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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 OCTOBER 1, 2004



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



There
is no public trading market for the registrants common stock. As of November 5, 2004, 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 October 1, 2004 and January 2, 2004                                         |  | 1   
|                               |  |                                                                                                              
|                               |  | Consolidated Statements of Income for the three and nine months ended October 1, 2004 and October 3, 2003     |  | 2   
|                               |  |                                                                                                              
|                               |  | Consolidated Statements of Cash Flows for the three and nine months ended October 1, 2004 and October 3, 2003 |  | 3   
|                               |  |                                                                                                              
|                               |  | Notes to Consolidated Financial Statements  October 1, 2004                                                  |  | 4   
|                               |  |                                                                                                              
|Item 2                         |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                         |  | 14  
|                               |  |                                                                                                              
|Item 3                         |  | Quantitative and Qualitative Disclosure about Market Risk                                                     |  | 30  
|                               |  |                                                                                                              
|Item 4                         |  | Controls and Procedures                                                                                       |  | 31  
|                               | 
|PART II  OTHER INFORMATION    |  |                                                                                                              
|                               |  |                                                                                                              
|Item 1                         |  | Legal Proceedings                                                                                             |  | 34  
|                               |  |                                                                                                              
|Item 6                         |  | Exhibits and Reports on Form 8K                                                                              |  | 34  
|                               | 
|Signatures                     |  | 35                                                                                                           
|                               | 
|Exhibit Index                  |  | 36                                                                                                           





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Unless otherwise indicated, references to Holdings, 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 successfully complete the integration of the DiverseyLever business, including the achievement of cost and tax savings;
| | - | --------------------------------------------------------------------------------------------------------------------------------------



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



| |  | 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, particularly those sectors adversely affected by the current economic downturn, 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; and
| | - | -----------------------------------------------------------------------------------------------------------



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



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)



|                                                                                                                                     |  |                 |           |   |                 |   |           |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | --------------- | --------- | - | --------------- | - | --------- | -
|                                                                                                                                     |  | October 1, 2004 |           |   | January 2, 2004 |  
|                                                                                                                                     |  | (unaudited)     |           |   |                 |  
|ASSETS                                                                                                                               |  |                 |           |   |                 |   |           |  
|Current assets:                                                                                                                      |  |                 |           |   |                 |   |           |  
|Cash and cash equivalents                                                                                                            |  | $               | 40,272    |   |                 | $ | 24,543    |  
|Accounts receivable, less allowance of $29,458 and $28,089, respectively                                                             |  |                 | 477,783   |   |                 |   | 618,991   |  
|Accounts receivable  related parties                                                                                                |  |                 | 28,155    |   |                 |   | 27,527    |  
|Inventories                                                                                                                          |  |                 | 277,425   |   |                 |   | 263,397   |  
|Deferred income taxes                                                                                                                |  |                 | 22,059    |   |                 |   | 20,165    |  
|Other current assets                                                                                                                 |  |                 | 108,649   |   |                 |   | 97,928    |  
|                                                                                                                                     |  |                 |           |   |                 |   |           |  
|Total current assets                                                                                                                 |  |                 | 954,343   |   |                 |   | 1,052,551 |  
|Property, plant and equipment, net                                                                                                   |  |                 | 553,967   |   |                 |   | 595,483   |  
|Capitalized software, net                                                                                                            |  |                 | 103,624   |   |                 |   | 107,947   |  
|Goodwill, net                                                                                                                        |  |                 | 1,179,660 |   |                 |   | 1,237,671 |  
|Other intangibles, net                                                                                                               |  |                 | 391,250   |   |                 |   | 418,622   |  
|Deferred income taxes                                                                                                                |  |                 | 109,622   |   |                 |   | 97,189    |  
|Long-term receivables  related parties                                                                                              |  |                 | 89,508    |   |                 |   | 87,663    |  
|Other assets                                                                                                                         |  |                 | 72,951    |   |                 |   | 85,780    |  
|                                                                                                                                     |  |                 |           |   |                 |   |           |  
|Total assets                                                                                                                         |  | $               | 3,454,925 |   |                 | $ | 3,682,906 |  
|                                                                                                                                     |  |                 |           |   |                 |   |           |  
|LIABILITIES, CLASS B COMMON STOCK AND STOCKHOLDERS EQUITY                                                                           |  |                 |           |   |                 |   |           |  
|Current liabilities:                                                                                                                 |  |                 |           |   |                 |   |           |  
|Short-term borrowings                                                                                                                |  | $               | 73,727    |   |                 | $ | 124,228   |  
|Current portion of long-term debt                                                                                                    |  |                 | 7,663     |   |                 |   | 27,812    |  
|Accounts payable                                                                                                                     |  |                 | 308,037   |   |                 |   | 298,202   |  
|Accounts payable  related parties                                                                                                   |  |                 | 70,589    |   |                 |   | 62,346    |  
|Accrued expenses                                                                                                                     |  |                 | 425,915   |   |                 |   | 440,144   |  
|                                                                                                                                     |  |                 |           |   |                 |   |           |  
|Total current liabilities                                                                                                            |  |                 | 885,931   |   |                 |   | 952,732   |  
|Pension and other post-retirement benefits                                                                                           |  |                 | 235,185   |   |                 |   | 253,787   |  
|Long-term borrowings                                                                                                                 |  |                 | 1,488,794 |   |                 |   | 1,586,295 |  
|Long-term payables  related parties                                                                                                 |  |                 | 28,101    |   |                 |   | 28,309    |  
|Other liabilities                                                                                                                    |  |                 | 79,919    |   |                 |   | 101,352   |  
|                                                                                                                                     |  |                 |           |   |                 |   |           |  
|Total liabilities                                                                                                                    |  |                 | 2,717,930 |   |                 |   | 2,922,475 |  
|Commitments and contingencies (Note 17)                                                                                              |  |                 |          |   |                 |   |          |  
|Class B common stock subject to put and call options  $0.01 par value; 3,000 shares authorized; 1,960 shares issued and
outstanding |  |                 | 467,000   |   |                 |   | 467,000   |  
|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                                                                                                       |  |                 | 68,611    |   |                 |   | 68,081    |  
|Retained earnings                                                                                                                    |  |                 | 85,124    |   |                 |   | 81,636    |  
|Accumulated other comprehensive income                                                                                               |  |                 | 117,529   |   |                 |   | 145,401   |  
|Notes receivable from officers                                                                                                       |  |                 | (1,269    | ) |                 |   | (1,687    | )
|                                                                                                                                     |  |                 |           |   |                 |   |           |  
|Total stockholders equity                                                                                                           |  |                 | 269,995   |   |                 |   | 293,431   |  
|                                                                                                                                     |  |                 |           |   |                 |   |           |  
|Total liabilities, class B common stock and stockholders equity                                                                     |  | $               | 3,454,925 |   |                 | $ | 3,682,906 |  
|                                                                                                                                     |  |                 |           |   |                 |   |           |  



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



1



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JOHNSONDIVERSEY HOLDINGS, INC.



CONSOLIDATED STATEMENTS OF INCOME



|                                                                                                         |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|-------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------- | --------------- |  | - | --------------- | - |  | - | --------- | -
|                                                                                                         |  | Three Months Ended |         |   | Nine Months Ended |  
|(dollars in thousands)                                                                                   |  | October 1, 2004    |         |   | October 3, 2003   |   |         | October 1, 2004 |  |   | October 3, 2003 |  
|                                                                                                         |  | (unaudited)        |         |   | (unaudited)       |  
|Net sales:                                                                                               |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|Net product and service sales                                                                            |  | $                  | 761,430 |   |                   | $ | 696,976 |                 |  | $ | 2,295,892       |   |  | $ | 2,088,951 |  
|Sales agency fee income                                                                                  |  |                    | 22,508  |   |                   |   | 21,835  |                 |  |   | 68,079          |   |  |   | 65,996    |  
|                                                                                                         |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|                                                                                                         |  |                    | 783,938 |   |                   |   | 718,811 |                 |  |   | 2,363,971       |   |  |   | 2,154,947 |  
|Cost of sales                                                                                            |  |                    | 449,645 |   |                   |   | 395,932 |                 |  |   | 1,331,569       |   |  |   | 1,183,838 |  
|                                                                                                         |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|Gross profit                                                                                             |  |                    | 334,293 |   |                   |   | 322,879 |                 |  |   | 1,032,402       |   |  |   | 971,109   |  
|Selling, general and administrative expenses                                                             |  |                    | 271,115 |   |                   |   | 259,479 |                 |  |   | 825,733         |   |  |   | 785,613   |  
|Research and development expenses                                                                        |  |                    | 18,387  |   |                   |   | 16,922  |                 |  |   | 55,406          |   |  |   | 51,216    |  
|Restructuring expense                                                                                    |  |                    | 5,604   |   |                   |   | 561     |                 |  |   | 13,154          |   |  |   | 13,862    |  
|                                                                                                         |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|Operating profit                                                                                         |  |                    | 39,187  |   |                   |   | 45,917  |                 |  |   | 138,109         |   |  |   | 120,418   |  
|Other expense (income):                                                                                  |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|Interest expense                                                                                         |  |                    | 39,175  |   |                   |   | 38,773  |                 |  |   | 119,227         |   |  |   | 118,589   |  
|Interest income                                                                                          |  |                    | (2,250  | ) |                   |   | (262    | )               |  |   | (4,204          | ) |  |   | (2,189    | )
|Other expense (income), net                                                                              |  |                    | 1,624   |   |                   |   | 666     |                 |  |   | 3,886           |   |  |   | (2,484    | )
|                                                                                                         |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|Income before income taxes, minority interests and discontinued operations                               |  |                    | 638     |   |                   |   | 6,740   |                 |  |   | 19,200          |   |  |   | 6,502     |  
|Provision for income taxes                                                                               |  |                    | 1,686   |   |                   |   | 3,028   |                 |  |   | 10,131          |   |  |   | 3,074     |  
|                                                                                                         |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|Income (loss) before minority interests and discontinued operations                                      |  |                    | (1,048  | ) |                   |   | 3,712   |                 |  |   | 9,069           |   |  |   | 3,428     |  
|Minority interests in net income (loss) of subsidiaries                                                  |  |                    | (7      | ) |                   |   | 61      |                 |  |   | 154             |   |  |   | 112       |  
|                                                                                                         |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|Income (loss) from continuing operations                                                                 |  |                    | (1,041  | ) |                   |   | 3,651   |                 |  |   | 8,915           |   |  |   | 3,316     |  
|Income (loss) from discontinued operations, net of income taxes of $11, $1,277, $958 and $3,412 (Note 6) |  |                    | (139    | ) |                   |   | 1,869   |                 |  |   | 2,119           |   |  |   | 5,001     |  
|                                                                                                         |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|Net income (loss)                                                                                        |  | $                  | (1,180  | ) |                   | $ | 5,520   |                 |  | $ | 11,034          |   |  | $ | 8,317     |  
|                                                                                                         |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  



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



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JOHNSONDIVERSEY HOLDINGS, INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)



|                                                                                                              |  |                   |          |   |                 |   |          |  
|------------------------------------------------------------------------------------------------------------- |  | ----------------- | -------- | - | --------------- | - | -------- | -
|                                                                                                              |  | Nine Months Ended |         
|                                                                                                              |  | October 1, 2004   |          |   | October 3, 2003 |  
|                                                                                                              |  | (unaudited)       |         
|Cash flows from operating activities:                                                                         |  |                   |          |   |                 |   |          |  
|Net income                                                                                                    |  | $                 | 11,034   |   |                 | $ | 8,317    |  
|Adjustments to reconcile net income to net cash provided by operating activities                             |  |                   |          |   |                 |   |          |  
|Depreciation and amortization                                                                                 |  |                   | 112,350  |   |                 |   | 90,660   |  
|Amortization of intangibles                                                                                   |  |                   | 27,241   |   |                 |   | 25,708   |  
|Amortization of debt issuance costs                                                                           |  |                   | 9,851    |   |                 |   | 7,742    |  
|Interest accrued on long-term receivables - related parties                                                   |  |                   | (2,556   | ) |                 |   |         |  
|Interest accreted on notes payable                                                                            |  |                   | 24,943   |   |                 |   | 22,573   |  
|Deferred income taxes                                                                                         |  |                   | (17,250  | ) |                 |   | (22,315  | )
|Gain from divestitures                                                                                        |  |                   | (2,757   | ) |                 |   | (799     | )
|Loss on property disposals                                                                                    |  |                   | 212      |   |                 |   | 9,231    |  
|Other                                                                                                         |  |                   | 848      |   |                 |   | 1,127    |  
|Changes in operating assets and liabilities, net of effects from acquisitions and divestitures of businesses |  |                   |          |   |                 |   |          |  
|Accounts receivable                                                                                           |  |                   | (10,819  | ) |                 |   | (5,641   | )
|Accounts receivable securitization                                                                            |  |                   | 40,600   |   |                 |   | 26,900   |  
|Inventories                                                                                                   |  |                   | (26,968  | ) |                 |   | (1,752   | )
|Other current assets                                                                                          |  |                   | (12,912  | ) |                 |   | 2,245    |  
|Other assets                                                                                                  |  |                   | 4,327    |   |                 |   | (6,207   | )
|Accounts payable and accrued expenses                                                                         |  |                   | 24,885   |   |                 |   | (6,488   | )
|Other liabilities                                                                                             |  |                   | (29,611  | ) |                 |   | 10,352   |  
|                                                                                                              |  |                   |          |   |                 |   |          |  
|Net cash provided by operating activities                                                                     |  |                   | 153,418  |   |                 |   | 161,653  |  
|Cash flows from investing activities:                                                                         |  |                   |          |   |                 |   |          |  
|Capital expenditures                                                                                          |  |                   | (63,335  | ) |                 |   | (70,799  | )
|Expenditures for capitalized computer software                                                                |  |                   | (21,757  | ) |                 |   | (27,036  | )
|Cash from property disposals                                                                                  |  |                   | 5,825    |   |                 |   | 16,907   |  
|Acquisitions of businesses                                                                                    |  |                   | (4,646   | ) |                 |   | (1,599   | )
|Proceeds from divestitures                                                                                    |  |                   | 48,254   |   |                 |   | 988      |  
|                                                                                                              |  |                   |          |   |                 |   |          |  
|Net cash used in investing activities                                                                         |  |                   | (35,659  | ) |                 |   | (81,539  | )
|Cash flows from financing activities:                                                                         |  |                   |          |   |                 |   |          |  
|Proceeds from (repayments of) short-term borrowings                                                           |  |                   | 48,872   |   |                 |   | (15,700  | )
|Repayments of long-term borrowings                                                                            |  |                   | (120,559 | ) |                 |   | (90,011  | )
|Payment of debt issuance costs and fees                                                                       |  |                   | (1,337   | ) |                 |   |         |  
|Dividends paid                                                                                                |  |                   | (10,204  | ) |                 |   | (5,300   | )
|                                                                                                              |  |                   |          |   |                 |   |          |  
|Net cash used in financing activities                                                                         |  |                   | (83,228  | ) |                 |   | (111,011 | )
|                                                                                                              |  |                   |          |   |                 |   |          |  
|Effect of exchange rate changes on cash and cash equivalents                                                  |  |                   | (18,802  | ) |                 |   | (4,014   | )
|                                                                                                              |  |                   |          |   |                 |   |          |  
|Change in cash and cash equivalents                                                                           |  |                   | 15,729   |   |                 |   | (34,911  | )
|Beginning balance                                                                                             |  |                   | 24,543   |   |                 |   | 59,273   |  
|                                                                                                              |  |                   |          |   |                 |   |          |  
|Ending balance                                                                                                |  | $                 | 40,272   |   |                 | $ | 24,362   |  
|                                                                                                              |  |                   |          |   |                 |   |          |  
|Supplemental cash flows information                                                                           |  |                   |          |   |                 |   |          |  
|Cash paid during the period:                                                                                  |  |                   |          |   |                 |   |          |  
|Interest                                                                                                      |  | $                 | 67,518   |   |                 | $ | 68,042   |  
|Income taxes                                                                                                  |  |                   | 14,056   |   |                 |   | 19,553   |  



