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UNITED STATES

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, 2010

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 333-10885





DIVERSEY HOLDINGS, INC.

(Exact name of registrant as specified in its charter)







|                                                               |  |  |  |                                  
|-------------------------------------------------------------- |  |  |  | ---------------------------------
|Delaware                                                       |  |  |  | 80-0010497                       
|(State or other jurisdiction of
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)



(Former name, former address and former fiscal year, if changed
since last report)





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 has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule-405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 month (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

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



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  | x  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

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

There is no public trading market for the registrant's common stock. As of October 29, 2010, there were 99,764,706 outstanding
shares of the registrants Class A common stock, $0.01 par value and 1,555,971 outstanding shares of the registrants Class B common stock, $0.01 par value.









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INDEX



|                               |  |                                                                                                                                        |    |      |    | 
|------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|Section                        |  | Topic                                                                                                                                  |    | Page |   
|                               |  |                                                                                                                                       
|                               |  | Forward-Looking Statements                                                                                                             |    |      | i  | 
|                               | 
|PART I  FINANCIAL INFORMATION |  |                                                                                                                                        |    |     
|                               |  |                                                                                                                                       
|Item 1                         |  | Financial Statements                                                                                                                   |    |      |    | 
|                               |  |                                                                                                                                       
|                               |  | Consolidated Balance Sheets as of October 1, 2010 (unaudited) and December 31, 2009                                                    |    |      | 1  | 
|                               |  |                                                                                                                                       
|                               |  | Consolidated Statements of Operations for the three and nine months ended October 1, 2010 (unaudited) and October
 2, 2009 (unaudited) |    |      | 2  | 
|                               |  |                                                                                                                                       
|                               |  | Consolidated Statements of Cash Flows for the nine months ended October 1, 2010 (unaudited) and October 2,
 2009 (unaudited)           |    |      | 3  | 
|                               |  |                                                                                                                                       
|                               |  | Notes to Consolidated Financial Statements (unaudited)                                                                                 |    |      | 4  | 
|                               |  |                                                                                                                                       
|Item 2                         |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations                                                  |    |      | 22 | 
|                               |  |                                                                                                                                       
|Item 3                         |  | Quantitative and Qualitative Disclosure about Market Risk                                                                              |    |      | 45 | 
|                               |  |                                                                                                                                       
|Item 4                         |  | Controls and Procedures                                                                                                                |    |      | 45 | 
|                               | 
|PART II  OTHER INFORMATION    |  |                                                                                                                                        |    |     
|                               |  |                                                                                                                                       
|Item 1                         |  | Legal Proceedings                                                                                                                      |    |      | 46 | 
|                               |  |                                                                                                                                       
|Item 6                         |  | Exhibits                                                                                                                               |    |      | 46 | 
|                               | 
|SIGNATURES                     |  |                                                                                                                                        | 47 |     
|                               | 
|Exhibit Index                  |  |                                                                                                                                        | 48 |     



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

On October 7, 2009, Holdings,
together with Diversey, entered into a series of agreements to recapitalize Holdings and refinance the Companys and Diverseys debt (the Transactions). The closing of the Transactions occurred on November 24, 2009.
Additional information regarding the Transactions and the Company is disclosed in the Companys Annual Report on Form 10-K, and as amended in Amendments No. 1 and No. 2 on Form 10-K/A for the year ended December 31, 2009, and
Current Report on Form 8-K, as filed with the Securities and Exchange Commission (SEC) on March 18, 2010, April 1, 2010, July 2, 2010 and May 27, 2010, respectively.

Forward-Looking Statements

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



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



| |  |  | our ability to fully realize the anticipated benefits of the Transactions;
| | - |  | --------------------------------------------------------------------------



| |  |  | our substantial indebtedness and our ability to operate in accordance with the terms and conditions of the agreements governing the indebtedness
incurred pursuant to the Transactions, including the indebtedness under Diverseys senior secured credit facilities, Diverseys senior notes and Holdings senior notes;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to operate in accordance with the terms and conditions of the agreements governing the indebtedness incurred pursuant to the Transactions;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | potential conflicts of interest that any of our indirect principal shareholders may have with us in the future;
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | our ability to sustain our brand equity subsequent to Diverseys name change to Diversey, Inc.
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | our ability to successfully execute and complete our restructuring program, including workforce reduction, achievement of cost savings, as well as
plant closures and disposition of assets;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | successful operation of outsourced functions, including information technology and certain financial shared services;
| | - |  | ---------------------------------------------------------------------------------------------------------------------



| |  |  | general economic and political conditions, interest rates, exposure to foreign currency risks and financial market volatility;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | the vitality of the institutional and industrial cleaning and sanitation market and conditions affecting the industry, including health-related,
political, global economic and weather-related;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | restraints on pricing flexibility due to competitive conditions in the professional market;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | the loss or insolvency of a significant supplier or customer, or the inability of a significant supplier or customer to fulfill their obligations to
us;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



i



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



| |  |  | 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;
| | - |  | ---------------------------------------



| |  |  | 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, war, and other such events that cause business interruptions or affect our
markets;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the costs and effect of a relocation of manufacturing capability from our primary U.S. manufacturing facility; and
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | other factors listed from time to time in reports that we file with the SEC.
| | - |  | ----------------------------------------------------------------------------



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PART I. FINANCIAL
INFORMATION



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

DIVERSEY HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share data)



|                                                                                                                                                                                                                                |  |                 |           |   |                   |   |           |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------- | --------- | - | ----------------- | - | --------- | -
|                                                                                                                                                                                                                                |  | October 1, 2010 |           |   | December 31, 2009 |  
|                                                                                                                                                                                                                                |  | (unaudited)     |           |   |                   |  
|ASSETS                                                                                                                                                                                                                          |  |                 |           |   |                   |   |           |  
|Current assets:                                                                                                                                                                                                                 |  |                 |           |   |                   |   |           |  
|Cash and cash equivalents                                                                                                                                                                                                       |  | $               | 229,107   |   |                   | $ | 249,713   |  
|Restricted cash                                                                                                                                                                                                                 |  |                 | 23,064    |   |                   |   | 39,654    |  
|Accounts receivable, less allowance of $21,681 and $20,645, respectively                                                                                                                                                        |  |                 | 586,717   |   |                   |   | 556,720   |  
|Accounts receivable  related parties                                                                                                                                                                                           |  |                 | 10,021    |   |                   |   | 21,943    |  
|Inventories                                                                                                                                                                                                                     |  |                 | 283,667   |   |                   |   | 255,989   |  
|Deferred income taxes                                                                                                                                                                                                           |  |                 | 30,342    |   |                   |   | 30,288    |  
|Other current assets                                                                                                                                                                                                            |  |                 | 174,635   |   |                   |   | 171,232   |  
|Current assets of discontinued operations                                                                                                                                                                                       |  |                 | 60        |   |                   |   | 60        |  
|                                                                                                                                                                                                                                |  |                 |           |   |                   |   |           |  
|Total current assets                                                                                                                                                                                                            |  |                 | 1,337,613 |   |                   |   | 1,325,599 |  
|Property, plant and equipment, net                                                                                                                                                                                              |  |                 | 403,556   |   |                   |   | 415,645   |  
|Capitalized software, net                                                                                                                                                                                                       |  |                 | 48,848    |   |                   |   | 53,298    |  
|Goodwill                                                                                                                                                                                                                        |  |                 | 1,268,346 |   |                   |   | 1,271,032 |  
|Other intangibles, net                                                                                                                                                                                                          |  |                 | 201,274   |   |                   |   | 220,769   |  
|Other assets                                                                                                                                                                                                                    |  |                 | 152,450   |   |                   |   | 158,045   |  
|Noncurrent assets of discontinued operations                                                                                                                                                                                    |  |                 |          |   |                   |   | 3,919     |  
|                                                                                                                                                                                                                                |  |                 |           |   |                   |   |           |  
|Total assets                                                                                                                                                                                                                    |  | $               | 3,412,087 |   |                   | $ | 3,448,307 |  
|                                                                                                                                                                                                                                |  |                 |           |   |                   |   |           |  
|LIABILITIES, CLASS B SHARES AND EQUITY AWARDS SUBJECT TO CONTINGENT REDEMPTION AND STOCKHOLDERS
EQUITY                                                                                                                         |  |                 |           |   |                   |   |           |  
|Current liabilities:                                                                                                                                                                                                            |  |                 |           |   |                   |   |           |  
|Short-term borrowings                                                                                                                                                                                                           |  | $               | 46,663    |   |                   | $ | 27,661    |  
|Current portion of long-term borrowings                                                                                                                                                                                         |  |                 | 9,596     |   |                   |   | 9,811     |  
|Accounts payable                                                                                                                                                                                                                |  |                 | 304,539   |   |                   |   | 380,378   |  
|Accounts payable  related parties                                                                                                                                                                                              |  |                 | 27,271    |   |                   |   | 35,900    |  
|Accrued expenses                                                                                                                                                                                                                |  |                 | 478,590   |   |                   |   | 472,735   |  
|Current liabilities of discontinued operations                                                                                                                                                                                  |  |                 | 3,846     |   |                   |   | 6,174     |  
|                                                                                                                                                                                                                                |  |                 |           |   |                   |   |           |  
|Total current liabilities                                                                                                                                                                                                       |  |                 | 870,505   |   |                   |   | 932,659   |  
|                                                                                                                                                                                                                                |  |                
|Pension and other post-retirement benefits                                                                                                                                                                                      |  |                 | 250,073   |   |                   |   | 248,414   |  
|Long-term borrowings                                                                                                                                                                                                            |  |                 | 1,531,000 |   |                   |   | 1,593,697 |  
|Deferred income taxes                                                                                                                                                                                                           |  |                 | 116,794   |   |                   |   | 101,312   |  
|Other liabilities                                                                                                                                                                                                               |  |                 | 129,345   |   |                   |   | 144,392   |  
|Noncurrent liabilities of discontinued operations                                                                                                                                                                               |  |                 | 5,000     |   |                   |   | 4,522     |  
|                                                                                                                                                                                                                                |  |                 |           |   |                   |   |           |  
|Total liabilities                                                                                                                                                                                                               |  |                 | 2,902,717 |   |                   |   | 3,024,996 |  
|Commitments and contingencies                                                                                                                                                                                                   |  |                 |           |   |                   |   |           |  
|                                                                                                                                                                                                                                |  |                
|Class B shares and equity awards subject to contingent redemption                                                                                                                                                               |  |                 | 36,388    |   |                   |   |          |  
|Stockholders equity:                                                                                                                                                                                                           |  |                 |           |   |                   |   |           |  
|                                                                                                                                                                                                                                |  |                
|Class A common stock - $0.01 par value; 200,000,000 shares authorized; 99,764,706 shares issued and outstanding at
October 1, 2010 and December 31, 2009                                                                        |  |                 | 998       |   |                   |   | 998       |  
|Class B common stock - $0.01 par value; 20,000,000 shares authorized; 1,555,971 shares issued and outstanding at October 1,
2010 (subject to contingent redemption) and 0 shares issued and outstanding as of December 31, 2009 |  |                 |          |   |                   |   |          |  
|Capital in excess of par value                                                                                                                                                                                                  |  |                 | 553,318   |   |                   |   | 549,512   |  
|Accumulated deficit                                                                                                                                                                                                             |  |                 | (303,593  | ) |                   |   | (342,515  | )
|Accumulated other comprehensive income                                                                                                                                                                                          |  |                 | 222,259   |   |                   |   | 215,316   |  
|                                                                                                                                                                                                                                |  |                 |           |   |                   |   |           |  
|Total stockholders equity                                                                                                                                                                                                      |  |                 | 472,982   |   |                   |   | 423,311   |  
|                                                                                                                                                                                                                                |  |                 |           |   |                   |   |           |  
|Total liabilities, class B shares and equity awards subject to contingent redemption and stockholders
equity                                                                                                                   |  | $               | 3,412,087 |   |                   | $ | 3,448,307 |  
|                                                                                                                                                                                                                                |  |                 |           |   |                   |   |           |  

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



1



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DIVERSEY HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands)



|                                                                                         |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|---------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------- | --------------- |  | - | --------------- | - |  | - | --------- | -
|                                                                                         |  | Three Months Ended |         |   | Nine Months Ended |  
|                                                                                         |  | October 1, 2010    |         |   | October 2, 2009   |   |         | October 1, 2010 |  |   | October 2, 2009 |  
|                                                                                         |  | (unaudited)        |         |   | (unaudited)       |  
|Net sales:                                                                               |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|Net product and service sales                                                            |  | $                  | 776,308 |   |                   | $ | 808,231 |                 |  | $ | 2,306,379       |   |  | $ | 2,293,332 |  
|Sales agency fee income                                                                  |  |                    | 7,264   |   |                   |   | 7,206   |                 |  |   | 19,170          |   |  |   | 19,271    |  
|                                                                                         |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|                                                                                         |  |                    | 783,572 |   |                   |   | 815,437 |                 |  |   | 2,325,549       |   |  |   | 2,312,603 |  
|Cost of sales                                                                            |  |                    | 455,433 |   |                   |   | 463,015 |                 |  |   | 1,335,090       |   |  |   | 1,364,905 |  
|                                                                                         |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|Gross profit                                                                             |  |                    | 328,139 |   |                   |   | 352,422 |                 |  |   | 990,459         |   |  |   | 947,698   |  
|Selling, general and administrative expenses                                             |  |                    | 224,705 |   |                   |   | 251,920 |                 |  |   | 728,976         |   |  |   | 732,776   |  
|Research and development expenses                                                        |  |                    | 15,572  |   |                   |   | 15,598  |                 |  |   | 48,829          |   |  |   | 46,591    |  
|Restructuring expenses                                                                   |  |                    | 173     |   |                   |   | 919     |                 |  |   | (2,347          | ) |  |   | 8,162     |  
|                                                                                         |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|Operating profit                                                                         |  |                    | 87,689  |   |                   |   | 83,985  |                 |  |   | 215,001         |   |  |   | 160,169   |  
|Other (income) expense:                                                                  |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|Interest expense                                                                         |  |                    | 38,400  |   |                   |   | 34,530  |                 |  |   | 108,308         |   |  |   | 106,013   |  
|Interest income                                                                          |  |                    | (630    | ) |                   |   | (1,242  | )               |  |   | (1,511          | ) |  |   | (3,760    | )
|Other (income) expense, net                                                              |  |                    | (871    | ) |                   |   | (765    | )               |  |   | 2,883           |   |  |   | (4,316    | )
|                                                                                         |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|Income from continuing operations before income taxes                                    |  |                    | 50,790  |   |                   |   | 51,462  |                 |  |   | 105,321         |   |  |   | 62,232    |  
|Income tax provision                                                                     |  |                    | 16,301  |   |                   |   | 20,715  |                 |  |   | 56,209          |   |  |   | 51,886    |  
|                                                                                         |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|Income from continuing operations                                                        |  |                    | 34,489  |   |                   |   | 30,747  |                 |  |   | 49,112          |   |  |   | 10,346    |  
|Income (loss) from discontinued operations, net of income taxes of $0, $2, $0 and ($114) |  |                    | (1,129  | ) |                   |   | 342     |                 |  |   | (10,190         | ) |  |   | (1,055    | )
|                                                                                         |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  
|Net income                                                                               |  | $                  | 33,360  |   |                   | $ | 31,089  |                 |  | $ | 38,922          |   |  | $ | 9,291     |  
|                                                                                         |  |                    |         |   |                   |   |         |                 |  |   |                 |   |  |   |           |  

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



2



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DIVERSEY HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)



|                                                                                                              |  |                   |         |   |                 |   |         |  
|------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | --------------- | - | ------- | -
|                                                                                                              |  | Nine Months Ended |        
|                                                                                                              |  | October 1, 2010   |         |   | October 2, 2009 |  
|                                                                                                              |  | (unaudited)       |        
|Cash flows from operating activities:                                                                         |  |                   |         |   |                 |   |         |  
|Net income                                                                                                    |  | $                 | 38,922  |   |                 | $ | 9,291   |  
|Adjustments to reconcile net income to net cash used in operating activities:                                 |  |                   |         |   |                 |   |         |  
|                                                                                                              |  |                  
|Depreciation and amortization                                                                                 |  |                   | 70,999  |   |                 |   | 67,658  |  
|Amortization of intangibles                                                                                   |  |                   | 13,101  |   |                 |   | 14,361  |  
|Amortization of debt issuance costs                                                                           |  |                   | 11,088  |   |                 |   | 3,672   |  
|Accretion of original issue discount                                                                          |  |                   | 3,218   |   |                 |   |        |  
|Interest accreted on notes payable                                                                            |  |                   | 12,469  |   |                 |   | 14,072  |  
|Interest accrued on long-term receivablesrelated parties                                                     |  |                   |        |   |                 |   | (2,138  | )
|Deferred income taxes                                                                                         |  |                   | 18,753  |   |                 |   | 16,103  |  
|Loss on disposal of discontinued operations                                                                   |  |                   | 842     |   |                 |   | 713     |  
|Loss from divestitures                                                                                        |  |                   | 108     |   |                 |   | 19      |  
|Loss on property, plant and equipment disposals                                                               |  |                   | 353     |   |                 |   | 173     |  
|Compensation costs associated with new stock-based long-term incentive plan                                   |  |                   | 11,075  |   |                 |   |        |  
|Other                                                                                                         |  |                   | 7,478   |   |                 |   | 1,109   |  
|Changes in operating assets and liabilities, net of effects from acquisitions and divestitures of businesses: |  |                   |         |   |                 |   |         |  
|Accounts receivable securitization                                                                            |  |                   |        |   |                 |   | 39,610  |  
|Accounts receivable                                                                                           |  |                   | 807     |   |                 |   | (28,585 | )
|Inventories                                                                                                   |  |                   | (29,439 | ) |                 |   | (5,939  | )
|Other current assets                                                                                          |  |                   | (4,629  | ) |                 |   | (24,663 | )
|Accounts payable and accrued expenses                                                                         |  |                   | (59,082 | ) |                 |   | 13,061  |  
|Other assets                                                                                                  |  |                   | (2,731  | ) |                 |   | (31,214 | )
|Other liabilities                                                                                             |  |                   | (14,572 | ) |                 |   | (6,527  | )
|                                                                                                              |  |                   |         |   |                 |   |         |  
|Net cash provided by operating activities                                                                     |  |                   | 78,760  |   |                 |   | 80,776  |  
|Cash flows from investing activities:                                                                         |  |                   |         |   |                 |   |         |  
|Capital expenditures                                                                                          |  |                   | (45,866 | ) |                 |   | (43,397 | )
|Expenditures for capitalized computer software                                                                |  |                   | (8,690  | ) |                 |   | (15,591 | )
|Proceeds from property, plant and equipment disposals                                                         |  |                   | 2,642   |   |                 |   | 7,681   |  
|Acquisitions of businesses and other intangibles                                                              |  |                   |        |   |                 |   | (1,612  | )
|Cash from unconsolidated affiliates                                                                           |  |                   | 598     |   |                 |   |        |  
|Net costs of divestiture of businesses                                                                        |  |                   | (950    | ) |                 |   | (1,044  | )
|                                                                                                              |  |                   |         |   |                 |   |         |  
|Net cash used in investing activities                                                                         |  |                   | (52,266 | ) |                 |   | (53,963 | )
|Cash flows from financing activities:                                                                         |  |                   |         |   |                 |   |         |  
|Proceeds from (repayments of) short-term borrowings, net                                                      |  |                   | (1,351  | ) |                 |   | 8,999   |  
|Repayments of long-term borrowings                                                                            |  |                   | (56,382 | ) |                 |   | (6,958  | )
|Payment of costs for equity redemption and issuance                                                           |  |                   | (961    | ) |                 |   |        |  
|Proceeds related to new stock-based long-term incentive plan                                                  |  |                   | 9,345   |   |                 |   |        |  
|Payment of debt issuance costs                                                                                |  |                   | (4,949  | ) |                 |   | (2,261  | )
|Dividends paid                                                                                                |  |                   | (80     | ) |                 |   | (367    | )
|                                                                                                              |  |                   |         |   |                 |   |         |  
|Net cash used in financing activities                                                                         |  |                   | (54,378 | ) |                 |   | (587    | )
|Effect of exchange rate changes on cash and cash equivalents                                                  |  |                   | 7,278   |   |                 |   | (5,399  | )
|                                                                                                              |  |                   |         |   |                 |   |         |  
|Change in cash and cash equivalents                                                                           |  |                   | (20,606 | ) |                 |   | 20,827  |  
|Beginning balance                                                                                             |  |                   | 249,713 |   |                 |   | 107,923 |  
|                                                                                                              |  |                   |         |   |                 |   |         |  
|Ending balance                                                                                                |  | $                 | 229,107 |   |                 | $ | 128,750 |  
|                                                                                                              |  |                   |         |   |                 |   |         |  
|Supplemental cash flows information                                                                           |  |                   |         |   |                 |   |         |  
|Cash paid during the period:                                                                                  |  |                   |         |   |                 |   |         |  
|Interest, net                                                                                                 |  | $                 | 69,110  |   |                 | $ | 70,236  |  
|Income taxes                                                                                                  |  |                   | 27,353  |   |                 |   | 22,644  |  

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



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DIVERSEY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2010

(Unaudited)

1. Description of the Company

Diversey Holdings, Inc., formerly
known as JohnsonDiversey Holdings, Inc., (Holdings or the Company) directly owns all of the shares of Diversey, Inc. (Diversey). The one share previously owned by S.C. Johnson & Son, Inc.
(SCJ) was acquired by the Company on July 20, 2010. The Company is a holding company and its sole business interest is the ownership and control of Diversey and its subsidiaries. Diversey is a leading global marketer and
manufacturer of commercial cleaning, hygiene, operational efficiency, appearance enhancing products and equipment and related services and solutions for food safety and service, food and beverage plant operations, floor care, housekeeping and room
care, laundry and skin care. Diversey serves institutional and industrial end-users such as food service providers, lodging establishments, food and beverage processing plants, building service contractors, building managers and property owners,
retail outlets, schools and health-care facilities in more than 175 countries worldwide.

2. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting
principles (U.S. GAAP) for interim financial information and pursuant to the rules and regulations of the SEC. 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, 2010 and its results of operations for the three and nine months ended October 1, 2010
and cash flows for the nine months ended October 1, 2010 have been included. The results of operations for the three and nine months ended October 1, 2010 are not necessarily indicative of the results to be expected for the full fiscal
year ending December 31, 2010. It is recommended that the accompanying consolidated financial statements be read in conjunction with the audited consolidated financial statements and notes thereto included in the Companys Annual Reports
on Form 10-K and Forms 10-K/A for the fiscal year ended December 31, 2009 and the Companys Current Report on Form 8-K filed with the SEC on May 27, 2010. As a public reporting company, the Company evaluates subsequent events through
the date the financial statements are issued.

Except where noted, the consolidated financial statements and related notes,
excluding the consolidated statements of cash flows, reflect the results of continuing operations excluding the divestiture of DuBois Chemicals (DuBois) and the Polymer Business segment (Polymer Business) (see Note 6).

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Diversey Holdings, Inc., Diversey, Inc. and its wholly owned subsidiaries. All inter-company balances and transactions have been
eliminated upon consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure
of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

The Company uses estimates and assumptions in accounting for the following significant matters, among others:



| |  |  | Allowances for doubtful accounts
| | - |  | --------------------------------



| |  |  | Inventory valuation and allowances
| | - |  | ----------------------------------



| |  |  | Valuation of acquired assets and liabilities
| | - |  | --------------------------------------------



| |  |  | Useful lives of property and equipment and intangible assets
| | - |  | ------------------------------------------------------------



| |  |  | Goodwill and other long-lived asset impairment
| | - |  | ----------------------------------------------



| |  |  | Contingencies
| | - |  | -------------



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DIVERSEY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2010

(Unaudited)





| |  |  | Accounting for income taxes
| | - |  | ---------------------------



| |  |  | Stock-based compensation
| | - |  | ------------------------

Actual results may differ from previously estimated amounts, and such differences may be material to the consolidated financial statements. The Company periodically reviews estimates and assumptions, and
the effects of revisions are reflected in the period in which the revision is made. No significant revisions to estimates or assumptions were made during the periods presented in the accompanying consolidated financial statements.

Unless otherwise indicated, all monetary amounts, except for share data, are stated in thousand dollars.

Segment Reporting

The Financial Standards Accounting Board (FASB) Accounting Standards CodificationTM(ASC) Topic 280, Segment Reporting, defines operating segments as components of an enterprise for
which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

In June 2008, the Company announced plans to organize its operating structure to better position the Company to address consolidation and
globalization trends among its customers and to enable the Company to more effectively deploy resources. These plans included a change in the organization of the Companys operating segments from five to three regions. Effective January 2010,
the Company completed its reorganization to the new three region model, having implemented the following:



| |  |  | Three regional presidents have been appointed to lead the operations of the three segments;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | The three regional presidents report to the Companys Chief Executive Officer (CEO), who is its chief operating decision maker;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | Financial information is prepared separately and regularly for each of the three regions; and
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | The CEO regularly reviews the results of operations, manages the allocation of resources and assesses the performance of each of these regions.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------

The Companys operations were previously organized in five regions: Europe/Middle East/Africa
(Europe), North America, Latin America, Asia Pacific and Japan. The new three region model is composed of the following:



| |  |  | The existing Europe region;
| | - |  | ---------------------------



| |  |  | A new Americas region combining the former North and Latin American regions; and
| | - |  | --------------------------------------------------------------------------------



| |  |  | A new Greater Asia Pacific region combining the former Asia Pacific and Japan regions.
| | - |  | --------------------------------------------------------------------------------------

Segment reclassification and restatement. As a result of the integration of certain of the Companys equipment business into
the Americas segment, revenues, expenses and assets associated with the transfer have been reclassified from Eliminations/Other to the Americas segment effective in the third quarter of 2010. This reclassification is consistent with changes in the
Companys organizational reporting structure, and reflects the chief operating decision makers approach to assessing performance and asset allocation. Prior period results have been restated for consistency with this change in structure.
See Note 19 for additional information.

Hyperinflationary accounting

Effective January 11, 2010, the Venezuelan government devalued its currency (bolivar) and moved to a two- tier exchange
structure. The official exchange rate moved from 2.15 to 2.60 for essential goods and to 4.30 for non-essential goods and services. The Companys goods meet the non-essential classification.

Beginning with fiscal year 2010, the Company accounted for its Venezuelan subsidiary as hyperinflationary and used the exchange rate at
which it expects to be able to remit dividends to translate its earnings and month end balance sheet. This exchange rate is currently 4.30, the official rate currently applied to non-essential goods and services. In association with the
conversion, the Company recorded a pretax loss of $3,874, as a component of other (income) expense, net, during the three months ended April 2, 2010.



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DIVERSEY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2010

(Unaudited)





Effective interest method

The Company amortizes the discount and related capitalized debt issuance costs on its loans under the effective interest
method, which is based on a schedule of anticipated cash flows over the terms of the various debt instruments. Under this method, periodic amortization changes in relation to changes in expected cash flows. In the third quarter of fiscal 2010, as a
result of an early optional principal payment of $50,000 on a portion of the Companys indebtedness amortization of original issue discounts and capitalized debt issuance costs were accelerated, and the Companys election to pay cash
interest of $13,780 on its New Holdings Senior Notes on May 15, 2011, the Company recognized an increase in amortization of $3,436, recorded as additional interest expense in the consolidated statement of operations.

Consolidated Statements of Cash Flows Adjustment

During the third quarter of 2010, following further analysis of the underlying accounting guidance and consideration of the relationship between the Company and Diversey, the Company concluded that
certain adjustments to the Consolidated Statements of Cash Flows were necessary to appropriately reflect non-cash activities relating to the New Stock-Based Long-Term Incentive Plan (the Plan) in its Consolidated Statements of Cash Flows
for the three and six months ended April 2, 2010 and July 2, 2010, respectively.

Below is a summary of the
adjustments relating to the non-cash activities of the Plan the Company intends to reflect in the Consolidated Statements of Cash Flows for the three and six months ended April 2, 2010 and July 2, 2010, respectively, when it presents its
quarterly results on Form 10-Q for the first and second quarter of 2011:



|                                                                                |  |                                  |         |   |                               |   |         |            |  |   |             |   |  |            |          |   |            |   |         |   |  |   |          |  
|------------------------------------------------------------------------------- |  | -------------------------------- | ------- | - | ----------------------------- | - | ------- | ---------- |  | - | ----------- | - |  | ---------- | -------- | - | ---------- | - | ------- | - |  | - | -------- | -
|                                                                                |  | Three Months Ended April 2, 2010 |         |   | Six Months Ended July 2, 2010 |  
|                                                                                |  | AsPresented                      |         |   | Adjustment                    |   |         | AsRestated |  |   | AsPresented |   |  | Adjustment |          |   | AsRestated |  
|Adjustments to reconcile net income to net cash used in operating activities:   |  |                                  |         |   |                               |   |         |            |  |   |             |   |  |            |          |   |            |   |         |   |  |   |          |  
|Compensation costs associated with the new stock-based long-term incentive plan |  | $                                |        |   |                               | $ | 3,490   |            |  | $ | 3,490       |   |  | $          |         |   |            | $ | 7,284   |   |  | $ | 7,284    |  
|Changes to Operating Assets and Liabilities:                                    |  |                                  |         |   |                               |   |         |            |  |   |             |   |  |            |          |   |            |   |         |   |  |   |          |  
|Accounts payable and accrued expenses                                           |  |                                  | (80,684 | ) |                               |   | 6,257   |            |  |   | (74,427     | ) |  |            | (109,707 | ) |            |   | 6,257   |   |  |   | (103,450 | )
|Other Liabilities                                                               |  |                                  | (11,896 | ) |                               |   | 14,479  |            |  |   | 2,583       |   |  |            | (8,262   | ) |            |   | 14,479  |   |  |   | 6,217    |  
|Net cash used in operating activities                                           |  |                                  | (65,187 | ) |                               |   | 24,226  |            |  |   | (40,961     | ) |  |            | (56,330  | ) |            |   | 28,020  |   |  |   | (28,310  | )
|Cash flows from financing activities:                                           |  |                                  |         |   |                               |   |         |            |  |   |             |   |  |            |          |   |            |   |         |   |  |   |          |  
|Proceeds related to new stock-based long-term incentive plan                    |  |                                  | 33,304  |   |                               |   | (24,226 | )          |  |   | 9,078       |   |  |            | 37,487   |   |            |   | (28,020 | ) |  |   | 9,467    |  
|Net cash provided by financing activities                                       |  | $                                | 34,587  |   |                               | $ | (24,226 | )          |  | $ | 10,361      |   |  | $          | 25,962   |   |            | $ | (28,020 | ) |  | $ | (2,058   | )

3. Recent Accounting
Pronouncements

With the exception of those discussed below, there have been no recent accounting pronouncements or
changes in accounting pronouncements during the nine months ended October 1, 2010, as compared to the recent accounting pronouncements described in the Companys Annual Report on Form 10-K for the year ended December 31, 2009,
that are of significance, or potential significance, to the Company.



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DIVERSEY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2010

(Unaudited)





Foreign
Currency Matters (ASC Topic 830)

In May 2010, the FASB issued an Accounting Standard Update (ASU) to
codify the SEC staffs views on certain foreign currency issues related to investments in Venezuela. Among other things, this announcement provides background on the two acceptable inflation indices for Venezuela, states that Venezuela is now
considered highly inflationary and calendar year entities that have not previously accounted for their Venezuelan investment as such should be applying highly inflationary accounting beginning January 1, 2010. As discussed in Note 2, the
Company has accounted for its Venezuelan subsidiary as highly inflationary effective January 2010; this update does not impact the Companys consolidated financial statements.

Revenue Recognition (ASC Topic 605)

In October 2009, the FASB issued an ASU on its standard on Multiple-Deliverable Revenue Arrangements to enable vendors to account for products or services (deliverables) separately rather than as a
combined unit. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, specifically: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimates. It also
eliminates the residual method of allocation and requires that consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method. In addition, this guidance significantly expands required
disclosures related to a vendors multiple-deliverable revenue arrangements. This ASU is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The
Company adopted this guidance at the beginning of the current fiscal quarter and its adoption did not impact the consolidated financial statements.

Fair Value Measurements (ASC Topic 820)

In January 2010, the FASB
issued additional guidance to improve fair value disclosures and increase the transparency in financial reporting. These enhancements include: (1) a reporting entity should disclose separately the amounts of significant transfers in and out of
Level 1 and Level 2 fair value measurements and describe the reasons for the transfers; and (2) in the reconciliation for fair value measurements using significant unobservable inputs, a reporting entity should present separately information
about purchases, sales, issuances, and settlements. This new guidance is effective for interim and annual reporting periods beginning after December 15, 2009. The Company adopted this guidance at the beginning of fiscal year 2010 and its
adoption did not impact the consolidated financial statements.

Transfers and Servicing (ASC Topic 860)

In June 2009, the FASB eliminated the concept of a qualifying special-purpose entity and changed the
requirements for derecognizing financial assets. As a result of this amendment to U.S. GAAP, many types of transferred financial assets that previously qualified for de-recognition in the balance sheet no longer qualify, including certain
securitized accounts receivable. In particular, this amendment introduced the concept of a participating interest as a unit of account and reiterates the requirement that in order for a transfer of accounts receivable to qualify as a sale, effective
control must be transferred; if the accounts receivable transferred meet the definition of a participating interest, the transfer qualifies for sale accounting. Because the accounts receivable transferred under our securitization arrangements do not
meet the definition of a participating interest, the arrangement fails to meet the requirements of a complete transfer of control, and cannot continue to be treated as a sale. The Company adopted this guidance at the beginning of fiscal year 2010,
the effective day of this guidance to the Company. As a result of the adoption of this standard, the Company restored the securitized accounts receivable in its balance sheet and recognized short-term borrowings. See Note 7 for additional
information.



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DIVERSEY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2010

(Unaudited)





Consolidation (ASC Topic 810)

Variable Interest Entities (VIEs):In June 2009, the FASB amended the evaluation criteria used to identify the primary beneficiary of a VIE, potentially changing significantly the
decision on whether or not a VIE should be consolidated. This statement requires companies to qualitatively assess the determination of the primary beneficiary of a VIE based on whether the entity (1) has the power to direct matters that most
significantly impact the activities of the VIE, and (2) has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Additionally, the new standard requires ongoing
reassessments of whether an enterprise is the primary beneficiary. The Company adopted this guidance at the beginning of fiscal year 2010, the effective day of this guidance to the Company and its adoption did not impact the consolidated financial
statements.

International Financial Reporting Standards (IFRS)

In February 2010, the SEC issued a statement that reaffirms its support for the potential use of IFRS in the preparation of financial
statements by U.S. registrants. It announced a work plan by which it is expected to make a determination in 2011 whether or not it will mandate the conversion to IFRS. The Company is currently assessing the potential impact of IFRS on its financial
statements and will continue to review developments of the work plan.

4. Master Sales Agency Terminations and Umbrella Agreement

In connection with the May 2002 acquisition of the DiverseyLever business, Diversey entered into a master sales agency
agreement (the Sales Agency Agreement) with Unilever PLC and Unilever N.V. (Unilever), whereby Diversey acts as an exclusive sales agent in the sale of Unilevers consumer branded products to various institutional and
industrial end-users.

An agency fee is paid by Unilever to Diversey in exchange for its sales agency services. An additional
fee is payable by Unilever to Diversey in the event that conditions for full or partial termination of the Sales Agency Agreement are met. Diversey elected, and Unilever agreed, to partially terminate the Sales Agency Agreement in several
territories resulting in payment by Unilever to Diversey of additional fees. In association with the partial terminations, the Company recognized sales agency fee income of $154 and $164 during the three months ended October 1, 2010 and
October 2, 2009, respectively; and $463 and $470 during the nine months ended October 1, 2010 and October 2, 2009, respectively.

In October 2007, Diversey and Unilever agreed on an Umbrella Agreement (the Umbrella), to replace the previous Sales Agency Agreement, which includes; i) a new agency agreement with terms
similar to the previous Sales Agency Agreement, covering Ireland, the United Kingdom, Portugal and Brazil, and ii) a Master Sub-License Agreement (the License Agreement) under which Unilever has agreed to grant 31 of Diverseys
subsidiaries a license to produce and sell professional size packs of Unilevers consumer branded cleaning products. The entities covered by the License Agreement will also enter agreements with Unilever to distribute Unilevers consumer
branded products. Except for some transitional arrangements in certain countries, the Umbrella became effective January 1, 2008, and, unless otherwise terminated or extended, will expire on December 31, 2017.

An additional fee is payable by Unilever to the Company in the event that conditions for full or partial termination of the License
Agreement are met. The Company elected, and Unilever agreed, to partially terminate the License Agreement in several territories resulting in payment by Unilever to the Company of additional fees. In association with the partial terminations, the
Company recognized sales income of $78 during the three and nine months ended October 1, 2010.

Under the License
Agreement, the Company recorded net product and service sales of $30,233 and $35,671 during the three months ended October 1, 2010 and October 2, 2009, respectively; and $91,111 and $99,905 during the nine months ended October 1, 2010
and October 2, 2009, respectively.



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DIVERSEY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2010

(Unaudited)





5. Divestitures

In December 2007, in conjunction with its November 2005 Plan (see Note 10), Diversey executed a sales agreement for its
Auto-Chlor Master Franchise and substantially all of its remaining Auto-Chlor branch operations in North America, a business that marketed and sold low-energy dishwashing systems, kitchen chemicals, laundry and housekeeping products and services to
foodservice, lodging, healthcare, and institutional customers, for $69,800.

The sales agreement was subject to the approval
of Diverseys Board of Directors and Unilever consent, both of which the Company considered necessary in order to meet held for sale criteria under ASC Topic 360, Property, Plant and Equipment. Accordingly, these assets were
classified as held and used as of December 28, 2007. Diversey obtained approval from its Board of Directors and consent from Unilever in January 2008.

The transaction closed on February 29, 2008, resulting in a net book gain of approximately $1,292 after taxes and related costs. The gain associated with these divestiture activities is included as a
component of selling, general and administrative expenses in the consolidated statements of operations. In fiscal year 2009, JDI recorded adjustments to closing costs and pension-related settlement charges, reducing the gain by $106 and $19 during
the three and nine months ended October 2, 2009, respectively. In fiscal year 2010, the Company recorded adjustments related to closing costs and pension-related settlement charges, reducing the gain by $7 during the three months ended
October 1, 2010, and resulting in a net gain reduction of $108 for the nine months ended October 1, 2010. Additional post-closing adjustments are not anticipated to be significant.

6. Discontinued Operations

DuBois Chemicals

On September 26, 2008, Diversey and JohnsonDiversey Canada, Inc., a wholly-owned subsidiary of Diversey, sold substantially all of
the assets of DuBois Chemicals (DuBois) to DuBois Chemicals, Inc. and DuBois Chemicals Canada, Inc., subsidiaries of The Riverside Company (collectively, Riverside), for approximately $69,700, of which, $5,000 was escrowed
subject to meeting certain fiscal year 2009 performance measures and $1,000 was escrowed subject to resolution of certain environmental representations by Diversey. The purchase price was also subject to certain post-closing adjustments that were
based on net working capital targets. Finalization of this adjustment in the first quarter of 2009 did not require any purchase price adjustment. In July of 2009, Diversey met certain environmental representations and Riverside released the $1,000
escrow to Diversey. Diversey and Riverside finalized the performance related adjustments during the second quarter of 2010 which did not require any purchase price adjustment.

DuBois is a North American based manufacturer and marketer of specialty chemicals, control systems and related services primarily for use by industrial manufacturers. DuBois was a non-core asset of the
Company and a component of the Americas business segment. The sale resulted in a gain of approximately $14,774 ($6,211 after tax) being recorded in the fiscal year ended December 31, 2008, net of related costs. The Company reduced the gain by
$122 ($116 after tax) and $827 ($704 after tax) of additional one-time costs, pension-related settlement charges partially offset by proceeds from the environmental escrow, for the three and nine months ended October 2, 2009, respectively.
During the three and nine months ended October 1, 2010, the Company reduced the gain by $0 ($0 after tax) and $91 ($91 after tax), respectively, as a result of additional one-time costs. Additional post-closing adjustments are not anticipated
to be significant.

Polymer Business

On June 30, 2006, Johnson Polymer, LLC (Johnson Polymer) and Diversey Holdings II B.V. (Holdings II), an indirectly owned subsidiary of the Company, completed the sale of
substantially all of the assets of Johnson Polymer, certain of the equity interests in, or assets of, certain Johnson Polymer subsidiaries and all of the equity interests owned by Holdings II in Johnson Polymer B.V. (collectively, the Polymer
Business) to BASF Aktiengesellschaft (BASF) for approximately $470,000 plus an additional $8,119 in connection with the parties



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DIVERSEY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2010

(Unaudited)



estimate of purchase price adjustments that are based upon the closing net asset value of the Polymer Business. Further, BASF paid the Company $1,500 for the option to extend the tolling
agreement by up to six months. In December 2006, the Company and BASF finalized purchase price adjustments related to the net asset value and the Company received an additional $4,062.

