary of all costs associated with the restructuring and integration programs for the three months ended
September 30, 2005 and October 1, 2004 is outlined below. The reserve balance shown below reflects the aggregate reserves for all restructuring and integration projects.



|                                                                        |  |                    |        |   |                 |   |        |  
|----------------------------------------------------------------------- |  | ------------------ | ------ | - | --------------- | - | ------ | -
|                                                                        |  | Three Months Ended |       
|(dollars in thousands)                                                  |  | September 30, 2005 |        |   | October 1, 2004 |  
|Reserve balance at beginning of period                                  |  | $                  | 9,145  |   |                 | $ | 9,020  |  
|Exit costs recorded as purchase accounting adjustments                  |  |                    |       |   |                 |   |       |  
|Restructuring costs charged to income                                   |  |                    | 4,298  |   |                 |   | 5,604  |  
|Liability adjustments                                                   |  |                    | 407    |   |                 |   | (140   | )
|Payments of accrued costs                                               |  |                    | (5,433 | ) |                 |   | (6,560 | )
|                                                                        |  |                    |        |   |                 |   |        |  
|Reserve balance at end of period                                        |  | $                  | 8,417  |   |                 | $ | 7,924  |  
|                                                                        |  |                    |        |   |                 |   |        |  
|Period costs classified as selling, general and administrative expenses |  | $                  | 9,824  |   |                 | $ | 6,985  |  
|Capital expenditures                                                    |  |                    | 7,531  |   |                 |   | 10,043 |  



| |  |  | During the three months ended September 30, 2005, we recorded $4.3 million of restructuring costs and $9.8 million of selling, general and administrative expenses related to
our restructuring and integration programs in our consolidated statement of income. These costs consisted primarily of involuntary termination and other costs incurred throughout North America and Europe as we continued to consolidate our operations
and IT ERP system platforms and complete the integration of the acquired DiverseyLever business.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Non-Operating Results:



|                       |  |                    |        |   |                 |   |        |        |  |   |            |   |  |       |  
|---------------------- |  | ------------------ | ------ | - | --------------- | - | ------ | ------ |  | - | ---------- | - |  | ----- | -
|                       |  | Three Months Ended |        |   | Change          |  
|(dollars in thousands) |  | September 30, 2005 |        |   | October 1, 2004 |   |        | Amount |  |   | Percentage |  
|Interest expense       |  | $                  | 39,318 |   |                 | $ | 39,175 |        |  | $ | 143        |   |  | 0.4   | %
|Interest income        |  |                    | (2,203 | ) |                 |   | (2,250 | )      |  |   | 47         |   |  | -2.1  | %
|                       |  |                    |        |   |                 |   |        |        |  |   |            |   |  |       |  
|Net interest expense   |  |                    | 37,115 |   |                 |   | 36,925 |        |  |   | 190        |   |  | 0.5   | %
|Other expense, net     |  |                    | 451    |   |                 |   | 1,544  |        |  |   | (1,093     | ) |  | -70.8 | %



| |  |  | Other expense, net, decreased compared to the prior year period, primarily due to lower net losses from foreign currency translation and transactions.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



Income Taxes:



|                                                                                                                 |  |                    |        |   |                 |   |       |        |  |            |        |  |        |  
|---------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------ | - | --------------- | - | ----- | ------ |  | ---------- | ------ |  | ------ | -
|                                                                                                                 |  | Three Months Ended |        |   | Change          |  
|(dollars in thousands)                                                                                           |  | September 30, 2005 |        |   | October 1, 2004 |   |       | Amount |  | Percentage |       
|Income from continuing operations, including minority interests, before income taxes and discontinued operations |  | $                  | 12,360 |   |                 | $ | 645   |        |  | $          | 11,715 |  | 1816.3 | %
|Provision for income taxes                                                                                       |  |                    | 10,147 |   |                 |   | 1,686 |        |  |            | 8,461  |  | 501.8  | %
|Effective income tax rate                                                                                        |  |                    | 82.1   | % |                 |   | 261.4 | %      |  |            |        |  |        |  



21



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##### Table of Contents

| |  |  | During the three months ended September 30, 3005, we reported an effective tax rate of 82.1%. This effective tax is primarily due to incremental income tax expense related to
repatriation of earnings from international operations and the inability to claim an income tax benefit for book goodwill considered disposed as part of divestitures occurring in the three months ended September 30, 2005.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | For the three months ended October 1, 2004, we reported an effective tax rate of 261.4%. This effective tax rate resulted from lower pre-tax income, higher taxes on foreign
income and an increase in the valuation allowance for foreign tax loss carryforwards.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Net Income:



Net income
increased by $3.4 million, or 288%, to $2.2 million for the three months ended September 30, 2005 compared to a net loss of $1.2 million for the three months ended October 1, 2004, primarily due to an increase in gross profit and savings
from synergy and cost reduction/containment programs, a settlement with Unilever related to indemnified legal costs ($2.5 million) and a change in estimate for environmental reserves ($2.9 million) based on an updated exposure studies have offset
general inflationary pressures, partially offset by a loss on divestiture of the European and Canadian commercial laundry businesses ($1.4 million), certain employee separation costs ($3.6 million), partial contract termination fees ($3.0 million)
and an increased provision for income taxes. Gross profit improvements were attributed to the strengthening of the euro and certain other foreign currencies against the U.S. dollar and price increases, which partially offset increased raw material
costs.



EBITDA:



EBITDA is a non-U.S. GAAP financial measure, and you should not consider
EBITDA as an alternative to U.S. GAAP financial measures such as (a) operating profit or net profit as a measure of our operating performance or (b) cash flows provided by operating, investing and financing activities (as determined in
accordance with U.S. GAAP) as a measure of our ability to meet cash needs.



We believe that, in addition to cash flows from operating activities, EBITDA is a useful financial measurement for assessing liquidity as it provides management, investors, lenders and financial analysts with an
additional basis to evaluate our ability to incur and service debt and to fund capital expenditures. In addition, various covenants under our senior secured credit facilities are based on EBITDA, as adjusted pursuant to the provisions of those
facilities.



In evaluating EBITDA, management considers, among
other things, the amount by which EBITDA exceeds interest costs for the period, how EBITDA compares to principal repayments on outstanding debt for the period and how EBITDA compares to capital expenditures for the period. Management believes many
investors, lenders and financial analysts evaluate EBITDA for similar purposes. To evaluate EBITDA, the components of EBITDA, such as net sales and operating expenses and the variability of such components over time, should also be considered.



Accordingly, we believe that the inclusion of EBITDA in this
quarterly report permits a more comprehensive analysis of our liquidity relative to other companies and our ability to service debt requirements. Because all companies do not calculate EBITDA identically, the presentation of EBITDA in this quarterly
report may not be comparable to similarly titled measures of other companies.



EBITDA should not be construed as a substitute for, and should be read together with, net cash flows provided by operating activities as determined in accordance with U.S. GAAP. The following table reconciles EBITDA
to net cash flows provided by operating activities, which is the U.S. GAAP measure most comparable to EBITDA, for each of the periods for which EBITDA is presented.