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

October 1, 2004

(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 (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 manufacturer of commercial, industrial and institutional building maintenance and sanitation products. The Polymer Business is a global 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 October 1, 2004 and its results of operations and cash flows for the three and nine month periods ended
October 1, 2004 have been included. The results of operations for the three and nine month periods ended October 1, 2004 are not necessarily indicative of the results to be expected for the full fiscal year. It is suggested 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 January 2, 2004.



In order to achieve alignment with its functional cost structure, beginning
with fiscal year 2004, the Company reclassified certain technical customer support costs from selling, general and administrative expenses to cost of sales. Prior year amounts have been reclassified for consistency. Related technical customer
support costs were $6,029 and $2,366 for the three months ended October 1, 2004 and October 3, 2003, respectively; and $15,384 and $6,440 for the nine months ended October 1, 2004 and October 3, 2003, respectively.



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 December 2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No.
132 (revised 2003), Employers Disclosures about Pensions and Other Post-retirement Benefits, an amendment of FASB Statements No. 87, 88 and 106. In fiscal year 2003, the Company adopted SFAS No. 132, as revised, for all U.S.-based
plans. SFAS No. 132, as revised, requires additional disclosures in year-end reports about assets, obligations, cash flows and net periodic benefit cost of defined benefit pension plans and other postretirement benefit plans. As permitted by this
standard, the Company will adopt the annual disclosure provisions for all foreign plans for the year ending December 31, 2004. SFAS No. 132, as revised, also amends Accounting Principles Board (APB) Opinion No. 28, Interim
Financial Reporting, to require interim-period disclosure of the components of net periodic benefit cost and, if significantly different from previously disclosed amounts, the amounts of contributions and projected contributions to fund
pension plans and other postretirement benefit plans. The Company has adopted the interim-period disclosure requirements of SFAS No. 132, as revised, for its U.S.-based defined benefit and non-pension postretirement plans effective January 3, 2004.
Because SFAS No. 132, as revised, pertains only to disclosure provisions, the Companys adoption of SFAS No. 132, as revised, did not have an impact on the Companys consolidated financial condition, results of operations or cash flows.



4



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##### Table of Contents

JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2004

(unaudited)



In January 2004, the FASB issued FASB Staff Position (FSP) No. 106-1, Accounting
and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, with an effective date for interim or annual financial statements with fiscal years ending after December 7, 2003. FSP 106-1
relates to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) signed into law on December 8, 2003. FSP 106-1 introduced a prescription drug benefit under Medicare, as well as a federal subsidy to sponsors
of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare. As permitted by FSP 106-1, the Company made a one-time election to defer adoption of the Act until more specific authoritative guidance
was issued. In May 2004, the FASB issued FSP No. 106-2, which supercedes FSP 106-1, and is effective for the first interim or annual period beginning after June 15, 2004. FSP 106-2 requires companies to account for the effect of the subsidy on
benefits attributable to past service as an actuarial experience gain and as a reduction of the service cost component of net postretirement health care costs for amounts attributable to current service, if the benefit provided is at least
actuarially equivalent to Medicare Part D. The Company adopted FSP 106-2 in the quarter ending October 1, 2004. See Note 13 for further disclosure.



|4. | Acquisitions
|-- | ------------



In November 2003, the Company acquired 50.1% of the outstanding shares of Daisan Kogyo Co., Ltd. (Daisan), Japans leading provider of
commercial cleaning products and services to the food and beverage industry, for $12,076. The Company previously held 49.9% of the outstanding shares and accounted for its holding in Daisan on an equity basis. The Company completed a valuation
exercise during the quarter ending July 2, 2004 and assigned $841 and $1,462 of the purchase price to customer lists and intellectual property, respectively. As of October 1, 2004 and January 2, 2004, goodwill recorded with respect to the
acquisition was $5,722 and $7,762, respectively.



In October
2003, the Company acquired certain net assets of Southwest Auto-Chlor System L.P., an Austin, Texas-based business that markets and sells low-energy dishwashing systems, kitchen chemicals, laundry and housekeeping products and services to
foodservice, lodging, healthcare, and institutional customers, for $13,577. In addition, the Company entered into non-compete arrangements with the sellers. The Company has preliminarily assigned $11,295 of the purchase price to customer lists and
related contracts, pending completion of a valuation exercise. The Company did not record goodwill as a result of the transaction.



During the nine months ending October 1, 2004, the Company acquired or purchased interest in three businesses associated with its professional segment
from SCJ for $2,999 and one business as part of its polymer segment for $1,414. None of the transactions were considered material to Companys consolidated financial position or results of operations.



The results of operations for the acquired companies have been included in
the consolidated financial statements from the date of acquisition.



|5. | Acquisition of the DiverseyLever Business
|-- | -----------------------------------------



On May 3, 2002, the Company and JDI acquired the assets and equity interests of the DiverseyLever business  the institutional and industrial
cleaning and sanitation business of Unilever. In addition, with specified exceptions, the Company and JDI assumed liabilities to the extent relating to, or arising out of, the DiverseyLever business. The acquisition was accounted for under the
purchase method of accounting.



During the nine months ending
October 1, 2004, JDI settled the pension adjustment  fully funded and pension adjustment  EBITDA with Unilever as provided for in the purchase agreement, and adjusted certain net tangible assets and tax liabilities, resulting in an
increase in acquisition goodwill of $1,894, substantially all of which was recorded in the second quarter. JDI and Unilever are continuing the settlement process relative to certain remaining purchase price adjustments as provided for in the
purchase agreement. Further adjustments are not expected to be



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##### Table of Contents

JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2004

(unaudited)



significant and are anticipated to be finalized with Unilever in the fourth quarter of 2004, and settled during the first quarter of 2005.



During the nine months ending October 1, 2004, the Company reversed $4,180 of
restructuring reserves previously established in purchase accounting, net of $1,203 of deferred taxes, resulting in a decrease in acquisition goodwill of $2,977 (see Note 11). These adjustments were substantially recorded in the second quarter.



|6. | Divestiture of the Whitmire Micro-Gen Business
|-- | ----------------------------------------------



As previously reported, the Company had determined that Whitmire Micro-Gen Research Laboratories, Inc. (Whitmire), a wholly-owned subsidiary
that manufactures and supplies insecticides and equipment to the professional pest management industry in the U.S., was no longer part of the overall corporate strategic focus and therefore had been seeking a buyer.



On June 10, 2004, the Company completed the sale of Whitmire to Sorex
Holdings, Ltd., a leading 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. The purchase agreement also provides for additional earnout provisions based on future Whitmire net sales. As of the divestiture date, Whitmire net assets totaled $45,000.



Effective with the second quarter of 2004, Whitmire, which was
included in the Companys professional segment, has been classified as a discontinued operation in the consolidated statement of income with the prior periods restated. No adjustments or restatements for discontinued operations have been made
to the consolidated balance sheets and consolidated statements of cash flows due to the immaterial impact of the divestiture for the periods presented.



Income from discontinued operations for the three and nine month periods ended October 1, 2004 and October 3, 2003 is comprised of the following:



|                                                                                                                                      |  |                    |      |   |                   |   |        |                 |  |   |                 |   |  |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ---- | - | ----------------- | - | ------ | --------------- |  | - | --------------- | - |  | - | ------ | -
|                                                                                                                                      |  | Three Months Ended |      |   | Nine Months Ended |  
|                                                                                                                                      |  | October 1, 2004    |      |   | October 3, 2003   |   |        | October 1, 2004 |  |   | October 3, 2003 |  
|Income (loss) from operations before taxes                                                                                            |  | $                  | (105 | ) |                   | $ | 3,146  |                 |  | $ | 2,111           |   |  | $ | 8,413  |  
|(Loss) Gain on sale                                                                                                                   |  |                    | (23  | ) |                   |   |       |                 |  |   | 966             |   |  |   |       |  
|Income tax provision                                                                                                                  |  |                    | (11  | ) |                   |   | (1,277 | )               |  |   | (958            | ) |  |   | (3,412 | )
|                                                                                                                                      |  |                    |      |   |                   |   |        |                 |  |   |                 |   |  |   |        |  
|Income (loss) from discontinued operations                                                                                            |  | $                  | (139 | ) |                   | $ | 1,869  |                 |  | $ | 2,119           |   |  | $ | 5,001  |  
|                                                                                                                                      |  |                    |      |   |                   |   |        |                 |  |   |                 |   |  |   |        |  
|                                                                                                                                     
|Net sales from discontinued operations for the three and nine month periods ended October 1, 2004 and October 3, 2003 are as follows: | 
|                                                                                                                                      |  |                   
|                                                                                                                                      |  | Three Months Ended |      |   | Nine Months Ended |  
|                                                                                                                                      |  | October 1, 2004    |      |   | October 3, 2003   |   |        | October 1, 2004 |  |   | October 3, 2003 |  
|Net sales                                                                                                                             |  | $                  |     |   |                   | $ | 12,559 |                 |  | $ | 18,688          |   |  | $ | 35,878 |  



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##### Table of Contents

JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2004

(unaudited)



|7. | 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 U.S.
subsidiaries party to the agreement. JWPRC in turn sells an undivided interest in the accounts receivable to a nonconsolidated financial institution (the Conduit) for an amount equal to the percentage of total receivables deemed
eligible. 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.



On August 29, 2003, the Receivables
Facility was amended to include certain additional U.S. subsidiaries of JDI, expand the total potential for securitization of trade receivables to $75,000 from the previous limit of $55,000, and change the facility term to 354 days from the date of
closing, renewable without fee.



On October 24, 2003, the
Receivables Facility was again amended to include certain United Kingdom subsidiaries of JDI and further expand the total potential for securitization of trade receivables to $100,000 (the October 2003 amendment). Prior to the October
2003 amendment, the beneficial interest of accounts receivable sold under the Receivables Facility was excluded from accounts receivable in the Companys consolidated balance sheets in accordance with SFAS No. 140. As a result of the terms of
the October 2003 amendment, limitations in the articles of incorporation of JWPRC and the requirements for sale defined in SFAS No. 140, JDI was no longer able to exclude the accounts receivable sold under the Receivables Facility from its
consolidated balance sheets.



On January 5, 2004, the
Receivables Facility was amended and restated to include JDIs Italian subsidiary and further expand the total potential for securitization of trade receivables to $150,000.



During the first quarter of 2004, JDI modified the articles of incorporation of JWPRC and obtained necessary legal opinions,
in order for the amended Receivables Facility to be in compliance with the provisions of SFAS No. 140. As such, the Company has excluded accounts receivable sold under the Receivables Facility from the consolidated balance sheet at October 1, 2004.



As of October 1, 2004, the Conduit held $135,800 of accounts
receivable that are not included in the accounts receivable balance reflected in the Companys consolidated balance sheet. As of January 2, 2004, the Company included $95,200 of accounts receivable held by the Conduit in its consolidated
balance sheet for the reasons noted above.



As of October 1,
2004, JDI had a retained interest of $129,321 in the receivables of JWPRC. The retained interest is included in the accounts receivable balance and is reflected in the Companys consolidated balance sheet at estimated fair value.