The Polymer Business developed, manufactured, and sold specialty polymers for use in the industrial print and packaging industry,
industrial paint and coatings industry, and industrial plastics industry. The Polymer Business was a non-core asset of the Company and had been reported as a separate business segment. The sale resulted in a gain of approximately $352,907 ($256,693
after tax), net of related costs.

During the fiscal year ended December 28, 2007, the Company recorded and paid certain
pension-related adjustments; adjusted net assets disposed and recorded additional closing costs, reducing the gain by $1,742 ($305 after tax gain). The Company recorded additional closing costs, reducing the gain by $192 ($226 after tax loss),
during the fiscal year ended December 31, 2008. During the three and nine months ended October 2, 2009, JDI recorded and refined additional closing costs and pension-related settlement charges reducing the gain by $182 ($190 after tax) and
$198 ($207 after tax), respectively. During the three and nine months ended October 1, 2010, the Company recorded and refined additional closing costs and recorded and paid certain pension-related adjustments reducing the gain by $88 ($88 after
tax) and $751 ($751 after tax). The Company recorded a loss from discontinued operations, net of tax, relating to the tolling agreement of ($1,041) and $648 during the three months ended October 1, 2010 and October 2, 2009, respectively
and ($9,348) and ($144), respectively for the nine months ended October 1, 2010 and October 2, 2009.

7. Accounts Receivable
Securitization

JWPR Corporation

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

The total
potential for securitization of trade receivables under the Receivables Facility at October 1, 2010 and December 31, 2009 was $50,000. In December 2009, the Receivables Facility was amended to extend the maturity of the program to
December 19, 2011.

As of October 1, 2010 and December 31, 2009, JWPRC sold no accounts receivable to the
Conduit.

As of October 1, 2010 and December 31, 2009, the Company had a retained interest of $65,683 and $60,048,
respectively, in the receivables of JWPRC. The retained interest is included in the accounts receivable balance and is reflected in the consolidated balance sheets.

In October 2010, JWPRC gave notice to the Conduit of its intention to terminate the Receivables Facility effective November 2010.

JDER Limited

In September 2009, certain subsidiaries of Diversey entered
into agreements (the European Receivables Facility) to sell, on a continuous basis, certain trade receivables originated in the United Kingdom, France and Spain to JDER Limited (JDER), a wholly-owned, consolidated, special
purpose, bankruptcy-remote subsidiary of Diversey. JDER was formed for the sole purpose of buying and selling receivables originated by subsidiaries subject



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DIVERSEY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2010

(Unaudited)



to the European Receivables Facility. JDER will sell an undivided interest in the accounts receivable to a nonconsolidated financial institution (the European Conduit) for an amount
equal to the value of the eligible receivables less the applicable reserve. The total amount available for securitization of trade receivables under the European Receivables Facility is 50,000. The maturity date of the European Receivables
Facility is September 8, 2012.

Effective January 1, 2010, the accounting treatment for Diverseys receivables
securitization facilities (see Note 3) required that accounts receivable sold to the Conduit and to the European Conduit be included in accounts receivable, with a corresponding increase in short-term borrowings. Accordingly, as of October 1,
2010, the Company included $ 17,699 in accounts receivable and short-term borrowings on its consolidated balance sheet. Prior to the effective date of the change in accounting treatment, as of December 31, 2009, the European Conduit held
$18,703, of accounts receivable that were not included in the accounts receivable balance in the Companys consolidated balance sheet.

As of October 1, 2010 and December 31, 2009, the Company had a retained interest of $93,496 and $110,445, respectively, in the receivables of JDER. The retained interest is included in the
accounts receivable balance and is reflected in the consolidated balance sheets.

In October 2010, JDER gave notice to the
European Conduit of its intention to terminate the European Receivables Facility effective November 2010.

8. Income Taxes

For the fiscal year ending December 31, 2010, the Company is projecting an effective income tax rate on pre-tax
income from continuing operations of approximately 64%. The projected effective income tax rate for the fiscal year exceeds the statutory income tax rate primarily as a result of increased valuation allowances against deferred tax assets in certain
jurisdictions and increases in reserves for uncertain tax positions.

The Company reported an effective income tax rate of
53.4% on pre-tax income from continuing operations for the nine month period ended October 1, 2010. When compared to the estimated annual effective income tax rate, the effective income tax rate for the nine months ended October 1, 2010 is
lower primarily due to certain income tax expense (benefit) amounts that were recorded as discrete items during the period, rather than included in the annual effective income tax rate.

9. Inventories

The components of inventories are summarized as
follows:



|                             |  |                 |         |  |                   |   |         | 
|---------------------------- |  | --------------- | ------- |  | ----------------- | - | ------- | 
|                             |  | October 1, 2010 |         |  | December 31, 2009 |  
|Raw materials and containers |  | $               | 56,951  |  |                   | $ | 53,198  | 
|Finished goods               |  |                 | 226,716 |  |                   |   | 202,791 | 
|                             |  |                 |         |  |                   |   |         | 
|Total inventories            |  | $               | 283,667 |  |                   | $ | 255,989 | 
|                             |  |                 |         |  |                   |   |         | 

Inventories are stated in the consolidated balance sheets net of allowance for excess and obsolete inventory
of $23,615 and $20,932 on October 1, 2010 and December 31, 2009, respectively.



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DIVERSEY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2010

(Unaudited)





10. Restructuring
Liabilities

November 2005 Restructuring Program

On November 7, 2005, the Company announced a restructuring program (November 2005 Plan), the execution of which is expected to continue through fiscal 2011, with the associated reserves
expected to be substantially paid out through our restricted cash balance. The November 2005 Plan has included redesigning the Companys organizational structure, the closure of a number of manufacturing and other facilities, outsourcing the
majority of information technology support worldwide, outsourcing certain financial services in Western Europe and a workforce reduction of approximately 15%.

In connection with the November 2005 Plan, the Company added liabilities of $176 for the involuntary termination of 8 employees during the three months ended October 1, 2010, most of which are
associated with the European business segment. During the nine months ended October 1, 2010, the Company reduced liabilities by ($2,281) as certain individuals, formerly expected to be severed, either were retained by the Company or resigned.
Most of the reduced liabilities are associated with the European business segment. The Company also reduced other restructuring costs by $3 and $66 during the three and nine months ended October 1, 2010.

In addition, and in connection with the November 2005 Plan, the Company recognized liabilities of $750 for the involuntary termination of
18 employees during the three months ended October 2, 2009, most of which are associated with the European business segment. During the nine months ended October 2, 2009, the Company recognized liabilities of $7,905 for the involuntary
termination of 189 employees, most of which are associated with the European business segment. The Company also recorded $169 and $257 of other restructuring costs during the three and nine months ended October 2, 2009, respectively.

The activities associated with the November 2005 Plan for the three and nine months ended October 1, 2010 were as
follows:



|                                                 |  |                  |        |   |       |   |       |       |  |   |        |  
|------------------------------------------------ |  | ---------------- | ------ | - | ----- | - | ----- | ----- |  | - | ------ | -
|                                                 |  | Employee-Related |        |   | Other |   |       | Total | 
|Liability balances as of December 31, 2009       |  | $                | 46,899 |   |       | $ | 1,469 |       |  | $ | 48,368 |  
|                                                 |  |                  |       
|Restructuring charges and adjustments            |  |                  | (721   | ) |       |   |      |       |  |   | (721   | )
|Cash paid1                                       |  |                  | (8,547 | ) |       |   | (115  | )     |  |   | (8,662 | )
|                                                 |  |                  |        |   |       |   |       |       |  |   |        |  
|Liability balances as of April 2, 2010           |  | $                | 37,631 |   |       | $ | 1,354 |       |  | $ | 38,985 |  
|                                                 |  |                  |       
|Liability recorded as restructuring expense, net |  |                  | (1,736 | ) |       |   | (63   | )     |  |   | (1,799 | )
|Cash paid2                                       |  |                  | (7,301 | ) |       |   | (149  | )     |  |   | (7,450 | )
|                                                 |  |                  |        |   |       |   |       |       |  |   |        |  
|Liability balances as of July 2, 2010            |  | $                | 28,594 |   |       | $ | 1,142 |       |  | $ | 29,736 |  
|                                                 |  |                  |        |   |       |   |       |       |  |   |        |  
|                                                 |  |                  |       
|Liability recorded as restructuring expense, net |  |                  | 176    |   |       |   | (3    | )     |  |   | 173    |  
|Cash paid3                                       |  |                  | (2,013 | ) |       |   | 57    |       |  |   | (1,956 | )
|                                                 |  |                  |        |   |       |   |       |       |  |   |        |  
|Liability balances as of October 1, 2010         |  | $                | 26,757 |   |       | $ | 1,196 |       |  | $ | 27,953 |  
|                                                 |  |                  |        |   |       |   |       |       |  |   |        |  

1Cash paid is increased by $1 due to the effects of foreign exchange.

2
Cash paid is increased by $378 due to the effects of foreign exchange.

3
Cash paid is increased by $68 due to the effects of foreign exchange.

In
connection with the November 2005 Plan, the Company recorded long-lived asset impairment charges of $283 and $802 for the three and nine months ended October 1, 2010, respectively. In addition, and in connection with the November 2005 Plan, the
Company recorded long-lived asset impairment charges of ($10) and $546 for the three and nine months ended October 2, 2009 respectively. The impairment charges are included in selling, general and administrative costs in the consolidated
statements of operations.



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DIVERSEY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2010

(Unaudited)





Total plan-to-date
expense associated with the November 2005 Plan, by reporting segment is summarized as follows:



|                     |  |                   |                 |  |                    |                 |      |                   |                 |   |      |                 |  |   |        |   |  |   |       |  
|-------------------- |  | ----------------- | --------------- |  | ------------------ | --------------- | ---- | ----------------- | --------------- | - | ---- | --------------- |  | - | ------ | - |  | - | ----- | -
|                     |  | Total
PlanTo-Date |                 |  | Three Months Ended |                 |      | Nine Months Ended |                
|                     |  |                   | October 1, 2010 |  |                    | October 2, 2009 |      |                   | October 1, 2010 |   |      | October 2, 2009 | 
|Europe               |  | $                 | 148,373         |  |                    | $               | 576  |                   |                 | $ | 764  |                 |  | $ | (1,000 | ) |  | $ | 5,604 |  
|Americas             |  |                   | 41,466          |  |                    |                 | 80   |                   |                 |   | (607 | )               |  |   | (537   | ) |  |   | 422   |  
|Greater Asia Pacific |  |                   | 18,650          |  |                    |                 | (199 | )                 |                 |   | 520  |                 |  |   | 1      |   |  |   | 2,324 |  
|Other                |  |                   | 25,830          |  |                    |                 | (284 | )                 |                 |   | 242  |                 |  |   | (811   | ) |  |   | (188  | )
|                     |  |                   |                 |  |                    |                 |      |                   |                 |   |      |                 |  |   |        |   |  |   |       |  
|                     |  | $                 | 234,319         |  |                    | $               | 173  |                   |                 | $ | 919  |                 |  | $ | (2,347 | ) |  | $ | 8,162 |  
|                     |  |                   |                 |  |                    |                 |      |                   |                 |   |      |                 |  |   |        |   |  |   |       |  

In December 2009 and December 2008, the Company transferred $27,404 and $49,463, respectively, to
irrevocable trusts for the settlement of certain obligations associated with the November 2005 Restructuring Plan. The Company utilized a majority of the December 2008 funds during fiscal year 2009, and it expects to utilize a majority of the
remaining December 2008 and the December 2009 funds in fiscal years 2010 and 2011. The Company classified the trust balances as restricted cash on its consolidated balance sheets.

11. Exit or Disposal Activities

In June 2010, the Company announced
plans to transition certain accounting functions in its corporate center and certain Americas locations to a third party provider. The Company expects to execute the plan between July 2010 and December 2011. The Company also affirmed its decision to
cease manufacturing operations at Waxdale, its primary U.S. manufacturing facility, and to move some production to other locations in North America, as well as pursue contract manufacturing for a portion of its product line. The timeline to
transition out of Waxdale is expected to extend into fiscal 2013. In connection with these plans, the Company recognized liabilities of $46 and $6,291 for the involuntary termination of employees during the three and nine months ended
October 1, 2010 respectively, most of which are associated with the Americas business segment. The related expenses are included in selling, general and administrative expenses in the consolidated statements of operations.

12. Other (Income) Expense, Net

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



|                                                                |  |                    |        |   |                   |   |        |                 |  |   |                 |   |  |   |         |  
|--------------------------------------------------------------- |  | ------------------ | ------ | - | ----------------- | - | ------ | --------------- |  | - | --------------- | - |  | - | ------- | -
|                                                                |  | Three Months Ended |        |   | Nine Months Ended |  
|                                                                |  | October 1, 2010    |        |   | October 2, 2009   |   |        | October 1, 2010 |  |   | October 2, 2009 |  
|Foreign currency translation (gain)/loss                        |  | $                  | (7,269 | ) |                   | $ | (6,833 | )               |  | $ | 1,706           |   |  | $ | (15,301 | )
|Forward contracts (gain)/loss                                   |  |                    | 7,948  |   |                   |   | 6,328  |                 |  |   | (767            | ) |  |   | 11,172  |  
|Loss on hyperinflationary country foreign currency translations |  |                    | 29     |   |                   |   |       |                 |  |   | 3,934           |   |  |   |        |  
|Other, net                                                      |  |                    | (1,579 | ) |                   |   | (260   | )               |  |   | (1,990          | ) |  |   | (187    | )
|                                                                |  |                    |        |   |                   |   |        |                 |  |   |                 |   |  |   |         |  
|                                                                |  | $                  | (871   | ) |                   | $ | (765   | )               |  | $ | 2,883           |   |  | $ | (4,316  | )
|                                                                |  |                    |        |   |                   |   |        |                 |  |   |                 |   |  |   |         |  



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DIVERSEY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2010

(Unaudited)





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

The components of net periodic benefit costs for the Companys defined
benefit pension plans and other post-employment benefit plans for the three and six months ended October 1, 2010 and October 2, 2009 are as follows:



|                                                           |  |                                |         |   |                   |   |        |                 |  |   |                 |   |  |   |         |  
|---------------------------------------------------------- |  | ------------------------------ | ------- | - | ----------------- | - | ------ | --------------- |  | - | --------------- | - |  | - | ------- | -
|                                                           |  | Defined Pension Benefits       |        
|                                                           |  | Three Months Ended             |         |   | Nine Months Ended |  
|                                                           |  | October 1, 2010                |         |   | October 2, 2009   |   |        | October 1, 2010 |  |   | October 2, 2009 |  
|Service cost                                               |  | $                              | 2,380   |   |                   | $ | 3,644  |                 |  | $ | 7,076           |   |  | $ | 10,432  |  
|Interest cost                                              |  |                                | 8,310   |   |                   |   | 8,965  |                 |  |   | 25,270          |   |  |   | 25,959  |  
|Expected return on plan assets                             |  |                                | (9,193  | ) |                   |   | (8,763 | )               |  |   | (27,737         | ) |  |   | (25,373 | )
|Amortization of net loss                                   |  |                                | 1,762   |   |                   |   | 2,258  |                 |  |   | 4,991           |   |  |   | 6,592   |  
|Amortization of transition obligation                      |  |                                | 44      |   |                   |   | 60     |                 |  |   | 155             |   |  |   | 172     |  
|Amortization of prior service credit                       |  |                                | (613    | ) |                   |   | (234   | )               |  |   | (1,370          | ) |  |   | (672    | )
|Curtailments, settlements and special termination benefits |  |                                | (10,140 | ) |                   |   | 5,144  |                 |  |   | (5,355          | ) |  |   | 6,325   |  
|                                                           |  |                                |         |   |                   |   |        |                 |  |   |                 |   |  |   |         |  
|Net periodic pension cost (credit)                         |  | $                              | (7,450  | ) |                   | $ | 11,074 |                 |  | $ | 3,030           |   |  | $ | 23,435  |  
|                                                           |  |                                |         |   |                   |   |        |                 |  |   |                 |   |  |   |         |  
|                                                           | 
|                                                           |  | Other Post-Employment Benefits |        
|                                                           |  | Three Months Ended             |         |   | Nine Months Ended |  
|                                                           |  | October 1, 2010                |         |   | October 2, 2009   |   |        | October 1, 2010 |  |   | October 2, 2009 |  
|Service cost                                               |  | $                              | 326     |   |                   | $ | 431    |                 |  | $ | 979             |   |  | $ | 1,290   |  
|Interest cost                                              |  |                                | 1,157   |   |                   |   | 1,264  |                 |  |   | 3,473           |   |  |   | 3,786   |  
|Amortization of net (gain) loss                            |  |                                | (22     | ) |                   |   | 18     |                 |  |   | (67             | ) |  |   | 60      |  
|Amortization of prior service credit                       |  |                                | (51     | ) |                   |   | (50    | )               |  |   | (153            | ) |  |   | (151    | )
|                                                           |  |                                |         |   |                   |   |        |                 |  |   |                 |   |  |   |         |  
|Net periodic benefit cost                                  |  | $                              | 1,410   |   |                   | $ | 1,663  |                 |  | $ | 4,232           |   |  | $ | 4,985   |  
|                                                           |  |                                |         |   |                   |   |        |                 |  |   |                 |   |  |   |         |  

The Company made contributions to its defined benefit pension plans of $9,258 and $8,900 during the three
months ended October 1, 2010 and October 2, 2009, respectively; and $22,701 and $34,659 during the nine months ended October 1, 2010 and October 2, 2009, respectively.

In September 2010, the Company recognized a curtailment gain of $11,348 relating to the announced freezing of its pension plan in The
Netherlands. The company recorded this gain in selling, general, and administrative expenses in the consolidated statement of operations.

In June 2010, the Company recognized a settlement of defined benefits to former U.S. employees resulting in a related loss of $3,974. The Company recorded $1,996 of this loss as a component of
discontinued operations, and $1,978 in selling, general and administrative expenses in the consolidated statement of operations. In September 2010, the Company recognized an additional loss of $1,080. The Company recorded $682 of this loss as a
component of discontinued operations, and $398 in selling, general, and administrative expenses in the consolidated statement of operations.

In June 2010, the Company recognized a curtailment and settlement of defined benefits to former Japan employees, resulting in a related loss of $571. In September 2010, the Company recognized an
additional loss of $128. The Company recorded these losses in selling, general and administrative expenses in the consolidated statement of operations.

In June 2010, the Company recognized a curtailment of defined benefits to former Ireland employees resulting in a related loss of $241. The Company recorded this loss in selling, general and
administrative expenses in the consolidated statement of operations.



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DIVERSEY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2010

(Unaudited)





In September 2009,
the Company recognized a settlement of defined benefits to former U.S. employees resulting in a related loss of $3,612. The Company recorded $1,741 of this loss as a component of discontinued operations, and $1,871 in selling, general and
administrative expenses in the consolidated statement of operations.

In September 2009, in association with restructuring
activities, the Company recognized special termination losses of $1,006 related to SERA pension benefits in the United Kingdom. The Company recorded this loss in selling, general and administrative expenses in the consolidated statement of
operations.

In June 2009, the Company recognized a curtailment and settlement of defined benefits to former Japan employees,
resulting in a related loss of $1,181. In September 2009, the Company recognized an additional loss of $526. The Company recorded these losses in selling, general, and administrative expenses in the consolidated statement of operations.

14. Financial Instruments

The Company sells its products in more than 175 countries and approximately 83% of the Companys revenues are generated outside the United States. The Companys activities expose it to a variety
of market risks, including the effects of changes in foreign currency exchange rates and interest rates. These financial risks are monitored and managed by the Company as an integral part of its overall risk management program.

The Company maintains a foreign currency risk management strategy that uses derivative instruments (foreign currency forward contracts)
to protect its interests from fluctuations in earnings and cash flows caused by the volatility in currency exchange rates. Movements in foreign currency exchange rates pose a risk to the Companys operations and competitive position, since
exchange rate changes may affect the profitability and cash flow of the Company, and business and/or pricing strategies of competitors.