22



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##### Table of Contents

|                                                                                                             |  |                    |         |   |                |   |         |  
|------------------------------------------------------------------------------------------------------------ |  | ------------------ | ------- | - | -------------- | - | ------- | -
|                                                                                                             |  | Three Months Ended |        
|(dollars in thousands)                                                                                       |  | September 30,2005  |         |   | October 1,2004 |  
|Net cash flows provided by operating activities                                                              |  | $                  | 153,882 |   |                | $ | 67,252  |  
|Changes in operating assets and liabilities, net of effects from acquisitions and divestitures of businesses |  |                    | (93,863 | ) |                |   | (25,338 | )
|Changes in deferred income taxes                                                                             |  |                    | (1,755  | ) |                |   | 14,137  |  
|Gain from divestitures                                                                                       |  |                    | (1,189  | ) |                |   | (276    | )
|Loss on property disposals                                                                                   |  |                    | 817     |   |                |   | 550     |  
|Depreciation and amortization expense                                                                        |  |                    | (42,255 | ) |                |   | (46,954 | )
|Amortization of debt issuance costs                                                                          |  |                    | (1,341  | ) |                |   | (3,207  | )
|Interest accreted on notes payable                                                                           |  |                    | (29,964 | ) |                |   | (8,563  | )
|Interest accrued on long-term receivables-related parties                                                    |  |                    | 21,317  |   |                |   | 733     |  
|Unrealized (gains) losses                                                                                    |  |                    | (4,340  | ) |                |   | 1,169   |  
|Other                                                                                                        |  |                    | 904     |   |                |   | (683    | )
|                                                                                                             |  |                    |         |   |                |   |         |  
|Net income (loss)                                                                                            |  |                    | 2,213   |   |                |   | (1,180  | )
|Minority interests in net income (loss) of subsidiaries                                                      |  |                    | 39      |   |                |   | (7      | )
|Provision for income taxes                                                                                   |  |                    | 10,147  |   |                |   | 1,697   |  
|Interest expense, net                                                                                        |  |                    | 37,115  |   |                |   | 36,925  |  
|Depreciation and amortization expense                                                                        |  |                    | 42,255  |   |                |   | 46,954  |  
|                                                                                                             |  |                    |         |   |                |   |         |  
|EBITDA                                                                                                       |  | $                  | 91,769  |   |                | $ | 84,389  |  
|                                                                                                             |  |                    |         |   |                |   |         |  



EBITDA increased by
$7.4 million, or 8.7%, compared to the same period in the prior year, primarily due to an increase in gross profit and savings from synergy and cost reduction/containment programs. Gross profit improvements were attributed to the strengthening of
the euro and certain other foreign currencies against the U.S. dollar and price increases, which partially offset increased raw material costs.



Nine Months Ended September 30, 2005 Compared to Nine Months Ended October 1, 2004



Net Sales:



|                               |  |                    |           |                 |   |           |  |            |         |  |      |  
|------------------------------ |  | ------------------ | --------- | --------------- | - | --------- |  | ---------- | ------- |  | ---- | -
|                               |  | Nine Months Ended  |           | Change          |  
|(dollars in thousands)         |  | September 30, 2005 |           | October 1, 2004 |   | Amount    |  | Percentage |        
|Net product and service sales: |  |                    |           |                 |   |           |  |            |         |  |      |  
|Professional                   |  | $                  | 2,175,819 |                 | $ | 2,065,253 |  | $          | 110,566 |  | 5.4  | %
|Polymer (1)                    |  |                    | 257,709   |                 |   | 230,639   |  |            | 27,070  |  | 11.7 | %
|                               |  |                    |           |                 |   |           |  |            |         |  |      |  
|                               |  |                    | 2,433,528 |                 |   | 2,295,892 |  |            | 137,636 |  | 6.0  | %
|Sales agency fee income        |  |                    | 73,920    |                 |   | 70,951    |  |            | 2,969   |  | 4.2  | %
|                               |  |                    |           |                 |   |           |  |            |         |  |      |  
|                               |  | $                  | 2,507,448 |                 | $ | 2,366,843 |  | $          | 140,605 |  | 5.9  | %
|                               |  |                    |           |                 |   |           |  |            |         |  |      |  



|(1) | Excludes inter-segment sales to the professional segment.
|--- | ---------------------------------------------------------



| |  |  | The strengthening of the euro and certain other foreign currencies against the U.S. dollar contributed $66.2 million ($63.4 million for the professional segment and $2.8 million for
the polymer segment) to the increase in net product and service sales compared to the prior year period.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Excluding the impact of foreign currency exchange rates and acquisitions and divestitures, consolidated net sales increased 3.1% compared to the prior year period.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Excluding the foreign currency impact and sales agency fee income, professional segment net sales increased 2.2% compared to the prior year period. The net sales growth was
primarily due to price increases taking hold in all business sectors and global geographic areas, and expansion of developing markets in Asia Pacific, Latin America, Central and Eastern Europe, Africa and the Middle East.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



23



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##### Table of Contents

| |  |  | In North America, net sales showed an increase of 3.9% for the year-to-date compared to the prior year period, continuing a trend of recent growth. The increase in net sales was
primarily attributable to key customer wins and pricing actions, which have more than offset regional challenges of industry consolidation and changes in customer purchase practices.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In our Europe, Africa and Middle East region, net sales increased by 0.9% for the year-to-date compared to the prior year period, primarily due to a correction in accounting
treatment for certain equipment leases which increased Europes first quarter 2005 net sales by $15.3 million and growth in developing countries in Central and Eastern Europe, Africa and the Middle East. These favorable factors were partially
offset by softening economies in key countries and continuing consolidation in key market sectors, including distribution, building service contractors and food and beverage.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In Asia Pacific, net sales increased by 5.9% for the year-to-date compared to the prior year period, primarily due to growth in China and India.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In Latin America, net sales increased by 10.6% for the year-to-date compared to the prior year period, primarily due to improved economic conditions and growth in distributor
markets, the food and beverage business and the lodging sector.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In Japan, net sales are flat year-to-date despite significant economic pressures.
| | - |  | ---------------------------------------------------------------------------------



| |  |  | Excluding the foreign currency impact, polymer segment net sales increased by $24.3 million, or 10.4%, compared to the prior year period, primarily due to price increases in
response to the significant rise in raw material costs experienced over the past year.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Excluding a $2.9 million increase from the strengthening of the euro and certain other foreign currencies against the U.S. dollar, net sales under JDIs Master Sales Agency
agreement with Unilever were flat as, compared to the prior year. The adverse impact of certain brand disposals by Unilever in the European and Asia Pacific markets over the past two years was offset by a $4.6 million increase in termination fees in
certain European territories associated with JDIs Master Sales Agency Agreement.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Gross Profit:



|                                           |  |                    |           |   |                 |   |           |        |  |   |            |   |  |      |  
|------------------------------------------ |  | ------------------ | --------- | - | --------------- | - | --------- | ------ |  | - | ---------- | - |  | ---- | -
|                                           |  | Nine Months Ended  |           |   | Change          |  
|                                           |  | September 30, 2005 |           |   | October 1, 2004 |   |           | Amount |  |   | Percentage |  
|Professional                               |  | $                  | 971,814   |   |                 | $ | 965,040   |        |  | $ | 6,774      |   |  | 0.7  | %
|Polymer                                    |  |                    | 66,452    |   |                 |   | 70,234    |        |  |   | (3,782     | ) |  | -5.4 | %
|                                           |  |                    |           |   |                 |   |           |        |  |   |            |   |  |      |  
|                                           |  |                    | 1,038,266 |   |                 |   | 1,035,274 |        |  |   | 2,992      |   |  | 0.3  | %
|                                           |  |                    |           |   |                 |   |           |        |  |   |            |   |  |      |  
|Gross profit as a percentage of net sales: |  |                    |           |   |                 |   |           |        |  |   |            |   |  |      |  
|Professional                               |  |                    | 43.2      | % |                 |   | 45.2      | %      |  |   |            |   |  |      |  
|Polymer                                    |  |                    | 25.8      | % |                 |   | 30.5      | %      |  |   |            |   |  |      |  
|                                           |  |                    |           |   |                 |   |           |        |  |   |            |   |  |      |  
|                                           |  |                    | 41.4      | % |                 |   | 43.7      | %      |  |   |            |   |  |      |  
|                                           |  |                    |           |   |                 |   |           |        |  |   |            |   |  |      |  



| |  |  | The strengthening of the euro and certain other foreign currencies against the U.S. dollar increased gross profit by $33.5 million ($32.7 million for the professional segment and
$0.8 million for the polymer segment) compared to the prior year period.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The reductions in professional segment gross profit for the year-to-date compared to the prior year were primarily due the impact of increased crude oil and natural
gas costs which negatively affected our floorcare business where acrylic based polymers are common in product formulations. The segment was also adversely impacted by higher freight and transportation costs, primarily attributable to the rise in
crude oil prices and changes in U.S. transportation legislation that has affected driver hours and carrier availability. To a lesser extent, gross profit has been impacted by a change in product and services mix, reflecting a relative increase in
lower margin sales to our food and beverage sector, which is not expected to continue, and a strategic shift towards increased solutions selling, which has a different business model than most of our operations. These negative influences were
partially offset by the effect of a correction in accounting treatment in the first quarter of 2005 for certain equipment leased to customers in Europe,
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | which increased gross profit by $5.8 million compared to the prior year period, and partial termination fees associated with JDIs Master Sales Agency
Agreement with Unilever in certain European territories, which increased gross profit by $4.6 million.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We continue to be confronted with rising raw material costs and, in response, we continue to implement a mix of general and selective price increases to recover these costs, to the
extent possible, and pursue further cost reduction initiatives.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Operating Expenses:



|                                             |  |                    |         |   |                 |   |         |        |  |   |            |   |  |      |  
|-------------------------------------------- |  | ------------------ | ------- | - | --------------- | - | ------- | ------ |  | - | ---------- | - |  | ---- | -
|                                             |  | Nine Months Ended  |         |   | Change          |  
|(dollars in thousands)                       |  | September 30, 2005 |         |   | October 1, 2004 |   |         | Amount |  |   | Percentage |  
|Selling, general and administrative expenses |  | $                  | 850,944 |   |                 | $ | 824,119 |        |  | $ | 26,825     |   |  | 3.3  | %
|Research and development expenses            |  |                    | 53,018  |   |                 |   | 55,406  |        |  |   | (2,388     | ) |  | -4.3 | %
|Restructuring expenses                       |  |                    | 12,406  |   |                 |   | 13,154  |        |  |   | (748       | ) |  | -5.7 | %
|                                             |  |                    |         |   |                 |   |         |        |  |   |            |   |  |      |  
|                                             |  | $                  | 916,368 |   |                 | $ | 892,679 |        |  | $ | 23,689     |   |  | 2.7  | %
|                                             |  |                    |         |   |                 |   |         |        |  |   |            |   |  |      |  
|As a percentage of net sales:                |  |                    |         |   |                 |   |         |        |  |   |            |   |  |      |  
|Selling, general and administrative expenses |  |                    | 33.9    | % |                 |   | 34.8    | %      |  |   |            |   |  |      |  
|Research and development expenses            |  |                    | 2.1     | % |                 |   | 2.3     | %      |  |   |            |   |  |      |  
|Restructuring expenses                       |  |                    | 0.5     | % |                 |   | 0.6     | %      |  |   |            |   |  |      |  
|                                             |  |                    |         |   |                 |   |         |        |  |   |            |   |  |      |  
|                                             |  |                    | 36.5    | % |                 |   | 37.7    | %      |  |   |            |   |  |      |  
|                                             |  |                    |         |   |                 |   |         |        |  |   |            |   |  |      |  



| |  |  | The strengthening of the euro and certain other foreign currencies against the U.S. dollar increased operating expenses by $21.7 million ($20.7 million in selling, general and
administrative expenses, $0.7 million in research and development expenses and $0.3 million in restructuring expenses) compared to the prior year period.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Selling, general and administrative expenses as a percentage of net sales have improved 90 basis points compared to the same period in the prior year. Excluding the impact of
foreign currency, selling, general and administrative expenses increased $6.0 million compared to the prior year period, primarily due to general inflationary pressures, a loss on divestiture of the European and Canadian commercial laundry
businesses ($1.4 million), and certain employee separation costs ($3.6 million) and partial contract termination fees ($3.0 million) incurred in the third quarter of fiscal year 2005. These increases have been partially offset by the impact from
cost containment and reduction programs, a change in estimate for environmental reserves ($2.9 million) and risk insurance reserves ($2.1 million) based on updated exposure studies, and a settlement with Unilever related to indemnified legal costs
($2.5 million).
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Excluding the impact of foreign currency, restructuring expenses decreased $1.1 million compared to the prior year period, primarily due to the timing of employee severance and exit
cost payments and the wind-down of prior period reserves related to the DiverseyLever acquisition integration.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Restructuring and Integration:



A summary of all costs associated with the restructuring and integration programs for the nine months ended September 30, 2005, the nine months ended
October 1, 2004 and since the DiverseyLever acquisition, which occurred in May 2002, is outlined below. The reserve balance shown below reflects the aggregate reserves for all restructuring and integration projects.