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JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2004

(unaudited)



|8. | Inventories
|-- | -----------



The components of inventories are summarized as follows:



|                             |  |                 |         |                 |   |        
|---------------------------- |  | --------------- | ------- | --------------- | - | -------
|                             |  | October 1, 2004 |         | January 2, 2004
|Raw materials and containers |  | $               | 69,143  |                 | $ | 64,322 
|Finished goods               |  |                 | 208,282 |                 |   | 199,075
|                             |  |                 |         |                 |   |        
|Total inventories            |  | $               | 277,425 |                 | $ | 263,397
|                             |  |                 |         |                 |   |        



Inventories are stated
in the consolidated balance sheets net of allowance for excess and obsolete inventory of $25,032 and $25,446 on October 1, 2004 and January 2, 2004, respectively.



|9. | Property, Plant and Equipment
|-- | -----------------------------



Effective January 3, 2004, the Company changed its accounting estimates relating to depreciation. The estimated useful lives for dishwashing machines were
changed to seven years from a range of five to 14 years to provide consistency in accounting treatment following the integration of acquisitions into a combined business unit. As a result of this change in accounting estimate, cost of sales was
increased by $3,200 and $9,500, for the three and nine month periods ended October 1, 2004, respectively.



|10. | Indebtedness and Credit Arrangements
|--- | ------------------------------------



The $1.2 billion senior secured credit facilities of JDI were amended on February 24, 2004. This amendment reduced the interest rate payable for the U.S.
dollar portion of the tranche B term loan under the JDI senior secured credit facilities, thereby reducing the borrowing cost over the remaining life of the tranche. In addition, the amendment changed various financial covenants and administrative
requirements to provide JDI with greater flexibility to operate and complete the integration of the DiverseyLever business.



|11. | 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). The Companys exit plans provide for the planned termination of 1,299 employees, of which 1,205 and 998
were actually terminated as of October 1, 2004 and January 2, 2004, respectively.



Additionally, the Company developed plans to restructure certain facilities that it owned prior to the acquisition of the DiverseyLever business (restructuring plans), 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 restructuring plans, the Company recorded liabilities for the involuntary termination of
pre-acquisition employees and other restructuring costs associated with pre-acquisition facilities. During the three months ended October 1, 2004 and October 3, 2003, the Company recognized net liabilities of $5,343 and $342 for the involuntary
termination of 99 and 15 additional pre-acquisition employees and $261 and $219 for additional other restructuring costs, respectively, which were recorded as restructuring expenses in accordance with SFAS No. 146. During the nine months ended
October 1, 2004 and October 3, 2003, the Company recognized net liabilities of $12,748 and $10,453 for the involuntary termination of 252 and 114 additional pre-acquisition employees and $406 and $3,409 for additional other restructuring costs,
respectively, which were recorded as restructuring expenses in accordance with SFAS No. 146.



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JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2004

(unaudited)



The Companys restructuring plans provide for the planned termination of 613 pre-acquisition
employees, of which 433 and 340 were actually terminated as of October 1, 2004 and January 2, 2004, respectively.



|                                            |  |                  |        |   |                     |   |        |       |  |   |                  |   |  |       |        |   |       |   |       |   |  |   |        |  
|------------------------------------------- |  | ---------------- | ------ | - | ------------------- | - | ------ | ----- |  | - | ---------------- | - |  | ----- | ------ | - | ----- | - | ----- | - |  | - | ------ | -
|                                            |  | Exit Plans       |        |   | Restructuring Plans |  
|                                            |  | Employee-Related |        |   | Other               |   |        | Total |  |   | Employee-Related |   |  | Other |        |   | Total |  
|Liability balances as of January 2, 2004    |  | $                | 24,821 |   |                     | $ | 3,411  |       |  | $ | 28,232           |   |  | $     | 5,173  |   |       | $ | 1,393 |   |  | $ | 6,566  |  
|Liability recorded as restructuring expense |  |                  |       |   |                     |   |       |       |  |   |                 |   |  |       | 4,719  |   |       |   | 333   |   |  |   | 5,052  |  
|Liability adjustments2                      |  |                  | (149   | ) |                     |   |       |       |  |   | (149             | ) |  |       |       |   |       |   |      |   |  |   |       |  
|Cash paid1                                  |  |                  | (8,908 | ) |                     |   | (246   | )     |  |   | (9,154           | ) |  |       | (4,528 | ) |       |   | (562  | ) |  |   | (5,090 | )
|                                            |  |                  |        |   |                     |   |        |       |  |   |                  |   |  |       |        |   |       |   |       |   |  |   |        |  
|Liability balances as of April 2, 2004      |  | $                | 15,764 |   |                     | $ | 3,165  |       |  | $ | 18,929           |   |  | $     | 5,364  |   |       | $ | 1,164 |   |  | $ | 6,528  |  
|Liability recorded as restructuring expense |  |                  |       |   |                     |   |       |       |  |   |                 |   |  |       | 2,686  |   |       |   | 97    |   |  |   | 2,783  |  
|Liability adjustments2                      |  |                  | (2,486 | ) |                     |   | (1,405 | )     |  |   | (3,891           | ) |  |       |       |   |       |   | (285  | ) |  |   | (285   | )
|Cash paid1                                  |  |                  | (9,079 | ) |                     |   | (718   | )     |  |   | (9,797           | ) |  |       | (4,655 | ) |       |   | (592  | ) |  |   | (5,247 | )
|                                            |  |                  |        |   |                     |   |        |       |  |   |                  |   |  |       |        |   |       |   |       |   |  |   |        |  
|Liability balances as of July 2, 2004       |  | $                | 4,199  |   |                     | $ | 1,042  |       |  | $ | 5,241            |   |  | $     | 3,395  |   |       | $ | 384   |   |  | $ | 3,779  |  
|Liability recorded as restructuring expense |  |                  |       |   |                     |   |       |       |  |   |                 |   |  |       | 5,516  |   |       |   | 261   |   |  |   | 5,777  |  
|Liability adjustments2                      |  |                  | (140   | ) |                     |   |       |       |  |   | (140             | ) |  |       | (173   | ) |       |   |      |   |  |   | (173   | )
|Cash paid1                                  |  |                  | (1,939 | ) |                     |   | (325   | )     |  |   | (2,264           | ) |  |       | (4,147 | ) |       |   | (149  | ) |  |   | (4,296 | )
|                                            |  |                  |        |   |                     |   |        |       |  |   |                  |   |  |       |        |   |       |   |       |   |  |   |        |  
|Liability balances as of October 1, 2004    |  | $                | 2,120  |   |                     | $ | 717    |       |  | $ | 2,837            |   |  | $     | 4,591  |   |       | $ | 496   |   |  | $ | 5,087  |  
|                                            |  |                  |        |   |                     |   |        |       |  |   |                  |   |  |       |        |   |       |   |       |   |  |   |        |  



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



|2 | Liability adjustments include reductions to previously established plan obligations based on revisions to initial assumptions.
|- | ------------------------------------------------------------------------------------------------------------------------------



|12. | Other (Income) Expense, Net
|--- | ---------------------------



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



|                                                                                        |  |                    |       |   |                   |   |       |                 |  |   |                 |   |  |   |        |  
|--------------------------------------------------------------------------------------- |  | ------------------ | ----- | - | ----------------- | - | ----- | --------------- |  | - | --------------- | - |  | - | ------ | -
|                                                                                        |  | Three Months Ended |       |   | Nine Months Ended |  
|                                                                                        |  | October 1, 2004    |       |   | October 3, 2003   |   |       | October 1, 2004 |  |   | October 3, 2003 |  
|Revaluation losses (gains) on foreign currency denominated instruments and transactions |  |                    | 714   |   |                   |   | 1,060 |                 |  |   | 4,149           |   |  |   | (3,612 | )
|Foreign currency transaction and hyper-inflationary currency translation losses (gains) |  |                    | 896   |   |                   |   | (99   | )               |  |   | 3,117           |   |  |   | 1,769  |  
|Net losses (gains) on sale of product lines                                             |  |                    | 207   |   |                   |   | 496   |                 |  |   | (1,791          | ) |  |   | 320    |  
|Non-recoverable sales tax assessment related to prior years                             |  |                    | 137   |   |                   |   |      |                 |  |   | 1,109           |   |  |   |       |  
|Compensation for partial termination of sales agency agreement1                         |  |                    |      |   |                   |   |      |                 |  |   | (2,485          | ) |  |   |       |  
|Other                                                                                   |  |                    | (330  | ) |                   |   | (791  | )               |  |   | (213            | ) |  |   | (961   | )
|                                                                                        |  |                    |       |   |                   |   |       |                 |  |   |                 |   |  |   |        |  
|                                                                                        |  | $                  | 1,624 |   |                   | $ | 666   |                 |  | $ | 3,886           |   |  | $ | (2,484 | )
|                                                                                        |  |                    |       |   |                   |   |       |                 |  |   |                 |   |  |   |        |  



|1 | In the second quarter of 2004, JDI and Unilever, under volume terms provided for by the sales agency agreement, terminated sales agency relationships in certain
countries, resulting in a gain of $2,485. The partial termination is an isolated situation and is not expected to have a significant impact on future sales agency fee income or our consolidated results of operations.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2004

(unaudited)



|13. | Defined Benefit Plans and Other Post-Employment Benefit Plans
|--- | -------------------------------------------------------------



The components of net periodic benefit costs for JDIs defined benefit pension plans and other post-employment benefit plans for the three and
nine month periods ended October 1, 2004 and October 3, 2003 are as follows:



|                                       |  |                                |        |   |                   |   |        |                 |  |   |                 |   |  |   |         |  
|-------------------------------------- |  | ------------------------------ | ------ | - | ----------------- | - | ------ | --------------- |  | - | --------------- | - |  | - | ------- | -
|                                       |  | Defined Pension Benefits       |       
|                                       |  | Three Months Ended             |        |   | Nine Months Ended |  
|                                       |  | October 1, 2004                |        |   | October 3, 2003   |   |        | October 1, 2004 |  |   | October 3, 2003 |  
|Service cost                           |  | $                              | 8,077  |   |                   | $ | 6,661  |                 |  | $ | 23,246          |   |  | $ | 19,984  |  
|Interest cost                          |  |                                | 7,595  |   |                   |   | 6,347  |                 |  |   | 20,896          |   |  |   | 19,040  |  
|Expected return on plan assets         |  |                                | (6,616 | ) |                   |   | (4,415 | )               |  |   | (16,580         | ) |  |   | (13,245 | )
|Amortization of net loss               |  |                                | 1,237  |   |                   |   | 1,597  |                 |  |   | 4,565           |   |  |   | 4,789   |  
|Amortization of prior service benefit  |  |                                | (132   | ) |                   |   | (5     | )               |  |   | (173            | ) |  |   | (14     | )
|Amortization of transition obligation  |  |                                | 65     |   |                   |   | 60     |                 |  |   | 190             |   |  |   | 180     |  
|Effect of curtailments and settlements |  |                                | (1,130 | ) |                   |   |       |                 |  |   | (1,130          | ) |  |   |        |  
|                                       |  |                                |        |   |                   |   |        |                 |  |   |                 |   |  |   |         |  
|Net periodic pension cost              |  | $                              | 9,096  |   |                   | $ | 10,245 |                 |  | $ | 31,014          |   |  | $ | 30,734  |  
|                                       |  |                                |        |   |                   |   |        |                 |  |   |                 |   |  |   |         |  
|                                       | 
|                                       |  | Other Post-Employment Benefits |       
|                                       |  | Three Months Ended             |        |   | Nine Months Ended |  
|                                       |  | October 1, 2004                |        |   | October 3, 2003   |   |        | October 1, 2004 |  |   | October 3, 2003 |  
|Service cost                           |  | $                              | 576    |   |                   | $ | 741    |                 |  | $ | 2,340           |   |  | $ | 2,224   |  
|Interest cost                          |  |                                | 947    |   |                   |   | 1,228  |                 |  |   | 3,388           |   |  |   | 3,683   |  
|Amortization of net loss               |  |                                | 91     |   |                   |   | 83     |                 |  |   | 369             |   |  |   | 249     |  
|Amortization of prior service cost     |  |                                | 18     |   |                   |   |       |                 |  |   | 36              |   |  |   |        |  
|Amortization of transition obligation  |  |                                | 71     |   |                   |   | 181    |                 |  |   | 215             |   |  |   | 542     |  
|                                       |  |                                |        |   |                   |   |        |                 |  |   |                 |   |  |   |         |  
|Net periodic benefit cost              |  | $                              | 1,703  |   |                   | $ | 2,233  |                 |  | $ | 6,348           |   |  | $ | 6,698   |  
|                                       |  |                                |        |   |                   |   |        |                 |  |   |                 |   |  |   |         |  



The Company adopted
FSP 106-2 Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, during the quarter ending October 1, 2004. In accordance with the proposed guidance, JDI and its
actuarial advisors determined that benefits provided to certain plan participants are expected to be at least actuarially equivalent to Medicare Part D, and, accordingly, JDI will be entitled to a subsidy. The expected subsidy reduces the
accumulated postretirement benefit obligation at January 1, 2004 by $6,100, and net periodic benefit cost by $561 during the quarter ending October 1, 2004. JDI will not need to amend its postretirement health care plans to qualify for the federal
subsidy.



The Company recognized income of $5,800 during the
quarter ending October 1, 2004 in association with pension plan adjustments which resulted from changes in census data and plan curtailments in Brazil and the United Kingdom.



JDI made contributions to its material defined pension benefit plans of approximately $27,600 and $62,600, of which $28,600
relates to the acquisition of the DiverseyLever business, during the three and nine months ending October 1, 2004, respectively.



10



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##### Table of Contents

JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2004

(unaudited)



|14. | Stock-Based Compensation
|--- | ------------------------



JDI 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 Holdings, for certain senior management of JDI. 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 JDI 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. Also, employees that remain with JDI for four years after November 1, 2000 are granted debt forgiveness of at least 50% of the purchase price of the stock.



