Table of Contents

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UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

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FORM 10-Q

(Mark One)

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

For thequarterly period ended March  31,  2006

or

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|--------|-----------------------------------------------------------------------------------------|
|   | TRANSITION REPORT PURSUANT TO SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

For the transition periodfrom            to            .

Commission File No. 333-115560-15

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NALCO HOLDINGSLLC

(Exact name of registrant asspecified in its charter)

|                                                              |  |                                       |  |  |  |  |
|--------------------------------------------------------------|--|---------------------------------------|--|--|--|--|
| Delaware                                                     |  | 73-1683500                            |
| (Stateor other jurisdiction ofIncorporation or Organization) |  | (I.R.S. EmployerIdentificationNumber) |
|                                                              |

1601 West Diehl RoadNaperville, IL60563-1198(630) 305-1000

(Address,Including Zip Code, and Telephone Number, Including Area Code, ofRegistrant’s Principal Executive Offices)

Notapplicable

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

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

Indicate bycheck mark whether the registrant is a large accelerated filer, anaccelerated filer, or a non-accelerated filer. See definition of‘‘accelerated filer and large acceleratedfiler’’ in Rule 12b-2 of the Exchange Act. (Check one):

|                         |  |                   |  |                       |  |  |  |  |  |  |
|-------------------------|--|-------------------|--|-----------------------|--|--|--|--|--|--|
| Large accelerated filer |  | Accelerated filer |  | Non-accelerated filer |
|                         |

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

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QUARTERLY REPORTON FORM 10-QNALCO HOLDINGS LLCQuarter Ended March31,  2006

TABLE OF CONTENTS

|                              |  |                                                                                                   |        |        |        |        |  |  |  |  |
|------------------------------|--|---------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--|--|--|--|
| Part I. FinancialInformation |  |                                                                                              |   |   |
| Item1.                       |  | FinancialStatements (Unaudited)                                                                   |        |   |   |   |
|                         |  | CondensedConsolidated Balance Sheets – March 31, 2006 andDecember 31, 2005                  |        |   | 2      |   |
|                         |  | Condensed Consolidated Statements of Operations –Three months ended March 31, 2006 and 2005 |        |   | 3      |   |
|                         |  | Condensed Consolidated Statements ofCash Flows – Three months ended March 31, 2006 and2005  |        |   | 4      |   |
|                         |  | Notes to CondensedConsolidated Financial Statements – March 31,2006                         |        |   | 5      |   |
| Item2.                       |  | Management’s Discussion and Analysis of FinancialCondition and Results of Operations        |        |   | 18     |   |
| Item 3.                      |  | Quantitative and QualitativeDisclosures About Market Risk                                         |        |   | 29     |   |
| Item 4.                      |  | Controls and Procedures                                                                           |        |   | 29     |   |
| PartII. Other Information    |  |                                                                                              |
| Item1A.                      |  | Risk Factors                                                                                      |        |   | 30     |   |
| Item6.                       |  | Exhibits                                                                                          |        |   | 31     |   |
| Signature                    |  |                                                                                              | 32     |   |
|                              |

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PART I. FINANCIALINFORMATION

|               |                                 |
|---------------|---------------------------------|
| Item 1.  | Financial Statements(Unaudited) |

Nalco Holdings LLC and Subsidiaries CondensedConsolidated Balance Sheets(dollars in millions)

|                                                                        |  |                          |         |                  |  |        |         |        |  |  |
|------------------------------------------------------------------------|--|--------------------------|---------|------------------|--|--------|---------|--------|--|--|
|                                                                   |  | (Unaudited)March 31,2006 |         | December 31,2005 |
| Assets                                                                 |  |                     |    |             |  |   |    |   |
| Currentassets:                                                         |  |                     |    |             |  |   |    |   |
| Cash and cashequivalents                                               |  | $                        | 42.8    |             |  | $      | 30.8    |   |
| Accounts receivable, less allowances of $19.6 in 2006and $16.6 in 2005 |  |                     | 621.9   |             |  |   | 622.3   |   |
| Inventories:                                                           |  |                     |    |             |  |   |    |   |
| Finishedproducts                                                       |  |                     | 272.4   |             |  |   | 242.6   |   |
| Materials and work in process                                          |  |                     | 76.5    |             |  |   | 70.6    |   |
|                                                                   |  |                     | 348.9   |             |  |   | 313.2   |   |
| Prepaidexpenses, taxes and other current assets                        |  |                     | 54.6    |             |  |   | 83.1    |   |
| Totalcurrent assets                                                    |  |                     | 1,068.2 |             |  |   | 1,049.4 |   |
| Property, plant, and equipment,net                                     |  |                     | 742.7   |             |  |   | 755.3   |   |
| Intangibleassets:                                                      |  |                     |    |             |  |   |    |   |
| Goodwill                                                               |  |                     | 2,213.3 |             |  |   | 2,196.7 |   |
| Otherintangibles, net                                                  |  |                     | 1,212.6 |             |  |   | 1,227.5 |   |
| Other assets                                                           |  |                     | 325.4   |             |  |   | 325.3   |   |
| Total assets                                                           |  | $                        | 5,562.2 |             |  | $      | 5,554.2 |   |
| Liabilities and unitholder’sequity                               |  |                     |    |             |  |   |    |   |
| Currentliabilities:                                                    |  |                     |    |             |  |   |    |   |
| Accounts payable                                                       |  | $                        | 280.1   |             |  | $      | 285.4   |   |
| Short termdebt                                                         |  |                     | 35.6    |             |  |   | 22.6    |   |
| Othercurrent liabilities                                               |  |                     | 244.3   |             |  |   | 235.1   |   |
| Total current liabilities                                              |  |                     | 560.0   |             |  |   | 543.1   |   |
| Otherliabilities:                                                      |  |                     |    |             |  |   |    |   |
| Long-term debt                                                         |  |                     | 2,861.0 |             |  |   | 2,890.7 |   |
| Deferred incometaxes                                                   |  |                     | 363.9   |             |  |   | 380.7   |   |
| Accruedpension benefits                                                |  |                     | 413.5   |             |  |   | 416.4   |   |
| Other liabilities                                                      |  |                     | 284.4   |             |  |   | 278.9   |   |
| Minorityinterest                                                       |  |                     | 12.2    |             |  |   | 11.2    |   |
| Unitholder’s equity                                              |  |                     | 1,067.2 |             |  |   | 1,033.2 |   |
| Total liabilities and unitholder’s equity                        |  | $                        | 5,562.2 |             |  | $      | 5,554.2 |   |
|                                                                        |

See accompanying notes tocondensed consolidated financial statements.

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Nalco Holdings LLC and SubsidiariesCondensed Consolidated Statements of Operations (Unaudited)(dollars in millions)

|                                                    |  |                                |        |                                 |  |        |        |         |  |  |
|----------------------------------------------------|--|--------------------------------|--------|---------------------------------|--|--------|--------|---------|--|--|
|                                               |  | Three MonthsendedMarch 31,2006 |        | Three MonthsendedMarch 31, 2005 |
| Net sales                                          |  | $                              | 849.4  |                            |  | $      | 777.6  |    |
| Operating costs andexpenses:                       |  |                           |   |                            |  |   |   |    |
| Cost of product sold                               |  |                           | 471.1  |                            |  |   | 412.8  |    |
| Selling,administrative, and research expenses      |  |                           | 275.4  |                            |  |   | 258.1  |    |
| Amortization of intangibleassets                   |  |                           | 17.3   |                            |  |   | 20.6   |    |
| Businessoptimization expenses                      |  |                           | 3.8    |                            |  |   | 0.8    |    |
| Total operating costs and expenses                 |  |                           | 767.6  |                            |  |   | 692.3  |    |
| Operating earnings                                 |  |                           | 81.8   |                            |  |   | 85.3   |    |
| Other income(expense), net                         |  |                           | 1.3    |                            |  |   | (2.2   | )  |
| Interestincome                                     |  |                           | 1.7    |                            |  |   | 2.1    |    |
| Interestexpense                                    |  |                           | (58.5  | )                          |  |   | (54.9  | )  |
| Earnings before income taxes andminority interests |  |                           | 26.3   |                            |  |   | 30.3   |    |
| Income tax provision                               |  |                           | 11.0   |                            |  |   | 13.0   |    |
| Minorityinterests                                  |  |                           | (1.7   | )                          |  |   | (1.2   | )  |
| Net earnings                                       |  | $                              | 13.6   |                            |  | $      | 16.1   |    |
|                                                    |

See accompanying notes tocondensed consolidated financial statements.