Certain of the Companys foreign business unit sales and purchases are denominated in the customers or vendors local currency. The Company purchases foreign currency forward contracts as
hedges of foreign currency denominated receivables and payables and as hedges of forecasted foreign currency denominated sales and purchases. These contracts are entered into to protect against the risk that the future dollar-net-cash inflows and
outflows resulting from such sales, purchases, firm commitments or settlements will be adversely affected by changes in exchange rates.

At October 1, 2010, the Company held 21 foreign currency forward contracts as hedges of foreign currency denominated receivables and payables with an aggregate notional amount of $168,853. Because
the terms of such contracts are primarily less than three months, the Company did not elect hedge accounting treatment for these contracts. The Company records the changes in the fair value of those contracts within other (income) expense, net, in
the consolidated statements of operations. Total net realized and unrealized (gains) losses recognized on these contracts were $7,948 and ($767) during the three and nine months ended October 1, 2010, respectively.

As of October 1, 2010, the Company held 155 foreign currency forward contracts as hedges of forecasted foreign currency denominated
sales and purchases with an aggregate notional amount of $46,895. The maximum length of time over which the Company typically hedges cash flow exposures is twelve months. To the extent that these contracts are designated and qualify as cash flow
hedging instruments, the effective portion of the gain or loss on the derivative instrument is recorded in accumulated other comprehensive income and reclassified as a component to net income (loss) in the same period or periods during which the
hedged transaction affects earnings. Net unrealized loss on cash flow hedging instruments of $108 was included in accumulated other comprehensive income, net of tax, at October 1, 2010. There was no ineffectiveness related to cash flow hedging
instruments during the nine months ended October 1, 2010. Unrealized gains and losses existing at October 1, 2010, which are expected to be reclassified into the consolidated statements of operations from accumulated other comprehensive
income during the next year, are not expected to be significant.



15



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##### Table of Contents

DIVERSEY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2010

(Unaudited)





At October 1,
2010 the location and fair value amounts of derivative instruments is as follows:



|                                                  |                 |                        |  |                 |                       |  |                        |                  |            |   |       | 
|------------------------------------------------- | --------------- | ---------------------- |  | --------------- | --------------------- |  | ---------------------- | ---------------- | ---------- | - | ----- | 
|                                                  |                 | Asset Derivatives      |  |                 | Liability Derivatives | 
|                                                  | October 1, 2010 |                        |  | October 1, 2010 |                      
|                                                  |                 | Balance Sheet Location |  | Fair Value      |                       |  | Balance Sheet Location |                  | Fair Value |  
|Derivatives designated as hedging
instruments     |                 |                        |  |                 |                       |  |                        |                  |            |  
|Foreign currency forward contracts                |                 | Other current assets   |  | $               | 886                   |  |                        | Accrued expenses |            | $ | 1,064 | 
|                                                  |                 |                        |  |                
|Derivatives not designated as hedging
instruments |                 |                        |  |                 |                       |  |                        |                  |            |  
|Foreign currency forward contracts                |                 | Other current assets   |  |                 | 236                   |  |                        | Accrued expenses |            |   | 2,474 | 
|                                                  |                 |                        |  |                 |                       |  |                        |                  |            |   |       | 
|Total Derivatives                                 |                 |                        |  | $               | 1,122                 |  |                        |                  |            | $ | 3,538 | 
|                                                  |                 |                        |  |                 |                       |  |                        |                  |            |   |       | 

The amounts of (gain) loss recognized in accumulated Other Comprehensive Income (OCI) at
October 1, 2010, and the amounts reclassified into income from accumulated OCI for the three and nine months ended October 1, 2010 were as follows:



|                                                |  |                                                                          |     |  |                                                                      |                             |                                                                                      |   |     |                                  |  |   |     | 
|----------------------------------------------- |  | ------------------------------------------------------------------------ | --- |  | -------------------------------------------------------------------- | --------------------------- | ------------------------------------------------------------------------------------ | - | --- | -------------------------------- |  | - | --- | 
|                                                |  | Amount of (gain) lossrecognized in OCI on derivatives(effective
portion) |     |  |                                                                      |                             | Amount of (gain) lossreclassified from accumulatedOCI into income(effective
portion) |  
|Derivatives with cash flow hedgingrelationships |  | Nine months endedOctober 1, 2010                                         |     |  | Location of (gain) loss reclassifiedfrom accumulated OCI into
income |                             | Three Months EndedOctober 1, 2010                                                    |   |     | Nine months endedOctober 1, 2010 | 
|Foreign currency forward contracts              |  | $                                                                        | 178 |  |                                                                      | Other (income) expense, net |                                                                                      | $ | 168 |                                  |  | $ | 533 | 
|                                                |  |                                                                          |     |  |                                                                      |                             |                                                                                      |   |     |                                  |  |   |     | 

15. Fair Value Measurements of Financial Instruments

Financial instruments measured at fair value on a recurring basis were as follows:



|                                   |  |                           |       |  |         |   |   |         |  |   |         |  |  |   |   | 
|---------------------------------- |  | ------------------------- | ----- |  | ------- | - | - | ------- |  | - | ------- |  |  | - | - | 
|                                   |  | Balance atOctober 1, 2010 |       |  | Level 1 |   |   | Level 2 |  |   | Level 3 | 
|Assets:                            |  |                           |       |  |         |   |   |         |  |   |         |  |  |   |   | 
|Foreign currency forward contracts |  | $                         | 1,122 |  |         | $ |  |         |  | $ | 1,122   |  |  | $ |  | 
|                                   |  |                           |       |  |         |   |   |         |  |   |         |  |  |   |   | 
|                                   |  |                           |       | 
|Liabilities:                       |  |                           |       |  |         |   |   |         |  |   |         |  |  |   |   | 
|Foreign currency forward contracts |  | $                         | 3,538 |  |         | $ |  |         |  | $ | 3,538   |  |  | $ |  | 
|                                   |  |                           |       |  |         |   |   |         |  |   |         |  |  |   |   | 

The Company primarily uses readily observable market data in conjunction with globally accepted valuation
model software when valuing its financial instruments portfolio and, consequently, the Company designates all financial instruments as Level 2. Under ASC Topic 820,Fair Value Measurements and Disclosures, there are three levels of inputs
that may be used to measure fair value. Level 2 is defined as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived
valuations in which all significant inputs and significant value drivers are observable in active markets.



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DIVERSEY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2010

(Unaudited)





16. Comprehensive Income
(Loss)

Comprehensive income (loss) for three and nine months ended October 1, 2010 was as follows:



|                                                                   |  |                    |         |   |                   |   |        |                 |  |   |                 |   |  |   |        | 
|------------------------------------------------------------------ |  | ------------------ | ------- | - | ----------------- | - | ------ | --------------- |  | - | --------------- | - |  | - | ------ | 
|                                                                   |  | Three Months Ended |         |   | Nine Months Ended |  
|                                                                   |  | October 1, 2010    |         |   | October 2, 2009   |   |        | October 1, 2010 |  |   | October 2, 2009 |  
|Net income                                                         |  | $                  | 33,360  |   |                   | $ | 31,089 |                 |  | $ | 38,922          |   |  | $ | 9,291  | 
|Foreign currency translation adjustments                           |  |                    | 93,973  |   |                   |   | 43,972 |                 |  |   | 17,755          |   |  |   | 65,967 | 
|Adjustments to pension and post-retirement liabilities, net of tax |  |                    | (7,971  | ) |                   |   | 4,069  |                 |  |   | (10,900         | ) |  |   | 8,874  | 
|Unrealized gains (losses) on derivatives, net of tax               |  |                    | 132     |   |                   |   | 1,102  |                 |  |   | 88              |   |  |   | 565    | 
|                                                                   |  |                    |         |   |                   |   |        |                 |  |   |                 |   |  |   |        | 
|Total comprehensive income                                         |  | $                  | 119,494 |   |                   | $ | 80,232 |                 |  | $ | 45,865          |   |  | $ | 84,697 | 
|                                                                   |  |                    |         |   |                   |   |        |                 |  |   |                 |   |  |   |        | 

17. Stock-Based Compensation

Adoption of a New Stock-Based Long-Term Incentive Plan

In January 2010,
the Company approved a new Stock Incentive Plan (SIP), which replaced the cash-based Long-Term Incentive Program (LTIP) for the officers and most senior managers of the Company. The SIP provides for the purchase or award of
new class B common stock of the Company (Shares) and options to purchase new Shares representing in the aggregate up to 12% of the outstanding common stock of the Company.

During the nine months ended October 1, 2010, under terms of the approved SIP, participants were granted 2,982,002 Deferred Share
Units (DSUs) and 7,879,381 matching options, which represent rights to Shares in the future subject to the satisfaction of service and performance conditions. The DSUs include 1,447,890 units related to the conversion of LTIP awards that
have been earned but are not yet vested at adoption of the SIP. The conversion resulted in the reclassification of $14,479 from other liabilities to Class B shares subject to contingent redemption, as these awards are expected to be settled in
equity rather than in cash. The DSUs have a grant-date fair value of $10 per share and the matching options have an exercise price of between $10 and $12.35 per share, with a contractual term of ten years. The DSUs and matching options are subject
to vesting periods of one to two years and three to four years, respectively.

Also during the nine months ended
October 1, 2010, pursuant to the conditions of the SIP, the Company completed an equity offering resulting in the issuance of 1,448,471 Shares at $10 per share, and 2,850,925 matching options to purchase Shares pursuant to a matching formula,
at an exercise price of between $10 and $12.35 per share, with a contractual term of ten years. The matching options are subject to a vesting period of four years.

The Company recognizes the cost of employee services in exchange for awards of equity instruments based on the grant-date fair value of those awards. That cost, based on the estimated number of awards
that are expected to vest, is recognized on a straight-line basis over the period during which the employee is required to provide the service in exchange for the award. No compensation cost is recognized for awards for which the employees do not
render the requisite service. The grant-date fair value of SIP matching options is estimated using the Black-Scholes valuation model. The grant-date fair value of SIP DSUs is equal to the purchase price of the equity offering pursuant to which the
SIP DSUs are granted, as determined by the Board of Directors based on a third-party valuation.

The following
weighted-average assumptions were used in calculating the fair value of SIP matching options for each award, as of the date of grant:



|                                   |  |  |       |  
|---------------------------------- |  |  | ----- | -
|Expected term of option (in years) |  |  | 5.00  |  
|Expected volatility factor         |  |  | 34.51 | %
|Expected dividend yield            |  |  | 0.00  | %
|Risk-free interest rate            |  |  | 2.37  | %



17



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DIVERSEY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2010

(Unaudited)





In determining a
five-year expected term, the Company used managements best estimate of the time period to potential liquidity activity. Expected volatility is based on the median monthly volatility of peer companies measured over a five-year period
corresponding to the expected term of the option. The expected dividend yield is 0% based on the Companys expectation that no dividends will be paid during the expected term of the option. The risk-free interest rate is based on the U.S.
five-year treasury constant maturity as of February 2, 2010 for the expected term of the option.

The summary of stock
option activity during the first nine months of 2010 is presented below:



|                                       |  |                   |            |  |                            |   |       |                                       |  |  |                          |  |  |   |        | 
|-------------------------------------- |  | ----------------- | ---------- |  | -------------------------- | - | ----- | ------------------------------------- |  |  | ------------------------ |  |  | - | ------ | 
|                                       |  | Number of Options |            |  | Exercise Price perOption
1 |   |       | RemainingContractual 
Term1(in years) |  |  | Aggregate IntrinsicValue | 
|Outstanding at beginning of the period |  |                   |           |  |                            | $ |      |                                       |  |  |                          |  |  |   |        | 
|Granted 2                              |  |                   | 10,730,306 |  |                            |   | 10.00 |                                       |  |  |                          |  |  |   |        | 
|Exercised                              |  |                   |           |  |                            |   |      |                                       |  |  |                          |  |  |   |        | 
|Forfeited or expired                   |  |                   |           |  |                            |   |      |                                       |  |  |                          |  |  |   |        | 
|                                       |  |                   |            |  |                            |   |       |                                       |  |  |                          |  |  |   |        | 
|                                       |  |                   |            | 
|Outstanding at end of period           |  |                   | 10,730,306 |  |                            | $ | 10.00 |                                       |  |  |                         |  |  | $ | 27,874 | 
|                                       |  |                   |            |  |                            |   |       |                                       |  |  |                          |  |  |   |        | 
|                                       |  |                   |            | 
|Exercisable at end of period           |  |                   |            |  |                            |   | N/A   |                                       |  |  | N/A                      |  |  |   | N/A    | 

1Weighted-average

2An additional 10,617 options were granted during the third quarter of 2010, at an exercise price of $12.35 per share.

The weighted-average grant-date fair value of options granted was $3.43.

At October 1, 2010, there was $29,057 of unrecognized compensation cost related to DSUs and non-vested option compensation
arrangements that is expected to be recognized as a charge to earnings over a weighted-average period of five years.

The SIP
expense was $3,703 and $10,820 for the three and nine months ended October 1, 2010, and is recorded as part of selling, general and administrative expenses in the consolidated statement of operations.

In conjunction with the approval of the SIP, the Company changed the LTIP from being measured on operational performance to stock
appreciation for grants beginning in 2010. The new program provides for cash awards based on stock appreciation rights (SARs) and includes the managers of the Company who participated in the LTIP but are not subject to the SIP. SARs have
no effect on shares outstanding as appreciation awards are paid in cash and not in common stock. The Company accounts for SARs as liability awards in which the pro-rata portion of the awards fair value is recognized as expense over the vesting
period, which approximates three years.

In February 2010, the Company adopted a Director Stock Incentive Plan
(DIP), which provides for the sale of Shares to certain non-employee directors of the Company, as well as the grant to these individuals of DSUs in lieu of receiving cash compensation for their services as a member of the Companys
Board of Directors. In the first nine months of 2010, pursuant to the DIP, the Company completed an equity offering of 85,000 Shares at $10 per share, and 29,167 shares at $12 per share, to certain directors. Pursuant to the DIP, participating
directors were granted 50,000 DSUs, which represent rights to Shares in the first quarter of 2011, subject to the satisfaction of certain conditions at an acquisition price of $10 per share, and 8,229 DSUs at $12 per share. In September 2010,
Holdings purchased back 10,000 shares at $12.35 per share and 12,500 DSUs were forfeited following the departure of a director.

Class B
shares and equity awards subject to contingent redemption

The Companys SIP program is subject to a contingent
redemption feature relating to any potential future change in control of the Company. Among other provisions, this feature provides for the cash settlement of Shares and DSUs at fair value as of the date of the change in control. As the Company does
not deem such redemption event as currently probable, applicable accounting guidance requires recognition of Shares and earned DSUs as mezzanine equity, which the Company has presented as Class B shares and equity awards subject to contingent
redemption on its consolidated balance sheets.



18



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##### Table of Contents

DIVERSEY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2010

(Unaudited)





At October 1,
2010, the Companys mezzanine equity consisted of $14,479 related to DSUs associated with the conversion of the LTIP, $6,284 related to DSUs that were earned during the first nine months, $14,525 related to the SIP equity offering and $1,100
related to the DIP equity offering.

18. 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 financial position, results of
operations or cash flows.

The Company has purchase commitments for materials, supplies, and property, plant and equipment
incidental to 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
year. 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.

In September 2010, the Company conditionally pledged $6,000 to a
charitable organization near its Sturtevant, Wisconsin headquarters. The Company expects to expense the amount committed during the fourth quarter of 2010, following satisfaction of certain conditions.

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

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 and executing plans to address the contamination, including the potential to recover some of these costs from Unilever under the terms of the DiverseyLever purchase agreement. As of October 1, 2010, the
Company maintained related reserves of $10,200 on a discounted basis (using country specific rates ranging from 7.6% to 21.7%) and $13,200 on an undiscounted basis. The Company intends to seek recovery from Unilever under indemnification clauses
contained in the purchase agreement.



19



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##### Table of Contents

DIVERSEY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2010

(Unaudited)





19. Segment Information

In accordance with the new operating segments as described in Note 2, business segment information is summarized as
follows:



|                                                              |  |                                    |           |  |          |   |         |                     |  |   |                      |  |  |              |         |   |  |   |           | 
|------------------------------------------------------------- |  | ---------------------------------- | --------- |  | -------- | - | ------- | ------------------- |  | - | -------------------- |  |  | ------------ | ------- | - |  | - | --------- | 
|                                                              |  | Three Months Ended October 1, 2010 |          
|                                                              |  | Europe                             |           |  | Americas |   |         | Greater AsiaPacific |  |   | Eliminations /Other1 |  |  | TotalCompany |        
|Net sales                                                     |  | $                                  | 407,288   |  |          | $ | 231,450 |                     |  | $ | 151,719              |  |  | $            | (6,885  | ) |  | $ | 783,572   | 
|Operating profit                                              |  |                                    | 55,720    |  |          |   | 22,169  |                     |  |   | 11,024               |  |  |              | (1,224  | ) |  |   | 87,689    | 
|Depreciation and amortization                                 |  |                                    | 11,484    |  |          |   | 5,971   |                     |  |   | 3,844                |  |  |              | 8,611   |   |  |   | 29,910    | 
|Interest expense                                              |  |                                    | 12,119    |  |          |   | 4,457   |                     |  |   | 537                  |  |  |              | 21,287  |   |  |   | 38,400    | 
|Interest income                                               |  |                                    | 335       |  |          |   | 686     |                     |  |   | 157                  |  |  |              | (548    | ) |  |   | 630       | 
|Total assets                                                  |  |                                    | 1,960,322 |  |          |   | 599,407 |                     |  |   | 552,818              |  |  |              | 299,540 |   |  |   | 3,412,087 | 
|Goodwill                                                      |  |                                    | 782,981   |  |          |   | 210,707 |                     |  |   | 208,527              |  |  |              | 66,131  |   |  |   | 1,268,346 | 
|Capital expenditures, including capitalized computer software |  |                                    | 5,817     |  |          |   | 4,457   |                     |  |   | 3,398                |  |  |              | 4,670   |   |  |   | 18,342    | 
|Long-lived assets2                                            |  |                                    | 1,034,057 |  |          |   | 305,696 |                     |  |   | 288,896              |  |  |              | 304,357 |   |  |   | 1,933,006 | 
|                                                              | 
|                                                              |  | Three Months Ended October 2, 2009 |          
|                                                              |  | Europe                             |           |  | Americas |   |         | Greater AsiaPacific |  |   | Eliminations /Other1 |  |  | TotalCompany |        
|Net sales                                                     |  | $                                  | 447,413   |  |          | $ | 232,861 |                     |  | $ | 140,229              |  |  | $            | (5,066  | ) |  | $ | 815,437   | 
|Operating profit                                              |  |                                    | 53,071    |  |          |   | 30,714  |                     |  |   | 8,895                |  |  |              | (8,695  | ) |  |   | 83,985    | 
|Depreciation and amortization                                 |  |                                    | 11,665    |  |          |   | 5,357   |                     |  |   | 3,858                |  |  |              | 7,351   |   |  |   | 28,231    | 
|Interest expense                                              |  |                                    | 14,441    |  |          |   | 3,804   |                     |  |   | 427                  |  |  |              | 15,858  |   |  |   | 34,530    | 
|Interest income                                               |  |                                    | 1,110     |  |          |   | 420     |                     |  |   | 79                   |  |  |              | (367    | ) |  |   | 1,242     | 
|Total assets                                                  |  |                                    | 1,981,178 |  |          |   | 564,322 |                     |  |   | 499,948              |  |  |              | 305,254 |   |  |   | 3,350,702 | 
|Goodwill                                                      |  |                                    | 810,507   |  |          |   | 204,800 |                     |  |   | 193,671              |  |  |              | 66,956  |   |  |   | 1,275,934 | 
|Capital expenditures, including capitalized computer software |  |                                    | 7,007     |  |          |   | 4,607   |                     |  |   | 3,370                |  |  |              | 4,872   |   |  |   | 19,856    | 
|Long-lived assets2                                            |  |                                    | 1,086,757 |  |          |   | 298,774 |                     |  |   | 270,885              |  |  |              | 316,681 |   |  |   | 1,973,097 | 

1Eliminations/Other includes the Companys corporate operating and holding entities, discontinued operations and
corporate level eliminations and consolidating entries.

2Long-lived assets includes property, plant and equipment, capital software, intangible items and investments in
affiliates.