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 vest over four years and have an exercise period of seven years from the date of grant.



The Company recorded compensation expense of $398 and $379 related to restricted stock and debt forgiveness during the three months ended October 1, 2004
and October 3, 2003; and $1,545 and $1,006 related to restricted stock and debt forgiveness during the nine months ended October 1, 2004 and October 3, 2003, 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 by approximately $4,407 and $2,039 for the three months ended October 1, 2004 and October 3, 2003, respectively; and approximately $11,933 and $6,124 for the nine months ended October 1, 2004 and
October 3, 2003, respectively.



|15. | Comprehensive Income (Loss)
|--- | ---------------------------



Comprehensive income (loss) for the three and nine month periods ended October 1, 2004 and October 3, 2003 is as follows:



|                                                     |  |                    |        |   |                   |   |        |                 |  |   |                 |   |  |   |        |  
|---------------------------------------------------- |  | ------------------ | ------ | - | ----------------- | - | ------ | --------------- |  | - | --------------- | - |  | - | ------ | -
|                                                     |  | Three Months Ended |        |   | Nine Months Ended |  
|                                                     |  | October 1, 2004    |        |   | October 3, 2003   |   |        | October 1, 2004 |  |   | October 3, 2003 |  
|Net (loss) income                                    |  | $                  | (1,180 | ) |                   | $ | 5,520  |                 |  | $ | 11,034          |   |  | $ | 8,317  |  
|Foreign currency translation adjustments             |  |                    | 180    |   |                   |   | (4,773 | )               |  |   | (30,994         | ) |  |   | 59,408 |  
|Unrealized gains (losses) on derivatives, net of tax |  |                    | 396    |   |                   |   | 3,995  |                 |  |   | 3,122           |   |  |   | (288   | )
|                                                     |  |                    |        |   |                   |   |        |                 |  |   |                 |   |  |   |        |  
|Total comprehensive income (loss)                    |  | $                  | (604   | ) |                   | $ | 4,742  |                 |  | $ | (16,838         | ) |  | $ | 67,437 |  
|                                                     |  |                    |        |   |                   |   |        |                 |  |   |                 |   |  |   |        |  



|16. | 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 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 the closing of the acquisition through the end of the fiscal year preceding the payment (not including any cash flow with
respect to which



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JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2004

(unaudited)



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.



|17. | 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 conduct 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. The
Company continues to evaluate the nature and extent of the identified contamination and is preparing plans to address the contamination. An estimate of costs has been made based on the expected extent of contamination and the expected likelihood of
recovery for some of these costs from Unilever under the purchase agreement. To the extent that contamination is determined to be in violation of local environmental laws, the Company intends to seek recovery under indemnification clauses contained
in the purchase agreement.



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JOHNSONDIVERSEY HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2004

(unaudited)



|18. | Segment Information
|--- | -------------------



Business segment information is summarized as follows. Income statement measures include results from continuing operations only.



|                                                              |  |                                             |           |         |   |                    |  |   |              |   |  |   |          
|------------------------------------------------------------- |  | ------------------------------------------- | --------- | ------- | - | ------------------ |  | - | ------------ | - |  | - | ---------
|                                                              |  | Three Months Ended or As Of October 1, 2004
|                                                              |  | Professional                                |           | Polymer |   | Eliminations/Other |  |   | TotalCompany
|Net sales                                                     |  | $                                           | 706,893   |         | $ | 82,187             |  | $ | (5,142       | ) |  | $ | 783,938  
|Operating profit                                              |  |                                             | 31,895    |         |   | 7,292              |  |   |             |   |  |   | 39,187   
|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                                                  |  |                                             | 3,290,544 |         |   | 225,394            |  |   | (61,013      | ) |  |   | 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   
|                                                              | 
|                                                              |  | Three Months Ended or As Of October 3, 2003
|                                                              |  | Professional                                |           | Polymer |   | Eliminations/Other |  |   | TotalCompany
|Net sales                                                     |  | $                                           | 651,711   |         | $ | 71,362             |  | $ | (4,262       | ) |  | $ | 718,811  
|Operating profit                                              |  |                                             | 37,308    |         |   | 8,609              |  |   |             |   |  |   | 45,917   
|Depreciation and amortization                                 |  |                                             | 36,982    |         |   | 2,411              |  |   |             |   |  |   | 39,393   
|Interest expense                                              |  |                                             | 30,935    |         |   | 270                |  |   | 7,568        |   |  |   | 38,773   
|Interest income                                               |  |                                             | 78        |         |   | 420                |  |   | (236         | ) |  |   | 262      
|Total assets                                                  |  |                                             | 3,373,492 |         |   | 203,178            |  |   | (73,038      | ) |  |   | 3,503,632
|Goodwill, net                                                 |  |                                             | 1,186,274 |         |   | 579                |  |   | 13,612       |   |  |   | 1,200,465
|Capital expenditures, including capitalized computer software |  |                                             | 35,860    |         |   | 448                |  |   |             |   |  |   | 36,308   
|                                                              | 
|                                                              |  | Nine Months Ended or As Of October 1, 2004 
|                                                              |  | Professional                                |           | Polymer |   | Eliminations/Other |  |   | TotalCompany
|Net sales                                                     |  | $                                           | 2,133,332 |         | $ | 246,730            |  | $ | (16,091      | ) |  | $ | 2,363,971
|Operating profit                                              |  |                                             | 107,262   |         |   | 30,847             |  |   |             |   |  |   | 138,109  
|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                                                  |  |                                             | 3,290,544 |         |   | 225,394            |  |   | (61,013      | ) |  |   | 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   
|                                                              | 
|                                                              |  | Nine Months Ended or As Of October 3, 2003 
|                                                              |  | Professional                                |           | Polymer |   | Eliminations/Other |  |   | TotalCompany
|Net sales                                                     |  | $                                           | 1,953,772 |         | $ | 216,149            |  | $ | (14,974      | ) |  | $ | 2,154,947
|Operating profit                                              |  |                                             | 92,608    |         |   | 27,810             |  |   |             |   |  |   | 120,418  
|Depreciation and amortization                                 |  |                                             | 109,417   |         |   | 6,951              |  |   |             |   |  |   | 116,368  
|Interest expense                                              |  |                                             | 95,994    |         |   | 521                |  |   | 22,074       |   |  |   | 118,589  
|Interest income                                               |  |                                             | 1,932     |         |   | 756                |  |   | (499         | ) |  |   | 2,189    
|Total assets                                                  |  |                                             | 3,373,492 |         |   | 203,178            |  |   | (73,038      | ) |  |   | 3,503,632
|Goodwill, net                                                 |  |                                             | 1,186,274 |         |   | 579                |  |   | 13,612       |   |  |   | 1,200,465
|Capital expenditures, including capitalized computer software |  |                                             | 95,052    |         |   | 2,783              |  |   |             |   |  |   | 97,835   



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



Executive Summary:



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 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 the Asia Pacific region.



For both
the third quarter and the year-to-date, we have continued to increase net sales, overcoming a challenging competitive and economic landscape and our significant on-going restructuring and integration programs. For the three months ended October 1,
2004, net sales increased $65.1 million, or 9.1%, as compared to the prior year and for the nine months ended October 1, 2004, our net sales increased $209 million, or 9.7%, as compared to the prior year. Key contributors to our growth in net sales
include the strengthening of the euro and certain other foreign currencies against the U.S. dollar ($32.9 million and $131 million, respectively), the impact of JDIs November 2003 acquisition of Daisan Kogyo Co., Ltd. ($13.0 million and $38.1
million, respectively), volume growth in Europe, Japan and Asia Pacific driven by new customer wins, and volume growth in the polymer segment due to increased global demand. We also saw a return to growth in North America. As indicated in the
following table, excluding the impact of foreign currency exchange rates and acquisitions and divestitures, our net sales growth for the three and nine months ended October 1, 2004 increased 3.0% and 2.2%, respectively, as compared to the prior
year.



|                              |  |                    |         |   |                |   |         |                   |  |     |                |  |   |                |   |  |        |           |   |  |     |  
|----------------------------- |  | ------------------ | ------- | - | -------------- | - | ------- | ----------------- |  | --- | -------------- |  | - | -------------- | - |  | ------ | --------- | - |  | --- | -
|                              |  | Three Months Ended |         |   |                |   |         | Nine Months Ended |  |     |                | 
|(dollars in thousands)        |  | October 1,2004     |         |   | October 3,2003 |   |         | Change            |  |     | October 1,2004 |  |   | October 3,2003 |   |  | Change |          
|Net Sales                     |  | $                  | 783,938 |   |                | $ | 718,811 |                   |  | 9.1 | %              |  | $ | 2,363,971      |   |  | $      | 2,154,947 |   |  | 9.7 | %
|Variance due to:              |  |                    |         |   |                |   |         |                   |  |     |                |  |   |                |   |  |        |           |   |  |     |  
|Foreign currency exchange     |  |                    |        |   |                |   | 32,922  |                   |  |     |                |  |   |               |   |  |        | 130,933   |   |  |     |  
|Acquisitions and divestitures |  |                    | (14,560 | ) |                |   | (5,091  | )                 |  |     |                |  |   | (42,706        | ) |  |        | (14,495   | ) |  |     |  
|                              |  |                    |         |   |                |   |         |                   |  |     |                |  |   |                |   |  |        |           |   |  |     |  
|                              |  |                    | (14,560 | ) |                |   | 27,831  |                   |  |     |                |  |   | (42,706        | ) |  |        | 116,438   |   |  |     |  
|                              |  |                    |         |   |                |   |         |                   |  |     |                |  |   |                |   |  |        |           |   |  |     |  
|                              |  | $                  | 769,378 |   |                | $ | 746,642 |                   |  | 3.0 | %              |  | $ | 2,321,265      |   |  | $      | 2,271,385 |   |  | 2.2 | %
|                              |  |                    |         |   |                |   |         |                   |  |     |                |  |   |                |   |  |        |           |   |  |     |  



For the three and nine
months ended October 1, 2004, our gross margins have declined in both business segments as compared to the prior year as follows:



|                     |  |                    |   |  |                   |   |  |                |   |  |                |  
|-------------------- |  | ------------------ | - |  | ----------------- | - |  | -------------- | - |  | -------------- | -
|                     |  | Three Months Ended |   |  | Nine Months Ended |  
|                     |  | October 1,2004     |   |  | October 3,2003    |   |  | October 1,2004 |   |  | October 3,2003 |  
|Consolidated         |  | 42.6               | % |  | 44.9              | % |  | 43.7           | % |  | 45.1           | %
|                     |  |                    |   |  |                   |   |  |                |   |  |                |  
|Professional Segment |  | 44.5               | % |  | 46.2              | % |  | 45.1           | % |  | 46.3           | %
|Polymer Segment      |  | 25.3               | % |  | 32.5              | % |  | 30.5           | % |  | 33.2           | %





The reductions in gross margin were most evident in our polymer segment where raw material prices have continued to escalate, driven by higher crude oil
and natural gas costs, as well as industry cyclical factors that are causing demand to outstrip supply.



In our professional segment, an unfavorable product mix, particularly in Europe, Japan and Latin America, is adversely impacting gross margins. In
addition, the increase in crude oil and natural gas costs have negatively affected our floorcare business where acrylic based polymers are more common in product formulations. We have also been faced with escalating freight and transportation costs
in North America, which can be attributed to the rise in crude oil prices.



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We are implementing focused price increases in the fourth quarter and into fiscal 2005 to recover, to the
fullest extent possible, raw material cost increases, including the impact of further cost increases we anticipate in the fourth quarter. In addition, the implementation of incentives and training programs designed to improve our product mix and the
continuation of our aggressive global cost reduction programs will also be required to lift gross margins.



The successful integration of the DiverseyLever acquisition continued in the first nine months of 2004 as efficiencies and cost reductions gained through
the synergies from restructuring and integration programs have contributed to the growth in income from continuing operations and have partially offset the gross profit margin impact from competitive and economic factors and a less profitable
product mix. We continue to track ahead of schedule in achieving our target cost savings from the multi-year restructuring and integration program, which are projected to be at least $215 million by the end of fiscal year 2005.



In June 2004, JDI sold Whitmire Micro-Gen Research Laboratories, Inc.
(Whitmire), its wholly-owned subsidiary that manufactures and supplies insecticides and equipment to the professional pest management industry in the U.S., to Sorex Holdings, Ltd., a leading European pest-control manufacturer
headquartered in the United Kingdom. As previously disclosed, we had determined that the Whitmire business was not part of the overall corporate strategic focus and therefore had been actively seeking a buyer. The transaction resulted in a net gain
of $1.0 million, net of tax, with the proceeds of $46.0 million used to reduce debt. We have classified the Whitmire business as a discontinued operation and have restated the consolidated statements of income for both the current and prior year.



During the first nine months of 2004, our management team
focused on maximizing the cash flows of the business and further improving the management of working capital and global cash balances. During the nine months ended October 1, 2004, JDI repaid $122 million in term debt while at the same time
complying with its debt covenants and increasing short-term borrowings by only $42.0 million. Despite higher pension plan contributions and other cash outlays at the end of the third quarter, we have generated $153 million in additional cash from
operations and improved working capital by $145 million through an increase of JDIs receivables securitization program to $136 million from $95.2 million at January 2, 2004, primarily from the addition of JDIs Italian subsidiary to the
program in January 2004, and from the proceeds of the Whitmire divestiture.