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Nalco Holdings LLC and SubsidiariesCondensed Consolidated Statements of Cash Flows (Unaudited)(dollars in millions)

|                                                                                   |  |                                |         |                                 |  |        |        |         |  |  |
|-----------------------------------------------------------------------------------|--|--------------------------------|---------|---------------------------------|--|--------|--------|---------|--|--|
|                                                                              |  | Three MonthsendedMarch 31,2006 |         | Three MonthsendedMarch 31, 2005 |
| Operatingactivities                                                               |  |                           |    |                            |  |   |   |    |
| Net earnings                                                                      |  | $                              | 13.6    |                            |  | $      | 16.1   |    |
| Adjustments toreconcile net earnings to net cash provided by operatingactivities: |  |                           |    |                            |  |   |   |    |
| Depreciation                                                                      |  |                           | 32.4    |                            |  |   | 33.2   |    |
| Amortization                                                                      |  |                           | 17.3    |                            |  |   | 20.6   |    |
| Amortization ofdeferred financing costs                                           |  |                           | 1.8     |                            |  |   | 2.7    |    |
| Other                                                                             |  |                           | (2.4    | )                          |  |   | 14.1   |    |
| Changes in operating assets and liabilities                                       |  |                           | (3.8    | )                          |  |   | (69.8  | )  |
| Netcash provided by operating activities                                          |  |                           | 58.9    |                            |  |   | 16.9   |    |
| Investingactivities                                                               |  |                           |    |                            |  |   |   |    |
| Purchase price adjustmenton acquisition of Ondeo Nalco Group                      |  |                           | — |                            |  |   | (3.2   | )  |
| Additions to property, plant, andequipment, net                                   |  |                           | (14.6   | )                          |  |   | (12.3  | )  |
| Other                                                                             |  |                           | (0.4    | )                          |  |   | (1.6   | )  |
| Net cash used for investingactivities                                             |  |                           | (15.0   | )                          |  |   | (17.1  | )  |
| Financingactivities                                                               |  |                           |    |                            |  |   |   |    |
| Changes in short-term debt,net                                                    |  |                           | 10.3    |                            |  |   | 7.9    |    |
| Proceeds fromlong-term debt                                                       |  |                           | 3.3     |                            |  |   | 0.1    |    |
| Repaymentsof long-term debt                                                       |  |                           | (45.1   | )                          |  |   | (2.1   | )  |
| Other                                                                             |  |                           | (0.8    | )                          |  |   | (4.0   | )  |
| Net cash provided by (used for) financingactivities                               |  |                           | (32.3   | )                          |  |   | 1.9    |    |
| Effect ofexchange rate changes on cash and cash equivalents                       |  |                           | 0.4     |                            |  |   | (0.5   | )  |
| Increasein cash and cash equivalents                                              |  |                           | 12.0    |                            |  |   | 1.2    |    |
| Cash and cash equivalents at beginning of period                                  |  |                           | 30.8    |                            |  |   | 33.2   |    |
| Cash andcash equivalents at end of period                                         |  | $                              | 42.8    |                            |  | $      | 34.4   |    |
|                                                                                   |

See accompanying notes tocondensed consolidated financialstatements.

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Nalco Holdings LLCand SubsidiariesNotes to Condensed Consolidated FinancialStatements(Unaudited)

March  31,2006

|          |                                                |
|----------|------------------------------------------------|
| 1.  | Descriptionof Business and Change in Ownership |

Description ofBusiness

Nalco Holdings LLC and subsidiaries (theCompany) is engaged in the worldwide manufacture and sale of highlyspecialized service chemical programs. This includes production andservice related to the sale and application of chemicals and technologyused in water treatment, pollution control, energy conservation, oilproduction and refining, steelmaking, papermaking, mining, and otherindustrial processes.

Change in Ownership

On November  4,  2003, Nalco Holdings LLC (theBuyer), a newly-formed entity controlled by affiliates of TheBlackstone Group, L.P., Apollo Management, L.P., and The Goldman SachsGroup, Inc. (collectively, the Sponsors), pursuant to a Stock PurchaseAgreement, as amended, with Suez S.A. (Suez or Seller) and certain ofits affiliates, acquired the net assets of Ondeo Nalco Group for$4,127.1  million, including direct costs of the acquisition of$125.6  million, excluding assumed debt of $30.2  million,and subject to certain closing and post-closing adjustments (theAcquisition).

|          |                      |
|----------|----------------------|
| 2.  | Basisof Presentation |

These condensed consolidated financialstatements should be read in conjunction with the consolidated andcombined financial statements and notes thereto included in the AnnualReport for Nalco Holdings LLC and subsidiaries for the fiscal yearended December  31,  2005.

The accompanyingunaudited condensed consolidated financial statements have beenprepared in accordance with generally accepted accounting principlesfor interim financial information. Accordingly, they do not include allof the information and footnotes required by accounting principlesgenerally accepted in the United States for complete financialstatements. Management believes these financial statements include allnormal recurring adjustments considered necessary for a fairpresentation of the financial position and results of operations of theCompany. Operating results for the three months ended March31,  2006 are not necessarily indicative of results that may beexpected for the year ended December  31,  2006.

Certain reclassifications have been made to the prior yeardata to conform to the current year presentation which had no effect onnet earnings reported for any period.

|          |                                     |
|----------|-------------------------------------|
| 3.  | Goodwilland Other Intangible Assets |

The changes in goodwill forthe period were as follows:

|                                             |  |        |         |         |  |  |
|---------------------------------------------|--|--------|---------|---------|--|--|
| (dollars inmillions)                        |  |   |
| Balance as of December31,  2005             |  | $      | 2,196.7 |    |
| Excess accrualsfor costs to exit activities |  |   | (1.0    | )  |
| Effectof foreign currency translation       |  |   | 17.6    |    |
| Balance as ofMarch  31,  2006               |  | $      | 2,213.3 |    |
|                                             |

Inconjunction with the Acquisition, the Company recorded liabilities of$35.5  million, primarily for employee severance and relatedcosts, in connection with a plan to exit or restructure certainactivities. As of December  31,  2005, the remaining balanceof the accrual was $2.5  million. During the 

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|          |                                                      |
|----------|------------------------------------------------------|
| 3.  | Goodwilland Other Intangible Assets (Continued) |

three months ended March  31,  2006,an additional $1.1  million of severance costs was charged againstthe accrual. The remaining $1.4  million represented an excessaccrual that was written off to goodwill, net of the related deferredtax asset of $0.4  million.

The following tablereflects intangible assets and related amortization information:

|                                               |  |                      |         |                         |  |             |         |                         |  |        |         |        |  |        |         |         |  |  |
|-----------------------------------------------|--|----------------------|---------|-------------------------|--|-------------|---------|-------------------------|--|--------|---------|--------|--|--------|---------|---------|--|--|
|                                          |  | As of March 31, 2006 |         | As of December 31, 2005 |
| (dollars inmillions)                          |  | GrossAmount          |         | AccumulatedAmortization |  | GrossAmount |         | AccumulatedAmortization |
| Intangible assets subject toamortization:     |  |                 |    |                    |  |        |    |                    |  |   |    |   |  |   |    |    |
| Customerrelationships                         |  | $                    | 489.9   |                    |  | $           | (185.7  | )                  |  | $      | 486.4   |   |  | $      | (169.8  | )  |
| Patents and developedtechnology               |  |                 | 100.5   |                    |  |        | (24.7   | )                  |  |   | 100.5   |   |  |   | (22.2   | )  |
| Other                                         |  |                 | 2.4     |                    |  |        | (0.3    | )                  |  |   | 2.4     |   |  |   | (0.3    | )  |
| Intangible assets not subject toamortization: |  |                 |    |                    |  |        |    |                    |  |   |    |   |  |   |    |    |
| Trademarksand trade names                     |  |                 | 830.0   |                    |  |        | — |                    |  |   | 830.0   |   |  |   | — |    |
| Pension asset                                 |  |                 | 0.5     |                    |  |        | — |                    |  |   | 0.5     |   |  |   | — |    |
|                                          |  | $                    | 1,423.3 |                    |  | $           | (210.7  | )                  |  | $      | 1,419.8 |   |  | $      | (192.3  | )  |
|                                               |

|          |      |
|----------|------|
| 4.  | Debt |

Debt consists of the following:

|                                               |  |               |         |                  |  |        |         |        |  |  |
|-----------------------------------------------|--|---------------|---------|------------------|--|--------|---------|--------|--|--|
| (dollars inmillions)                          |  | March 31,2006 |         | December 31,2005 |
| Short-term                                    |  |          |    |             |  |   |    |   |
| Checks outstanding and bankoverdrafts         |  | $             | 27.5    |             |  | $      | 17.9    |   |
| Notespayable to banks                         |  |          | 2.1     |             |  |   | 0.9     |   |
| Currentmaturities of long-term debt           |  |          | 6.0     |             |  |   | 3.8     |   |
|                                          |  | $             | 35.6    |             |  | $      | 22.6    |   |
| Long-term                                     |  |          |    |             |  |   |    |   |
| Securitizedtrade accounts receivable facility |  | $             | 78.6    |             |  | $      | 75.3    |   |
| Term loan A, due November  2009               |  |          | 74.4    |             |  |   | 107.6   |   |
| Term loan B, dueNovember  2010                |  |          | 1,071.0 |             |  |   | 1,081.0 |   |
| Senior notes, due November  2011              |  |          | 906.9   |             |  |   | 900.7   |   |
| Senior subordinated notes, dueNovember  2013  |  |          | 706.9   |             |  |   | 700.7   |   |
| Unsecured notes, due May  2008                |  |          | 27.8    |             |  |   | 27.8    |   |
| Other                                         |  |          | 1.4     |             |  |   | 1.4     |   |
|                                          |  |          | 2,867.0 |             |  |   | 2,894.5 |   |
| Less:Current portion                          |  |          | 6.0     |             |  |   | 3.8     |   |
|                                          |  | $             | 2,861.0 |             |  | $      | 2,890.7 |   |
|                                               |

|          |                          |
|----------|--------------------------|
| 5.  | Unitholder’sEquity |

Unitholder’s equity consists of thefollowing:

|                                       |  |               |         |                  |  |        |         |         |  |  |
|---------------------------------------|--|---------------|---------|------------------|--|--------|---------|---------|--|--|
| (dollars inmillions)                  |  | March 31,2006 |         | December 31,2005 |
| Capital account                       |  | $             | 1,013.4 |             |  | $      | 1,013.2 |    |
| Accumulateddeficit                    |  |          | (46.5   | )           |  |   | (60.1   | )  |
| Accumulatedother comprehensive income |  |          | 100.3   |             |  |   | 80.1    |    |
| Total unitholder’s equity       |  | $             | 1,067.2 |             |  | $      | 1,033.2 |    |
|                                       |

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|          |                                           |
|----------|-------------------------------------------|
| 5.  | Unitholder’sEquity (Continued) |

The capital structure of the Companyconsists of one class of limited liability company interestsrepresented by Units, which are identical with each other in everyrespect. At March  31,  2006 and December  31,2005, there were 100 Units issued and outstanding, which were owned byNalco Finance Holdings LLC.

|          |                                               |
|----------|-----------------------------------------------|
| 6.  | Pensionand Other Postretirement Benefit Plans |