20



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DIVERSEY HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2010

(Unaudited)





|                                                              |  |                                   |           |  |          |   |         |                     |  |   |                      |  |  |              |         |   |  |   |           | 
|------------------------------------------------------------- |  | --------------------------------- | --------- |  | -------- | - | ------- | ------------------- |  | - | -------------------- |  |  | ------------ | ------- | - |  | - | --------- | 
|                                                              |  | Nine Months Ended October 1, 2010 |          
|                                                              |  | Europe                            |           |  | Americas |   |         | Greater AsiaPacific |  |   | Eliminations /Other1 |  |  | TotalCompany |        
|Net sales                                                     |  | $                                 | 1,222,886 |  |          | $ | 690,678 |                     |  | $ | 432,033              |  |  | $            | (20,048 | ) |  | $ | 2,325,549 | 
|Operating profit                                              |  |                                   | 138,475   |  |          |   | 66,817  |                     |  |   | 27,697               |  |  |              | (17,988 | ) |  |   | 215,001   | 
|Depreciation and amortization                                 |  |                                   | 33,536    |  |          |   | 17,698  |                     |  |   | 11,272               |  |  |              | 21,594  |   |  |   | 84,100    | 
|Interest expense                                              |  |                                   | 33,552    |  |          |   | 13,346  |                     |  |   | 1,658                |  |  |              | 59,752  |   |  |   | 108,308   | 
|Interest income                                               |  |                                   | 1,053     |  |          |   | 1,647   |                     |  |   | 439                  |  |  |              | (1,628  | ) |  |   | 1,511     | 
|Total assets                                                  |  |                                   | 1,960,322 |  |          |   | 599,407 |                     |  |   | 552,818              |  |  |              | 299,540 |   |  |   | 3,412,087 | 
|Goodwill                                                      |  |                                   | 782,981   |  |          |   | 210,707 |                     |  |   | 208,527              |  |  |              | 66,131  |   |  |   | 1,268,346 | 
|Capital expenditures, including capitalized computer software |  |                                   | 17,790    |  |          |   | 14,218  |                     |  |   | 9,508                |  |  |              | 13,040  |   |  |   | 54,556    | 
|Long-lived assets2                                            |  |                                   | 1,034,057 |  |          |   | 305,696 |                     |  |   | 288,896              |  |  |              | 304,357 |   |  |   | 1,933,006 | 
|                                                              | 
|                                                              |  | Nine Months Ended October 2, 2009 |          
|                                                              |  | Europe                            |           |  | Americas |   |         | Greater AsiaPacific |  |   | Eliminations /Other1 |  |  | TotalCompany |        
|Net sales                                                     |  | $                                 | 1,251,801 |  |          | $ | 681,601 |                     |  | $ | 393,175              |  |  | $            | (13,974 | ) |  | $ | 2,312,603 | 
|Operating profit                                              |  |                                   | 103,708   |  |          |   | 60,433  |                     |  |   | 13,733               |  |  |              | (17,705 | ) |  |   | 160,169   | 
|Depreciation and amortization                                 |  |                                   | 33,728    |  |          |   | 15,799  |                     |  |   | 11,356               |  |  |              | 21,136  |   |  |   | 82,019    | 
|Interest expense                                              |  |                                   | 41,402    |  |          |   | 11,554  |                     |  |   | 1,330                |  |  |              | 51,727  |   |  |   | 106,013   | 
|Interest income                                               |  |                                   | 3,832     |  |          |   | 1,205   |                     |  |   | 203                  |  |  |              | (1,480  | ) |  |   | 3,760     | 
|Total assets                                                  |  |                                   | 1,981,178 |  |          |   | 564,322 |                     |  |   | 499,948              |  |  |              | 305,254 |   |  |   | 3,350,702 | 
|Goodwill                                                      |  |                                   | 810,507   |  |          |   | 204,800 |                     |  |   | 193,671              |  |  |              | 66,956  |   |  |   | 1,275,934 | 
|Capital expenditures, including capitalized computer software |  |                                   | 20,025    |  |          |   | 14,071  |                     |  |   | 7,757                |  |  |              | 17,135  |   |  |   | 58,988    | 
|Long-lived assets2                                            |  |                                   | 1,086,757 |  |          |   | 298,774 |                     |  |   | 270,885              |  |  |              | 316,681 |   |  |   | 1,973,097 | 

1Eliminations/Other includes the Companys corporate operating
and holding entities, discontinued operations and corporate level eliminations and consolidating entries.

2Long-lived assets includes property, plant and equipment, capital
software, intangible items and investments in affiliates.



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

Executive Overview

The following management discussion and analysis
describes material changes in the financial condition and results of operations of Diversey Holdings, Inc. and its consolidated subsidiaries since December 31, 2009. This discussion should be read in conjunction with our consolidated financial
statements as of, and for the three months and nine months ended October 1, 2010, our Annual Reports on Form 10-K and Form 10-K/A for the year ended December 31, 2009, our Current Report on Form 8-K as filed with the SEC on May 27,
2010, and the section entitled Forward-Looking Statements immediately preceding Part I of this report.

We operate
our business through Diversey and its subsidiaries. We are an environmentally responsible, leading global marketer and manufacturer of cleaning, hygiene, operational efficiency, appearance enhancing products and equipment and related services
for the institutional and industrial cleaning and sanitation market. We have net product and service sales (net sales) in more than 175 countries through our direct sales force, wholesalers and third-party distributors. Our sales are
balanced geographically, with our principal markets being Western Europe, North America and Japan, with an increasing presence in the emerging markets of Asia Pacific, Latin America, Africa and Eastern Europe.

In June 2008, the Company announced plans to organize its operating structure to better position the Company to address consolidation and
globalization trends among its customers and to enable the Company to more effectively deploy resources. These plans included a change in the organization of the Companys operating segments from five to three regions. Effective January 2010,
the Company completed its reorganization to the new three region model, having implemented the following:



| |  |  | Three regional presidents have been appointed to lead the operations of the three segments;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | The three regional presidents report to the Companys Chief Executive Officer (CEO), who is its chief operating decision maker;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | Financial information is prepared separately and regularly for each of the three regions; and
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | The CEO regularly reviews the results of operations, manages the allocation of resources and assesses the performance of each of these regions.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------

The Companys operations were previously organized in five regions: Europe/Middle East/Africa
(Europe), North America, Latin America, Asia Pacific and Japan. The new three region model is composed of the following:



| |  |  | The existing Europe region
| | - |  | --------------------------



| |  |  | A new Americas region combining the former North and Latin American regions; and
| | - |  | --------------------------------------------------------------------------------



| |  |  | A new Greater Asia Pacific region combining the former Asia Pacific and Japan regions.
| | - |  | --------------------------------------------------------------------------------------

Accordingly, the following management discussion and analysis reflects segment information in conformity with the new three region model.

Also, except where noted, the management discussion and analysis below, excluding the consolidated statements of cash flows,
reflects the results of continuing operations, which excludes the divestiture of DuBois Chemicals (DuBois), and the former Polymer business segment (Polymer Business) as discussed in Note 6 to the consolidated financial
statements.

As indicated in the following table, after excluding the impact of foreign currency exchange rates, our net sales
decreased by 2.1% and 0.9% for the three and nine months ended October 1, 2010, respectively, compared to the three months and nine months ended October 2, 2009.



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|                                          |  |                    |       |  |                 |   |       |                   |  |  |                 |   |  |                 |         |  |        |   |         |  |  |  |      |  
|----------------------------------------- |  | ------------------ | ----- |  | --------------- | - | ----- | ----------------- |  |  | --------------- | - |  | --------------- | ------- |  | ------ | - | ------- |  |  |  | ---- | -
|                                          |  | Three Months Ended |       |  |                 |   |       | Nine Months Ended |  |  |                 |  
|(dollars in millions)                     |  | October 1, 2010    |       |  | October 2, 2009 |   |       | Change            |  |  | October 1, 2010 |   |  | October 2, 2009 |         |  | Change |  
|Net sales                                 |  | $                  | 783.6 |  |                 | $ | 815.4 |                   |  |  | -3.9            | % |  | $               | 2,325.6 |  |        | $ | 2,312.6 |  |  |  | 0.6  | %
|                                          |  |                    |       |  |                 |  
|Variance due to foreign currency exchange |  |                    |       |  |                 |   | (15.4 | )                 |  |  |                 |   |  |                 |         |  |        |   | 34.6    |  |  |  |      |  
|                                          |  |                    |       |  |                 |   |       |                   |  |  |                 |   |  |                 |         |  |        |   |         |  |  |  |      |  
|                                          |  | $                  | 783.6 |  |                 | $ | 800.0 |                   |  |  | -2.1            | % |  | $               | 2,325.6 |  |        | $ | 2,347.2 |  |  |  | -0.9 | %
|                                          |  |                    |       |  |                 |   |       |                   |  |  |                 |   |  |                 |         |  |        |   |         |  |  |  |      |  

The decrease for the quarter was driven by the impact of H1N1 virus related sales in the
comparable prior quarter. Excluding the impact of H1N1 virus related volume, the Companys net sales for the quarter were effectively flat. We continued to experience challenging economic conditions in the developed markets of Western Europe,
North America and Japan, where depressed customer demand continued to pressure sales. Our consistent application of successful pricing strategies, improved customer contract compliance and customer acquisitions have helped offset the adverse impact
of decreased consumption of our products. In particular, emerging markets across the world and global equipment sales have demonstrated consistent growth trends since the beginning of fiscal 2010. We continue to believe that our differentiated value
proposition, complemented by our diversified customer base, has allowed us to effectively execute our sales strategies and should help mitigate continued market uncertainty.

As indicated in the following table, the Companys gross profit percentage declined for the third quarter of 2010 compared to the third quarter of 2009.



|                                            |  |                                            |  |                 |  |                
|------------------------------------------- |  | ------------------------------------------ |  | --------------- |  | ---------------
|Gross Margin on Net SalesThree Months Ended |  | Gross Margin on Net SalesNine Months
Ended
|October 1, 2010                             |  | October 2, 2009                            |  | October 1, 2010 |  | October 2, 2009
|41.9%                                       |  | 43.2%                                      |  | 42.6%           |  | 41.0%          
|                                            |  |                                            |  |                 |  |                

During the quarter, the Company experienced a 130
basis point decline in margin as compared to last year, which was driven by volume and product mix changes, including the decrease in higher margin H1N1 virus related sales. For the first nine months of this year compared to prior year, the
Companys margin improved by 160 basis points, despite the difficult economic conditions, largely the result of continued implementation of price increases and reductions in certain raw material costs and successful implementation of our
restructuring program along with structural improvements built in to our global sourcing activities. We expect to leverage our process improvements to mitigate current and expected inflationary pressures.

As of October 1, 2010, we were in compliance with the financial covenants under the credit agreement for our new senior secured
credit facilities and indentures. We believe that our cash flows from continuing operations, together with available cash on hand, and borrowings available under our new senior secured credit facilities will generate sufficient cash flow to meet our
liquidity needs for the foreseeable future. From time to time, the company has considered and may in the future pursue debt or other financing alternatives, depending on market conditions and other factors. We believe that the global economy is
still recovering from the economic crisis and recession. We are not able to predict whether market conditions will continue to improve or deteriorate, or how long such changes will last or they will affect our business or our customers
businesses going forward.

During the third quarter of 2010, we continued to make significant progress with the operational
restructuring of our Company in accordance with the November 2005 Plan. Key activities during this quarter included the continued transition to a new organizational model in our Europe region, and the continued progress on various supply chain
optimization projects to improve capacity utilization and efficiency. Our November 2005 restructuring program activity is expected to continue through fiscal 2011, with the associated reserves expected to be paid out through our restricted cash
balance.

In conjunction with its ongoing operational efficiency efforts, the Company announced plans to transition certain
accounting functions in its corporate center and North America location to a third party provider. The Company commenced the plan and expects to complete execution by December 2011. The Company also affirmed its decision to cease manufacturing
operations at Waxdale, its primary U.S. manufacturing facility, and to move some production to its other locations in North America, as well as to pursue contract manufacturing for a portion of its product line. The timeline to transition out of
Waxdale is not certain, but is expected to be largely completed during the first semester of fiscal 2012.



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Critical Accounting Policies and
Estimates

As discussed in Note 3 to the consolidated financial statements in Part I, Item I, in June 2009, the FASB issued
new guidance under ASC Topic 860, Transfers and Servicing, which changed the requirements for derecognizing financial assets. As a result of this amendment to U.S. GAAP, effective at the beginning of fiscal year 2010, the Company restored the
securitized accounts receivable in its balance sheet and recognized related short-term borrowings. See Note 7 for additional information.

There have been no other material changes to the Companys critical accounting policies as described in its Annual Report on Form 10-K and Forms 10-K/A for the year ended December 31, 2009.

Recent Accounting Pronouncements

For information with respect to recent accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, see Note 3 to the consolidated financial statements in
Part I, Item I of this report.

Three Months Ended October 1, 2010 Compared to Three Months Ended October 2, 2009

Net Sales:



|                                          |  |                    |       |  |                 |   |       |        |  |   |            |   |  |  |      |  
|----------------------------------------- |  | ------------------ | ----- |  | --------------- | - | ----- | ------ |  | - | ---------- | - |  |  | ---- | -
|                                          |  | Three Months Ended |       |  | Change          |  
|(dollars in millions)                     |  | October 1, 2010    |       |  | October 2, 2009 |   |       | Amount |  |   | Percentage |  
|                                          |  |                    |       | 
|Net product and service sales             |  | $                  | 776.3 |  |                 | $ | 808.2 |        |  | $ | (31.9      | ) |  |  | -3.9 | %
|Sales agency fee income                   |  |                    | 7.3   |  |                 |   | 7.2   |        |  |   | 0.1        |   |  |  | 0.8  | %
|                                          |  |                    |       |  |                 |   |       |        |  |   |            |   |  |  |      |  
|                                          |  |                    | 783.6 |  |                 |   | 815.4 |        |  |   | (31.8      | ) |  |  | -3.9 | %
|Variance due to foreign currency exchange |  |                    |      |  |                 |   | (15.4 | )      |  |   | 15.4       |   |  |  |      |  
|                                          |  |                    |       |  |                 |   |       |        |  |   |            |   |  |  |      |  
|                                          |  | $                  | 783.6 |  |                 | $ | 800.0 |        |  | $ | (16.4      | ) |  |  | -2.1 | %
|                                          |  |                    |       |  |                 |   |       |        |  |   |            |   |  |  |      |  



| |  |  | The comparability of net sales reported in the two periods is affected by the impact of foreign exchange rate movements. As measured against prior
years results, the stronger U.S. dollar against the euro and certain other foreign currencies resulted in a $15.4 million decline in net sales in the third quarter of 2010.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Excluding the impact of foreign currency exchange rates, net sales decreased by 2.1%. The decrease for the quarter was driven by the impact of H1N1
virus related sales in the comparable prior quarter. Excluding the impact of H1N1 virus related volume, the Companys net sales for the quarter were effectively flat. We continued to experience challenging economic conditions in the developed
markets of Western Europe, North America and Japan, where depressed customer demand continued to pressure sales. Our consistent application of successful pricing strategies, improved customer contract compliance and customer acquisitions have helped
offset the adverse impact of decreased consumption of our products. In particular, emerging markets across the world and global equipment sales have demonstrated consistent growth trends since the beginning of fiscal 2010. We continue to believe
that our differentiated value proposition, complemented by our diversified customer base, has allowed us to effectively execute our sales strategies and should help mitigate continued market uncertainty. The following is a review of the sales
performance for each of our regions:
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In our Europe, Middle East and Africa markets, net sales decreased by 3.0% in the third quarter of 2010 versus the same period last year. The decrease
is substantially due to the impact of H1N1 virus related sales in the comparable prior period, which resulted in lower volumes in Western Europe across multiple customer sectors. These volume challenges were offset by continued favorable increases
in emerging markets and in equipment sales. We will continue to pursue the successful execution of our sales strategies to mitigate the economic challenges in the region.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | In our Americas region, net sales decreased by 2.3% in the third quarter of 2010 versus the same period last year. The decline was driven by the impact
of H1N1 virus related sales in the comparable prior period in the U.S. and Canada, downward pressure from the government and education sector due to budgetary constraints in the U.S., and the strategic exit from lower margin commodity sales in our
food and beverage sector, offset by continued sales growth in our key emerging markets in the region. We expect a continued trend of consumption growth in emerging markets and will continue to pursue effective sales strategies to address the ongoing
softness and economic uncertainty in many sectors of the U.S. and Canada marketplaces.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In our Greater Asia Pacific region, net sales improved by 0.9% in the third quarter of 2010 versus the same period last year. Growth in this region
continues to be led by India and China, which experienced strong volume improvements across sectors and whose expanding economies reflect strengthening customer demand. In these markets, we experienced sales growth in the food and beverage sector
due to customer acquisitions, while favorable occupancy rates helped sustain growth in the lodging sector. Equipment sales across various customer sectors continue to show favorable increases. Our growth trends in emerging markets are offset by
volume decreases in Japan, consistent with certain other developed markets and the strategic shift away from commodity-based sales in our Japanese food and beverage sector and reductions in beverage consumption patterns. The region expects continued
sales growth as general economic recovery and customer demand is restored and as we continue our focus on key customer acquisitions and emerging markets.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sales Agency Fee. As explained in Note 4 to our consolidated financial statements, the Company entered into an Umbrella Agreement with Unilever
consisting of a new sales agency (Sales Agency Agreement) and License Agreement, which became effective January 1, 2008, and unless otherwise terminated or extended, will expire on December 31, 2017. The amounts of sales agency
fee income earned under the Sales Agency Agreement are reported in the preceding table.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Gross Profit:

Our gross profit and gross profit percentages for the three months ended October 1, 2010 and October 2, 2009 were as follows:



|                                           |  |                    |       |   |                 |   |       |        |  |   |            |   |  |  |      |  
|------------------------------------------ |  | ------------------ | ----- | - | --------------- | - | ----- | ------ |  | - | ---------- | - |  |  | ---- | -
|                                           |  | Three Months Ended |       |   | Change          |  
|(dollars in millions)                      |  | October 1, 2010    |       |   | October 2, 2009 |   |       | Amount |  |   | Percentage |  
|Gross Profit                               |  | $                  | 328.1 |   |                 | $ | 352.4 |        |  | $ | (24.3      | ) |  |  | -6.9 | %
|                                           |  |                    |       |  
|Gross profit as a percentage of net sales: |  |                    | 41.9  | % |                 |   | 43.2  | %      |  |   |            |   |  |  |      |  



| |  |  | The comparability of gross profit between the two periods is affected by the impact of foreign exchange rate movements. As measured against the same
period in the prior year, the stronger U.S. dollar against the euro and certain other foreign currencies resulted in an $8.1 million decline in gross profit.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our gross profit percentage declined by 130 basis points in the third quarter of 2010 compared to the third quarter of 2009.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | The 130 basis point decline in margin was driven by volume and product mix changes, including the decrease in higher margin H1N1 virus related sales.
The adverse effect of volume and product mix was partially offset by our continued implementation of price increases. Effective actions helping to mitigate inflation in the quarter included more efficient materials purchasing, improvements in our
manufacturing and logistics footprint, rationalizing the number of product offerings, eliminating low margin products, and implementing internal processes to more effectively monitor customer profitability. We expect to leverage our process
improvements to manage current and expected inflationary pressures.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents



Operating Expenses:



|                                             |  |                    |       |   |                 |   |       |        |  |   |            |   |  |  |       |  
|-------------------------------------------- |  | ------------------ | ----- | - | --------------- | - | ----- | ------ |  | - | ---------- | - |  |  | ----- | -
|                                             |  | Three Months Ended |       |   | Change          |  
|(dollars in millions)                        |  | October 1, 2010    |       |   | October 2, 2009 |   |       | Amount |  |   | Percentage |  
|Selling, general and administrative expenses |  | $                  | 224.7 |   |                 | $ | 251.9 |        |  | $ | (27.2      | ) |  |  | -10.8 | %
|Research and development expenses            |  | $                  | 15.6  |   |                 |   | 15.6  |        |  | $ | (0.0       | ) |  |  | 0.0   | %
|Restructuring expenses (credits)             |  | $                  | 0.2   |   |                 |   | 0.9   |        |  | $ | (0.7       | ) |  |  | -81.2 | %
|                                             |  |                    |       |   |                 |   |       |        |  |   |            |   |  |  |       |  
|                                             |  | $                  | 240.5 |   |                 |   | 268.4 |        |  | $ | (27.9      | ) |  |  | -10.4 | %
|                                             |  |                    |       |   |                 |   |       |        |  |   |            |   |  |  |       |  
|As a percentage of net sales:                |  |                    |       |   |                 |   |       |        |  |   |            |   |  |  |       |  
|Selling, general and administrative expenses |  |                    | 28.7  | % |                 |   | 30.9  | %      |  |   |            |   |  |  |       |  
|Research and development expenses            |  |                    | 2.0   | % |                 |   | 1.9   | %      |  |   |            |   |  |  |       |  
|Restructuring expenses (credits)             |  |                    | 0.0   | % |                 |   | 0.1   | %      |  |   |            |   |  |  |       |  
|                                             |  |                    |       |   |                 |   |       |        |  |   |            |   |  |  |       |  
|                                             |  |                    | 30.7  | % |                 |   | 32.9  | %      |  |   |            |   |  |  |       |  
|                                             |  |                    |       |   |                 |   |       |        |  |   |            |   |  |  |       |  