Critical Accounting Policies



The preparation
of our financial statements in conformity with accounting principles generally accepted in the United States (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 involve managements judgment and/or evaluation of inherent uncertain factors are as follows:



Revenue Recognition. We recognize revenue on product sales at the time
title transfers to the customer. 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 estimates.



Estimating Reserves and Allowances. Management estimates 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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Further, management estimates 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.



Managements current estimated ranges of liabilities relating to litigation and environmental claims are based on managements best estimate of
future costs. 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.



Pension and Post-Retirement Benefits. JDI
sponsors 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,
JDIs 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. Management
periodically reviews its long-lived assets, including non-amortizing intangible assets and goodwill, for impairment and assesses 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. Management also periodically reassesses the estimated remaining useful lives of its amortizing intangible assets and its 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. There were no known impairments or indicators of impairment identified
during the three and nine month periods ended October 1, 2004 or October 3, 2003.



Three Months Ended October 1, 2004 Compared to Three Months Ended October 3, 2003



Net Sales:



|                               |  |                    |         |                |   |         |  |            |        |  |      |  
|------------------------------ |  | ------------------ | ------- | -------------- | - | ------- |  | ---------- | ------ |  | ---- | -
|                               |  | Three Months Ended |         | Change         |  
|(dollars in thousands)         |  | October 1,2004     |         | October 3,2003 |   | Amount  |  | Percentage |       
|Net product and service sales: |  |                    |         |                |   |         |  |            |        |  |      |  
|Professional                   |  | $                  | 684,385 |                | $ | 629,876 |  | $          | 54,509 |  | 8.7  | %
|Polymer(1)                     |  |                    | 77,045  |                |   | 67,100  |  |            | 9,945  |  | 14.8 | %
|                               |  |                    |         |                |   |         |  |            |        |  |      |  
|                               |  |                    | 761,430 |                |   | 696,976 |  |            | 64,454 |  | 9.2  | %
|Sales agency fee income        |  |                    | 22,508  |                |   | 21,835  |  |            | 673    |  | 3.1  | %
|                               |  |                    |         |                |   |         |  |            |        |  |      |  
|                               |  | $                  | 783,938 |                | $ | 718,811 |  | $          | 65,127 |  | 9.1  | %
|                               |  |                    |         |                |   |         |  |            |        |  |      |  



|(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 $31.2 million to the increase in net product and service sales for the three
months ended October 1, 2004 as compared to the same period in the prior year, which was comprised of $29.3 million and $1.9 million, respectively, for the professional segment and the polymer segment.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  | Excluding the foreign currency impact, professional segment net sales increased by $25.2 million, or 3.8%, for the three months ended October 1, 2004 as compared to the same period
in the prior year primarily due to the impact of recent acquisitions, most notably Daisan Kogyo Co., Ltd. ($13.0 million), and volume growth in Latin America (5.4%) from economic recovery in Brazil and customer wins in Mexico, in the Asia Pacific
region (8.3%) from expansion in the developing markets of India and China, and in Japan (3.7%) from the success of the total solutions business. As expected, the North America region returned to growth in the third quarter of 2004, establishing a
platform for future expansion. In the European region, net sales grew moderately as compared to the prior period. These improvements were partially offset by competitive global pricing pressures, industry consolidation in the food and beverage
business and a change in product mix in key markets as cost reduction efforts cause customers to purchase increased volumes of lower priced, lower margin products at the expense of higher priced, higher margin products.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Excluding the foreign currency impact, polymer segment net sales increased by $8.0 million, or 11.6%, for the three months ended October 1, 2004 as compared to the same period in
the prior year primarily as a result of volume growth of 13%, mainly in the Asia Pacific and North America regions and in Japan.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Excluding a $1.7 million increase from the strengthening of the euro and certain other foreign currencies against the U.S. dollar, net sales under JDIs sales agency agreement
with Unilever decreased $1.0 million, or 4.4%, for the three months ended October 1, 2004 as compared to the same period in the prior year primarily due to certain brand disposals by Unilever in the European and Asia Pacific markets.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Gross Profit:



|                                  |  |                    |         |   |                |   |         |        |  |   |            |   |  |       |  
|--------------------------------- |  | ------------------ | ------- | - | -------------- | - | ------- | ------ |  | - | ---------- | - |  | ----- | -
|                                  |  | Three Months Ended |         |   | Change         |  
|(dollars in thousands)            |  | October 1,2004     |         |   | October 3,2003 |   |         | Amount |  |   | Percentage |  
|Professional                      |  | $                  | 314,769 |   |                | $ | 301,070 |        |  | $ | 13,699     |   |  | 4.6   | %
|Polymer                           |  |                    | 19,524  |   |                |   | 21,809  |        |  |   | (2,285     | ) |  | -10.5 | %
|                                  |  |                    |         |   |                |   |         |        |  |   |            |   |  |       |  
|                                  |  |                    | 334,293 |   |                |   | 322,879 |        |  |   | 11,414     |   |  | 3.5   | %
|                                  |  |                    |         |   |                |   |         |        |  |   |            |   |  |       |  
|Gross profit as a % of net sales: |  |                    |         |   |                |   |         |        |  |   |            |   |  |       |  
|Professional                      |  |                    | 44.5    | % |                |   | 46.2    | %      |  |   |            |   |  |       |  
|Polymer                           |  |                    | 25.3    | % |                |   | 32.5    | %      |  |   |            |   |  |       |  
|                                  |  |                    |         |   |                |   |         |        |  |   |            |   |  |       |  
|                                  |  |                    | 42.6    | % |                |   | 44.9    | %      |  |   |            |   |  |       |  
|                                  |  |                    |         |   |                |   |         |        |  |   |            |   |  |       |  



| |  | The strengthening of the euro and certain other foreign currencies against the U.S. dollar increased gross profits by $18.8 million for the three months ended October 1, 2004 as
compared to the same period in the prior year, which was comprised of $14.7 million and $4.1 million, respectively, for the professional segment and the polymer segment.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The reductions in gross margin were most evident in our polymer segment, where our products are formulated from solvents, acrylates and resins that include propylene, ethylene and
benzene, all of which are dependent of the price of crude oil and natural gas. Styrene costs, a key raw material in our polymer business, are currently at a level more than 50% above their peak in 2003. Another contributor to the rise in raw
material costs and the availability of product is a cyclical mismatch in demand and supply for these materials in the marketplace. As costs have increased, the polymer segment has trended toward an unfavorable product mix from customers substituting
lower margin products for specialty polymers.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | In our professional segment, the primary driver of the gross margin decline has been an unfavorable product and services mix, primarily in Europe, Japan and Latin America, where
lower margin products or services are being substituted for higher margin products. The increase crude oil and natural gas costs have also negatively affected our floorcare business, where acrylic based polymers are more common in product
formulations. The segment has also been adversely impacted by a steady rise in freight and transportation costs, primarily in North America, which can be attributed to the rise in crude oil prices, and additional depreciation expense ($3.2 million)
resulting from a change in accounting estimate for dishwashing equipment useful lives.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  | We are implementing focused price increases in the fourth quarter and into fiscal 2005 to recover, to the fullest extent possible, raw material cost increases, including the impact
of further cost increases we anticipate in the fourth quarter. In addition, the implementation of incentives and training programs designed to improve our product mix and the continuation of our aggressive global cost reduction programs will also be
required to lift gross margins.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Operating Expenses:



|                                             |  |                    |         |                |   |         |  |            |        |  |       |  
|-------------------------------------------- |  | ------------------ | ------- | -------------- | - | ------- |  | ---------- | ------ |  | ----- | -
|                                             |  | Three Months Ended |         | Change         |  
|(dollars in thousands)                       |  | October 1,2004     |         | October 3,2003 |   | Amount  |  | Percentage |       
|Selling, general and administrative expenses |  | $                  | 271,115 |                | $ | 259,479 |  | $          | 11,636 |  | 4.5   | %
|Research and development expenses            |  |                    | 18,387  |                |   | 16,922  |  |            | 1,465  |  | 8.7   | %
|Restructuring expense                        |  |                    | 5,604   |                |   | 561     |  |            | 5,043  |  | 898.9 | %
|                                             |  |                    |         |                |   |         |  |            |        |  |       |  
|                                             |  | $                  | 295,106 |                | $ | 276,962 |  | $          | 18,144 |  | 6.6   | %
|                                             |  |                    |         |                |   |         |  |            |        |  |       |  



| |  | The strengthening of the euro and certain other foreign currencies against the U.S. dollar increased operating expenses by $11.9 million for the three months ended October 1, 2004
as compared to the same period in the prior year, which was comprised of selling, general and administrative expenses ($11.3 million), research and development expenses ($0.5 million) and restructuring expense ($0.1 million).
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Excluding the impact of foreign currency, selling, general and administrative expenses increased $0.3 million for the three months ended October 1, 2004 as compared to the same
period in the prior year due to incremental operating expenses from the Daisan Kogyo Co., Ltd. acquisition ($3.4 million), an increase in capital software amortization costs related to projects placed into service in 2003, increased legal and other
professional fees, higher employee benefit costs, particularly in North America, and other inflationary wage and cost increases. These increased costs were effectively offset by decreases in pension plan costs ($5.8 million), which resulted from
adjustments to census data and plan curtailments in Brazil and the United Kingdom, and synergies from restructuring and integration programs, primarily in the sales and administrative functions.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Excluding the impact of foreign currency, restructuring expense increased $5.0 million for the three months ended October 1, 2004 as compared to the same period in the prior year,
primarily due to severance costs recorded for employees terminated as part of approved integration projects, which projects include the closure of facilities, organizational restructuring in the United States ($3.9 million) and restructuring
initiatives in Italy and Spain ($1.1 million).
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Restructuring
and Integration:



We initiated an extensive restructuring
and integration program in connection with the May 2002 acquisition of the DiverseyLever business. Under this program, specified costs associated with the closure of former DiverseyLever operations and the involuntary termination of former
DiverseyLever employees (exit costs) are recorded as purchase accounting adjustments. Costs under the program associated with the closure of specified pre-acquisition operations and the involuntary terminations of pre-acquisition
employees (restructuring costs) are recorded as restructuring expenses in the consolidated statements of income. Also incurred under the program are costs related to the acquisition which do not meet the definition of exit costs or
restructuring costs. Those costs are included in selling, general and administrative expenses in the consolidated statements of income (period costs).



During the three months ended October 1, 2004, we recorded $5.6 million of restructuring costs and $7.0 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.



A
summary of all costs associated with the restructuring and integration program for the three months ended October 1, 2004 and the three months ended October 3, 2003 is outlined below. The reserve balance shown below reflects the aggregate reserves
for restructuring costs.



18



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|                                                                        |  |                    |        |   |                |   |         |  
|----------------------------------------------------------------------- |  | ------------------ | ------ | - | -------------- | - | ------- | -
|                                                                        |  | Three Months Ended |       
|(dollars in thousands)                                                  |  | October 1,2004     |        |   | October 3,2003 |  
|Reserve balance at beginning of period                                  |  | $                  | 9,020  |   |                | $ | 69,400  |  
|Restructuring costs charged to income                                   |  |                    | 5,604  |   |                |   | 561     |  
|Liability adjustments                                                   |  |                    | (140   | ) |                |   |        |  
|Payments of accrued costs                                               |  |                    | (6,560 | ) |                |   | (12,728 | )
|                                                                        |  |                    |        |   |                |   |         |  
|Reserve balance at end of period                                        |  | $                  | 7,924  |   |                | $ | 57,233  |  
|                                                                        |  |                    |        |   |                |   |         |  
|Period costs classified as selling, general and administrative expenses |  | $                  | 6,985  |   |                | $ | 5,312   |  
|Capital expenditures                                                    |  |                    | 10,043 |   |                |   | 10,942  |  



Non-Operating Results:



|                       |  |                    |        |   |                |   |        |        |  |   |            |   |  |       |  
|---------------------- |  | ------------------ | ------ | - | -------------- | - | ------ | ------ |  | - | ---------- | - |  | ----- | -
|                       |  | Three Months Ended |        |   | Change         |  
|(dollars in thousands) |  | October 1,2004     |        |   | October 3,2003 |   |        | Amount |  |   | Percentage |  
|Interest expense       |  | $                  | 39,175 |   |                | $ | 38,773 |        |  | $ | 402        |   |  | 1.0   | %
|Interest income        |  |                    | (2,250 | ) |                |   | (262   | )      |  |   | (1,988     | ) |  | 758.8 | %
|                       |  |                    |        |   |                |   |        |        |  |   |            |   |  |       |  
|Net interest expense   |  |                    | 36,925 |   |                |   | 38,511 |        |  |   | (1,587     | ) |  | -4.1  | %
|Other expense, net     |  |                    | 1,624  |   |                |   | 666    |        |  |   | 958        |   |  |      |  



| |  | Net interest expense decreased for the three months ended October 1, 2004 as compared to the same period in the prior year primarily due to the reduction in total debt outstanding
and reduction in interest rates resulting from the August 2003 and February 2004 amendments to JDIs senior secured credit facilities and higher interest income from short-term investments, partially offset by increased debt issuance cost
amortization expense resulting from the pre-payment of debt as required under the JDI senior secured credit facility agreement.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Other expense, net for the three months ended October 1, 2004 consisted primarily of net losses from foreign currency transactions of $1.6 million.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Other expense, net for the three months ended October 3, 2003 consisted primarily of net losses from foreign currency transactions of $1.0 million.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------



Income Taxes:



|                                                                             |  |                    |       |   |                |   |       |        |  |   |            |   |  |       |  
|---------------------------------------------------------------------------- |  | ------------------ | ----- | - | -------------- | - | ----- | ------ |  | - | ---------- | - |  | ----- | -
|                                                                             |  | Three Months Ended |       |   | Change         |  
|(dollars in thousands)                                                       |  | October 1,2004     |       |   | October 3,2003 |   |       | Amount |  |   | Percentage |  
|Income before taxes and discontinued operations including minority interests |  | $                  | 645   |   |                | $ | 6,679 |        |  | $ | (6,034     | ) |  | -90.3 | %
|Provision for income taxes                                                   |  |                    | 1,686 |   |                |   | 3,028 |        |  |   | (1,342     | ) |  | -44.3 | %
|Effective income tax rate                                                    |  |                    | 261.4 | % |                |   | 45.3  | %      |  |   |            |   |  |       |  



| |  | The provision for income taxes decreased as compared to the prior year primarily due to lower income and an increase in the effective tax rate as a result of higher taxes on foreign
income and an increase in the valuation allowance for foreign tax loss carryforwards, partially offset by lower income before taxes.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



19



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##### Table of Contents

EBITDA:



EBITDA decreased by $3.4 million, or 3.9%, to $84.4 million for the three months ended October 1, 2004, as compared to $87.8 million for the three months
ended October 3, 2003, primarily due to the $6.7 million increase in restructuring expenses charged to operations and selling, general and administrative expenses and growth in sales volume were offset by a reduction in gross margin resulting from
product and geographic mix and the unrecovered raw material price increases discussed above. While third quarter EBITDA was lower than the same period in the prior year, we are ahead of last year for the nine month period and should continue to show
improvement on 2003 for the full year.