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|                                                                        |  |                   |         |   |                                                      |   |         |   |  |   |          |  
|----------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------------------------------------------- | - | ------- | - |  | - | -------- | -
|                                                                        |  | Nine Months Ended |         |   | Total Project toDate May 4, 2002 -September 30, 2005 |  
|(dollars in thousands)                                                  |  | September 30,2005 |         |   | October 1,2004                                       |   |        
|Reserve balance at beginning of period                                  |  | $                 | 9,008   |   |                                                      | $ | 34,798  |   |  | $ |         |  
|Exit costs recorded as purchase accounting adjustments                  |  |                   |        |   |                                                      |   |        |   |  |   | 80,574   |  
|Restructuring costs charged to income                                   |  |                   | 12,406  |   |                                                      |   | 13,154  |   |  |   | 65,496   |  
|Liability adjustments                                                   |  |                   | 407     |   |                                                      |   | (4,180  | ) |  |   | (3,930   | )
|Payments of accrued costs                                               |  |                   | (13,404 | ) |                                                      |   | (35,848 | ) |  |   | (133,723 | )
|                                                                        |  |                   |         |   |                                                      |   |         |   |  |   |          |  
|Reserve balance at end of period                                        |  | $                 | 8,417   |   |                                                      | $ | 7,924   |   |  | $ | 8,417    |  
|                                                                        |  |                   |         |   |                                                      |   |         |   |  |   |          |  
|Period costs classified as cost of sales                                |  | $                 |        |   |                                                      | $ |        |   |  | $ | 4,878    |  
|Period costs classified as selling, general and administrative expenses |  |                   | 22,818  |   |                                                      |   | 16,661  |   |  |   | 122,818  |  
|Capital expenditures                                                    |  |                   | 20,043  |   |                                                      |   | 22,767  |   |  |   | 130,461  |  



| |  |  | During fiscal years 2002, 2003 and 2004, in connection with the May 2002 acquisition of the DiverseyLever business, we recorded liabilities for the involuntary termination of former
DiverseyLever employees and other exit costs associated with former DiverseyLever facilities. We also developed plans to restructure certain facilities that we owned prior to the acquisition of the DiverseyLever business, primarily for the purpose
of eliminating redundancies resulting from the acquisition.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | During the nine months ended September 30, 2005, we recorded $12.4 million of restructuring costs and $22.8 million of selling, general and administrative expenses related to
our restructuring and integration programs in our consolidated statement of income. These costs consisted primarily of involuntary termination and other costs incurred throughout North America and Europe as we continued to consolidate our operations
and IT ERP system platforms and complete the integration of the acquired DiverseyLever business.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Non-Operating Results:



|                       |  |                    |         |   |                 |   |         |        |  |   |            |   |  |       |  
|---------------------- |  | ------------------ | ------- | - | --------------- | - | ------- | ------ |  | - | ---------- | - |  | ----- | -
|                       |  | Nine Months Ended  |         |   | Change          |  
|(dollars in thousands) |  | September 30, 2005 |         |   | October 1, 2004 |   |         | Amount |  |   | Percentage |  
|Interest expense       |  | $                  | 132,463 |   |                 | $ | 119,227 |        |  | $ | 13,236     |   |  | 11.1  | %
|Interest income        |  |                    | (6,315  | ) |                 |   | (4,204  | )      |  |   | (2,111     | ) |  | 50.2  | %
|                       |  |                    |         |   |                 |   |         |        |  |   |            |   |  |       |  
|Net interest expense   |  |                    | 126,148 |   |                 |   | 115,023 |        |  |   | 11,125     |   |  | 9.7   | %
|Other expense, net     |  |                    | 625     |   |                 |   | 8,372   |        |  |   | (7,747     | ) |  | -92.5 | %



| |  |  | Net interest expense increased, compared to the prior year period, primarily due to one-time charges associated with repayment of the Euro portion of JDIs term loan B in
connection with an April 2005 amendment to the JDI senior secured credit facilities, including the write-off of accumulated losses associated with JDIs EURIBOR-based interest swap agreements ($8.7 million) and the write-off of unamortized debt
issuance costs ($3.6 million), partially offset by gains recognized on the ineffective EURIBOR-based interest swap agreements subsequent to the repayment of the JDI term B loan ($1.1 million), a reduction in the interest rate spread on the JDI term
B loan resulting from the February 2004 and April 2005 amendments to JDIs senior secured credit facilities and higher interest income from short-term investments.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other expense, net, decreased, compared to the prior year period, primarily due to lower net losses from foreign currency translation and transactions and a prior year gain on a
non-recoverable sales tax assessment.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Income Taxes:



|                                                                                                                        |  |                   |        |   |                |   |        |        |  |   |            |   |  |        |  
|----------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------ | - | -------------- | - | ------ | ------ |  | - | ---------- | - |  | ------ | -
|                                                                                                                        |  | Nine Months Ended |        |   | Change         |  
|(dollars in thousands)                                                                                                  |  | September 30,2005 |        |   | October 1,2004 |   |        | Amount |  |   | Percentage |  
|(Loss) Income from continuing operations, including minority interests, before income taxes and discontinued operations |  | $                 | (4,800 | ) |                | $ | 19,046 |        |  | $ | (23,846    | ) |  | -125.2 | %
|Provision for income taxes                                                                                              |  |                   | 11,902 |   |                |   | 10,131 |        |  |   | 1,771      |   |  | 17.5   | %
|Effective income tax rate                                                                                               |  |                   | -248.0 | % |                |   | 53.2   | %      |  |   |            |   |  |        |  



| |  |  | During the nine months ended September 30, 2005, we reported a negative effective income tax rate of 248.0% on losses of $4,800, the result of certain tax reporting entities
with low income tax benefit reporting losses during the first nine months of 2005 while other profitable tax reporting entities reported income tax expense generally at or near their statutory tax rate. We recognized incremental income tax expense
due to repatriation of earnings from international operations. An increased valuation allowance has been provided at September 30, 2005 against tax loss carryforwards of international operations which resulted in additional income tax expense.
A tax benefit could not be claimed for book goodwill considered disposed as part of divestitures occurring in the nine months ended September 30, 2005. These increases to income tax expense have been partially offset by a tax benefit from the
realization of previously un-benefited foreign tax credits.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | For the nine months ended October 1, 2004, foreign tax reporting entities that reported income recorded income tax expense at a rate higher than the U.S. statutory income tax
rate. Certain tax reporting entities that reported losses were not able to claim the full tax benefit for their losses; however, most loss reporting entities were able to claim income tax benefit at or near the U.S. statutory income tax rates.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Net Income:



Net income decreased by $23.7 million, or 215.1%, to a net loss of $12.7
million for the nine months ended September 30, 2005, compared to net income of $11.0 million for the nine months ended October 1, 2004, primarily due to an increase in interest expense resulting from ineffective interest rate swap
agreements ($7.6 million), the write-off of unamortized debt issuance costs ($3.6 million) associated with JDIs April 2005 credit facility amendment, a loss on divestiture of the European and Canadian commercial laundry businesses ($1.4
million), certain employee separation costs ($3.6 million) and partial contract termination fees ($3.0 million) incurred in the third quarter of fiscal year 2005 and an increase in the income tax provision , as well as raw material cost increases in
both our professional and polymer segments. Price increases introduced late in 2004 and the first nine months of 2005 have not been able to fully offset these rising raw material costs. These factors were partially offset by a $3.8 million increase
from the correction in the accounting treatment for equipment leased to customers, a $4.0 million gain on discontinued operations, partial termination fees associated with JDIs Master Sales Agency Agreement with Unilever in certain European
territories ($4.6 million), a change in estimate for environmental reserves ($2.9 million) and risk insurance reserves ($2.1 million) based on an updated exposure studies, a settlement with Unilever related to indemnified legal costs ($2.5 million),
the impact of cost reduction/containment programs and the net effect of the strengthening of the euro and certain other foreign currencies against the U.S. dollar.