The components ofnet periodic pension cost and the cost of other postretirement benefitsfor the three months ended March  31,  2006 and 2005 were asfollows:

|                                    |  |                               |         |                                |  |                                |         |                               |  |        |         |         |  |        |         |         |  |  |
|------------------------------------|--|-------------------------------|---------|--------------------------------|--|--------------------------------|---------|-------------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                               |  | Pension Benefits              |         | Other Postretirement Benefits  |
| (dollars inmillions)               |  | Three MonthsendedMarch31,2006 |         | Three MonthsendedMarch 31,2005 |  | Three MonthsendedMarch 31,2006 |         | ThreeMonthsendedMarch 31,2005 |
| Servicecost                        |  | $                             | 7.7     |                           |  | $                              | 7.1     |                          |  | $      | 1.6     |    |  | $      | 1.4     |    |
| Interest cost                      |  |                          | 10.4    |                           |  |                           | 10.2    |                          |  |   | 2.3     |    |  |   | 2.1     |    |
| Expected return on plan assets     |  |                          | (6.8    | )                         |  |                           | (6.5    | )                        |  |   | — |    |  |   | — |    |
| Amortization of prior service cost |  |                          | — |                           |  |                           | — |                          |  |   | (1.0    | )  |  |   | (0.9    | )  |
| Recognized net actuarial loss      |  |                          | 0.1     |                           |  |                           | — |                          |  |   | — |    |  |   | — |    |
| Settlement charge                  |  |                          | 0.3     |                           |  |                           | — |                          |  |   | — |    |  |   | — |    |
| Netperiodic cost                   |  | $                             | 11.7    |                           |  | $                              | 10.8    |                          |  | $      | 2.9     |    |  | $      | 2.6     |    |
|                                    |

|          |                               |
|----------|-------------------------------|
| 7.  | BusinessOptimization Expenses |

The Company has undertaken severalinitiatives to redesign and optimize its business and work processes.Business process optimization expenses, consisting mostly of employeeseverance and related costs, were $3.8  million and $0.8million for the three months ended March  31,  2006 andMarch  31,  2005, respectively.

|          |                                  |
|----------|----------------------------------|
| 8.  | Summaryof Other Income (Expense) |

The components of other income(expense), net for the three months ended March  31,  2006and 2005, include the following:

|                                                  |  |                               |      |                               |  |        |      |         |  |  |
|--------------------------------------------------|--|-------------------------------|------|-------------------------------|--|--------|------|---------|--|--|
| (dollars inmillions)                             |  | Three MonthsendedMarch31,2006 |      | Three MonthsendedMarch31,2005 |
| Franchise taxes                                  |  | $                             | (0.8 | )                        |  | $      | (0.7 | )  |
| Equity in earnings of unconsolidatedsubsidiaries |  |                          | 0.7  |                          |  |   | 0.8  |    |
| Foreigncurrency exchange adjustments             |  |                          | 0.3  |                          |  |   | (0.7 | )  |
| Other                                            |  |                          | 1.1  |                          |  |   | (1.6 | )  |
|                                             |  | $                             | 1.3  |                          |  | $      | (2.2 | )  |
|                                                  |

|          |                         |
|----------|-------------------------|
| 9.  | IncomeTaxes   |

The Company’s effective income taxrate was 41.8% for the three months ended March  31,2006. The rate varies from the U.S. federal statutory income tax rateof 35% due primarily to the incremental tax on dividendsreceived from non-U.S. subsidiaries, foreign taxes provided at otherthan the 35% U.S. statutory rate, U.S. state income taxes,nondeductible expenses, and other permanent differences.

These aforementioned items also contributed to the variationbetween the U.S. federal statutory income tax rate and theCompany’s effective income tax rate for the three months endedMarch  31,  2005.

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|          |                                          |
|----------|------------------------------------------|
| 9.  | IncomeTaxes   (Continued) |

The effective rate of the provisionfor income taxes differs from the U.S. statutory tax rate due to thefollowing items:

|                                 |  |                               |      |                               |  |        |      |        |  |  |
|---------------------------------|--|-------------------------------|------|-------------------------------|--|--------|------|--------|--|--|
| (dollars inmillions)            |  | Three MonthsendedMarch31,2006 |      | Three MonthsendedMarch31,2005 |
| U.S. federal statutory tax rate |  | $                             | 9.2  |                          |  | $      | 10.6 |   |
| Other                           |  |                          | 1.8  |                          |  |   | 2.4  |   |
| Income tax provision            |  | $                             | 11.0 |                          |  | $      | 13.0 |   |
|                                 |

|           |                            |
|-----------|----------------------------|
| 10.  | ComprehensiveIncome (Loss) |

Total comprehensive income (loss) and itscomponents, net of related tax, for the three months ended March31,  2006 and 2005, are as follows:

|                                                       |  |                               |        |                               |  |        |        |         |  |  |
|-------------------------------------------------------|--|-------------------------------|--------|-------------------------------|--|--------|--------|---------|--|--|
| (dollars inmillions)                                  |  | Three MonthsendedMarch31,2006 |        | Three MonthsendedMarch31,2005 |
| Net earnings                                          |  | $                             | 13.6   |                          |  | $      | 16.1   |    |
| Other comprehensive income(loss), net of incometaxes: |  |                          |   |                          |  |   |   |    |
| Derivatives                                           |  |                          | (0.3   | )                        |  |   | 0.5    |    |
| Foreign currencytranslation adjustments               |  |                          | 20.5   |                          |  |   | (21.1  | )  |
| Comprehensive income (loss)                           |  | $                             | 33.8   |                          |  | $      | (4.5   | )  |
|                                                       |

|           |                                |
|-----------|--------------------------------|
| 11.  | SegmentInformation   |

The Company provides integrated watertreatment and process improvement services for industrial andinstitutional applications, using technologically advanced solutions,combining chemical products and equipment, and consistent, reliableon-site service and expertise. These solutions and services enable theCompany’s customers to improve production yields, lowermanufacturing costs, extend asset lives and maintain environmentalstandards at costs that represent a small share of their overallproduction expense.

The Company is organized based on theend markets it serves. The organization is comprised of the followingreportable segments:

Industrial and InstitutionalServices – This segment serves the global water treatmentand process chemical needs of the industrial, institutional, andmunicipal markets.

Energy Services – Thissegment serves the process chemicals and water treatment needs of theglobal petroleum and petrochemical industries in both upstream anddownstream applications.

Paper Services –This segment serves the process chemicals and water treatment needs ofthe global pulp and paper industry.

Other– This segment serves the alternative channels to market, supplychain activities, and certain other operating expenses not allocated toa segment. It also includes the Company’s subsidiary in Indiaand the Katayama Nalco joint venture.

The Companyevaluates the performance of its segments based on ‘‘directcontribution’’, which is defined as net sales, less cost ofproducts sold (excluding variances to standard costs), selling andservice expenses, marketing expenses, research expenses and‘‘capital charges’’ directly attributable toeach segment. Each segment is assessed an internal non-GAAP‘‘capital charge’’ based on trade accountsreceivable, inventories and equipment specifically identifiable to thesegment. The capital 

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|           |                                                 |
|-----------|-------------------------------------------------|
| 11.  | SegmentInformation   (Continued) |

charges included in each segment’sdirect contribution are eliminated to arrive at the consolidated directcontribution for the Company. There are no intersegment revenues. TheCompany’s segment reporting was changed in the first quarter of2006 to reflect the aforementioned capital charge in the reporteddirect contribution of each segment. Prior year data have beenreclassified between segments to conform to the current yearpresentation.

Net sales by reportable segment were asfollows:

|                                       |  |                               |       |                               |  |        |       |        |  |  |
|---------------------------------------|--|-------------------------------|-------|-------------------------------|--|--------|-------|--------|--|--|
| (dollars inmillions)                  |  | Three MonthsendedMarch31,2006 |       | Three MonthsendedMarch31,2005 |
| Industrial and Institutional Services |  | $                             | 378.4 |                          |  | $      | 341.0 |   |
| Energy Services                       |  |                          | 246.3 |                          |  |   | 210.6 |   |
| Paper Services                        |  |                          | 175.8 |                          |  |   | 170.1 |   |
| Other                                 |  |                          | 48.9  |                          |  |   | 55.9  |   |
| Netsales                              |  | $                             | 849.4 |                          |  | $      | 777.6 |   |
|                                       |

The following table presentsdirect contribution by reportable segment and reconciles the totalsegment direct contribution to earnings before income taxes andminority interests:

|                                                     |  |                               |        |                               |  |        |        |         |  |  |
|-----------------------------------------------------|--|-------------------------------|--------|-------------------------------|--|--------|--------|---------|--|--|
| (dollars inmillions)                                |  | Three MonthsendedMarch31,2006 |        | Three MonthsendedMarch31,2005 |
| Segment directcontribution:                         |  |                          |   |                          |  |   |   |    |
| Industrial andInstitutional Services                |  | $                             | 79.8   |                          |  | $      | 65.5   |    |
| Energy Services                                     |  |                          | 48.3   |                          |  |   | 43.0   |    |
| Paper Services                                      |  |                          | 26.1   |                          |  |   | 30.1   |    |
| Other                                               |  |                          | (19.4  | )                        |  |   | (5.2   | )  |
| Capital charge elimination                          |  |                          | 19.2   |                          |  |   | 19.8   |    |
| Totalsegment direct contribution                    |  |                          | 154.0  |                          |  |   | 153.2  |    |
| Expenses not allocated tosegments:                  |  |                          |   |                          |  |   |   |    |
| Administrativeexpenses                              |  |                          | 51.1   |                          |  |   | 46.5   |    |
| Amortization of intangible assets                   |  |                          | 17.3   |                          |  |   | 20.6   |    |
| Business optimization expenses                      |  |                          | 3.8    |                          |  |   | 0.8    |    |
| Operatingearnings                                   |  |                          | 81.8   |                          |  |   | 85.3   |    |
| Other income(expense), net                          |  |                          | 1.3    |                          |  |   | (2.2   | )  |
| Interestincome                                      |  |                          | 1.7    |                          |  |   | 2.1    |    |
| Interestexpense                                     |  |                          | (58.5  | )                        |  |   | (54.9  | )  |
| Earnings before income taxes and minority interests |  | $                             | 26.3   |                          |  | $      | 30.3   |    |
|                                                     |

Administrative expenses primarilyrepresent the cost of support functions, including informationtechnology, finance, human resources and legal, as well as expenses forsupport facilities, executive management and management incentiveplans.

|           |                                         |
|-----------|-----------------------------------------|
| 12.  | Contingenciesand Litigation   |

Various claims, lawsuits andadministrative proceedings are pending or threatened against theCompany and its subsidiaries, arising from the ordinary course ofbusiness with respect to commercial, contract, intellectual property,product liability, employee, environmental and other matters.Historically, these matters have not had a material impact on theconsolidated financial position of the Company. However, the Companycannot predict the outcome of any litigation or the potential forfuture litigation.