EBITDA is a non-GAAP
financial measure, and you should not consider EBITDA as an alternative to 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 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 the JDI 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 GAAP. The following table reconciles EBITDA to net cash flows provided by operating activities, which is the GAAP measure most comparable to EBITDA, for each of the periods for which EBITDA is presented.



20



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##### Table of Contents

|                                                                                                             |  |                    |         |   |                |   |         |  
|------------------------------------------------------------------------------------------------------------ |  | ------------------ | ------- | - | -------------- | - | ------- | -
|                                                                                                             |  | Three Months Ended |        
|(dollars in thousands)                                                                                       |  | October 1,2004     |         |   | October 3,2003 |  
|Net cash flows provided by operating activities                                                              |  | $                  | 67,773  |   |                | $ | 134,075 |  
|Changes in operating assets and liabilities, net of effects from acquisitions and divestitures of businesses |  |                    | (24,690 | ) |                |   | (86,147 | )
|Changes in deferred income taxes                                                                             |  |                    | 14,137  |   |                |   | 14,146  |  
|Loss from divestitures                                                                                       |  |                    | (276    | ) |                |   | (496    | )
|Gain (loss) on property disposals                                                                            |  |                    | 550     |   |                |   | (4,578  | )
|Depreciation and amortization expense                                                                        |  |                    | (46,954 | ) |                |   | (39,393 | )
|Amortization of debt issuance costs                                                                          |  |                    | (3,207  | ) |                |   | (2,624  | )
|Interest accrued on long-term receivables-related parties                                                    |  |                    | 733     |   |                |   |        |  
|Interest accreted on note payable                                                                            |  |                    | (8,563  | ) |                |   | (7,804  | )
|Other                                                                                                        |  |                    | (683    | ) |                |   | (1,659  | )
|                                                                                                             |  |                    |         |   |                |   |         |  
|Net income (loss)                                                                                            |  |                    | (1,180  | ) |                |   | 5,520   |  
|Minority interests in net income (loss) of subsidiaries                                                      |  |                    | (7      | ) |                |   | 61      |  
|Provision for income taxes                                                                                   |  |                    | 1,697   |   |                |   | 4,305   |  
|Interest expense, net                                                                                        |  |                    | 36,925  |   |                |   | 38,506  |  
|Depreciation and amortization expense                                                                        |  |                    | 46,954  |   |                |   | 39,393  |  
|                                                                                                             |  |                    |         |   |                |   |         |  
|EBITDA                                                                                                       |  | $                  | 84,389  |   |                | $ | 87,785  |  
|                                                                                                             |  |                    |         |   |                |   |         |  



Nine Months Ended October 1, 2004
Compared to Nine Months Ended October 3, 2003



Net Sales:



|                               |  |                   |           |                |   |           |  |            |         |  |      |  
|------------------------------ |  | ----------------- | --------- | -------------- | - | --------- |  | ---------- | ------- |  | ---- | -
|                               |  | Nine Months Ended |           | Change         |  
|(dollars in thousands)         |  | October 1,2004    |           | October 3,2003 |   | Amount    |  | Percentage |        
|Net product and service sales: |  |                   |           |                |   |           |  |            |         |  |      |  
|Professional                   |  | $                 | 2,065,253 |                | $ | 1,887,776 |  | $          | 177,477 |  | 9.4  | %
|Polymer(1)                     |  |                   | 230,639   |                |   | 201,175   |  |            | 29,464  |  | 14.6 | %
|                               |  |                   |           |                |   |           |  |            |         |  |      |  
|                               |  |                   | 2,295,892 |                |   | 2,088,951 |  |            | 206,941 |  | 9.9  | %
|Sales agency fee income        |  |                   | 68,079    |                |   | 65,996    |  |            | 2,083   |  | 3.2  | %
|                               |  |                   |           |                |   |           |  |            |         |  |      |  
|                               |  | $                 | 2,363,971 |                | $ | 2,154,947 |  | $          | 209,024 |  | 9.7  | %
|                               |  |                   |           |                |   |           |  |            |         |  |      |  



|(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 $124 million to the increase in net product and service sales for the nine
months ended October 1, 2004 as compared to the same period in the prior year, which was comprised of $116 million and $7.9 million, respectively, for the professional segment and the polymer segment.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Excluding the foreign currency impact, professional segment net sales increased by $61.2 million, or 3.1%, for the nine months ended October 1, 2004 as compared to the same period
in the prior year primarily due to the impact of recent acquisitions, most notably Daisan Kogyo Co., Ltd. ($38.1 million), and volume growth in the Asia Pacific region (8.5%) from expansion into the developing markets in India and China and in Japan
(3.2%) from the success of the total solutions business. All other regions showed slight improvement or were flat as compared to the prior period. These improvements were partially offset by competitive global pricing pressures, industry
consolidation in the food and beverage business and a change in product mix in key markets as cost reduction efforts cause customers to purchase increased volumes of lower priced, lower margin products at the expense of higher priced, higher margin
products.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Excluding the foreign currency impact, polymer segment net sales increased by $21.6 million, or 10.3%, for the nine months ended October 1, 2004 as compared to the same period in
the prior year primarily as a result of volume growth of 11%, mainly in the Asia Pacific and North America regions and in Japan.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  | Excluding a $6.8 million increase from the strengthening of the euro and certain other foreign currencies against the U.S. dollar, net sales under JDIs sales agency agreement
with Unilever decreased $4.7 million, or 6.4%, for the nine months ended October 1, 2004 as compared to the same period in the prior year primarily due to certain brand disposals by Unilever in the European and Asia Pacific markets.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Gross Profit:



|                                  |  |                   |           |   |                |   |         |        |  |            |        |  |     |  
|--------------------------------- |  | ----------------- | --------- | - | -------------- | - | ------- | ------ |  | ---------- | ------ |  | --- | -
|                                  |  | Nine Months Ended |           |   | Change         |  
|(dollars in thousands)            |  | October 1,2004    |           |   | October 3,2003 |   |         | Amount |  | Percentage |       
|Professional                      |  | $                 | 962,168   |   |                | $ | 904,240 |        |  | $          | 57,928 |  | 6.4 | %
|Polymer                           |  |                   | 70,234    |   |                |   | 66,869  |        |  |            | 3,365  |  | 5.0 | %
|                                  |  |                   |           |   |                |   |         |        |  |            |        |  |     |  
|                                  |  |                   | 1,032,402 |   |                |   | 971,109 |        |  |            | 61,293 |  | 6.3 | %
|                                  |  |                   |           |   |                |   |         |        |  |            |        |  |     |  
|Gross profit as a % of net sales: |  |                   |           |   |                |   |         |        |  |            |        |  |     |  
|Professional                      |  |                   | 45.1      | % |                |   | 46.3    | %      |  |            |        |  |     |  
|Polymer                           |  |                   | 30.5      | % |                |   | 33.2    | %      |  |            |        |  |     |  
|                                  |  |                   |           |   |                |   |         |        |  |            |        |  |     |  
|                                  |  |                   | 43.7      | % |                |   | 45.1    | %      |  |            |        |  |     |  
|                                  |  |                   |           |   |                |   |         |        |  |            |        |  |     |  



| |  | The strengthening of the euro and certain other foreign currencies against the U.S. dollar increased gross profits by $64.1 million for the nine months ended October 1, 2004 as
compared to the same period in the prior year, which was comprised of $58.2 million and $5.9 million, respectively, for the professional segment and the polymer segment.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The reductions in gross margin were most evident in our polymer segment, where our products are formulated from solvents, acrylates and resins that include propylene, ethylene and
benzene, all of which are dependent of the price of crude oil and natural gas. Styrene costs, a key raw material in our polymer business, are currently at a level more than 50% above their peak in 2003. Another contributor to the rise in raw
material costs and the availability of product is a cyclical mismatch in demand and supply for these materials in the marketplace. As costs have increased, the polymer segment has trended toward an unfavorable product mix from customers substituting
lower margin products for specialty polymers.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | In our professional segment, the primary driver of the gross margin decline has been an unfavorable product and services mix, primarily in Europe, Japan and Latin America, where
lower margin products or services are being substituted for higher margin products. The increase crude oil and natural gas costs have also negatively affected our floorcare business, where acrylic based polymers are more common in product
formulations. The segment has also been adversely impacted by a steady rise in freight and transportation costs, primarily in North America, which can be attributed to the rise in crude oil prices, and additional depreciation expense ($9.5 million)
resulting from a change in accounting estimate for dishwashing equipment useful lives.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | We are implementing focused price increases in the fourth quarter and into fiscal 2005 to recover, to the fullest extent possible, raw material cost increases, including the impact
of further cost increases we anticipate in the fourth quarter. In addition, the implementation of incentives and training programs designed to improve our product mix and the continuation of our aggressive global cost reduction programs will also be
required to lift gross margins.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



22



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##### Table of Contents

Operating Expenses:



|                                             |  |                   |         |                |   |         |  |   |            |   |  |      |  
|-------------------------------------------- |  | ----------------- | ------- | -------------- | - | ------- |  | - | ---------- | - |  | ---- | -
|                                             |  | Nine Months Ended |         | Change         |  
|(dollars in thousands)                       |  | October 1,2004    |         | October 3,2003 |   | Amount  |  |   | Percentage |  
|Selling, general and administrative expenses |  | $                 | 825,733 |                | $ | 785,613 |  | $ | 40,120     |   |  | 5.1  | %
|Research and development expenses            |  |                   | 55,406  |                |   | 51,216  |  |   | 4,190      |   |  | 8.2  | %
|Restructuring expense                        |  |                   | 13,154  |                |   | 13,862  |  |   | (708       | ) |  | -5.1 | %
|                                             |  |                   |         |                |   |         |  |   |            |   |  |      |  
|                                             |  | $                 | 894,293 |                | $ | 850,691 |  | $ | 43,602     |   |  | 5.1  | %
|                                             |  |                   |         |                |   |         |  |   |            |   |  |      |  



| |  | The strengthening of the euro and certain other foreign currencies against the U.S. dollar increased operating expenses by $47.5 million for the nine months ended October 1, 2004 as
compared to the same period in the prior year, which was comprised of selling, general and administrative expenses ($44.4 million), research and development expenses ($2.0 million) and restructuring expense ($1.1 million).
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Excluding the impact of foreign currency, selling, general and administrative expenses decreased $4.3 million for the nine months ended October 1, 2004 as compared to the same
period in the prior year. Decreases in pension plan costs ($5.8 million), which resulted from adjustments to census data and plan curtailments in Brazil and the United Kingdom, and synergies from restructuring and integration programs, primarily in
the sales and administrative functions, have exceeded the incremental operating expenses from the Daisan Kogyo Co., Ltd. acquisition ($9.2 million), an increase in capital software amortization costs related to projects placed into service in 2003,
increased legal and other professional fees, higher employee benefit costs, particularly in North America, and other wage and cost increases.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Restructuring and Integration:



During the nine months ended October 1, 2004, we recorded $13.2 million of restructuring costs and $16.7 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 severance costs recorded for employees terminated as part of approved integration projects, including the
closure of facilities and organizational restructuring in the United States ($7.1 million) and initiatives in the Netherlands, Italy and Spain ($4.4 million) as we continue to consolidate our operations.