EBITDA:



As discussed above, EBITDA should not be construed as a substitute for, and should be read together with, net cash flows provided by operating activities
as determined in accordance with U.S. GAAP. The following table reconciles EBITDA to net cash flows provided by operating activities, which is the U.S. GAAP measure most comparable to EBITDA, for each of the periods for which EBITDA is presented.



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|                                                                                                             |  |                    |          |   |                 |   |          |  
|------------------------------------------------------------------------------------------------------------ |  | ------------------ | -------- | - | --------------- | - | -------- | -
|                                                                                                             |  | Nine Months Ended  |         
|(dollars in thousands)                                                                                       |  | September 30, 2005 |          |   | October 1, 2004 |  
|Net cash flows provided by operating activities                                                              |  | $                  | 162,146  |   |                 | $ | 155,853  |  
|Changes in operating assets and liabilities, net of effects from acquisitions and divestitures of businesses |  |                    | 7,921    |   |                 |   | 9,850    |  
|Changes in deferred income taxes                                                                             |  |                    | 5,398    |   |                 |   | 17,250   |  
|Gain from divestitures                                                                                       |  |                    | 2,802    |   |                 |   | 2,757    |  
|Loss on property disposals                                                                                   |  |                    | (2,724   | ) |                 |   | (212     | )
|Depreciation and amortization expense                                                                        |  |                    | (137,613 | ) |                 |   | (139,591 | )
|Amortization of debt issuance costs                                                                          |  |                    | (17,839  | ) |                 |   | (9,851   | )
|Interest accreted on notes payable                                                                           |  |                    | (28,099  | ) |                 |   | (24,943  | )
|Interest accrued on long-term receivables-related parties                                                    |  |                    | 2,719    |   |                 |   | 2,556    |  
|Unrealized gains                                                                                             |  |                    | (4,621   | ) |                 |   | (1,787   | )
|Other                                                                                                        |  |                    | (2,792   | ) |                 |   | (848     | )
|                                                                                                             |  |                    |          |   |                 |   |          |  
|Net (loss) income                                                                                            |  |                    | (12,702  | ) |                 |   | 11,034   |  
|Minority interests in net income (loss) of subsidiaries                                                      |  |                    | (75      | ) |                 |   | 154      |  
|Provision for income taxes                                                                                   |  |                    | 11,902   |   |                 |   | 11,089   |  
|Interest expense, net                                                                                        |  |                    | 126,148  |   |                 |   | 115,023  |  
|Depreciation and amortization expense                                                                        |  |                    | 137,613  |   |                 |   | 139,591  |  
|                                                                                                             |  |                    |          |   |                 |   |          |  
|EBITDA                                                                                                       |  | $                  | 262,886  |   |                 | $ | 276,891  |  
|                                                                                                             |  |                    |          |   |                 |   |          |  



EBITDA decreased by
$14.0 million, or 5.1%, compared to the prior year period, primarily due to raw material cost increases in both our professional and polymer segments. Price increases introduced late in 2004 and the first nine months of 2005 have not been able to
fully offset these rising raw material costs. These factors were partially offset by a $5.8 million increase from the correction in the accounting treatment for equipment leased to customers, a $4.0 million gain on discontinued operations, partial
termination fees associated with our Master Sales Agency Agreement with Unilever in certain European territories ($4.6 million), a change in estimate for environmental reserves ($2.9 million) and risk insurance reserves ($2.1 million) based on an
updated exposure studies, a settlement with Unilever related to indemnified legal costs ($2.5 million), the impact of cost reduction/containment programs and the net effect of the strengthening of the euro and certain other foreign currencies
against the U.S. dollar.



Liquidity and Capital Resources



|                                          |  |                    |           |   |                   |   |           |        |  |   |            |   |  |       |  
|----------------------------------------- |  | ------------------ | --------- | - | ----------------- | - | --------- | ------ |  | - | ---------- | - |  | ----- | -
|                                          |  | Nine Months Ended  |           |   | Change            |  
|(dollars in thousands)                    |  | September 30, 2005 |           |   | October 1, 2004   |   |           | Amount |  |   | Percentage |  
|Net cash provided by operating activities |  | $                  | 162,146   |   |                   | $ | 155,853   |        |  | $ | 6,293      |   |  | 4.0   | %
|Net cash used in investing activities     |  |                    | (42,709   | ) |                   |   | (35,659   | )      |  |   | (7,050     | ) |  | 19.8  | %
|Net cash used in financing activities     |  |                    | (118,522  | ) |                   |   | (83,228   | )      |  |   | (35,294    | ) |  | 42.4  | %
|Capital expenditures                      |  |                    | 64,566    |   |                   |   | 85,092    |        |  |   | (20,526    | ) |  | -24.1 | %
|                                          |  |                    |          
|                                          |  |                    |           |   |                   |   |           | Change | 
|                                          |  | September 30, 2005 |           |   | December 31, 2004 |   |           | Amount |  |   | Percentage |  
|Cash and cash equivalents                 |  | $                  | 23,894    |   |                   | $ | 28,413    |        |  | $ | (4,519     | ) |  | -15.9 | %
|Working capital (1)                       |  |                    | 426,394   |   |                   |   | 407,701   |        |  |   | 18,693     |   |  | 4.6   | %
|Total debt                                |  |                    | 1,484,348 |   |                   |   | 1,626,593 |        |  |   | (142,245   | ) |  | -8.7  | %



|(1) | Working capital is defined as net accounts receivable, plus inventories less accounts payable.
|--- | ----------------------------------------------------------------------------------------------