Operating expenses. The comparability of operating expenses between the two periods is affected by the
impact of foreign exchange rate movements. As measured against the same period in the prior year, the stronger U.S. dollar against the euro and certain other foreign currencies resulted in a $4.9 million decline in operating expenses.



| |  |  | Selling, general and administrative expenses. Included in selling, general and administrative expenses are period costs associated with the
November 2005 Plan in the amounts of $3.6 million and $9.7 million for the third quarter of 2010 and 2009, respectively.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Selling, general and administrative expenses as a percentage of net sales were 28.7% for the third quarter of 2010 and 30.9% for the same period in the
prior year. Excluding the impact of foreign currency, selling, general and administrative expenses decreased by $22.9 million during the third quarter of 2010 compared to the same period in the prior year. This decrease is partially due to a net
reduction in expenses arising from: (a) the recognition of pension related net curtailment and settlement gains, (b) lower period costs associated with the November 2005 Plan, offset by (c) increased environmental reserves. In
addition, the Company has realized benefits from the continuing implementation of its restructuring program and expense control management.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Research and development expenses. Excluding the impact of foreign currency, research and development expenses increased by $0.7 million during
the third quarter of 2010 compared to the same period in the prior year.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Restructuring expenses. Restructuring expenses decreased by $0.8 million during the third quarter of 2010 compared to the same period in the
prior year, primarily due to the winding down of restructuring efforts and adjustments of previously recorded restructuring reserves.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents



Restructuring and
Integration:

A summary of all costs associated with the November 2005 Plan for the quarters ended October 1, 2010 and
October 2, 2009, and since inception of the program in November 2005, is outlined below:



|                                                                       |  |                    |      |   |                                       |   |       |   |  |   |        |  
|---------------------------------------------------------------------- |  | ------------------ | ---- | - | ------------------------------------- | - | ----- | - |  | - | ------ | -
|                                                                       |  | Three Months Ended |      |   | Total Project to 
DateOctober 1, 2010 |  
|(dollars in millions)                                                  |  | October 1, 2010    |      |   | October 2, 2009                       |   |      
|Reserve balance at beginning of period                                 |  | $                  | 29.7 |   |                                       | $ | 45.4  |   |  | $ |       |  
|Restructuring expenses (credits)                                       |  |                    | 0.2  |   |                                       |   | 0.9   |   |  |   | 234.7  |  
|Payments of accrued costs                                              |  |                    | (2.0 | ) |                                       |   | (15.4 | ) |  |   | (206.8 | )
|                                                                       |  |                    |      |   |                                       |   |       |   |  |   |        |  
|Reserve balance at end of period                                       |  | $                  | 27.9 |   |                                       | $ | 30.9  |   |  | $ | 27.9   |  
|                                                                       |  |                    |      |   |                                       |   |       |   |  |   |        |  
|                                                                       |  |                    |     
|Period costs classified as selling, generaland administrative expenses |  |                    | 3.6  |   |                                       |   | 9.7   |   |  |   | 312.6  |  
|Period costs classified as cost of sales                               |  |                    | 0.3  |   |                                       |   | 0.1   |   |  |   | 7.0    |  
|Capital expenditures                                                   |  |                    | 2.8  |   |                                       |   | 1.9   |   |  |   | 90.6   |  



| |  |  | During the third quarter of 2010 and 2009, we recorded $0.2 million and $0.9 million, respectively, of restructuring costs related to our November 2005
Plan, consisting primarily of involuntary termination costs. Our November 2005 restructuring program activity is expected to continue through fiscal 2011.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Period costs of $3.6 million and $9.7 million for 2010 and 2009, respectively, included in selling, general and administrative expenses and $0.3
million and $0.1 million for 2010 and 2009, respectively, included in cost of sales pertained to: (a) $1.4 million in 2010 ($6.2 million in 2009) for personnel related costs of employees and consultants associated with restructuring
initiatives, (b) $0.6 million in 2010 ($0.1 million in 2009) related to asset impairments, (c) $0.3 million in 2010 ($1.7 million in 2009) for value chain and cost savings projects, (d) $0.2 million in 2010 ($0.4 million in 2009) of
facilities related costs, and (e) $1.4 million in 2010 ($1.4 million in 2009) related to various other costs. The overall decrease in these expenses over the prior period was mainly due to a reduction in restructuring activities within our
Corporate Center as well as the Greater Asia Pacific and Americas business segments.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Non-Operating Results:



|                      |  |                    |      |   |                 |   |      |        |  |   |            |   |  |  |       |  
|--------------------- |  | ------------------ | ---- | - | --------------- | - | ---- | ------ |  | - | ---------- | - |  |  | ----- | -
|                      |  | Three Months Ended |      |   | Change          |  
|(dollars in millions) |  | October 1, 2010    |      |   | October 2, 2009 |   |      | Amount |  |   | Percentage |  
|Interest expense      |  | $                  | 38.4 |   |                 | $ | 34.5 |        |  | $ | 3.9        |   |  |  | 11.2  | %
|Interest income       |  |                    | (0.6 | ) |                 |   | (1.2 | )      |  |   | 0.6        |   |  |  | 49.3  | %
|                      |  |                    |      |   |                 |   |      |        |  |   |            |   |  |  |       |  
|Net interest expense  |  | $                  | 37.8 |   |                 | $ | 33.3 |        |  | $ | 4.5        |   |  |  | 13.5  | %
|                      |  |                    |      |  
|Other income, net     |  |                    | (0.9 | ) |                 |   | (0.8 | )      |  |   | (0.1       | ) |  |  | -13.9 | %



| |  |  | Net interest expense increased in the third quarter of 2010 compared to the same period in the prior year primarily due to the recognition of $3.4
million of additional non-cash interest expense, as amortization of discounts and capitalized debt issuance costs were accelerated due to an early optional principal payment made by Diversey on its New Term Loans and the Companys election to
pay cash interest on the New Holdings Senior Notes on May 15, 2011.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Income Taxes:



|                                  |  |                    |      |   |                 |   |      |        |  |   |            |   |  |  |       |  
|--------------------------------- |  | ------------------ | ---- | - | --------------- | - | ---- | ------ |  | - | ---------- | - |  |  | ----- | -
|                                  |  | Three Months Ended |      |   | Change          |  
|(dollars in millions)             |  | October 1, 2010    |      |   | October 2, 2009 |   |      | Amount |  |   | Percentage |  
|Income from continuing operations |  | $                  | 50.8 |   |                 | $ | 51.5 |        |  | $ | (0.7       | ) |  |  | -1.3  | %
|Provision for income taxes        |  |                    | 16.3 |   |                 |   | 20.7 |        |  |   | (4.4       | ) |  |  | -21.3 | %
|                                  |  |                    |      |  
|Effective income tax rate         |  |                    | 32.1 | % |                 |   | 40.3 | %      |  |   |            |   |  |  |       |  



| |  |  | For the fiscal year ending December 31, 2010, we are projecting an effective income tax rate of approximately 64% on pre-tax income from
continuing operations. The projected effective income tax rate for the fiscal year exceeds the statutory income tax rate primarily as a result of increased valuation allowances against deferred tax assets in certain jurisdictions and increases in
reserves for uncertain tax positions.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We reported an effective income tax rate of 32.1% on the pre-tax income from continuing operations for the third quarter ended October 1, 2010.
When compared to the estimated annual effective income tax rate, the effective income tax rate for the fiscal quarter ended October 1, 2010 is lower primarily due to certain income tax expense (benefit) amounts that were recorded as discrete
items during the period, rather than included in the annual effective income tax rate.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We reported an effective income tax rate of 40.3% on the pre-tax income from continuing operations for the third quarter ended October 2, 2009.
The high effective income tax rate is primarily the result of increased valuation allowances against deferred tax assets in certain jurisdictions and increases in reserves for uncertain tax positions.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Discontinued operations:



|                                                         |  |                    |      |   |                 |   |     |        |  |  |            |   |  |  |        |  
|-------------------------------------------------------- |  | ------------------ | ---- | - | --------------- | - | --- | ------ |  |  | ---------- | - |  |  | ------ | -
|                                                         |  | Three Months Ended |      |   | Change          |  
|(dollars in millions)                                    |  | October 1, 2010    |      |   | October 2, 2009 |   |     | Amount |  |  | Percentage |  
|Income (loss) from discontinued operations               |  | $                  | (1.1 | ) |                 | $ | 0.3 |        |  |  | (1.4       | ) |  |  | -476.3 | %
|Provision for (benefit from) income taxes                |  |                    |     |   |                 |   |    |        |  |  |           |   |  |  |       |  
|                                                         |  |                    |      |   |                 |   |     |        |  |  |            |   |  |  |        |  
|Income (loss) from discontinued operations, net of taxes |  | $                  | (1.1 | ) |                 | $ | 0.3 |        |  |  | (1.4       | ) |  |  | -476.3 | %

The loss from discontinued
operations during the three months ended October 1, 2010 includes $0.1 million in after-tax additional closing costs and certain pension-related adjustments ($0.2 million after-tax costs in 2009) related to the divestiture of Polymer business
and $1.0 million after-tax loss related to the Polymer tolling agreement ($0.6 million after-tax gain in 2009). The amount of loss from discontinued operations in the third quarter of 2009 also includes after-tax additional one-time costs associated
with the Dubois divestiture.

Net income:

Our net income of $33.3 million for the third quarter of 2010 represents an improvement of $2.2 million from the third quarter of 2009. Excluding the negative impact of foreign currency exchange of $2.4
million, our net income increased by $4.6 million. The increase in net income is primarily due to lower operating expenses in the current quarter compared to the same quarter last year.

EBITDA and Diversey Credit Agreement EBITDA:

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

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

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

Accordingly, we believe that
the inclusion of EBITDA in this 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 report may not be comparable to similarly titled measures of other companies.



29



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##### Table of Contents



EBITDA should not be
construed as a substitute for, and should be considered together with, net cash flows provided by operating activities as determined in accordance with U.S. GAAP. The following table reconciles EBITDA to net cash flows provided by operating
activities, which is the U.S. GAAP measure most comparable to EBITDA for the three months ended October 1, 2010 and October 2, 2009.



|                                                                                                             |  |                    |       |   |                 |   |       |  
|------------------------------------------------------------------------------------------------------------ |  | ------------------ | ----- | - | --------------- | - | ----- | -
|                                                                                                             |  | Three Months Ended |      
|(dollars in millions)                                                                                        |  | October 1, 2010    |       |   | October 2, 2009 |  
|Net cash provided by operating activities                                                                    |  | $                  | 135.1 |   |                 | $ | 170.4 |  
|Changes in operating assets and liabilities, net of effects from acquisitions and divestitures of businesses |  |                    | (53.0 | ) |                 |   | (92.4 | )
|Changes in deferred income taxes                                                                             |  |                    | (1.3  | ) |                 |   | (3.9  | )
|Depreciation and amortization expense                                                                        |  |                    | (29.9 | ) |                 |   | (28.2 | )
|Amortization of debt issuance costs                                                                          |  |                    | (5.4  | ) |                 |   | (1.3  | )
|Accretion of original issue discount                                                                         |  |                    | (1.7  | ) |                 |   |      |  
|Interest accreted on notes payable                                                                           |  |                    |      |   |                 |   | (11.7 | )
|Interest accrued on long-term receivables-related parties                                                    |  |                    |      |   |                 |   | 0.7   |  
|Compensation costs associated with new stock-based long-term incentive plan                                  |  |                    | (11.1 | ) |                 |   |      |  
|Other, net                                                                                                   |  |                    | 0.6   |   |                 |   | (2.5  | )
|                                                                                                             |  |                    |       |   |                 |   |       |  
|Net income                                                                                                   |  |                    | 33.3  |   |                 |   | 31.1  |  
|                                                                                                             |  |                   
|Provision for income taxes                                                                                   |  |                    | 16.3  |   |                 |   | 20.7  |  
|Interest expense, net                                                                                        |  |                    | 37.8  |   |                 |   | 33.3  |  
|Depreciation and amortization expense                                                                        |  |                    | 29.9  |   |                 |   | 28.2  |  
|                                                                                                             |  |                    |       |   |                 |   |       |  
|                                                                                                             |  | $                  | 117.3 |   |                 | $ | 113.3 |  
|                                                                                                             |  |                    |       |   |                 |   |       |  

EBITDA, net of foreign currency impact, improved by $7.2 million
for the third quarter ended October 1, 2010 compared to the same period in the prior year. This was primarily due to increased operating profit arising from lower operating expenses.



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Diversey Credit
Agreement EBITDA. For the purpose of calculating compliance with Diverseys financial covenants, the credit agreement for Diverseys New Senior Secured Credit Facility (see discussion in Liquidity and Capital Resources, Debt and
Contractual Obligations) requires Diversey to use a financial measure called Credit Agreement EBITDA, which is calculated as follows:



|                                        |  |   |       | 
|--------------------------------------- |  | - | ----- | 
|(dollars in millions)                   |  |   |      
|EBITDA                                  |  | $ | 117.3 | 
|Restructuring related costs             |  |   | 2.4   | 
|Acquisition and divestiture adjustments |  |   | 1.1   | 
|Non-cash and other items, net           |  |   | 4.1   | 
|Compensation adjustment                 |  |   | 5.1   | 
|                                        |  |   |       | 
|Credit Agreement EBITDA                 |  | $ | 130.0 | 
|                                        |  |   |       | 

We present Diversey Credit Agreement EBITDA because it is a financial measure that is used in the
calculation of compliance with Diverseys financial covenants under the credit agreement for Diverseys New Senior Secured Credit Facility. Credit Agreement EBITDA is not a measure under U.S, GAAP and should not be considered as a
substitute for financial performance and liquidity measures determined in accordance with U.S. GAAP, such as net income, operating income or operating cash flow.

Borrowings under Diverseys New Senior Secured Credit Facility are a key source of our liquidity. Our ability to borrow under Diverseys New Senior Secured Credit Facility depends upon, among
other things, compliance with certain representations, warranties and covenants under the credit agreement for Diverseys New Senior Secured Credit Facility. The financial covenants in Diverseys New Senior Secured Credit Facility include
a specified debt to Diversey Credit Agreement EBITDA leverage ratio and a specified Diversey Credit Agreement EBITDA to interest expense coverage ratio for specified periods.



31



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Nine Months Ended October 1,
2010 Compared to Nine Months Ended October 2, 2009

Net Sales:



|                                          |  |                   |         |  |                 |   |         |        |  |   |            |   |  |  |      |  
|----------------------------------------- |  | ----------------- | ------- |  | --------------- | - | ------- | ------ |  | - | ---------- | - |  |  | ---- | -
|                                          |  | Nine Months Ended |         |  | Change          |  
|(dollars in millions)                     |  | October 1, 2010   |         |  | October 2, 2009 |   |         | Amount |  |   | Percentage |  
|Net product and service sales             |  | $                 | 2,306.4 |  |                 | $ | 2,293.3 |        |  | $ | 13.1       |   |  |  | 0.6  | %
|Sales agency fee income                   |  |                   | 19.2    |  |                 |   | 19.3    |        |  |   | (0.1       | ) |  |  | -0.5 | %
|                                          |  |                   |         |  |                 |   |         |        |  |   |            |   |  |  |      |  
|                                          |  |                   | 2,325.6 |  |                 |   | 2,312.6 |        |  |   | 13.0       |   |  |  | 0.6  | %
|Variance due to foreign currency exchange |  |                   |        |  |                 |   | 34.6    |        |  |   | (34.6      | ) |  |  |      |  
|                                          |  |                   |         |  |                 |   |         |        |  |   |            |   |  |  |      |  
|                                          |  | $                 | 2,325.6 |  |                 | $ | 2,347.2 |        |  | $ | (21.6      | ) |  |  | -0.9 | %
|                                          |  |                   |         |  |                 |   |         |        |  |   |            |   |  |  |      |  



| |  |  | The comparability of net sales reported in the two periods is significantly affected by the impact of foreign exchange rate movements. As measured
against prior periods results, the weaker U.S. dollar against certain foreign currencies resulted in a $34.6 million increase in net sales.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Excluding the impact of foreign currency exchange rates, net sales decreased by 0.9 primarily a result of the impact of H1N1 related sales in the prior
year and the continuing challenging global economic conditions. The depressed conditions in the developed markets are partially offset by the strong growth we are experiencing in emerging markets. The following is a review of the sales performance
for each of our segments:
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In our Europe, Middle East and Africa markets, net sales decreased by 1.3% during the nine months ended October 1, 2010 compared to the same
period in the prior year. The decrease was substantially driven by the impact of H1N1 virus related sales in the prior period. We continue to experience pressures on sales volume in Western Europe primarily as a result of the stressed economic
conditions and lower consumption, partially offset by pricing and new customer acquisitions. We gained sales in emerging markets. Equipment sales grew despite the challenging marketplace. We will continue to pursue the successful execution of our
sales strategies to mitigate continuing economic challenges.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In our Americas region, net sales decreased by 2.3% during the nine months of 2010 versus the same period last year. The decline was a result of the
significant impact of H1N1 virus related sales in the prior period in the U.S. and Canada, decreased consumption in the government and education sector due to their budgetary constraints and the voluntary exit from underperforming applications in
the food and beverage sector. We continue to experience growth in our key emerging markets. We expect a continued trend of consumption growth in emerging markets and will continue to pursue effective sales strategies to address the ongoing softness
and economic uncertainties in many sectors of the U.S. and Canada marketplaces.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In our Greater Asia Pacific region, net sales increased by 2.5% during the nine months of 2010 versus the same period last year. This increase is
mainly due to strong volume improvements across sectors in our emerging markets, in particular, India and China. We experienced sales growth in the food and beverage sector due to customer acquisitions. This region also delivered growth in the
lodging sector, related to improved occupancy rates, as well as continuing improvement in equipment sales across various customer sectors. Our growth trends in emerging markets are offset by volume decreases in Japan, consistent with certain other
developed markets during this period. The region expects sales growth as economic recovery and customer demand is restored and as we continue our focus on key customer acquisitions and emerging markets.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents



| |  |  | Sales Agency Fee and License Agreement. As explained in Note 4 to our consolidated financial statements, the Company entered into an Umbrella
Agreement with Unilever consisting of a new sales agency (Sales Agency Agreement) and License Agreement, which became effective January 1, 2008, and unless otherwise terminated or extended, will expire on December 31, 2017.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The amounts of Sales Agency Fees and License Agreement revenues earned under these agreements are reported
in the preceding tables.