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|           |                                                          |
|-----------|----------------------------------------------------------|
| 12.  | Contingenciesand Litigation   (Continued) |

The Company has been named as apotentially responsible party (PRP) by the Environmental ProtectionAgency or state enforcement agencies at three pending waste sites wheresome financial contribution is or may be required. These agencies havealso identified many other parties who may be responsible for clean upcosts at these waste disposal sites. The Company is also remediating asmall ground contamination it discovered at its plant in Colombia. TheCompany’s financial contribution to remediate these sites is notexpected to be material. There has been no significant financial impacton the Company up to the present, nor is it anticipated that there willbe in the future, as a result of these matters. The Company has madeand will continue to make provisions for these costs if theCompany’s liability becomes probable and when costs can bereasonably estimated.

The Company’s undiscountedreserves for known environmental clean up costs were $2.1  millionat March  31,  2006.

These environmentalreserves represent management’s current estimate of itsproportional clean-up costs (and the cost to remediate the Colombiasite) and are based upon negotiation and agreement with enforcementagencies, its previous experience with respect to clean-up activities,a detailed review by the Company of known conditions, and informationabout other PRPs. They are not reduced by any possible recoveries frominsurance companies or other PRPs not specifically identified. Althoughmanagement cannot determine whether or not a material effect on futureoperations is reasonably likely to occur, given the evolving nature ofenvironmental regulations, it believes that the recorded reserve levelsare appropriate estimates of the potential liability. Althoughsettlement will require future cash outlays, it is not expected thatsuch outlays will materially impact the Company’s liquidityposition. Expenditures for the three months ended March  31,2006, relating to environmental compliance and clean up activities,were not significant.

The Company has been named as adefendant in lawsuits based on claimed involvement in the supply ofallegedly defective or hazardous materials and the claimed presence ofhazardous substances at its plants. The plaintiffs in these cases seekdamages for alleged personal injury or potential injury resulting fromexposure to our products or other chemicals. These matters have had ade minimis impact on the Company’s business historically and theCompany does not anticipate these matters to present any material riskto the Company’s business in the future. Notwithstanding, theCompany cannot predict the outcome of any such lawsuits or theinvolvement the Company might have in these matters in the future.

The U.K. Health and Safety Executive(‘‘HSE’’) has sent notice that it intends toinitiate legal proceedings against the Company’s U.K. subsidiaryunder the Health and Safety at Work Act. The place of these proceedingsis not indicated in the notice. This notice references a legionellaoutbreak that is claimed to have originated at cooling towers owned byone of the subsidiary’s customers. The HSE indicates that theproceedings will relate to the cleaning of these cooling towers. TheCompany has not received any specific charges or claims for relief, butwill, in any event, defend and refute any contention that it hasviolated any law.

The Company hasreceived subpoenas from the U.S. Department of Justice for documentsand testimony relating to its storage of claimed hazardous materials,the claimed leakage of wastewater and other matters at its plant inGaryville, Louisiana. No charges or indictments have been filed, butthe outcome of this investigation is unknown to the Company.

In the ordinary course of its business, the Company is also aparty to a number of lawsuits and is subject to various claims relatingto trademarks, employee matters, contracts, transactions, chemicals andother matters, the outcome of which, in the opinion of management,should not have a material effect on the consolidated financialposition of the Company. However, we cannot predict the outcome of anylitigation or the potential for future litigation. Were an unfavorableruling to occur, there exists the possibility of a material adverseimpact on the results of operations for the period in which the rulingoccurs. The Company maintains accruals where the outcome of the matteris probable and can be reasonably estimated.

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|           |            |
|-----------|------------|
| 13.  | Guarantees |

No significant guarantees were outstanding at March31,  2006, other than subsidiary-related performanceguarantees.

The Company had $27.2  million ofletters of credit outstanding at March  31,  2006.

|           |                                                      |
|-----------|------------------------------------------------------|
| 14.  | SupplementalGuarantor Condensed Financial Statements |

In connectionwith the Acquisition, Nalco Holdings LLC (presented as Parent in thefollowing tables), through its wholly owned subsidiary, Nalco Company(presented as Issuer in the following tables), issued Senior Notes andSenior Subordinated Notes as further described in Note 4. The SeniorNotes are fully, unconditionally and jointly and severally guaranteedon an unsecured senior basis and the Senior Subordinated Notes arefully, unconditionally and jointly and severally guaranteed on anunsecured senior subordinated basis, in each case, by Nalco HoldingsLLC and by substantially all existing and future wholly-ownedrestricted domestic subsidiaries of Nalco Company (collectively, the‘‘Guarantors’’). All other subsidiaries ofNalco Holdings LLC, whether direct or indirect, do not guarantee theSenior Notes and Senior Subordinated Notes(‘‘Non-Guarantors’’). The Guarantors alsounconditionally guarantee the Company’s borrowings under theSenior Secured Credit Facilities on a senior secured basis.

The following unaudited condensed consolidating financialstatements present the results of operations, financial position andcash flows of (1) the Parent, (2) the Issuer, (3) the Guarantors,(4)  the Non-Guarantors and (5) eliminations to arrive at theinformation for Nalco Holdings LLC on a consolidated basis. Separatefinancial statements and other disclosures concerning the Guarantorsare not presented because management does not believe that suchinformation is material toinvestors.

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Nalco HoldingsLLC and Subsidiaries Condensed Consolidating Balance SheetMarch  31,  2006(dollars in millions)

|                                                                    |  |        |         |        |  |                        |         |                            |  |              |         |              |  |        |         |        |  |        |          |         |  |        |         |        |  |  |
|--------------------------------------------------------------------|--|--------|---------|--------|--|------------------------|---------|----------------------------|--|--------------|---------|--------------|--|--------|---------|--------|--|--------|----------|---------|--|--------|---------|--------|--|--|
|                                                               |  | Parent |         | Issuer |  | Guarantor Subsidiaries |         | Non- GuarantorSubsidiaries |  | Eliminations |         | Consolidated |
| Cash & cash equivalents                                        |  | $      | — |   |  | $                      | — |                       |  | $            | 1.1     |         |  | $      | 41.7    |   |  | $      | —  |    |  | $      | 42.8    |   |
| Trade accounts receivable                                          |  |   | — |   |  |                   | (19.4   | )                     |  |         | 4.5     |         |  |   | 636.8   |   |  |   | —  |    |  |   | 621.9   |   |
| Inventories –finished products                               |  |   | — |   |  |                   | 120.3   |                       |  |         | — |         |  |   | 152.1   |   |  |   | —  |    |  |   | 272.4   |   |
| Inventories – materials & work in process                |  |   | — |   |  |                   | 31.3    |                       |  |         | — |         |  |   | 45.2    |   |  |   | —  |    |  |   | 76.5    |   |
| Receivables from relatedparties                                    |  |   | — |   |  |                   | 97.3    |                       |  |         | 7.4     |         |  |   | 25.7    |   |  |   | (130.4   | )  |  |   | — |   |
| Prepaid expenses,taxes, and other current assets                   |  |   | — |   |  |                   | 6.8     |                       |  |         | 3.3     |         |  |   | 44.5    |   |  |   | —  |    |  |   | 54.6    |   |
| TotalCurrent Assets                                                |  |   | — |   |  |                   | 236.3   |                       |  |         | 16.3    |         |  |   | 946.0   |   |  |   | (130.4   | )  |  |   | 1,068.2 |   |
| Property, plant, and equipment, net                                |  |   | — |   |  |                   | 306.0   |                       |  |         | 44.6    |         |  |   | 392.1   |   |  |   | —  |    |  |   | 742.7   |   |
| Investment in subsidiaries                                         |  |   | 1,079.4 |   |  |                   | 2,083.0 |                       |  |         | 367.9   |         |  |   | — |   |  |   | (3,530.3 | )  |  |   | — |   |
| Goodwill                                                           |  |   | — |   |  |                   | 952.5   |                       |  |         | 11.0    |         |  |   | 1,249.8 |   |  |   | —  |    |  |   | 2,213.3 |   |
| Intangibles                                                        |  |   | — |   |  |                   | 1,049.1 |                       |  |         | 3.7     |         |  |   | 159.8   |   |  |   | —  |    |  |   | 1,212.6 |   |
| Receivables fromrelated parties                                    |  |   | — |   |  |                   | — |                       |  |         | 319.1   |         |  |   | 220.5   |   |  |   | (539.6   | )  |  |   | — |   |
| Otherassets                                                        |  |   | — |   |  |                   | 266.8   |                       |  |         | 17.4    |         |  |   | 41.2    |   |  |   | —  |    |  |   | 325.4   |   |
| Total Assets                                                       |  | $      | 1,079.4 |   |  | $                      | 4,893.7 |                       |  | $            | 780.0   |         |  | $      | 3,009.4 |   |  | $      | (4,200.3 | )  |  | $      | 5,562.2 |   |
| Accounts payable                                                   |  | $      | — |   |  | $                      | 133.1   |                       |  | $            | 0.8     |         |  | $      | 146.2   |   |  | $      | —  |    |  | $      | 280.1   |   |
| Short-term debt                                                    |  |   | — |   |  |                   | 7.1     |                       |  |         | — |         |  |   | 28.5    |   |  |   | —  |    |  |   | 35.6    |   |
| Other currentliabilities                                           |  |   | — |   |  |                   | 90.8    |                       |  |         | 7.5     |         |  |   | 147.3   |   |  |   | (1.3     | )  |  |   | 244.3   |   |
| Intercompany accounts payable                                      |  |   | — |   |  |                   | 9.2     |                       |  |         | 25.2    |         |  |   | 94.7    |   |  |   | (129.1   | )  |  |   | — |   |
| TotalCurrent Liabilities                                           |  |   | — |   |  |                   | 240.2   |                       |  |         | 33.5    |         |  |   | 416.7   |   |  |   | (130.4   | )  |  |   | 560.0   |   |
| Long-term debt                                                     |  |   | — |   |  |                   | 2,781.7 |                       |  |         | — |         |  |   | 79.3    |   |  |   | —  |    |  |   | 2,861.0 |   |
| Deferred incometaxes                                               |  |   | — |   |  |                   | 244.5   |                       |  |         | 47.4    |         |  |   | 72.0    |   |  |   | —  |    |  |   | 363.9   |   |
| Accrued pensionbenefits                                            |  |   | — |   |  |                   | 263.3   |                       |  |         | — |         |  |   | 150.2   |   |  |   | —  |    |  |   | 413.5   |   |
| Intercompany notes payable-long term                               |  |   | — |   |  |                   | 539.6   |                       |  |         | — |         |  |   | — |   |  |   | (539.6   | )  |  |   | — |   |
| Other liabilities                                                  |  |   | — |   |  |                   | 261.7   |                       |  |         | — |         |  |   | 22.7    |   |  |   | —  |    |  |   | 284.4   |   |
| TotalOther Liabilities                                             |  |   | — |   |  |                   | 4,090.8 |                       |  |         | 47.4    |         |  |   | 324.2   |   |  |   | (539.6   | )  |  |   | 3,922.8 |   |
| Minority Interest                                                  |  |   | 12.2    |   |  |                   | — |                       |  |         | — |         |  |   | 12.2    |   |  |   | (12.2    | )  |  |   | 12.2    |   |
| TotalUnitholder’s/Shareholders’ Equity                 |  |   | 1,067.2 |   |  |                   | 562.7   |                       |  |         | 699.1   |         |  |   | 2,256.3 |   |  |   | (3,518.1 | )  |  |   | 1,067.2 |   |
| Total Liabilities andUnitholder’s/Shareholders’ Equity |  | $      | 1,079.4 |   |  | $                      | 4,893.7 |                       |  | $            | 780.0   |         |  | $      | 3,009.4 |   |  | $      | (4,200.3 | )  |  | $      | 5,562.2 |   |
|                                                                    |