| |  |  | Cash and cash equivalents were favorably impacted during the third quarter of fiscal year 2005 by payments from Unilever to settle and/or partially settle pension
adjustments related to the May 2002 acquisition of DiverseyLever ($28.9 million), to provide compensation for the termination, effective January 2006, of certain consumer packs under the JDI Master Sales Agency agreement ($6.5 million) and for
indemnification of prior period legal expenses and current legal claims as provided for under the DiverseyLever purchase agreement ($2.5 million). In addition, we realized cash proceeds from the
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | divestiture of the European and Canadian commercial laundry businesses ($18.6 million). These cash inflows were used to pay down term borrowings under the
JDI senior secured credit facilities.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The increase in net cash provided by operating activities during the nine months ended September 30, 2005 compared to the prior year period was primarily due to aforementioned
cash inflows from the divestiture of the European and Canadian commercial laundry businesses and from Unilever, partially offset by a $23.7 million decrease in net income and a $4.0 million gain on disposal of discontinued operations recognized in
the first quarter of fiscal year 2005.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The increase in net cash used in investing activities during the nine months ended September 30, 2005 compared to the prior year period was primarily due to a $25.1 million
decrease in proceeds received from divestitures, partially offset by a $20.5 million reduction in expenditures for property, plant and equipment and computer software. Other than our investment in dosing and feeder equipment with new and existing
customer accounts, the characteristics of our business do not generally require us to make significant ongoing capital expenditures. We may make significant cash expenditures in the next few years in an effort to capitalize on cost savings
opportunities.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The increase in net cash used in financing activities during the nine months ended September 30, 2005 compared the prior year period was primarily due to higher repayments of
debt, resulting from an increase in cash provided by operating activities, partially offset by a reduction in dividends paid.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The increase in net working capital at September 30, 2005 compared to December 31, 2004 was due to a $23.4 million decrease in accounts payable, resulting from a four-day
reduction in average days in trade accounts payable, and a $11.4 million increase in inventories, resulting from increased raw material costs, partially offset by a $16.1 million reduction in accounts receivable resulting from a three day decrease
in days sales outstanding as collection activities improved.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Debt and Contractual Obligations. As a result of the DiverseyLever acquisition, we and JDI have a significant amount of indebtedness. On May 3, 2002, in connection with the acquisition, we issued senior
discount notes with a principal amount at maturity of $406 million to Unilever. Under the indenture for the senior discount notes, the principal amount of the senior discount notes accretes at a rate of 10.67% per annum through May 15,
2007. After May 15, 2007, interest will accrue on the accreted value of the senior discount notes at this rate, but will be payable in cash semiannually in arrears to the extent that JDI can distribute to Holdings the cash necessary to make the
payments in accordance with the restrictions contained in the indentures for the JDI senior subordinated notes and the JDI senior secured credit facilities. The failure by Holdings to make all or any portion of a semiannual interest payment on the
senior discount notes will not constitute an event of default under the indenture for the senior discount notes if that failure results from JDIs inability to distribute the cash necessary to make that payment in accordance with these
restrictions. Instead, interest will continue to accrue on any unpaid interest at a rate of 10.67% per annum, and the unpaid interest will be payable on the next interest payment date on which JDI is able to distribute to Holdings the cash
necessary to make the payment in accordance with the provisions contained in the indentures for the JDI senior subordinated notes and the JDI senior secured credit facilities. Holdings has no income from operations and no meaningful assets. Holdings
receives all of its income from JDI and substantially all of its assets consist of its investment in JDI. The senior discount notes mature on May 15, 2013.



In addition, on May 3, 2002, in connection with the acquisition, JDI issued its senior subordinated notes and entered into a $1.2 billion senior
secured credit facility. JDI used the proceeds of the sale of the JDI senior subordinated notes and initial borrowings under the JDI senior secured credit facilities, together with other available funds, to finance the cash portion of the purchase
price for the DiverseyLever business and the related fees and expenses and to refinance then-existing indebtedness.



The JDI senior secured credit facilities were amended in August 2003, February 2004 and April 2005. The amendments, among other things, reduced the
interest rate spread on specified tranches of debt under the credit facilities, thereby reducing borrowing costs over the remaining life of the credit facilities. In addition, the amendments increased specified credit limits and changed various
financial covenants and administrative requirements to provide us with greater operating flexibility. In addition, the April 2005 amendment allowed us to borrow additional funds under the U.S. dollar portion of the term loan B and to repay the
entire euro portion.



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In connection with our restructuring program, JDI has requested the consent of its lenders to amend its
senior secured credit facilities to provide financial flexibility and liquidity to execute our strategy. The proposed amendment may include changes to certain covenants, pricing, terms and conditions.



As of September 30, 2005, excluding indebtedness held by JDI, Holdings
only indebtedness consisted of $300 million in senior discount notes. As of September 30, 2005, Holdings subsidiaries had total indebtedness of about $1.2 billion, consisting of $573 million of JDI senior subordinated notes, $587 million
of borrowings under the JDI senior secured credit facilities, $1.6 million of other long-term borrowings and $21.7 million in short-term credit lines. In addition, we had $198 million in operating lease commitments, $3.1 million in capital lease
commitments and $7.3 million committed under letters of credit that expire in 2005 and 2006.



JDI and some its subsidiaries have the capacity to borrow additional funds under the JDI senior secured credit facilities, subject to compliance with the financial covenants set forth in the facilities. As of
September 30, 2005, JDI had $1.9 million in borrowings under the revolving portion of the JDI senior secured credit facilities and had the ability to borrow an additional $311 million under those revolving facilities. Of this amount, we believe
JDI would have been able to borrow $98.3 million and still be in compliance with the financial covenants set forth in the JDI senior secured credit facilities and the indentures for the JDI senior subordinated notes.



We believe that the cash flows from operations, together with available cash,
borrowings that we expect to be available under the proposed amendment to the JDI senior secured credit facilities and the proceeds from JDIs receivables securitization facility will generate sufficient cash flow to meet our liquidity needs
for the foreseeable future, including the Restructuring Program. There can be no assurance that JDI will be able to amend the credit facilities on the terms described above, if at all. If JDI is unable to amend the credit facilities, we would not be
able to execute the Restructuring Program as currently contemplated and JDI may not be able to comply with the financial covenants in its existing credit facility, either of which would have a material adverse effect on our business, financial
condition or results of operations.



Off-Balance Sheet
Arrangements. JDI and certain of its subsidiaries entered into an agreement (the Receivables Facility) in March 2001 whereby they sell, on a continuous basis, certain trade receivables to JWPR Corporation (JWPRC),
JDIs wholly owned, consolidated, special purpose, bankruptcy-remote subsidiary. JWPRC was formed for the sole purpose of buying and selling receivables generated by JDI and certain of its subsidiaries party to the Receivables Facility. JWPRC,
in turn, sells an undivided interest in the accounts receivable to a nonconsolidated financial institution (the Conduit) for an amount equal to the value of all eligible receivables (as defined under the receivables sale agreement
between JWPRC and the Conduit) less the applicable reserve. The accounts receivable securitization arrangement is accounted for under the provisions of SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of LiabilitiesA replacement of FASB Statement No. 125.As of September 30, 2005 and December 31, 2004, the JDIs total potential for securitization of trade receivables was $150,000.



As of September 30, 2005 and December 31, 2004, the Conduit held
$140 million and $130 million, respectively, of accounts receivable that are not included in the accounts receivable balance reflected in our consolidated balance sheets.



As of September 30, 2005 and December 31, 2004, JDI had a retained interest of $130 million and $135 million,
respectively, in the receivables of JWPRC. The retained interest is included in the accounts receivable balance and is reflected in the consolidated balance sheets at estimated fair value.



For the nine months ended September 30, 2005, JWPRCs cost of
borrowing under the Receivables Facility was at a weighted average rate of 4.15% per annum, which is significantly lower than our incremental borrowing rate.



Under the terms of the JDI senior secured credit facilities, JDI must use any net proceeds from the Receivables Facility
first to prepay loans outstanding under the JDI senior secured credit facilities. In addition, the net amount of trade receivables at any time outstanding under this and any other securitization facility that JDI may enter into may not exceed $200
million in the aggregate.