Gross Profit:

Our gross profit percentages for the nine months ended October 1, 2010 and October 2, 2009 were as follows:



|                                           |  |                   |       |   |                 |   |       |        |  |   |            |  |  |  |     |  
|------------------------------------------ |  | ----------------- | ----- | - | --------------- | - | ----- | ------ |  | - | ---------- |  |  |  | --- | -
|                                           |  | Nine Months Ended |       |   | Change          |  
|(dollars in millions)                      |  | October 1, 2010   |       |   | October 2, 2009 |   |       | Amount |  |   | Percentage | 
|Gross Profit                               |  | $                 | 990.5 |   |                 | $ | 947.7 |        |  | $ | 42.8       |  |  |  | 4.5 | %
|                                           |  |                   |       |  
|Gross profit as a percentage of net sales: |  |                   | 42.6  | % |                 |   | 41.0  | %      |  |   |            |  |  |  |     |  



| |  |  | The comparability of gross profit between the two periods is significantly affected by the impact of foreign exchange rate movements. As measured
against prior periods results, the weaker U.S. dollar against certain foreign currencies resulted in a $9.7 million increase in gross profit.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our gross profit percentage increased by 160 basis points for the nine months of 2010 compared to the same period in the prior year.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The 160 basis point improvement in margin was largely the result of continued successful implementation of price increases, and reduction in certain
raw material costs. In addition, margins were enhanced through continuing successful implementation of our restructuring program along with structural improvements built in to our global sourcing activities. This includes more efficient materials
purchasing, improvements in our manufacturing and logistics footprint, rationalizing the number of product offerings, eliminating low margin products, and implementing internal processes to more effectively monitor customer profitability.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents



Operating Expenses:



|                                             |  |                   |       |   |                 |   |       |        |  |   |            |   |  |  |        |  
|-------------------------------------------- |  | ----------------- | ----- | - | --------------- | - | ----- | ------ |  | - | ---------- | - |  |  | ------ | -
|                                             |  | Nine Months Ended |       |   | Change          |  
|(dollars in millions)                        |  | October 1, 2010   |       |   | October 2, 2009 |   |       | Amount |  |   | Percentage |  
|Selling, general and administrative expenses |  | $                 | 729.0 |   |                 | $ | 732.8 |        |  | $ | (3.8       | ) |  |  | -0.5   | %
|Research and development expenses            |  |                   | 48.8  |   |                 |   | 46.6  |        |  |   | 2.2        |   |  |  | 4.8    | %
|Restructuring expenses (credits)             |  |                   | (2.3  | ) |                 |   | 8.2   |        |  |   | (10.5      | ) |  |  | -128.8 | %
|                                             |  |                   |       |   |                 |   |       |        |  |   |            |   |  |  |        |  
|                                             |  | $                 | 775.5 |   |                 | $ | 787.6 |        |  | $ | (12.1      | ) |  |  | -1.5   | %
|                                             |  |                   |       |   |                 |   |       |        |  |   |            |   |  |  |        |  
|As a percentage of net sales:                |  |                   |       |   |                 |   |       |        |  |   |            |   |  |  |        |  
|Selling, general and administrative expenses |  |                   | 31.3  | % |                 |   | 31.7  | %      |  |   |            |   |  |  |        |  
|Research and development expenses            |  |                   | 2.1   | % |                 |   | 2.0   | %      |  |   |            |   |  |  |        |  
|Restructuring expenses (credits)             |  |                   | -0.1  | % |                 |   | 0.4   | %      |  |   |            |   |  |  |        |  
|                                             |  |                   |       |   |                 |   |       |        |  |   |            |   |  |  |        |  
|                                             |  |                   | 33.3  | % |                 |   | 34.1  | %      |  |   |            |   |  |  |        |  
|                                             |  |                   |       |   |                 |   |       |        |  |   |            |   |  |  |        |  

Operating expenses. The comparability of operating expenses between the two periods is significantly
affected by the impact of foreign exchange rate movements. As measured against prior periods results, the weaker U.S. dollar against certain foreign currencies resulted in a $10.4 million increase in operating expenses.



| |  |  | Selling, general and administrative expenses. Included in selling, general and administrative expenses are period costs associated with
the November 2005 Plan, in the amounts of $10.3 million and $22.5 million for the first nine months of 2010 and 2009, respectively.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Selling, general and administrative expenses as a percentage of net sales were 31.3% for the nine months ended October 1, 2010 compared to 31.7% for the same period in the prior year. Excluding the
impact of foreign currency, selling, general and administrative costs decreased $14.8 million during the nine months ended October 1, 2010, compared to the same period in the prior year. This decrease is substantially due to a net reduction in
expenses arising from: (a) the recognition of pension related net settlement and curtailment gains, (b) lower period costs associated with the November 2005 Plan , offset by (c) employee termination costs related to the Companys
decision to move certain accounting functions to a third party provider and relocate its Waxdale manufacturing capability, and (d) increased environmental reserves.



| |  |  | Research and development expenses. Excluding the impact of foreign currency, research and development expenses increased by $2.8 million
during the first nine months of 2010 compared to the same period in the prior year, the majority of which is related to the addition of engineering resources.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Restructuring expenses (credits). Excluding the impact of foreign currency, restructuring expenses decreased by $10.5 million during the first
nine months of 2010 compared to the same period in the prior year, primarily due to the winding down of restructuring efforts and adjustments of previously recorded restructuring reserves.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



34



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##### Table of Contents



Restructuring and Integration:

A summary of all costs associated with the November 2005 Plan for the nine months ended October 1, 2010 and
October 2, 2009, and since inception of the program in November 2005, is outlined below:



|                                                                        |  |                   |       |   |                       |   |       |                 |  |   |        |  
|----------------------------------------------------------------------- |  | ----------------- | ----- | - | --------------------- | - | ----- | --------------- |  | - | ------ | -
|                                                                        |  | Nine Months Ended |       |   | Total Project to Date |  
|(dollars in millions)                                                   |  | October 1, 2010   |       |   | October 2, 2009       |   |       | October 1, 2010 | 
|Reserve balance at beginning of period                                  |  | $                 | 48.4  |   |                       | $ | 60.1  |                 |  | $ |       |  
|Restructuring expenses (credits)                                        |  |                   | (2.3  | ) |                       |   | 8.2   |                 |  |   | 234.7  |  
|Payments of accrued costs                                               |  |                   | (18.2 | ) |                       |   | (37.4 | )               |  |   | (206.8 | )
|                                                                        |  |                   |       |   |                       |   |       |                 |  |   |        |  
|Reserve balance at end of period                                        |  | $                 | 27.9  |   |                       | $ | 30.9  |                 |  | $ | 27.9   |  
|                                                                        |  |                   |       |   |                       |   |       |                 |  |   |        |  
|Period costs classified as selling, general and administrative expenses |  |                   | 10.3  |   |                       |   | 22.5  |                 |  |   | 312.6  |  
|Period costs classified as cost of sales                                |  |                   | 0.8   |   |                       |   | 0.8   |                 |  |   | 7.0    |  
|Capital expenditures                                                    |  |                   | 5.0   |   |                       |   | 13.4  |                 |  |   | 90.6   |  



| |  |  | During the first nine months of 2010 and 2009, we recorded $(2.3) million and $8.2 million, respectively, of restructuring costs related to our
November 2005 Plan. Costs for the first nine months of both 2010 and 2009 consist primarily of involuntary termination costs. Our November 2005 restructuring program activity is expected to continue through fiscal 2011.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Period costs of $10.3 and $22.5 million for 2010 and 2009, respectively, included in selling, general and administrative expenses and $0.8 million and
$0.8 million for 2010 and 2009, respectively, included in cost of sales pertained to: (a) $4.7 million in 2010 ($15.9 million in 2009) for personnel related costs of employees and consultative resources associated with restructuring
initiatives, (b) $1.6 million in 2010 ($1.4 million in 2009) related to asset impairments, (c) $1.5 million in 2010 ($3.8 million in 2009) for value chain and cost savings projects, (d) $0.5 million of facilities related costs in 2010
($1.5 million gain on sale of a manufacturing facility in Europe net of other facilities related costs in 2009), and (e) $2.8 million in 2010 ($3.7 million in 2009) related to various other costs. The overall decrease in these expenses over the
prior period was mainly due to a reduction in restructuring activities within our Corporate Center as well as the Greater Asia Pacific and North American business segments.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Non-Operating Results:



|                            |  |                   |       |   |                 |   |       |        |  |   |            |  |  |  |       |  
|--------------------------- |  | ----------------- | ----- | - | --------------- | - | ----- | ------ |  | - | ---------- |  |  |  | ----- | -
|                            |  | Nine Months Ended |       |   | Change          |  
|(dollars in millions)       |  | October 1, 2010   |       |   | October 2, 2009 |   |       | Amount |  |   | Percentage | 
|Interest expense            |  | $                 | 108.3 |   |                 | $ | 106.0 |        |  | $ | 2.3        |  |  |  | 2.2   | %
|Interest income             |  |                   | (1.5  | ) |                 |   | (3.8  | )      |  |   | 2.3        |  |  |  | 59.8  | %
|                            |  |                   |       |   |                 |   |       |        |  |   |            |  |  |  |       |  
|Net interest expense        |  | $                 | 106.8 |   |                 | $ | 102.2 |        |  | $ | 4.6        |  |  |  | 4.5   | %
|                            |  |                   |       |  
|Other (income) expense, net |  |                   | 2.9   |   |                 |   | (4.3  | )      |  |   | 7.2        |  |  |  | 166.8 | %



| |  |  | Net interest expense increased during the nine months ended October 1, 2010 compared to the same period in the prior year primarily due to the
recognition of $3.4 million of additional non-cash interest expense, as amortization of discounts and capitalized debt issuance costs were accelerated due to an early optional principal payment made by Diversey on its New Term Loans and the
Companys election to pay cash interest on the New Holdings Senior Notes on May 15, 2011.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The change in other (income) expense, net, is primarily due to the recognition of $3.9 million in foreign currency loss resulting from our adoption of
highly inflationary accounting for our Venezuelan subsidiary and gains on foreign currency positions in 2009.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents



Income Taxes:



|                                  |  |                   |       |   |                 |   |      |        |  |   |            |  |  |  |      |  
|--------------------------------- |  | ----------------- | ----- | - | --------------- | - | ---- | ------ |  | - | ---------- |  |  |  | ---- | -
|                                  |  | Nine Months Ended |       |   | Change          |  
|(dollars in millions)             |  | October 1, 2010   |       |   | October 2, 2009 |   |      | Amount |  |   | Percentage | 
|Income from continuing operations |  | $                 | 105.3 |   |                 | $ | 62.2 |        |  | $ | 43.1       |  |  |  | 69.2 | %
|Provision for income taxes        |  |                   | 56.2  |   |                 |   | 51.9 |        |  |   | 4.3        |  |  |  | 8.3  | %
|                                  |  |                   |       |  
|Effective income tax rate         |  |                   | 53.4  | % |                 |   | 83.4 | %      |  |   |            |  |  |  |      |  



| |  |  | For the fiscal year ending December 31, 2010, we are projecting an effective income tax rate of approximately 64%. The projected effective income
tax rate for the fiscal year exceeds the statutory income tax rate primarily as a result of increased valuation allowances against net deferred tax assets in certain jurisdictions and increases in reserves for uncertain tax positions.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We reported an effective income tax rate of 53.4% on the pre-tax income from continuing operations for the nine months ended October 1, 2010. When
compared to the estimated annual effective income tax rate, the effective income tax rate for the nine month period ended October 1, 2010 is lower primarily due to certain income tax expense (benefit) amounts that were recorded as discrete
items during the period, rather than included in the annual effective income tax rate.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We reported an effective income tax rate of 83.4% on the pre-tax income from continuing operations for the nine months ended October 2, 2009. The
high effective income tax rate is primarily the result of increased valuation allowances against net deferred tax assets in certain jurisdictions and increases in reserves for uncertain tax positions.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Discontinued operations:



|                                                         |  |                   |       |   |                 |   |      |        |  |   |            |   |  |  |        |  
|-------------------------------------------------------- |  | ----------------- | ----- | - | --------------- | - | ---- | ------ |  | - | ---------- | - |  |  | ------ | -
|                                                         |  | Nine Months Ended |       |   | Change          |  
|(dollars in millions)                                    |  | October 1, 2010   |       |   | October 2, 2009 |   |      | Amount |  |   | Percentage |  
|Income (loss) from discontinued operations               |  | $                 | (10.2 | ) |                 | $ | (1.2 | )      |  | $ | (9.0       | ) |  |  | -749.2 | %
|Provision for (benefit from) income taxes                |  |                   |      |   |                 |   | (0.1 | )      |  |   | 0.1        |   |  |  | 100.0  | %
|                                                         |  |                   |       |   |                 |   |      |        |  |   |            |   |  |  |        |  
|Income (loss) from discontinued operations, net of taxes |  | $                 | (10.2 | ) |                 | $ | (1.1 | )      |  | $ | (9.1       | ) |  |  | -826.4 | %

The loss from discontinued
operations during the nine months ended October 1, 2010 includes $0.8 million in after-tax additional closing costs and certain pension-related adjustments ($0.2 million after-tax costs in 2009) related to the divestiture of Polymer business
and $9.3 million after-tax loss related to the Polymer tolling agreement ($0.1 million after-tax loss in 2009). The amounts of loss from discontinued operations in the first nine months of 2009 and 2010 also include after-tax one time costs
associated with the Dubois divestiture.

Net Income:

Our net income of $38.9 million for the first nine months of 2010 represents an improvement of $29.6 million from the first nine months of 2009. Excluding the negative impact of foreign currency exchange
of $3.9 million, our net income increased by $33.5 million. This increase is primarily due to an increase of $33.1 million in gross profit and decrease of $22.5 million in operating expenses offset by $4.5 million increase in net interest expense,
$9.1 million in loss from discontinued operations and an increase in other expense. As previously discussed, the increase in gross margin is due to pricing action and a favorable reduction in certain raw material costs. The increase in net interest
expense is mainly due to accelerated amortization of discounts and capitalized debt issuance costs.



36



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##### Table of Contents



EBITDA and Diversey Credit
Agreement EBITDA:

EBITDA should not be construed as a substitute for, and should be considered together with, net cash
flows provided by operating activities as determined in accordance with U.S. GAAP. The following table reconciles EBITDA to net cash flows provided by operating activities, which is the U.S. GAAP measure most comparable to EBITDA for the nine months
ended October 1, 2010 and October 2, 2009.



|                                                                                                             |  |                   |       |   |                 |   |       |  
|------------------------------------------------------------------------------------------------------------ |  | ----------------- | ----- | - | --------------- | - | ----- | -
|                                                                                                             |  | Nine Months Ended |      
|(dollars in millions)                                                                                        |  | October 1, 2010   |       |   | October 2, 2009 |  
|Net cash used provided by operating activities                                                               |  | $                 | 78.8  |   |                 | $ | 80.8  |  
|Changes in operating assets and liabilities, net of effects from acquisitions and divestitures of businesses |  |                   | 109.7 |   |                 |   | 44.2  |  
|Changes in deferred income taxes                                                                             |  |                   | (18.8 | ) |                 |   | (16.1 | )
|Depreciation and amortization expense                                                                        |  |                   | (84.1 | ) |                 |   | (82.0 | )
|Amortization of debt issuance costs                                                                          |  |                   | (11.1 | ) |                 |   | (3.7  | )
|Accretion of original issue discount                                                                         |  |                   | (3.2  | ) |                 |   |      |  
|Interest accreted on notes payable                                                                           |  |                   | (12.5 | ) |                 |   | (14.1 | )
|Compensation costs associated with new stock-based long-term incentive plan                                  |  |                   | (11.1 | ) |                 |   |      |  
|Interest accrued on long-term receivables-related parties                                                    |  |                   |      |   |                 |   | 2.1   |  
|Other, net                                                                                                   |  |                   | (8.8  | ) |                 |   | (1.9  | )
|                                                                                                             |  |                   |       |   |                 |   |       |  
|Net income                                                                                                   |  |                   | 38.9  |   |                 |   | 9.3   |  
|                                                                                                             |  |                  
|Provision for income taxes                                                                                   |  |                   | 56.2  |   |                 |   | 51.8  |  
|Interest expense, net                                                                                        |  |                   | 106.8 |   |                 |   | 102.2 |  
|Depreciation and amortization expense                                                                        |  |                   | 84.1  |   |                 |   | 82.0  |  
|                                                                                                             |  |                   |       |   |                 |   |       |  
|                                                                                                             |  | $                 | 286.0 |   |                 | $ | 245.3 |  
|                                                                                                             |  |                   |       |   |                 |   |       |  

EBITDA, net of foreign currency impact, increased by $43.8 million for the first nine months of this year
compared to the same period in the prior year. This was primarily due to increased gross profit arising from pricing actions, favorable reduction in certain raw material costs and cost savings from successful implementation of our restructuring
program.

Diversey Credit Agreement EBITDA. For the purpose of calculating compliance with Diverseys financial
covenants, the credit agreement for Diverseys New Senior Secured Credit Facility (see discussion in Liquidity and Capital Resources, Debt and Contractual Obligations) requires Diversey to use a financial measure called Credit Agreement EBITDA,
which is calculated as follows:



|                                        |  |   |       | 
|--------------------------------------- |  | - | ----- | 
|(dollars in millions)                   |  |   |      
|EBITDA                                  |  | $ | 286.0 | 
|Restructuring related costs             |  |   | 4.4   | 
|Acquisition and divestiture adjustments |  |   | 10.2  | 
|Non-cash and other items, net           |  |   | 25.7  | 
|Compensation adjustment                 |  |   | 15.3  | 
|                                        |  |   |       | 
|Credit Agreement EBITDA                 |  | $ | 341.6 | 
|                                        |  |   |       | 



37



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##### Table of Contents



Liquidity and Capital Resources

The following table sets forth, for the periods presented, information relating to our liquidity and capital resources as
summarized from our consolidated statements of cash flows and consolidated balance sheets:



|                                          |  |                   |         |   |                   |   |         |        |  |   |            |   |  |  |      |  
|----------------------------------------- |  | ----------------- | ------- | - | ----------------- | - | ------- | ------ |  | - | ---------- | - |  |  | ---- | -
|                                          |  | Nine Months Ended |         |   | Change            |  
|(dollars in millions)                     |  | October 1, 2010   |         |   | October 2, 2009   |   |         | Amount |  |   | Percentage |  
|Net cash provided by operating activities |  | $                 | 78.8    |   |                   | $ | 80.8    |        |  | $ | (2.0       | ) |  |  | -2.5 | %
|Net cash used in investing activities     |  |                   | (52.3   | ) |                   |   | (54.0   | )      |  |   | 1.7        |   |  |  | 3.2  | %
|Net cash used in financing activities     |  |                   | (54.4   | ) |                   |   | (0.6    | )      |  |   | (53.8      | ) |  |  | NM   |  
|Capital expenditures                      |  |                   | 54.6    |   |                   |   | 59.0    |        |  |   | (4.4       | ) |  |  | -7.5 | %
|                                          |  |                  
|                                          |  | As of             |         |   | Change            |  
|                                          |  | October 1, 2010   |         |   | December 31, 2009 |   |         | Amount |  |   | Percentage |  
|Cash and cash equivalents                 |  | $                 | 229.1   |   |                   | $ | 249.7   |        |  | $ | (20.6      | ) |  |  | -8.2 | %
|Working capital*                          |  |                   | 548.6   |   |                   |   | 418.4   |        |  |   | 130.2      |   |  |  | 31.1 | %
|Total debt                                |  |                   | 1,587.3 |   |                   |   | 1,631.2 |        |  |   | (43.9      | ) |  |  | -2.7 | %



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



| |  |  | The decrease in cash and cash equivalents and decrease in total debt at October 1, 2010 compared to December 31, 2009 resulted primarily from
cash generated from operating activities offset by approximately $54.6 million in capital expenditures and $56.4 million in mandatory and optional repayments of long-term borrowings.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The decrease in net cash provided by operating activities during the nine months ended October 1, 2010 compared to the prior period was primarily
due to the accounting treatment of securitized accounts receivable as an operating activity prior to the adoption of the new provisions of FASB ASC Topic 860, Transfers and Servicing,effective January 1, 2010, offset by an increase in
operating income.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The increase in net cash used in financing activities during the nine months ended October 1, 2010 compared to the prior period was mainly due to
a $50 million optional principal repayment on Diverseys New Term Loans in September 2010.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Working capital increased by $130.2 million during the nine months ended October 1, 2010. This increase resulted primarily from a decrease of
$84.5 million in accounts payable, a $27.6 million increase in inventories and an increase of $18.1 million in accounts receivable. We continue to effectively manage our receivable collection programs and have been successful in reducing days
outstanding. The increase in accounts receivable was primarily due to the reinstatement of securitized accounts receivable in our balance sheet effective January 1, 2010, upon adoption of the new provisions of FASB ASC Topic 860, Transfers
and Servicing. The increase in inventories is a result of seasonally higher inventory levels and variability in customer ordering patterns. The decrease in accounts payable is due to a number of factors, including taking advantage of
negotiated discounts with vendors driven by our global strategic sourcing initiative.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Restricted Cash.In December 2009 and December 2008, we transferred $27.4 million and $49.5 million, respectively to the revocable trusts for the settlement of obligations associated with the November 2005 Restructuring Plan. As of October 1, 2010, we had
$23.1 million classified as restricted cash in our consolidated balance sheets. The remaining balance will be used to pay for various restructuring actions that will occur over the next 12 to 18 months. We have expanded the period in which these
actions will be completed in order to reduce the impact to the Company.