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Nalco Holdings LLC and SubsidiariesCondensed Consolidating Balance Sheet December  31,2005(dollars in millions)

|                                                                    |  |        |         |        |  |                        |         |                            |  |              |         |              |  |        |         |        |  |        |          |         |  |        |         |        |  |  |
|--------------------------------------------------------------------|--|--------|---------|--------|--|------------------------|---------|----------------------------|--|--------------|---------|--------------|--|--------|---------|--------|--|--------|----------|---------|--|--------|---------|--------|--|--|
|                                                               |  | Parent |         | Issuer |  | Guarantor Subsidiaries |         | Non- GuarantorSubsidiaries |  | Eliminations |         | Consolidated |
| Cash & cash equivalents                                        |  | $      | — |   |  | $                      | — |                       |  | $            | 1.7     |         |  | $      | 29.1    |   |  | $      | —  |    |  | $      | 30.8    |   |
| Trade accounts receivable                                          |  |   | — |   |  |                   | (13.6   | )                     |  |         | 6.5     |         |  |   | 629.4   |   |  |   | —  |    |  |   | 622.3   |   |
| Inventories –finished products                               |  |   | — |   |  |                   | 64.6    |                       |  |         | 45.1    |         |  |   | 132.9   |   |  |   | —  |    |  |   | 242.6   |   |
| Inventories – materials & work in process                |  |   | — |   |  |                   | 15.0    |                       |  |         | 11.5    |         |  |   | 44.1    |   |  |   | —  |    |  |   | 70.6    |   |
| Receivables from relatedparties                                    |  |   | — |   |  |                   | 24.8    |                       |  |         | 225.4   |         |  |   | 41.1    |   |  |   | (291.3   | )  |  |   | — |   |
| Prepaidexpenses, taxes, and other current assets                   |  |   | — |   |  |                   | 24.1    |                       |  |         | 13.8    |         |  |   | 45.2    |   |  |   | —  |    |  |   | 83.1    |   |
| TotalCurrent Assets                                                |  |   | — |   |  |                   | 114.9   |                       |  |         | 304.0   |         |  |   | 921.8   |   |  |   | (291.3   | )  |  |   | 1,049.4 |   |
| Property, plant, and equipment, net                                |  |   | — |   |  |                   | 218.1   |                       |  |         | 142.9   |         |  |   | 394.3   |   |  |   | —  |    |  |   | 755.3   |   |
| Investment in subsidiaries                                         |  |   | 1,044.4 |   |  |                   | 2,499.0 |                       |  |         | 367.9   |         |  |   | — |   |  |   | (3,911.3 | )  |  |   | — |   |
| Goodwill                                                           |  |   | — |   |  |                   | 654.9   |                       |  |         | 308.6   |         |  |   | 1,233.2 |   |  |   | —  |    |  |   | 2,196.7 |   |
| Intangibles                                                        |  |   | — |   |  |                   | 1,014.4 |                       |  |         | 47.9    |         |  |   | 165.2   |   |  |   | —  |    |  |   | 1,227.5 |   |
| Receivables fromrelated parties                                    |  |   | — |   |  |                   | — |                       |  |         | 309.4   |         |  |   | 173.3   |   |  |   | (482.7   | )  |  |   | — |   |
| Otherassets                                                        |  |   | — |   |  |                   | 268.4   |                       |  |         | 18.3    |         |  |   | 38.6    |   |  |   | —  |    |  |   | 325.3   |   |
| Total Assets                                                       |  | $      | 1,044.4 |   |  | $                      | 4,769.7 |                       |  | $            | 1,499.0 |         |  | $      | 2,926.4 |   |  | $      | (4,685.3 | )  |  | $      | 5,554.2 |   |
| Accounts payable                                                   |  | $      | — |   |  | $                      | 87.0    |                       |  | $            | 44.9    |         |  | $      | 153.5   |   |  |   | —  |    |  | $      | 285.4   |   |
| Short-term debt                                                    |  |   | — |   |  |                   | 6.2     |                       |  |         | 1.0     |         |  |   | 15.4    |   |  |   | —  |    |  |   | 22.6    |   |
| Other currentliabilities                                           |  |   | — |   |  |                   | 57.4    |                       |  |         | 35.2    |         |  |   | 143.8   |   |  |   | (1.3     | )  |  |   | 235.1   |   |
| Intercompany accounts payable                                      |  |   | — |   |  |                   | 155.9   |                       |  |         | 38.2    |         |  |   | 95.9    |   |  |   | (290.0   | )  |  |   | — |   |
| TotalCurrent Liabilities                                           |  |   | — |   |  |                   | 306.5   |                       |  |         | 119.3   |         |  |   | 408.6   |   |  |   | (291.3   | )  |  |   | 543.1   |   |
| Long-termdebt                                                      |  |   | — |   |  |                   | 2,814.7 |                       |  |         | — |         |  |   | 76.0    |   |  |   | —  |    |  |   | 2,890.7 |   |
| Deferredincome taxes                                               |  |   | — |   |  |                   | 303.5   |                       |  |         | 1.0     |         |  |   | 76.2    |   |  |   | —  |    |  |   | 380.7   |   |
| Accruedpension benefits                                            |  |   | — |   |  |                   | 227.9   |                       |  |         | 42.4    |         |  |   | 146.1   |   |  |   | —  |    |  |   | 416.4   |   |
| Intercompany notes payable-long term                               |  |   | — |   |  |                   | 482.7   |                       |  |         | — |         |  |   | — |   |  |   | (482.7   | )  |  |   | — |   |
| Other liabilities                                                  |  |   | — |   |  |                   | 231.8   |                       |  |         | 26.7    |         |  |   | 20.4    |   |  |   | —  |    |  |   | 278.9   |   |
| TotalOther Liabilities                                             |  |   | — |   |  |                   | 4,060.6 |                       |  |         | 70.1    |         |  |   | 318.7   |   |  |   | (482.7   | )  |  |   | 3,966.7 |   |
| Minority Interest                                                  |  |   | 11.2    |   |  |                   | — |                       |  |         | — |         |  |   | 11.2    |   |  |   | (11.2    | )  |  |   | 11.2    |   |
| Unitholder’s/Shareholders’ Equity                      |  |   | 1,033.2 |   |  |                   | 402.6   |                       |  |         | 1,309.6 |         |  |   | 2,187.9 |   |  |   | (3,900.1 | )  |  |   | 1,033.2 |   |
| Total Liabilities andUnitholder’s/Shareholders’ Equity |  | $      | 1,044.4 |   |  | $                      | 4,769.7 |                       |  | $            | 1,499.0 |         |  | $      | 2,926.4 |   |  | $      | (4,685.3 | )  |  | $      | 5,554.2 |   |
|                                                                    |