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Financial Covenants under Our Senior Secured Credit Facilities



Under the amended terms of the JDI senior secured credit facilities, we are
subject to certain financial covenants. The most restrictive covenants under the JDI senior secured credit facilities require JDI to meet the following targets and ratios.



Maximum Leverage Ratio. JDI is required to maintain a leverage ratio for each financial covenant period of no more
than the maximum ratio specified in the senior secured credit facilities for that financial covenant period. The maximum leverage ratio is the ratio of (1) JDIs consolidated indebtedness (excluding up to $55 million of indebtedness
incurred under the Receivables Facility and indebtedness relating to specified interest rate hedge agreements) as of the last day of a financial covenant period using a weighted-average exchange rate for the relevant fiscal six-month period to
(2) JDIs consolidated EBITDA, as defined in the JDI senior secured credit facilities, for that same financial covenant period.



The JDI senior secured credit facilities require that JDI maintain a leverage ratio of no more than the ratio set forth below for each of the financial
covenant periods ending nearest the corresponding date set forth below:



|                                  |  |                      
|--------------------------------- |  | ---------------------
|                                  |  | MaximumLeverage Ratio
|September 30, 2005                |  | 3.50 to 1            
|December 31, 2005                 |  | 3.25 to 1            
|March 31, 2006                    |  | 3.25 to 1            
|June 30, 2006                     |  | 3.25 to 1            
|September 30, 2006                |  | 3.00 to 1            
|December 31, 2006                 |  | 3.00 to 1            
|March 31, 2007                    |  | 3.25 to 1            
|June 30, 2007                     |  | 3.25 to 1            
|September 30, 2007                |  | 3.00 to 1            
|December 31, 2007                 |  | 3.00 to 1            
|March 31, 2008                    |  | 3.25 to 1            
|June 30, 2008                     |  | 3.25 to 1            
|September 30, 2008                |  | 3.00 to 1            
|December 31, 2008                 |  | 3.00 to 1            
|March 31, 2009                    |  | 3.25 to 1            
|June 30, 2009                     |  | 3.25 to 1            
|September 30, 2009 and thereafter |  | 3.00 to 1            



Minimum Interest
Coverage Ratio. JDI is required to maintain an interest coverage ratio for each financial covenant period of no less than the minimum ratio specified in the JDI senior secured credit facilities for that financial covenant period. The minimum
interest coverage ratio is the ratio of (1) JDIs consolidated EBITDA, as defined in the JDI senior secured credit facilities, for a financial covenant period to (2) JDIs cash interest expense for the same financial covenant
period.



The JDI senior secured credit facilities require that
JDI maintain an interest coverage ratio of no less than 3.50 to 1 for all fiscal periods ended on or after September 30, 2005.



Compliance with Maximum Leverage Ratio and Minimum Interest Coverage Ratio. For JDIs financial covenant period ended on September 30,
2005, JDI was in compliance with the maximum leverage ratio and minimum interest coverage ratio covenants contained in the JDI senior secured credit facilities.



Capital Expenditures. The JDI senior secured credit facilities prohibit JDI from making capital expenditures during any calendar year in an
amount exceeding $150,000. As of September 30, 2005, JDI was in compliance with the limitation on capital expenditures for fiscal year 2005.



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Restructuring Charges. The JDI senior secured credit facilities limit the amount of spending on
restructuring and integration-related activities in fiscal years 2004 and 2005 to $145 million in the aggregate. As of September 30, 2005, JDI was in compliance with the limitation on spending on restructuring and integration-related activities
for fiscal years 2004 and 2005.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
|------- | ---------------------------------------------------------



Interest Rate Risk



As
of September 30, 2005, JDI had $587 million of debt outstanding under the JDI senior secured credit facilities. After giving effect to the interest rate swap transactions that JDI has entered into with respect to some of the borrowings under
its credit facilities, $368 million of the debt outstanding remained subject to variable rates. JDI also has entered into interest rate swap agreements with a notional value of 146 million that were related to the euro portion of the term loan
B that was fully repaid in April 2005. As a result of the debt repayment, these interest rate swaps have been deemed ineffective and, therefore, must be marked-to-market at the end of each accounting period through the income statement. Because of
certain intercompany funding arrangements, we believe that these swaps provide an economic hedge to the incremental debt use to finance the repayment. In addition, as of September 30, 2005, JDI had $21.7 million of debt outstanding under
foreign lines of credit, all of which were subject to variable rates. Accordingly, our earnings and cash flows are affected by changes in interest rates. At the above level of variable rate borrowings, we do not anticipate a significant impact on
earnings in the event of a reasonable change in interest rates. In the event of an adverse change in interest rates, management would likely take actions that would mitigate our exposure to interest rate risk; however, due to the uncertainty of the
actions and their possible effects, this analysis assumes no such action. Further, this analysis does not consider the effects of the change in the level of the overall economic activity that could exist in such an environment.



Foreign Currency Risk



Through JDI and its subsidiaries, we conduct our business in various regions of the world and export and import products to
and from many countries. Our operations may, therefore, be subject to volatility because of currency fluctuations, inflation changes and changes in political and economic conditions in these countries. Sales and expenses are frequently denominated
in local currencies, and results of operations may be affected adversely as currency fluctuations affect product prices and operating costs. We engage in hedging operations, including forward foreign exchange contracts, to reduce the exposure of our
cash flows to fluctuations in foreign currency rates. All hedging instruments are designated and effective as hedges, in accordance with U.S. GAAP. Other instruments that do not qualify for hedge accounting are marked to market with changes
recognized in current earnings. We do not engage in hedging for speculative investment reasons. There can be no assurance that our hedging operations will eliminate or substantially reduce risks associated with fluctuating currencies.



Based on our overall foreign exchange exposure, we estimate that a 10% change
in the exchange rates would not materially affect our financial position and liquidity. The effect on our results of operations would be substantially offset by the impact of the hedged items.



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|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------



Evaluation of JohnsonDiversey Holdings Disclosure Controls and Internal Controls. As of the end of the period covered by this quarterly
report, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (Disclosure Controls). The controls evaluation was done under the supervision and with the participation of
management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO).



CEO & CFO Certifications. Attached as exhibits 31.1 and 31.2 to this quarterly report are certifications of the CEO and the CFO required
in accordance with Rule 13a-14 of the Securities Exchange Act of 1934, as amended (the Exchange Act). This portion of our quarterly report includes the information concerning the controls evaluation referred to in the certifications and
should be read in conjunction with the certifications for a more complete understanding of the topics presented.



Disclosure Controls. Disclosure Controls are procedures that are designed with the objective of ensuring that information required to be disclosed
in our reports filed under the Exchange Act, such as this quarterly report, is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms. Disclosure Controls are also designed with the objective
of ensuring that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Our Disclosure Controls include those components of our internal
control over financial reporting that are designed to provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with U.S. GAAP. To the extent that components of our
internal control over financial reporting are included in our Disclosure Controls, they are included in the scope of our quarterly evaluation of Disclosure Controls.