A summary of all costs associated with the restructuring and integration
program for the nine months ended October 1, 2004, the nine months ended October 3, 2003 and from inception is outlined below. The reserve balance shown below reflects the aggregate reserves for restructuring costs.



|                                                                        |                |                   |         |                |                                                    |   |         |   |  |   |          |  
|----------------------------------------------------------------------- | -------------- | ----------------- | ------- | -------------- | -------------------------------------------------- | - | ------- | - |  | - | -------- | -
|(dollars in thousands)                                                  |                | Nine Months Ended |         |                | Total Projectto Date May 4, 2002 - October 1, 2004 |  
|                                                                        | October 1,2004 |                   |         | October 3,2003 |                                                    |  
|Reserve balance at beginning of period                                  |                | $                 | 34,798  |                |                                                    | $ | 68,858  |   |  | $ |         |  
|Exit costs recorded as purchase accounting adjustments                  |                |                   |        |                |                                                    |   | 21,758  |   |  |   | 80,574   |  
|Restructuring costs charged to income                                   |                |                   | 13,154  |                |                                                    |   | 13,862  |   |  |   | 45,722   |  
|Liability adjustments                                                   |                |                   | (4,180  | )              |                                                    |   |        |   |  |   | (4,180   | )
|Payments of accrued costs                                               |                |                   | (35,848 | )              |                                                    |   | (47,245 | ) |  |   | (114,192 | )
|                                                                        |                |                   |         |                |                                                    |   |         |   |  |   |          |  
|Reserve balance at end of period                                        |                | $                 | 7,924   |                |                                                    | $ | 57,233  |   |  | $ | 7,924    |  
|                                                                        |                |                   |         |                |                                                    |   |         |   |  |   |          |  
|Period costs classified as cost of sales                                |                | $                 |        |                |                                                    | $ | 2,420   |   |  | $ | 4,878    |  
|Period costs classified as selling, general and administrative expenses |                |                   | 16,661  |                |                                                    |   | 28,236  |   |  |   | 91,329   |  
|Capital expenditures                                                    |                |                   | 22,767  |                |                                                    |   | 32,048  |   |  |   | 93,980   |  



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Non-Operating Results:



|                            |  |                   |         |   |                |   |         |        |  |   |            |   |  |      |  
|--------------------------- |  | ----------------- | ------- | - | -------------- | - | ------- | ------ |  | - | ---------- | - |  | ---- | -
|                            |  | Nine Months Ended |         |   | Change         |  
|(dollars in thousands)      |  | October 1,2004    |         |   | October 3,2003 |   |         | Amount |  |   | Percentage |  
|Interest expense            |  | $                 | 119,226 |   |                | $ | 118,589 |        |  | $ | 637        |   |  | 0.5  | %
|Interest income             |  |                   | (4,204  | ) |                |   | (2,189  | )      |  |   | (2,015     | ) |  | 92.1 | %
|                            |  |                   |         |   |                |   |         |        |  |   |            |   |  |      |  
|Net interest expense        |  |                   | 115,022 |   |                |   | 116,400 |        |  |   | (1,378     | ) |  | -1.2 | %
|Other (income) expense, net |  |                   | 3,887   |   |                |   | (2,484  | )      |  |   | 6,371      |   |  |     |  



| |  | Net interest expense decreased for the nine months ended October 1, 2004 as compared to the same period in the prior year primarily due to the reduction in total debt outstanding
and reduction in interest rates resulting from the August 2003 and February 2004 amendments to JDIs senior secured credit facilities and higher interest income from short-term investments, partially offset by increased debt issuance cost
amortization expense resulting from the pre-payment of debt as required under the JDI senior secured credit facility agreement.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Other expense, net for the nine months ended October 1, 2004 included net losses from foreign currency transactions ($7.3 million) and non-recoverable sales tax assessments related
to prior years ($1.1 million), offset by compensation received from Unilever on the partial termination of our sales agency agreement with Unilever under terms provided for by such agreement and as a result of the disposal by Unilever of certain of
its brands ($2.5 million) and net gains on the sale of certain product lines ($1.8 million).
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Other income, net for the nine months ended October 3, 2003 primarily included a net gain from foreign currency translation and transactions of $1.8 million.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------



Income Taxes:



|                                                                             |  |                   |        |   |                |   |       |        |  |            |        |  |       |  
|---------------------------------------------------------------------------- |  | ----------------- | ------ | - | -------------- | - | ----- | ------ |  | ---------- | ------ |  | ----- | -
|                                                                             |  | Nine Months Ended |        |   | Change         |  
|(dollars in thousands)                                                       |  | October 1,2004    |        |   | October 3,2003 |   |       | Amount |  | Percentage |       
|Income before taxes and discontinued operations including minority interests |  | $                 | 19,046 |   |                | $ | 6,390 |        |  | $          | 12,656 |  | 198.1 | %
|Provision for income taxes                                                   |  |                   | 10,131 |   |                |   | 3,074 |        |  |            | 7,057  |  | 229.6 | %
|Effective income tax rate                                                    |  |                   | 53.2   | % |                |   | 48.1  | %      |  |            |        |  |       |  



| |  | The provision for income taxes increased as compared to the prior year primarily due to higher income before taxes and an increase in the effective tax rate for the nine months
ended October 1, 2004 primarily attributable to higher taxes on foreign income and an increase in the valuation allowance for foreign tax loss carryforwards.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



EBITDA:



EBITDA increased by $29.2 million, or 11.8%, to $277 million for the nine months ended October 1, 2004, as compared to $248 million for the nine months
ended October 3, 2003, primarily due to the increase in gross profit, offset partially by a $6.4 million increase in other expense, net, all as previously discussed. Benefits from synergy and integration programs and growth in sales volume were
offset by a reduction in gross margin resulting from product and geographic mix and the unrecovered raw material price increases discussed above.



EBITDA is a non-GAAP financial measure, and you should not consider EBITDA as an alternative to 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 GAAP) as a measure of our ability to meet cash needs.



24



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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 the JDI 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 GAAP. The following table reconciles EBITDA to net cash flows provided by operating activities, which is the GAAP measure most comparable to EBITDA, for
each of the periods for which EBITDA is presented.



|                                                                                                             |  |                   |          |   |                |   |          |  
|------------------------------------------------------------------------------------------------------------ |  | ----------------- | -------- | - | -------------- | - | -------- | -
|                                                                                                             |  | Nine Months Ended |         
|(dollars in thousands)                                                                                       |  | October 1,2004    |          |   | October 3,2003 |  
|Net cash flows provided by operating activities                                                              |  | $                 | 153,418  |   |                | $ | 161,653  |  
|Changes in operating assets and liabilities, net of effects from acquisitions and divestitures of businesses |  |                   | 10,498   |   |                |   | (19,409  | )
|Changes in deferred income taxes                                                                             |  |                   | 17,250   |   |                |   | 22,315   |  
|Gain from divestitures                                                                                       |  |                   | 2,757    |   |                |   | 799      |  
|Loss on property disposals                                                                                   |  |                   | (212     | ) |                |   | (9,231   | )
|Depreciation and amortization expense                                                                        |  |                   | (139,591 | ) |                |   | (116,368 | )
|Amortization of debt issuance costs                                                                          |  |                   | (9,851   | ) |                |   | (7,742   | )
|Interest accrued on long-term receivables-related parties                                                    |  |                   | 2,556    |   |                |   |         |  
|Interest accreted on note payable                                                                            |  |                   | (24,943  | ) |                |   | (22,573  | )
|Other                                                                                                        |  |                   | (848     | ) |                |   | (1,127   | )
|                                                                                                             |  |                   |          |   |                |   |          |  
|Net income                                                                                                   |  |                   | 11,034   |   |                |   | 8,317    |  
|Minority interests in net income (loss) of subsidiaries                                                      |  |                   | 154      |   |                |   | 112      |  
|Provision for income taxes                                                                                   |  |                   | 11,089   |   |                |   | 6,486    |  
|Interest expense, net                                                                                        |  |                   | 115,023  |   |                |   | 116,374  |  
|Depreciation and amortization expense                                                                        |  |                   | 139,591  |   |                |   | 116,368  |  
|                                                                                                             |  |                   |          |   |                |   |          |  
|EBITDA                                                                                                       |  | $                 | 276,891  |   |                | $ | 247,657  |  
|                                                                                                             |  |                   |          |   |                |   |          |  



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##### Table of Contents

Liquidity and Capital Resources



|                                                    |  |                   |           |   |                 |   |           |        |  |   |            |   |  |       |  
|--------------------------------------------------- |  | ----------------- | --------- | - | --------------- | - | --------- | ------ |  | - | ---------- | - |  | ----- | -
|                                                    |  | Nine Months Ended |           |   | Change          |  
|(dollars in thousands)                              |  | October 1, 2004   |           |   | October 3, 2003 |   |           | Amount |  |   | Percentage |  
|Net cash provided by operating activities           |  | $                 | 153,418   |   |                 | $ | 161,653   |        |  | $ | (8,235     | ) |  | -5.1  | %
|Net cash used in investing activities               |  |                   | (35,659   | ) |                 |   | (81,539   | )      |  |   | 45,880     |   |  | -56.3 | %
|Net cash provided by (used in) financing activities |  |                   | (83,228   | ) |                 |   | (111,011  | )      |  |   | 27,783     |   |  | -25.0 | %
|Capital expenditures                                |  |                   | 85,092    |   |                 |   | 97,835    |        |  |   | (12,743    | ) |  | -13.0 | %
|                                                    |  |                   |          
|                                                    |  |                   |           |   |                 |   |           | Change | 
|                                                    |  | October 1, 2004   |           |   | January 2, 2004 |   |           | Amount |  |   | Percentage |  
|Cash and cash equivalents                           |  | $                 | 40,272    |   |                 | $ | 24,543    |        |  | $ | 15,729     |   |  | 64.1  | %
|Working capital(1)                                  |  |                   | 404,737   |   |                 |   | 549,367   |        |  |   | (144,630   | ) |  | -26.3 | %
|Total debt                                          |  |                   | 1,570,184 |   |                 |   | 1,738,335 |        |  |   | (168,151   | ) |  | -9.7  | %



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



| |  | Net cash flows provided by operating activities decreased $8.2 million for the nine months ended October 1, 2004 as compared to the same period in the prior year primarily due to
higher pension plan contributions and a reduction of non-current pension related liabilities resulting from adjustments to census data and plan curtailments in Brazil and the United Kingdom ($5.8 million), partially offset by the increase in net
income and additional participation in the JDI receivable securitization program ($13.7 million). For further detail on the JDI receivables securitization program, see Off-Balance Sheet Arrangements below.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Net cash used in investing activities improved by $45.9 million for the nine months ended October 1, 2004 as compared to the same period in the prior year primarily due to proceeds
from the Whitmire divestiture ($46.0 million). A decrease in capital expenditures for property, plant and equipment and computer software ($12.7 million) was largely offset by a reduction in proceeds from the sale of property, plant and equipment
($11.1 million). 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 further capitalize on anticipated
revenue growth and cost savings opportunities associated with the acquisition of the DiverseyLever business.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Net cash flows used in financing activities decreased by $27.8 million for the nine months ended October 1, 2004 as compared to the same period in the prior year primarily due to
lower net repayments of debt ($34.0 million) and the timing of dividend payments ($4.9 million). JDIs senior secured credit facility agreement requires that proceeds received through the sale of assets or expansion of the JDI receivables
securitization program be used to pay down outstanding term debt. In the nine months ended October 3, 2003, net repayments of debt were $106 million, resulting from the expansion of the JDI receivables securitization program and increased cash flow
from operations. In the nine months ended October 1, 2004, net repayments of debt were $71.7 million, resulting from the proceeds for the Whitmire divestiture and the further expansion of the JDI receivables securitization program.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Net working capital decreased $145 million for the nine months ended October 1, 2004 as compared to January 2, 2004 primarily as a result of changes to the JDI receivable
securitization program that moved $95.2 million in trade receivables to JDIs off-balance sheet special purpose entity, additional participation in the JDI receivable securitization program of $13.7 million, primarily in Italy, and a benefit
from foreign currency exchange rates. For further detail on the JDI receivables securitization program, see Off-Balance Sheet Arrangements below.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Due to the seasonality of our business, net working capital tends to be at its lowest levels at year-end with a build during the first half of the year to meet second half demand
and a reduction over the second half of the year. At October 1, 2004, net working capital of $405 million was $5.8 million lower than at the end of the second quarter. Given this trend, we anticipate that net working capital will decrease further by
the end of the fiscal year.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  | Total debt decreased $168 million for the nine months ended October 1, 2004 as compared to January 2, 2004 primarily as a result of the removal of $95.2 million of obligations under
the JDI receivables securitization facility to an off-balance sheet special purpose entity, pre-payment of debt under the JDI senior secured credit facilities ($122 million) and the strengthening of the U.S. dollar against the Euro and other foreign
currencies, partially offset by additional short-term borrowings ($42 million) to fund cash outflows from operations and the aforementioned term debt principal payments. For further detail on the JDI receivables securitization program, see
Off-Balance Sheet Arrangements below.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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. This amendment reduced the interest rate payable with respect to specified tranches
of debt under the credit facilities, thereby reducing borrowing costs over the remaining life of the credit facilities. In addition, the amendment increased specified credit limits and changed various administrative requirements to provide us
greater operating flexibility.



The JDI senior secured credit
facilities were amended for a second time on February 24, 2004. This amendment reduced the interest rate payable for the U.S. dollar portion of the term B tranche of debt under the senior secured credit facilities, thereby reducing the borrowing
cost over the remaining life of the tranche. In addition, the amendment changed various financial covenants and administrative requirements to provide us with greater flexibility to operate our business and to complete the integration of the
DiverseyLever acquisition.



On February 26, 2004, Holdings
successfully completed an offer to exchange $406 million in aggregate principal amount at maturity of the outstanding 10.67% senior discount notes due 2013, Series A, which were issued to Unilever in connection with the DiverseyLever acquisition in
a private placement transaction exempt from the registration requirements of the Securities Act of 1933 (the Securities Act), for 10.67% senior discount notes due 2013, Series B, which were registered with the Securities and Exchange
Commission (SEC) under the Securities Act.



As of
October 1, 2004, excluding indebtedness held by JDI, Holdings only indebtedness consisted of $264 million in senior discount notes. As of October 1, 2004, Holdings subsidiaries had total indebtedness of about $1.3 billion, consisting of $576
million of JDI senior subordinated notes, $670 million of borrowings under the JDI senior secured credit facilities, $1.7 million of other long-term borrowings and $57.8 million in short-term credit lines. In addition, we had $199 million in
operating lease commitments, $12.1 million in capital lease commitments and $7.3 million committed under letters of credit that expire in 2004 and 2005.