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Nalco Holdings LLC and SubsidiariesCondensed Consolidating Statement of Operations Three Months endedMarch  31,  2006(dollars in millions)

|                                                           |  |        |         |         |  |                       |         |                            |  |              |         |              |  |        |        |         |  |        |         |         |  |        |        |         |  |  |
|-----------------------------------------------------------|--|--------|---------|---------|--|-----------------------|---------|----------------------------|--|--------------|---------|--------------|--|--------|--------|---------|--|--------|---------|---------|--|--------|--------|---------|--|--|
|                                                      |  | Parent |         | Issuer  |  | GuarantorSubsidiaries |         | Non- GuarantorSubsidiaries |  | Eliminations |         | Consolidated |
| Net sales                                                 |  | $      | — |    |  | $                     | 436.2   |                       |  | $            | 5.6     |         |  | $      | 461.7  |    |  | $      | (54.1   | )  |  | $      | 849.4  |    |
| Operating costs andexpenses:                              |  |   |    |    |  |                  |    |                       |  |         |    |         |  |   |   |    |  |   |    |    |  |   |   |    |
| Costof product sold                                       |  |   | — |    |  |                  | 270.6   |                       |  |         | 3.6     |         |  |   | 251.0  |    |  |   | 54.1    |    |  |   | 471.1  |    |
| Selling, administrative, and research expenses            |  |   | — |    |  |                  | 139.3   |                       |  |         | 1.9     |         |  |   | 134.2  |    |  |   | — |    |  |   | 275.4  |    |
| Amortization ofintangible assets                          |  |   | — |    |  |                  | 9.5     |                       |  |         | — |         |  |   | 7.8    |    |  |   | — |    |  |   | 17.3   |    |
| Business optimization expenses                            |  |   | — |    |  |                  | 0.3     |                       |  |         | — |         |  |   | 3.5    |    |  |   | — |    |  |   | 3.8    |    |
| Totaloperating costs and expenses                         |  |   | — |    |  |                  | 419.7   |                       |  |         | 5.5     |         |  |   | 396.5  |    |  |   | 54.1    |    |  |   | 767.6  |    |
| Operating earnings (loss)                                 |  |   | — |    |  |                  | 16.5    |                       |  |         | 0.1     |         |  |   | 65.2   |    |  |   | — |    |  |   | 81.8   |    |
| Other income (expense), net                               |  |   | 15.3    |    |  |                  | 12.8    |                       |  |         | 6.4     |         |  |   | (17.2  | )  |  |   | (16.0   | )  |  |   | 1.3    |    |
| Interest income                                           |  |   | — |    |  |                  | 1.4     |                       |  |         | 3.4     |         |  |   | 13.7   |    |  |   | (16.8   | )  |  |   | 1.7    |    |
| Interest expense                                          |  |   | — |    |  |                  | (73.0   | )                     |  |         | — |         |  |   | (2.3   | )  |  |   | 16.8    |    |  |   | (58.5  | )  |
| Earnings(loss) before income taxes and minority interests |  |   | 15.3    |    |  |                  | (42.3   | )                     |  |         | 9.9     |         |  |   | 59.4   |    |  |   | (16.0   | )  |  |   | 26.3   |    |
| Income tax provision (benefit)                            |  |   | — |    |  |                  | (14.2   | )                     |  |         | 3.6     |         |  |   | 21.6   |    |  |   | — |    |  |   | 11.0   |    |
| Minority interests                                        |  |   | (1.7    | )  |  |                  | — |                       |  |         | — |         |  |   | (1.7   | )  |  |   | 1.7     |    |  |   | (1.7   | )  |
| Netearnings (loss)                                        |  | $      | 13.6    |    |  | $                     | (28.1   | )                     |  | $            | 6.3     |         |  | $      | 36.1   |    |  | $      | (14.3   | )  |  | $      | 13.6   |    |
|                                                           |

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Nalco Holdings LLC and SubsidiariesCondensed Consolidating Statement of Operations Three Months endedMarch  31,  2005(dollars in millions)

|                                                           |  |        |         |         |  |                       |         |                           |  |              |         |              |  |        |        |         |  |        |         |         |  |        |        |         |  |  |
|-----------------------------------------------------------|--|--------|---------|---------|--|-----------------------|---------|---------------------------|--|--------------|---------|--------------|--|--------|--------|---------|--|--------|---------|---------|--|--------|--------|---------|--|--|
|                                                      |  | Parent |         | Issuer  |  | GuarantorSubsidiaries |         | Non-GuarantorSubsidiaries |  | Eliminations |         | Consolidated |
| Net sales                                                 |  | $      | — |    |  | $                     | 275.1   |                      |  | $            | 148.5   |         |  | $      | 430.6  |    |  | $      | (76.6   | )  |  | $      | 777.6  |    |
| Operating costs andexpenses:                              |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |   |    |  |   |    |    |  |   |   |    |
| Costof product sold                                       |  |   | — |    |  |                  | 178.3   |                      |  |         | 94.9    |         |  |   | 216.2  |    |  |   | (76.6   | )  |  |   | 412.8  |    |
| Selling, administrative, and research expenses            |  |   | — |    |  |                  | 97.5    |                      |  |         | 29.5    |         |  |   | 131.1  |    |  |   | — |    |  |   | 258.1  |    |
| Amortization ofintangible assets                          |  |   | — |    |  |                  | 8.3     |                      |  |         | 2.7     |         |  |   | 9.6    |    |  |   | — |    |  |   | 20.6   |    |
| Business optimization expenses                            |  |   | — |    |  |                  | 0.4     |                      |  |         | — |         |  |   | 0.4    |    |  |   | — |    |  |   | 0.8    |    |
| Totaloperating costs and expenses                         |  |   | — |    |  |                  | 284.5   |                      |  |         | 127.1   |         |  |   | 357.3  |    |  |   | (76.6   | )  |  |   | 692.3  |    |
| Operating earnings (loss)                                 |  |   | — |    |  |                  | (9.4    | )                    |  |         | 21.4    |         |  |   | 73.3   |    |  |   | — |    |  |   | 85.3   |    |
| Other income (expense), net                               |  |   | 17.3    |    |  |                  | 28.1    |                      |  |         | 5.6     |         |  |   | (18.6  | )  |  |   | (34.6   | )  |  |   | (2.2   | )  |
| Interest income                                           |  |   | — |    |  |                  | 1.8     |                      |  |         | 2.2     |         |  |   | 9.2    |    |  |   | (11.1   | )  |  |   | 2.1    |    |
| Interest expense                                          |  |   | — |    |  |                  | (61.1   | )                    |  |         | (3.1    | )       |  |   | (1.8   | )  |  |   | 11.1    |    |  |   | (54.9  | )  |
| Earnings(loss) before income taxes and minority interests |  |   | 17.3    |    |  |                  | (40.6   | )                    |  |         | 26.1    |         |  |   | 62.1   |    |  |   | (34.6   | )  |  |   | 30.3   |    |
| Income tax provision (benefit)                            |  |   | — |    |  |                  | (9.4    | )                    |  |         | 1.7     |         |  |   | 20.7   |    |  |   | — |    |  |   | 13.0   |    |
| Minority interests                                        |  |   | (1.2    | )  |  |                  | — |                      |  |         | — |         |  |   | (1.2   | )  |  |   | 1.2     |    |  |   | (1.2   | )  |
| Netearnings (loss)                                        |  | $      | 16.1    |    |  | $                     | (31.2   | )                    |  | $            | 24.4    |         |  | $      | 40.2   |    |  | $      | (33.4   | )  |  | $      | 16.1   |    |
|                                                           |

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Nalco Holdings LLC and SubsidiariesCondensed Consolidating Statement of Cash Flows Three Months endedMarch  31,  2006(dollars in millions)

|                                                     |  |        |         |         |  |                       |         |                           |  |              |         |              |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|-----------------------------------------------------|--|--------|---------|---------|--|-----------------------|---------|---------------------------|--|--------------|---------|--------------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                |  | Parent |         | Issuer  |  | GuarantorSubsidiaries |         | Non-GuarantorSubsidiaries |  | Eliminations |         | Consolidated |
| Operatingactivities                                 |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |    |    |  |   |    |    |  |   |    |    |
| Netearnings (loss)                                  |  | $      | 13.6    |    |  | $                     | (28.1   | )                    |  | $            | 6.3     |         |  | $      | 36.1    |    |  | $      | (14.3   | )  |  | $      | 13.6    |    |
| Non-cashadjustments                                 |  |   | (13.6   | )  |  |                  | 12.4    |                      |  |         | 4.4     |         |  |   | 32.0    |    |  |   | 13.9    |    |  |   | 49.1    |    |
| Changes inoperating assets and liabilities          |  |   | — |    |  |                  | 10.0    |                      |  |         | 3.2     |         |  |   | (17.0   | )  |  |   | — |    |  |   | (3.8    | )  |
| Net cashprovided by (used for) operating activities |  |   | — |    |  |                  | (5.7    | )                    |  |         | 13.9    |         |  |   | 51.1    |    |  |   | (0.4    | )  |  |   | 58.9    |    |
| Investingactivities                                 |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |    |    |  |   |    |    |  |   |    |    |
| Additionsto property, plant, and equipment, net     |  |   | — |    |  |                  | (6.1    | )                    |  |         | — |         |  |   | (8.5    | )  |  |   | — |    |  |   | (14.6   | )  |
| Other                                               |  |   | — |    |  |                  | (2.7    | )                    |  |         | (14.1   | )       |  |   | (46.4   | )  |  |   | 62.8    |    |  |   | (0.4    | )  |
| Net cashprovided by (used for) investing activities |  |   | — |    |  |                  | (8.8    | )                    |  |         | (14.1   | )       |  |   | (54.9   | )  |  |   | 62.8    |    |  |   | (15.0   | )  |
| Financingactivities                                 |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |    |    |  |   |    |    |  |   |    |    |
| Cashdividends                                       |  |   | — |    |  |                  | — |                      |  |         | (0.4    | )       |  |   | — |    |  |   | 0.4     |    |  |   | — |    |
| Netborrowings (repayments) of debt                  |  |   | — |    |  |                  | 14.5    |                      |  |         | — |         |  |   | 15.8    |    |  |   | (61.8   | )  |  |   | (31.5   | )  |
| Capital contributions                               |  |   | — |    |  |                  | — |                      |  |         | — |         |  |   | 1.0     |    |  |   | (1.0    | )  |  |   | — |    |
| Other                                               |  |   | — |    |  |                  | — |                      |  |         | — |         |  |   | (0.8    | )  |  |   | — |    |  |   | (0.8    | )  |
| Net cash provided by (used for) financingactivities |  |   | — |    |  |                  | 14.5    |                      |  |         | (0.4    | )       |  |   | 16.0    |    |  |   | (62.4   | )  |  |   | (32.3   | )  |
| Effect ofexchange rate changes on cash              |  |   | — |    |  |                  | — |                      |  |         | — |         |  |   | 0.4     |    |  |   | — |    |  |   | 0.4     |    |
| Increase (decrease) in cash                         |  |   | — |    |  |                  | — |                      |  |         | (0.6    | )       |  |   | 12.6    |    |  |   | — |    |  |   | 12.0    |    |
| Cash at beginning ofperiod                          |  |   | — |    |  |                  | — |                      |  |         | 1.7     |         |  |   | 29.1    |    |  |   | — |    |  |   | 30.8    |    |
| Cash at end of period                               |  | $      | — |    |  | $                     | — |                      |  | $            | 1.1     |         |  | $      | 41.7    |    |  | $      | — |    |  | $      | 42.8    |    |
|                                                     |