Limitations on the Effectiveness of Controls. Our Disclosure Controls were designed to provide reasonable assurance
that the controls and procedures would meet their objectives. Our management, including the CEO and CFO, does not expect that our Disclosure Controls will prevent all error and all fraud. A control system, no matter how well designed and operated,
can provide only reasonable assurance of achieving the designed control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the
control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future
conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.



Scope of the Controls Evaluation. The evaluation of our Disclosure Controls included a review of the controls objectives and design, our
implementation of the controls and the effect of the controls on the information generated for use in this quarterly report. In the course of the controls evaluation, we sought to identify data errors, control problems or acts of fraud and to
confirm that appropriate corrective action, including process improvements, were undertaken. This evaluation is done on a quarterly basis so that the conclusions of management, including the CEO and the CFO, concerning the effectiveness of the
controls can be reported in our quarterly reports on Form 10-Q and our annual report on Form 10-K. Many of the components of our Disclosure Controls are also evaluated on an ongoing basis by our internal audit department and by other personnel in
our finance organization, as well as our independent registered public accounting firm in connection with their audit and review activities. The overall goals of these various evaluation activities are to monitor our Disclosure Controls and to make
modifications as necessary; our intent in this regard is that the Disclosure Controls will be maintained as dynamic systems that change (including with improvements and corrections) as conditions warrant.



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Among other matters, we sought in our evaluation to determine whether there were any significant
deficiencies or material weaknesses in our internal control over financial reporting, or whether we had identified any acts of fraud involving personnel who have a significant role in our internal control over financial reporting.
This information was important both for our controls evaluation and for Rule 13a-14 of the Exchange Act, which requires that the CEO and CFO disclose that information to our Audit Committee and to our independent registered public accounting firm,
and report on that information and related matters in this section of the quarterly report. In the professional accounting literature, significant deficiencies are referred to as reportable conditions, which are control
issues that could have a significant adverse effect on our ability to record, process, summarize and report financial data in the consolidated financial statements. A material weakness is defined in professional accounting literature as
a particularly serious reportable condition whereby the internal control does not reduce to a relatively low level the risk that misstatements caused by error or fraud may occur in amounts that would be material in relation to the financial
statements and not be detected within a timely period by employees in the normal course of performing their assigned functions. We also sought to deal with other control matters in the controls evaluation, and in each case, if an issue was
identified, we considered what revision, improvement and/or correction to make in accordance with our on-going procedures.



Conclusions. Based upon the controls evaluation, our CEO and CFO have concluded that, as of the end of the period covered by this quarterly report,
our Disclosure Controls are effective to ensure that material information relating to JohnsonDiversey Holdings, Inc. and its consolidated subsidiaries is made known to management, including the CEO and CFO, particularly during the period when our
periodic reports are being prepared, and that our internal controls are effective in providing reasonable assurance that our financial statements are fairly presented in conformity with U.S. GAAP. In addition, no change in our internal control over
financial reporting has occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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PART II. OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------



We and JDI are party to various legal proceedings in the ordinary course of our business which may, from time to time, include product liability,
intellectual property, contract, environmental and tax claims as well as government or regulatory agency inquiries or investigations. We believe that, taking into account our insurance and reserves and the valid defenses with respect to legal
matters currently pending against us and JDI, the ultimate resolution of these proceedings will not, individually or in the aggregate, have a material adverse effect on our business, financial condition, results of operations or cash flows.



|ITEM 5. | OTHER INFORMATION
|------- | -----------------



In mid to late 2004, our industry and others began to be materially impacted by rapid increases in crude oil and natural gas costs. This trend has
continued into 2005. In response to these structural changes in the raw materials market that have led to significant increases in our input costs, on November 7, 2005, the Companys Board of Directors concluded that an operational
restructuring of the Company is required and approved a restructuring program (the Restructuring Program).



The Restructuring Program, which is expected to take two to three years, includes a redesign of our organization structure, the closure of a number of
manufacturing and other facilities and a workforce reduction of approximately 10%, not including planned divestitures. We are also considering the potential divestiture of or exit from certain non-core or underperforming businesses. The businesses
being considered for divestiture, in the aggregate and if fully realized, have accounted for in excess of $500 million in net sales in the most recent twelve months, and include our Johnson Polymer operations. At the appropriate time, and as we
progress through our Restructuring Program, we expect to implement additional growth initiatives focusing on our core businesses.



The implementation of the Restructuring Program is expected to result in cumulative, pre-tax restructuring and other non-recurring period cash charges
totaling between $345 and $370 million, including approximately $20 to $30 million in the fourth quarter of fiscal year 2005 and $150 to $175 million in fiscal year 2006. Over the duration of the Restructuring Program, we expect to incur
approximately $195 to $210 million (pre-tax) in employee-related costs, including severance, pension and other termination benefits and approximately $150 to $160 million (pre-tax) in other associated costs, including facility closures, contract
termination fees and costs related to the execution of the Restructuring Program. In addition, we expect to incur approximately $60 to $75 million (pre-tax) in non-cash asset write-downs and require capital expenditures of approximately $50 to $65
million, primarily for certain new manufacturing facilities supporting our supply chain optimization and expansion in developing markets, and investment in continued ERP roll-out, business intelligence and customer-facing systems.



Annual savings associated with this Restructuring Program are expected to be
approximately $150 to $175 million by the end of fiscal year 2008. There can be no assurance, however, that we will achieve anticipated cost savings.



We expect to incur additional costs as part of our planned divestitures, which are not included in the above amounts. It is not our intent to sell any
business at a price below its fair market value. We are also examining our options in connection with the exit of certain businesses or operations that may also require us to incur other cash and non-cash charges.



In connection with our Restructuring Program, JDI has requested the consent
of its lenders to amend its senior secured credit facilities to provide financial flexibility and liquidity to execute our strategy. The proposed amendment may include changes to certain covenants, pricing, terms and conditions.



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|ITEM 6. | EXHIBITS
|------- | --------



|     |  |                                                                                                                        
|---- |  | -----------------------------------------------------------------------------------------------------------------------
|31.1 |  | Principal Executive Officers Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                
|     | 
|31.2 |  | Principal Financial Officers Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                
|     | 
|32.1 |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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SIGNATURES



Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                       |  |  |  |                                                              
|---------------------- |  |  |  | -------------------------------------------------------------
|                       |  |  |  | JOHNSONDIVERSEY HOLDINGS, INC                                
|                       |  | 
|Date: November 8, 2005 |  |  |  | /S/    JOSEPH F.
SMORADA                                     
|                       |  |  |  | Joseph F. Smorada, Vice President and Chief Financial Officer



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JOHNSONDIVERSEY HOLDINGS, INC.



EXHIBIT INDEX



|              |  |                                                                                                                        
|------------- |  | -----------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                                 
|31.1          |  | Principal Executive Officers Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                
|              | 
|31.2          |  | Principal Financial Officers Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                
|              | 
|32.1          |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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