27



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##### Table of Contents

JDI and some of 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 October 1, 2004, JDI had $15.9 million in borrowings under the revolving portion of the JDI senior secured credit facilities and had the
ability to borrow $302 million under those revolving facilities. Of this amount, we believe JDI would have been able to borrow $282 million and still be in compliance with the financial covenants set forth in the JDI senior secured credit
facilities, the indentures for the JDI senior subordinated notes and we would have still been in compliance with the financial covenants set forth in the indenture for the senior discount notes.



We believe that the cash flows from operations, the anticipated further cost
savings and operating improvements associated with the acquisition of the DiverseyLever business and our restructuring initiatives, together with available cash, available borrowings under 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. There can be no assurance, however, that we will be able to achieve the anticipated cost savings or that
our substantial indebtedness will not adversely affect our financial condition.



Off-Balance Sheet Arrangements. Since March 2001, JDI and some of its subsidiaries have funded a portion of their short-term liquidity needs through the securitization of some of their trade accounts receivable
(the Receivables Facility). JDI and some of its U.S. and foreign subsidiaries are parties to an agreement whereby they sell, on a continuous basis, all trade receivables to JWPR Corporation (JWPRC), a wholly owned, special
purpose, bankruptcy-remote subsidiary formed for the sole purpose of buying and selling receivables. Under the Receivables Facility, JDI and some of its subsidiaries, irrevocably and without recourse, transfer all trade receivables to JWPRC. JWPRC,
in turn, sells an undivided interest in these receivables to Falcon Asset Management Corporation (the Conduit) for an amount equal to the value of all eligible receivables (as defined under the receivables sale agreement) less the
applicable reserve.



On August 29, 2003, the Receivables
Facility was amended to include certain additional JDIs U.S. subsidiaries, expand the total potential for securitization of trade receivables to $75 million from the previous limit of $55 million, and change the facility term to 354 days from
the date of closing, renewable without fee.



On October 24,
2003, the Receivables Facility was again amended to include certain United Kingdom subsidiaries and further expand the total potential for securitization of trade receivables to $100 million (the October 2003 amendment). Prior to the
October 2003 amendment, the beneficial interest of accounts receivable sold under the Receivables Facility was excluded from accounts receivable in our consolidated balance sheets in accordance with SFAS No. 140. As a result of the terms of the
October 2003 amendment, limitations in the articles of incorporation of JWPRC and the requirements for sale defined in SFAS No. 140, we were no longer able to exclude the accounts receivable sold under the Receivables Facility from our consolidated
balance sheets.



On January 5, 2004, the Receivables Facility
was amended and restated to include JDIs Italian subsidiary and to further expand the potential for securitization of trade receivables to $150 million.



In March 2004, JDI modified the articles of incorporation of JWPRC and obtained necessary legal opinions in order for the Receivables Facility to be in
compliance with the provisions of SFAS No. 140. As such, we have excluded accounts receivable sold under the Receivables Facility from the consolidated balance sheet at October 1, 2004.



As of October 1, 2004, the Conduit held $136 million of accounts receivable that are not included in the accounts receivable
balance reflected in our consolidated balance sheet. As of January 2, 2004, we included $95.2 million of accounts receivable held by the Conduit in our consolidated balance sheet for the reasons noted above.



28



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##### Table of Contents

As of October 1, 2004, JDI had a retained interest of $129 million in the receivables of JWPRC. The
retained interest is included in the accounts receivable balance and is reflected in the consolidated balance sheet at estimated fair value.



For the nine months ended October 1, 2004, JWPRCs cost of borrowing under the Receivables Facility is at a weighted average rate of 2.56% per annum,
which is significantly lower than JDIs 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.



Financial Covenants under the JDI Senior Secured Credit Facilities



Under the 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 JDI 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:



|                                    |  |                       
|----------------------------------- |  | ----------------------
|                                    |  | Maximum Leverage Ratio
|September 30, 2004                  |  | 4.25 to 1             
|December 31, 2004, to June 30, 2005 |  | 3.75 to 1             
|September 30, 2005                  |  | 3.50 to 1             
|December 31, 2005                   |  | 3.25 to 1             
|March 31, 2006 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.



29



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##### Table of Contents

The JDI senior secured credit facilities require that JDI maintain an interest coverage ratio of no less
than the ratio set forth below for each of the financial covenant periods ending nearest the corresponding date set forth below:



|                                     |  |                                
|------------------------------------ |  | -------------------------------
|                                     |  | Minimum Interest Coverage Ratio
|September 30, 2004                   |  | 3.00 to 1                      
|December 31, 2004, to March 31, 2005 |  | 3.25 to 1                      
|June 30, 2005, to September 30, 2005 |  | 3.50 to 1                      
|December 31, 2005 and thereafter     |  | 4.00 to 1                      



Compliance with
Maximum Leverage Ratio and Minimum Interest Coverage Ratio. For JDIs financial covenant period ended on October 1, 2004, 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 nearest the corresponding date set forth below in an amount exceeding the following:



|                       |  |                              |        
|---------------------- |  | ---------------------------- | -------
|(dollars in thousands) |  | Maximum Capital Expenditures
|December 31, 2004      |  | $                            | 122,600
|December 31, 2005      |  | $                            | 107,000
|December 31, 2006      |  | $                            | 110,000
|December 31, 2007      |  | $                            | 113,200



JDI can exceed in a
year the maximum capital expenditures limitation set forth above for that year by the amount, if any, by which the limitation set forth above for the previous year exceeded actual capital expenditures made in that previous year. Based on fiscal year
2003 capital expenditures of $135 million as compared to the $161 million maximum, JDI may exceed the fiscal year 2004 capital expenditure limit by an additional $26 million. As of October 1, 2004, JDI was in compliance with the limitation on
capital expenditures for fiscal year 2004.



Restructuring
Charges. The JDI senior secured credit facilities limit the amount of spending on restructuring and integration-related activities in 2004 and 2005 to $145 million in the aggregate. As of October 1, 2004, JDI was in compliance with the
limitation on spending on restructuring and integration-related activities for fiscal year 2004.



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



Interest Rate Risk



As of October 1, 2004, JDI had $670 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 senior credit facilities, $216 million of the debt outstanding remained subject to variable rates. In addition, as of October 1, 2004, JDI had $57.8 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.



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##### Table of Contents

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 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.



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



Evaluation of JohnsonDiverseys 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 interim Chief Financial Officer (CFO). The result of the controls evaluation was reported to the Audit Committee of JohnsonDiversey, Inc.s (the Companys)
Board of Directors (the Audit Committee).



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 (the Exchange Act). This
portion of our quarterly report is our disclosure of the results of our controls evaluation referred to in Rule 13a-14 of the Exchange Act 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 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 or
detect all errors 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 prevented or 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.



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Scope of the Controls Evaluation. The evaluation of our Disclosure Controls included a review of
control 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
issues or acts of fraud and to confirm that appropriate corrective actions, including process improvements, were taken. This evaluation is performed, and reported to our Audit Committee, 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 to supplement the disclosures made in our annual reports on Form 10-K. Certain 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 auditors 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 is that the Disclosure Controls will be maintained as dynamic systems that change (including through improvements and
corrections) as conditions warrant.



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 auditors and report on that information and related matters in this section of the quarterly report. In the professional auditing literature, significant deficiencies are referred to as
reportable conditions which are control issues that could have a significant adverse effect on the Companys ability to record, process, summarize and report financial data in the financial statements. A material
weakness is defined in the auditing 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 controls 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.



Commencing in the first quarter of fiscal year 2003, we formulated our Finance Infrastructure Internal Control Improvement
Plan to take additional actions to strengthen our internal control environment, including the hiring of additional finance personnel, strengthening of the internal audit function, development of expanded Sarbanes-Oxley Act Section 302 certification
and monthly financial statement closing processes, expansion of Sarbanes-Oxley Act Section 404 internal control review activities, commencement of a skill set assessment survey of key members of the finance staff, and improved monitoring and
oversight of the finance function. In addition, to assist management in assessing our control environment and related issues associated with the material weaknesses previously identified, we retained, commencing in the first quarter of fiscal year
2003, independent consulting firms with experience in internal controls.



In connection with the completion of the audit of our consolidated financial statements for our fiscal year ended January 2, 2004, our independent auditors, Ernst & Young LLP, identified certain deficiencies in
the design and operation of our internal controls related to the financial reporting process, which represent reportable conditions that collectively represent a material weakness in internal control over financial reporting. Deficiencies were
identified with respect to the complex process to finalize the accounting for the purchase of the DiverseyLever business, our process for accounting, analysis, and documentation of income taxes, documentation of our receivables securitization
program, accounting for fixed asset transfers arising from the integration of the business, and oversight and monitoring of the finance function.



Management continues to refine and implement the Financial Infrastructure Internal Control Improvement Plan to address these matters with input from our
independent auditors and our Audit Committee. The following is a summary of actions completed as of the end of the third quarter of 2004:



| |  | In the first quarter of 2004, JDI amended the articles of incorporation related to our asset securitization facility and obtained the necessary updated legal opinions to permit us
to resume off-balance sheet treatment of our sold accounts receivable in compliance with SFAS No. 140;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  | In the second quarter of 2004, we completed the integration of our North America fixed asset systems;
| | - | -----------------------------------------------------------------------------------------------------



| |  | In the third quarter of 2004, we issued updated global fixed asset accounting policies and procedure statements designed to strengthen accounting and internal control in this area;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | In the third quarter of 2004, JDI finalized a significant portion of the remaining open purchase price allocation matters; and
| | - | ------------------------------------------------------------------------------------------------------------------------------



| |  | In the third quarter of 2004, with the assistance of a third party consulting firm, we completed our review of our financial statement closing process, which included a
comprehensive analysis of the tax closing process.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Remediation of the remaining reportable conditions continues to be addressed by management. The following is an update of managements ongoing actions as of the end of the third quarter of 2004:



| |  | We are making substantial progress with our comprehensive review of purchase accounting for local statutory reporting purposes and have held a number of regional training sessions
for finance personnel responsible for the preparation of local statutory reports and income tax returns. We will continue to use this work to assist in identifying any remaining purchase accounting related issues and focus further tailored training
sessions for local finance personnel as required.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | We have formed task forces to develop action plans to implement prioritized recommendations resulting from our analysis of the tax closing and financial statement closing process.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | We are continuing our work to develop and deploy against training requirements identified by the world-wide skill set assessment of key members of the finance staff that was
completed during the second quarter of 2004, with initial emphasis given to tax accounting.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The actions being taken by us to correct the weaknesses previously identified constitute significant changes in internal control over financial reporting
in the period covered by this quarterly report. These actions constitute the only changes to our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over
financial reporting in this quarterly period.



As previously
disclosed, effective August 16, 2004, Michael Bailey, Holdings Vice President, Chief Financial Officer and Treasurer and JDIs Executive Vice President and Chief Financial Officer, assumed the newly created strategic role of Executive
Vice President of Corporate Development for JDI. In his new role, Mr. Bailey is responsible for merger, acquisition and business alliance activity, strategy development and execution, information technology management and business development. Mr.
Bailey remains on JDIs Senior Management Committee, but is no longer an officer of Holdings.



Also as previously disclosed, effective August 16, 2004, Clive Newman, JDIs Vice President and Corporate Controller, assumed the role of Acting
Chief Financial Officer for Holdings and interim Chief Financial Officer for JDI. In addition, in his capacity as JDIs interim Chief Financial Officer, Mr. Newman is also serving as a member of JDIs Senior Management Committee. Mr.
Newman has been Vice President and Corporate Controller at JDI since completion of the our and JDIs acquisition of DiverseyLever in May 2002.



On November 1, 2004, the Holdings Board of Directors named Joseph Smorada as Vice President and Chief Executive Officer of JohnsonDiversey Holdings,
Inc. and JDIs Board of Directors named Mr. Smorada as Executive Vice President and Chief Financial Officer of JohnsonDiversey, Inc., effective November 15, 2004. Mr. Smorada will serve as a member of the JDIs Senior Management Committee,
replacing Mr. Newman in this role. Mr. Newman will continue to serve as Holdings Acting Chief Financial Officer and JDIs interim Chief Financial Officer until the effectiveness of Mr. Smoradas appointment, at which time he
will resume his prior role as Vice President and Corporate Controller of JDI.



We believe that the above actions taken by Holdings and JDI will enhance the skills of senior finance leadership, improve financial oversight and help Holdings and JDI meet applicable reporting and controls
requirements.



Conclusions. Based upon the controls
evaluation, our CEO and interim CFO have concluded that our Disclosure Controls, as of the end of the period covered by this quarterly report, including the additional procedures performed and controls instituted by us to supplement our internal
control over financial reporting in order to mitigate the effect of the weaknesses identified in this report, were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms.



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PART II. OTHER INFORMATION



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



Auto-C, LLC, JDIs wholly owned subsidiary, supplies commercial warewashing, laundry and other products in the United States that bear the
Auto-Chlor® System trademark and distributes these
products through JDI or through dealers with rights in defined territories. Pursuant to a complaint filed on March 2, 2002, as amended, a group of Auto-Chlor System dealers sued DLever, Inc., a subsidiary of Unilever, Auto-C, LLC and JDI in the
United States District Court for the District of Minnesota (the Court). Following the Courts July 19, 2004 dismissal of most of the claims made by the Auto-Chlor System dealers, the case was settled in August 2004 without material
adverse effect on our business, financial condition, results of operations or cash flows.



We and JDI are also 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 6. | EXHIBITS AND REPORTS ON FORM 8-K
|------- | --------------------------------



|(a) | 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 12, 2004 |  |  |  | /s/    CLIVE A.
NEWMAN        
|                        |  |  |  | Clive A. Newman               
|                        |  |  |  | Acting 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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