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Nalco Holdings LLC and SubsidiariesCondensed Consolidating Statement of Cash Flows Three Months endedMarch  31,  2005(dollars in millions)

|                                                      |  |        |         |         |  |                       |         |                           |  |              |         |              |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|------------------------------------------------------|--|--------|---------|---------|--|-----------------------|---------|---------------------------|--|--------------|---------|--------------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                 |  | Parent |         | Issuer  |  | GuarantorSubsidiaries |         | Non-GuarantorSubsidiaries |  | Eliminations |         | Consolidated |
| Operatingactivities                                  |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |    |    |  |   |    |    |  |   |    |    |
| Netearnings (loss)                                   |  | $      | 16.1    |    |  | $                     | (31.2   | )                    |  | $            | 24.4    |         |  | $      | 40.2    |    |  | $      | (33.4   | )  |  | $      | 16.1    |    |
| Non-cashadjustments                                  |  |   | (16.1   | )  |  |                  | 25.3    |                      |  |         | 12.9    |         |  |   | 31.2    |    |  |   | 17.3    |    |  |   | 70.6    |    |
| Changes inoperating assets and liabilities           |  |   | — |    |  |                  | 18.7    |                      |  |         | (33.7   | )       |  |   | (54.8   | )  |  |   | — |    |  |   | (69.8   | )  |
| Netcash provided by (used for) operating activities  |  |   | — |    |  |                  | 12.8    |                      |  |         | 3.6     |         |  |   | 16.6    |    |  |   | (16.1   | )  |  |   | 16.9    |    |
| Investingactivities                                  |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |    |    |  |   |    |    |  |   |    |    |
| Acquisitionof Ondeo Nalco Group                      |  |   | — |    |  |                  | (3.2    | )                    |  |         | — |         |  |   | — |    |  |   | — |    |  |   | (3.2    | )  |
| Additions to property, plant, and equipment, net     |  |   | — |    |  |                  | (4.4    | )                    |  |         | (2.0    | )       |  |   | (5.9    | )  |  |   | — |    |  |   | (12.3   | )  |
| Other                                                |  |   | — |    |  |                  | (2.5    | )                    |  |         | 0.8     |         |  |   | (1.8    | )  |  |   | 1.9     |    |  |   | (1.6    | )  |
| Net cashprovided by (used for) investing activities  |  |   | — |    |  |                  | (10.1   | )                    |  |         | (1.2    | )       |  |   | (7.7    | )  |  |   | 1.9     |    |  |   | (17.1   | )  |
| Financingactivities                                  |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |    |    |  |   |    |    |  |   |    |    |
| Cashdividends                                        |  |   | — |    |  |                  | — |                      |  |         | (1.5    | )       |  |   | (14.6   | )  |  |   | 16.1    |    |  |   | — |    |
| Netborrowings (repayments) of debt                   |  |   | — |    |  |                  | (2.5    | )                    |  |         | 0.6     |         |  |   | 8.9     |    |  |   | (1.1    | )  |  |   | 5.9     |    |
| Capital contributions                                |  |   | — |    |  |                  | — |                      |  |         | — |         |  |   | 0.8     |    |  |   | (0.8    | )  |  |   | — |    |
| Other                                                |  |   | — |    |  |                  | (1.3    | )                    |  |         | — |         |  |   | (2.7    | )  |  |   | — |    |  |   | (4.0    | )  |
| Net cash provided by (used for) financing activities |  |   | — |    |  |                  | (3.8    | )                    |  |         | (0.9    | )       |  |   | (7.6    | )  |  |   | 14.2    |    |  |   | 1.9     |    |
| Effect of exchange ratechanges on cash               |  |   | — |    |  |                  | — |                      |  |         | — |         |  |   | (0.5    | )  |  |   | — |    |  |   | (0.5    | )  |
| Increase (decrease) in cash                          |  |   | — |    |  |                  | (1.1    | )                    |  |         | 1.5     |         |  |   | 0.8     |    |  |   | — |    |  |   | 1.2     |    |
| Cash at beginning ofperiod                           |  |   | — |    |  |                  | 1.3     |                      |  |         | 0.8     |         |  |   | 31.1    |    |  |   | — |    |  |   | 33.2    |    |
| Cash at end of period                                |  | $      | — |    |  | $                     | 0.2     |                      |  | $            | 2.3     |         |  | $      | 31.9    |    |  | $      | — |    |  | $      | 34.4    |    |
|                                                      |

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|              |                                                                                            |
|--------------|--------------------------------------------------------------------------------------------|
| Item2.  | Management’s Discussion and Analysis ofFinancial Condition and Results of Operations |

OnNovember  4,  2003, Nalco Holdings LLC, a company formed byThe Blackstone Group, Apollo Management, L.P. and GS Capital Partners(the ‘‘Sponsors’’), purchased all of theoutstanding shares of capital stock of Ondeo Nalco Company (which isnow known as Nalco Company) and the Nalco International SASSubsidiaries, which had been operated as a single business unit, fromsubsidiaries of Suez S.A. (Suez). In the following discussion andanalysis, we refer to this acquisition as the‘‘Acquisition,’’ and the term‘‘Transactions’’ means, collectively, theAcquisition and the related financings to fund the Acquisition.

The statements in the discussion and analysis regardingindustry outlook, our expectations regarding the performance of ourbusiness and the other non-historical statements in the discussion andanalysis are forward-looking statements. These forward-lookingstatements are subject to numerous risks and uncertainties. Our actualresults may differ materially from those contained in or implied by anyforward-looking statements. You should read the following discussiontogether with the consolidated financial statements of Nalco HoldingsLLC included elsewhere in this report.

‘‘SafeHarbor’’ Statement Under Private Securities LitigationReform Act of 1995

This Quarterly Report for the fiscalquarter ended March  31,  2006 (the ‘‘QuarterlyReport’’) includes ‘‘forward-lookingstatements’’ within the meaning of Section 27A of theSecurities Act of 1933 and Section 21E of the Securities Exchange Actof 1934. These forward-looking statements include statements concerningour plans, objectives, goals, strategies, future events, future revenueor performance, capital expenditures, financing needs, plans orintentions relating to acquisitions, business trends and otherinformation that is not historical information. When used in thisQuarterly Report, the words ‘‘estimates,’’‘‘expects,’’‘‘anticipates,’’‘‘projects,’’‘‘plans,’’ ‘‘intends,’’‘‘ believes,’’‘‘forecasts,’’ or future or conditional verbs,such as ‘‘will,’’‘‘should,’’ ‘‘could’’or ‘‘may,’’ and variations of such words orsimilar expressions are intended to identify forward-lookingstatements. All forward-looking statements, including, withoutlimitation, management’s examination of historical operatingtrends and data are based upon our current expectations and variousassumptions. Our expectations, beliefs and projections are expressed ingood faith and we believe there is a reasonable basis for them.However, there can be no assurance that management’sexpectations, beliefs and projections will be achieved.

There are a number of risks and uncertainties that couldcause our actual results to differ materially from the forward-lookingstatements contained in this Quarterly Report. Additionally, importantfactors could cause our actual results to differ materially from theforward-looking statements we make in this Quarterly Report. As statedelsewhere in this Quarterly Report, such risks, uncertainties and otherimportant factors include, among others:

|  |              |                           |
|--|--------------|---------------------------|
|  | •  | our substantial leverage; |

|  |              |                                                                                       |
|--|--------------|---------------------------------------------------------------------------------------|
|  | •  | limitations on flexibility inoperating our business contained in our debt agreements; |

|  |              |                                                                           |
|--|--------------|---------------------------------------------------------------------------|
|  | •  | increases in interest rates as aresult of our variable rate indebtedness; |

|  |              |                                     |
|--|--------------|-------------------------------------|
|  | •  | pricing pressure from ourcustomers; |

|  |              |                                                                                                                                                                                                       |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | changes to, orelimination of, legal or regulatory requirements imposed upon ourcustomers which could adversely affect portions of our business, suchas that which serves the synthetic-fuel industry; |

|  |              |                                     |
|--|--------------|-------------------------------------|
|  | •  | technological change andinnovation; |

|  |              |                                               |
|--|--------------|-----------------------------------------------|
|  | •  | risks associatedwith our non-U.S. operations; |

|  |              |                                         |
|--|--------------|-----------------------------------------|
|  | •  | fluctuations in currencyexchange rates; |

|  |              |                                                     |
|--|--------------|-----------------------------------------------------|
|  | •  | highcompetition in the markets in which we operate; |

|  |              |                                                                 |
|--|--------------|-----------------------------------------------------------------|
|  | •  | adverse changes toenvironmental, health and safety regulations; |

|  |              |                                                |
|--|--------------|------------------------------------------------|
|  | •  | operating hazards in ourproduction facilities; |