38



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##### Table of Contents



Debt and
Contractual Obligations.In connection with the Transactions, we refinanced our debt and entered into new debt agreements:

New Holdings Senior Notes. In connection with the Transactions, on November 24, 2009, Holdings issued $250.0 million initial
aggregate principal of its 10.50% senior notes due 2020 (Holdings Senior Notes) in a private transaction exempt from the registration requirements of the Securities Act of 1933. The New Holdings Senior Notes bear interest at a rate of
10.50% per annum, compounded semi-annually on each May 15 and November 15. Under the terms of the indenture governing the Holdings Senior Notes, prior to November 15, 2014, Holdings may elect to pay interest on the Holdings
Senior Notes in cash or by increasing the principal amount of the Holdings Senior Notes. Thereafter, cash interest will be payable on the Holdings Senior Notes on May 15 and November 15 of each year, commencing on May 15, 2015;
provided that cash interest will be payable only to the extent of funds actually available for distribution by the Company to Holdings under applicable law and under any agreement governing the Companys indebtedness. The Holdings Senior Notes
will mature on May 15, 2020. The Holdings Senior Notes are not guaranteed by the Company or any of its subsidiaries. The indenture governing the Holdings Senior Notes contains certain covenants and events of default that the Company believes
are customary for indentures of this type.

On May 15, 2010, the principal of the Holdings Senior Notes increased by
$12.5 million, in lieu of a cash interest payment, to $262.5 million.

On April 26, 2010, Holdings provided notice to the
trustee appointed under the indenture as required therein, of its election to pay interest in cash on the Holdings Senior Notes on November 15, 2010. The amount of such cash interest is $13.8 million. Holdings has also elected to pay in cash,
the interest of $13.8 million on Holdings Senior Notes due on May 15, 2011. Pursuant to these elections to pay the interest in cash, the Company charged $0.9 million and $1.9 million for the current quarter and for the first nine months of
fiscal 2010, respectively, to interest expense, pertaining to accelerated amortizations of original issue discount and capitalized debt issuance costs.

Diversey and all of its subsidiaries that are restricted subsidiaries under the indenture governing Diverseys New Senior Notes (see below) are restricted subsidiaries of Holdings under the indenture
governing the new Holdings Senior Notes. The indenture governing the new Holdings Senior Notes generally contains the same covenants as contained in the indenture governing the notes, and none of the covenants in the indenture governing the new
Holdings Senior Notes are more restrictive with respect to Diversey or any of Diverseys restricted subsidiaries than the covenants in the indenture governing Diverseys New Senior Notes. The new Holdings Senior Notes are direct
obligations of Holdings. Neither Diversey nor any of its subsidiaries guarantee the new Holdings Senior Notes or have any other obligation to make funds available for payment on the new Holdings Senior Notes.

In connection with the issuance and sale of the Holdings Senior Notes, Holdings entered into an exchange and registration rights
agreement, dated as of November 24, 2009, with the purchasers party thereto, pursuant to which Holdings agreed to either offer to exchange the Holdings Senior Notes for substantially similar notes that are registered under the Securities Act of
1933 or, in certain circumstances, register the resale of the Holdings Senior Notes. In compliance with this agreement, on July 14, 2010, the Company, upon the declaration of effectiveness by the SEC on July 12, 2010 of its registration
statement filed on Form S-4, as amended, commenced an exchange offer whereby the notes will be exchanged for new notes registered under the Securities Act of 1933 (New Holdings Senior Notes). The terms of the New Holdings Senior Notes
will be substantially identical to the terms of the old notes, except that the New Holdings Senior Notes will be registered under the Securities Act and will not be subject to restrictions on transfer or provisions relating to additional interest.
The exchange offer was completed on August 11, 2010.

Diverseys New Senior Secured Credit Facility.
Diversey, Diverseys Canadian subsidiary, and one of Diverseys European subsidiaries, each as a borrower, entered into a new credit agreement, whereby the lenders provided an aggregate principal amount of up to $1.25 billion available in
U.S. dollars, euros, Canadian dollars and British pounds.

The new facility (New Senior Secured Credit Facility)
consists of (a) a revolving loan facility in an aggregate principal amount not to exceed $250.0 million, including a letter of credit sub-limit of $50.0 million and a swingline loan sub-limit of $30.0 million, that matures on November 24,
2014, and (b) term loan facilities in US dollars, euros and Canadian dollars maturing on November 24, 2015 (New Term Loans). The New Senior Secured Credit Facility also provides for an increase in the revolving credit facility
of up to $50.0 million under specified circumstances.



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The net proceeds of
the New Term Loans, after deducting the original issue discount of $15.0 million, but before offering expenses and other debt issuance costs, were approximately $985.0 million. The New Term Loans will mature on November 24, 2015 and will
amortize in quarterly installments of 1.0% per annum with the balance due at maturity.

Borrowings under the New Senior
Secured Credit Facility bear interest based on LIBOR, EURIBOR, the BA rate or Base Rate (all as defined in the credit agreement to the New Senior Secured Facility), plus an agreed upon margin that adjusts based on the Companys leverage ratio,
and subject to a floor rate. As of October 1, 2010, the U.S. dollar denominated borrowings bear interest at 5.5%, which is LIBOR plus 350 basis points, subject to a minimum LIBOR floor of 2.00%. The Canadian dollar denominated borrowings bear
interest at 5.5%, which is the BA rate plus 350 basis points, subject to a minimum BA floor of 2.00%. The euro denominated borrowings bear interest at 6.5%, which is EURIBOR plus 425 basis points, subject to a EURIBOR floor of 2.25%. Interest is
generally payable quarterly in arrears.

All obligations under the New Senior Secured Credit Facility are secured by all the
assets of Holdings, Diversey and each subsidiary of Diversey (but limited to the extent necessary to avoid materially adverse tax consequences to Diversey and its subsidiaries, taken as a whole, and by restrictions imposed by applicable law).

On September 30, 2010, Diversey made an optional pro rata principal repayment on the New Term Loans in the aggregate
principal amount of $50.0 million in addition to the scheduled principal payment on the same day. The pro rata percentages were based on the U.S. dollar equivalent of the euro, Canadian dollar, and U.S. dollar denominated New Term Loans, bringing
the total outstanding balance to $902.0 million. Pursuant to the above repayment of $50.0 million during the current quarter, the Company charged $2.5 million to the income statement consisting of accelerated original issue discount amortization of
$0.6 million and capitalized debt issuance costs amortization of $1.9 million.

New Diversey Senior Notes. In 2009,
Diversey issued $400.0 million aggregate principal amount of 8.25% senior notes due 2019 (New Senior Notes). The net proceeds of the offering, after deducting the original issue discount of $3.3 million, but before estimated offering
expenses and other debt issuance costs, were approximately $396.7 million.

Diversey pay interest on New Diversey Senior Notes
on May 15 and November 15 of each year, beginning on May 15, 2010, the New Diversey Senior Notes will mature on November 15, 2019.

The New Diversey Senior Notes are unsecured and are effectively subordinated to the New Senior Secured Credit Facility to the extent of the value of Diverseys assets and the assets of
Diverseys subsidiaries that secure such indebtedness. The indenture governing Diverseys New Senior Notes contains restrictions and limitations that could also significantly impact the ability of Diversey and its restricted subsidiaries
to conduct certain aspects of the business.

In connection with the issuance and sale of the New Diversey Senior Notes,
Diversey entered into an exchange and registration rights agreement, dated as of November 24, 2009, pursuant to which Diversey agreed to either offer to exchange the New Senior Notes for substantially similar notes that are registered under the
Securities Act of 1933 or, in certain circumstances, register the resale of the New Senior Notes. In compliance with this agreement, on July 14, 2010, Diversey, upon the declaration of effectiveness by the SEC on July 12, 2010 of
Diverseys registration statement filed on Form S-4, as amended, commenced an exchange offer whereby the notes were exchanged for new notes registered under the Securities Act of 1933 (New Diversey Senior Notes). The terms of the
New Diversey Senior Notes are substantially identical to the terms of the old notes, except that the New Diversey Senior Notes are registered under the Securities Act and will not be subject to restrictions on transfer or provisions relating to
additional interest. The exchange offer was completed on August 11, 2010.

Accounts Receivable Securitization. Due
to the adoption of the new guidance under the provisions of FASB ASC Topic 860,Transfers and Servicing, beginning this fiscal year as discussed in Notes 3 and 7 to the consolidated financial statements, the Company accounts for its accounts
receivable securitization arrangements as a borrowing.



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Diversey and certain
of its subsidiaries entered into an agreement (the Receivables Facility) in March 2001, as amended, whereby Diversey and each of its participating subsidiaries, on a continuous basis, certain trade receivables to JWPR Corporation
(JWPRC), a wholly-owned, consolidated, special purpose, bankruptcy-remote subsidiary of Diversey. JWPRC was formed for the sole purpose of buying and selling receivables generated by Diversey and certain of its subsidiaries party to the
Receivables Facility. JWPRC, in turn, sells an undivided interest in the accounts receivable to a nonconsolidated financial institution (the Conduit) for an amount equal to the value of all eligible receivables (as defined under the
receivables sale agreement between JWPRC and the Conduit) less the applicable reserve.

The total potential for securitization
of trade receivables under the Receivables Facility at October 1, 2010 and December 31, 2009 was $50.0 million. In December 2009, the Receivables Facility was amended to extend the maturity of the program to December 19, 2011.

As of October 1, 2010 and December 31, 2009, JWPRC sold no accounts receivable to the Conduit.

As of October 1, 2010 and December 31, 2009, we had a retained interest of $65.7 million and $60.1 million, respectively, in
the receivables of JWPRC. The retained interest is included in the accounts receivable balance and is reflected in the consolidated balance sheets.

In October 2010, JWPRC gave notice to the Conduit of its intention to terminate the Receivables Facility. The program will be terminated in November 2010.

In September 2009, certain subsidiaries of Diversey entered into agreements (the European Receivables Facility) to sell, on a
continuous basis, certain trade receivables originated in the United Kingdom, France and Spain to JDER Limited (JDER), a wholly-owned, consolidated, special purpose, bankruptcy-remote subsidiary of Diversey. JDER was formed for the sole
purpose of buying and selling receivables originated by subsidiaries subject to the European Receivables Facility. JDER, in turn, sells an undivided interest in the accounts receivable to a nonconsolidated financial institution (the
European Conduit) for an amount equal to the value of the eligible receivables less the applicable reserve. The total amount available for securitization of trade receivables under the European Receivables Facility is 50.0 million.
The maturity date of the European Receivables Facility is September 8, 2012.

Effective January 1, 2010, the
accounting treatment for Diverseys receivables securitization facilities (see Note 3) required that accounts receivable sold to the European Conduit be included in accounts receivable, with a corresponding increase in short-term
borrowings. Accordingly, as of October 1, 2010, the Company included $17.7 million in accounts receivable and short-term borrowings on its consolidated balance sheet. Prior to the effective date of the change in accounting treatment, as of
December 31, 2009, the European Conduit held $18.7 million of accounts receivable that were not included in the accounts receivable balance in the Companys consolidated balance sheet.

As of October 1, 2010 and December 31, 2009, we had a retained interest of $93.5 million and $110.4 million, respectively, in
the receivables of JDER. The retained interest is also included in the accounts receivable balance and is reflected in the consolidated balance sheets.

For the nine months ended October 1, 2010, JDERs cost of borrowing under the European Receivables Facility was at a weighted average rate of 3.64% per annum.

The net amount of trade receivables at any time outstanding under these and any other securitization facility that we may enter into may
not exceed $200.0 million in the aggregate.

In October 2010, JDER gave notice to the European Conduit of its intention to
terminate the European Receivables Facility. The program will be terminated in November 2010.



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As of October 1,
2010, we had total indebtedness of $1.611 billion, consisting of $262.5 million of New Holdings Senior Notes, $400.0 million of New Diversey Senior Notes, $902.0 million of borrowings under the New Senior Secured Credit Facility, $17.7 million in
borrowing under Diverseys accounts receivable securitization facilities and $29.0 million in other short-term credit lines. In addition, we had $169.8 million in operating lease commitments, $1.8 million in capital lease commitments and $3.7
million committed under letters of credit.

Our financial position and liquidity are, and will be, influenced by a variety of
factors, including:



| |  |  | Diverseys ability to generate cash flows from operations;
| | - |  | ----------------------------------------------------------



| |  |  | the level of our outstanding indebtedness and the interest we are obligated to pay on this indebtedness; and
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | our capital expenditure requirements, which consist primarily of purchases of equipment.
| | - |  | ----------------------------------------------------------------------------------------

We believe that the cash flows from continuing operations, together with available cash on hand and borrowings available under
Diverseys New Senior Secured Credit Facility will generate sufficient cash flow to meet our liquidity needs for the foreseeable future. From time to time, the company has considered and may in the future pursue debt or other financing
alternatives, depending on market conditions and other factors.

We have obligations related to our pension and
post-retirement plans that are discussed in detail in Note 13 to the consolidated financial statements. As of the most recent actuarial estimation, we anticipate making $24.7 million of contributions to pension plans in fiscal year 2010.
Post-retirement medical claims are paid as they are submitted and are anticipated to be $5.2 million in fiscal year 2010.

Our
Companys operations are subject to volatility because of currency fluctuations, inflation changes and changes in political and economic conditions in the countries where we conduct business. 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. Consequently, we engage in hedging activities, including forward foreign exchange contracts, to reduce the
exposure of our cash flows to fluctuations in foreign currency rates. See Notes 14 and 15 to the consolidated financial statements for gains and losses associated with these contracts.

Measurement of income tax reserve position. For the fiscal year ending December 31, 2010, we expect to increase income tax
reserve liabilities by $4.1 million, resulting in total income tax reserve liabilities of $40.6 million. Total income tax reserve liabilities for which payments are expected in less than one year are $9.9 million. We are not able to provide a
reasonably reliable estimate of the timing of future payments relating to non-current income tax reserve liabilities.

Financial Covenants
under Diverseys Senior Secured Credit Facilities

Under the terms of the credit agreement for the Diverseys New
Senior Secured Credit Facility, Diversey is subject to certain financial covenants. The financial covenants under Diverseys New Senior Secured Credit Facility require us to meet the following targets and ratios.

Maximum Leverage Ratio. Diversey is required to maintain a leverage ratio for each financial covenant period of no more than the
maximum ratio specified in the credit agreement for Diverseys New Senior Secured Credit Facility for that financial covenant period. The maximum leverage ratio is the ratio of (1) Diverseys consolidated indebtedness (excluding up to
$55 million of indebtedness incurred under Diverseys Receivables Facilities less cash and cash equivalents as of the last day of the financial covenant period to (2) Diverseys Credit Agreement EBITDA for the same financial covenant
period.



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The maximum leverage
ratio we are required to maintain for each period is set forth below:



|                                  |  |                        |           | 
|--------------------------------- |  | ---------------------- | --------- | 
|Period Ending                     |  | MaximumLeverage 
Ratio |          
|September 30, 2010                |  |                        | 4.75 to 1 | 
|December 31, 2010                 |  |                        | 4.75 to 1 | 
|March 31, 2011                    |  |                        | 4.75 to 1 | 
|June 30, 2011                     |  |                        | 4.75 to 1 | 
|September 30, 2011                |  |                        | 4.50 to 1 | 
|December 31, 2011                 |  |                        | 4.50 to 1 | 
|March 31, 2012                    |  |                        | 4.50 to 1 | 
|June 30, 2012                     |  |                        | 4.50 to 1 | 
|September 30, 2012                |  |                        | 4.00 to 1 | 
|December 31, 2012                 |  |                        | 4.00 to 1 | 
|March 31, 2013                    |  |                        | 4.00 to 1 | 
|June 30, 2013                     |  |                        | 4.00 to 1 | 
|September 30, 2013                |  |                        | 3.75 to 1 | 
|December 31, 2013                 |  |                        | 3.75 to 1 | 
|March 31, 2014                    |  |                        | 3.75 to 1 | 
|June 30, 2014                     |  |                        | 3.75 to 1 | 
|September 30, 2014 and thereafter |  |                        | 3.50 to 1 | 

Minimum Interest
Coverage Ratio. Diversey is required to maintain an interest coverage ratio for each financial covenant period of no less than the minimum ratio specified in the credit agreement for Diverseys New Senior Secured Credit Facility for that
financial covenant period. The minimum interest coverage ratio is the ratio of (1) Diverseys Credit Agreement EBITDA for a financial covenant period to (2) Diverseys cash interest expense for that same financial covenant period
calculated in accordance with the New Senior Secured Credit Facility.

The minimum interest coverage ratio Diversey is
required to maintain for each period is set forth below:



|                                  |  |                                |           | 
|--------------------------------- |  | ------------------------------ | --------- | 
|Period Ending                     |  | Minimum InterestCoverage
Ratio |          
|September 30, 2010                |  |                                | 2.75 to 1 | 
|December 31, 2010                 |  |                                | 2.75 to 1 | 
|March 31, 2011                    |  |                                | 2.75 to 1 | 
|June 30, 2011                     |  |                                | 2.75 to 1 | 
|September 30, 2011                |  |                                | 3.00 to 1 | 
|December 31, 2011                 |  |                                | 3.00 to 1 | 
|March 31, 2012                    |  |                                | 3.00 to 1 | 
|June 30, 2012                     |  |                                | 3.00 to 1 | 
|September 30, 2012 and thereafter |  |                                | 3.25 to 1 | 

Failure to comply
with these financial ratio covenants would result in a default under the credit agreement for Diverseys New Senior Secured Credit Facility and, absent a waiver or amendment from Diverseys lenders, would permit the acceleration of all
Diverseys outstanding borrowings under Diverseys New Senior Secured Credit Facility.

Compliance with Maximum
Leverage Ratio and Minimum Interest Coverage Ratio. For the Diverseys financial covenant period ended on October 1, 2010, Diversey was in compliance with the maximum leverage ratio and minimum interest coverage ratio covenants
contained in the credit agreement for Diverseys New Senior Secured Credit Facility.

Capital Expenditures.
Capital expenditures are limited under the New Senior Secured Credit Facility (with certain exceptions) to $150.0 million per fiscal year. To the extent that we make capital expenditures of less than the limit in any fiscal year, however, we may
carry forward into the subsequent year the difference between the limit and the actual amount we expended, provided that the amounts we carry forward from the previous year will be allocated to capital expenditures in the current fiscal year only
after the amount allocated to the current fiscal year is exhausted. As of October 1, 2010, we were in compliance with the limitation on capital expenditures for fiscal year 2010.



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The credit agreement
for Diverseys New Senior Secured Credit Facility contains additional covenants that restricts Diverseys ability to declare dividends and to redeem and repurchase capital stock. The credit agreement for Diverseys New Senior Secured
Credit Facility also limits Diverseys ability to incur additional liens, engage in sale-leaseback transactions, incur additional indebtedness and make investments, among other restrictions.



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

There have been no significant changes to our market risk since December 31, 2009. For a discussion of our exposure to market risk, refer to Part II, Item 7A, Quantitative and Qualitative
Disclosures about Market Risk, contained in our Annual Reports on Form 10-K and Forms 10-K/A for the year ended December 31, 2009.



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

Evaluation of Holdings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 Chief Financial Officer (CFO).

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

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, the Companys independent registered public accounting firm will provide an attestation report regarding the Companys internal
control over financial reporting with the issuance of its Annual Report on Form 10-K for fiscal 2010.

Disclosure 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 as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon
the controls evaluation, our CEO and CFO have concluded that, as of the end of the period covered by this quarterly report, our Disclosure Controls are effective in recording, processing, summarizing, and reporting, on a timely basis, information
required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, and that information is accumulated and communicated to the CEO and CFO, as appropriate, to allow timely discussions regarding required
disclosure.

Changes in Internal Control Over Financial Reporting. There has not been any change in our
internal control over financial reporting during the quarter ended October 1, 2010, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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



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PART II. OTHER
INFORMATION



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

We are
party to various legal proceedings in the ordinary course of our business which may, from time to time, include product liability, intellectual property, contract, employee benefits, 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, 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
|------- | --------



|     |  |                                                                                                                        
|---- |  | -----------------------------------------------------------------------------------------------------------------------
|     | 
|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.



|                        |  |  |  |                                                                   
|----------------------- |  |  |  | ------------------------------------------------------------------
|                        |  |  |  | DIVERSEY HOLDINGS, INC.                                           
|                        |  | 
|Date: November 15, 2010 |  |  |  | /s/ Norman Clubb                                                  
|                        |  |  |  | Norman Clubb, Executive Vice President and Chief Financial Officer



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DIVERSEY HOLDINGS,
INC.

EXHIBIT INDEX



|     |  |                                                                                                                        
|---- |  | -----------------------------------------------------------------------------------------------------------------------
|     | 
|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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