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|              |                                                                                                       |
|--------------|-------------------------------------------------------------------------------------------------------|
| Item2.  | Management’s Discussion and Analysis ofFinancial Condition and Results of Operations(continued) |

|  |              |                                            |
|--|--------------|--------------------------------------------|
|  | •  | inabilityto achieve expected cost savings; |

|  |              |                                                   |
|--|--------------|---------------------------------------------------|
|  | •  | difficulties in securing the rawmaterials we use; |

|  |              |                                                                                              |
|--|--------------|----------------------------------------------------------------------------------------------|
|  | •  | oursignificant pension benefit obligations and the current underfunding inour pension plans; |

|  |              |                                                                |
|--|--------------|----------------------------------------------------------------|
|  | •  | ourability to realize the full value of our intangible assets; |

|  |              |                                                                                                                                   |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------|
|  | •  | our ability to attract andretain skilled employees, particularly research scientists, technicalsales professionals and engineers; |

|  |              |                                                             |
|--|--------------|-------------------------------------------------------------|
|  | •  | our ability to protect ourintellectual property rights; and |

|  |              |                                                                                   |
|--|--------------|-----------------------------------------------------------------------------------|
|  | •  | the possibility that ourowners’ interests will conflict with ours or yours. |

There may be other factors that may cause our actual resultsto differ materially from the forward-looking statements.

All forward-looking statements attributable to us or personsacting on our behalf apply only as of the date of this Quarterly Reportand are expressly qualified in their entirety by the cautionarystatements included in this Quarterly Report. We undertake noobligation to update or revise forward-looking statements which may bemade to reflect events or circumstances that arise after the date madeor to reflect the occurrence of unanticipated events.

ExecutiveLevel Overview

Nalco delivered rapid sales growth andgood cash generation to repay debt in the first quarter, but thoseresults did not immediately translate into improved quarterly netincome or Adjusted EBITDA.

First quarter sales grew9.2% to $849.4  million, including 11.0% organicgrowth partly offset by negative foreign currency impacts of1.8%. Organic growth excludes the impacts of changes in foreigncurrency translation rates and acquisitions and divestitures. Realsales growth – organic growth less price that simply passes onhigher costs – exceeded what we expect for the remainder of theyear, benefiting from a year-ago quarter weakened by moving sales aheadof a January  2005 systems conversion. For the year, we expectreal sales growth to be nearly half of our 7% organic growthtarget in 2006. This is lower real sales growth than our long-termexpectations, as our sales engineers’ time continues to berequired to sell price increases.

At the sales level, webenefited from favorable external conditions during the quarter that weexpect to carry forward at least in the near term:

|  |              |                                                                          |
|--|--------------|--------------------------------------------------------------------------|
|  | •  | Economic improvement in WesternEurope and continued stability elsewhere, |

|  |              |                                                                          |
|--|--------------|--------------------------------------------------------------------------|
|  | •  | Continued strength in petroleumexploration, production and refining, and |

|  |              |                                                                                                                                   |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Production improvement amongNorth American paper producers that we hope will translate into animproved environment for suppliers. |

More than 55%of our sales came from business units growing at better than 10%organically. Only one business – our European Paper business– suffered a modest organic sales decline. Price continued to bean important part of our organic improvement, delivering 6.1% ofthe 11.0% improvement. Real growth of 4.9% is on trackwith our long-term expectations for our base business, and ahead ofplanned results. Price increases outpaced $34  million in costincreases during the quarter. However, since mid-2004, cumulativepurchased material and freight cost increases have totaled $229million versus about $197  million in increased price.

While we are now running price ahead of cost on ayear-on-year basis, we obviously need additional price increases to getus even with the total costs we have absorbed since purchased materialand freight cost increases began. This is particularly true in ourEnergy and Paper segments. It is far too 

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|              |                                                                                                       |
|--------------|-------------------------------------------------------------------------------------------------------|
| Item2.  | Management’s Discussion and Analysis ofFinancial Condition and Results of Operations(continued) |

early to declare victory over raw materialcosts with the recent run-up in crude oil prices, so we need tomaintain a strong focus on capturing price.

Our priceachievement is clearly strongest in the Industrial and InstitutionalServices business. The Industrial and Institutional business was veryhealthy in the quarter, with strong comparisons against a weak firstquarter in 2005. Real growth was near the corporate average, and we hadsubstantial success in price that allowed for solid expansion of ourdirect contribution margin. This growth came despite warm weatherconditions in North America that led to lower sales for boilertreatment products during the quarter. Despite the warm weather,NexGuard® boiler automation technology sales continuedto expand in the region. Mix impacts contributed negatively toIndustrial and Institutional Services results, but were more thanoffset by volume and price gains.

We are pleased thatcustomers and prospects are interested in technology innovations thatprovide performance advantages, particularly as we work to develop moreadvanced boiler automation technology for introduction in the nearfuture. We are also pleased with the current momentum in our coolingwater applications, driven by strong market acceptance of our 3DTRASAR® cooling water stress management technology.Also, within Industrial and Institutional Services, we continue to seevery strong financial performance from two of our smaller offerings.Sales of our colloidal particle products into the electronics, catalystand investment casting markets are robust, as are sales of additivesinto the personal care products industry. The improvements in ourcooling water and process additives business within Industrial andInstitutional Services were strong enough that we could absorbunfavorable weather in our largest region and still deliver substantialperformance improvement.

From a sales perspective, EnergyServices is doing extremely well. At $246.3  million in firstquarter sales, the business is well positioned to hit a $1billion year-end sales mark. Our Downstream, Oil Field and Adomitebusiness units all grew at better than 15% in the first quarter.Clearly, our customers in this business are enjoying the healthiesteconomic environment they have seen in many, many years. Growth in ourbusiness comes despite some lingering sales and earnings impactsrelated to the 2005 hurricanes, with the most noticeable of theseimpacts being that a number of customer operations in the Gulf ofMexico have not yet restarted.

Unfortunately, we did notgain the type of operating leverage we would expect from sales growthat the exceptional levels delivered by Energy Services. While operatingprofits are higher than in the prior year in Energy Services, weexperienced a modest decline in Energy Services direct contribution asa percent of sales. This was the result of a continued lag in priceincreases catching up with rising product costs, along with severalunplanned cost items that were booked in the quarter. We are confidentthis is not a trend that will continue, and that ongoing very strongsales can be matched with earnings improvement more in line with thatgrowth as the year progresses.

Our Paper Services segmentcontinued to struggle in every region except Asia. While sales in NorthAmerica and Latin America grew modestly, those regions joined Europe inunder-performing 2005 results at an earnings level. External datasuggests that market conditions for many customers in North America arestarting to improve. As we look at our raw material costs, the businesslikely to face the largest continued cost increase is our PaperServices business. Price clearly remains the issue in Paper.

Taken as a total, our three primary segments delivered11.3% improvement in direct contribution dollars compared to thefirst quarter of 2005. Given this performance improvement in ourprimary businesses, our flat overall earnings resulted in part fromimpacts in the Other segment. The business units in the Other segmentperformed reasonably, including Katayama Nalco, India and ourIntegrated Channels Group. However, there were supply chain variancesand favorable adjustments in the first quarter of 2005 for commissionsand insurance/legal claims that did not recur in 2006. In addition, asa 

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| Item2.  | Management’s Discussion and Analysis ofFinancial Condition and Results of Operations(continued) |

result of a significant increase in volumesshipped in the last few days of March  2006 vs. 2005, we deferreda higher amount of revenue to the subsequent period when the shipmentswere received by our customers and title transferred.

Beginning with the period ended March  31,  2006,our segment reporting is being changed to allocate capital charges toeach of the segments. These charges for receivables, customer-consignedinventory and equipment are intended to ensure that business managersrecognize the full costs of each business decision and better manageour balance sheet. The charge will result in reduced directcontribution and direct contribution margin levels for the segments. Anelimination adjustment is now shown to offset the capital chargesplaced on the segments.

In addition to expenses in theOther segment, our business units also incurred some unusual levels ofexpense in the first quarter that we do not expect to recur during theyear – items that included outside services, higher-than-expectedbad debt write-offs and timing of other operating expenses.

Higher interest and business process optimization expensesalso contributed to decreasing net earnings to $13.6  million from$16.1  million in the first quarter of 2005. Net earnings includesafter-tax charges of $4.9  million for business processoptimization, reimbursed benefit plan contributions and unusual chargessuch as costs related to a secondary share offering in March.

Adjusted EBITDA of $143.9  million was comparable toyear-earlier results of $144.3  million. Solid Free Cash Flow of$42.6  million enabled the Company to make debt reduction paymentsof $45  million, even with a sizable use of cash to expandinventory in preparation for the summer cooling water season. Free CashFlow improvement compared to the prior-year period was aided by makingno payments this year under our variable incentive plans for 2005. FreeCash Flow is defined as net cash provided by operating activities, lesscapital expenditures and minority interest charges.

|                                                 |  |                                |       |                                |  |        |       |         |  |  |
|-------------------------------------------------|--|--------------------------------|-------|--------------------------------|--|--------|-------|---------|--|--|
| (inmillions)                                    |  | Three Monthsended March31,2006 |       | Three Monthsended March31,2005 |
| Net cash provided by operatingactivities        |  | $                              | 58.9  |                           |  | $      | 16.9  |    |
| Minorityinterests                               |  |                           | (1.7  | )                         |  |   | (1.2  | )  |
| Additionsto property, plant, and equipment, net |  |                           | (14.6 | )                         |  |   | (12.3 | )  |
| Freecash flow                                   |  | $                              | 42.6  |                           |  | $      | 3.4   |    |
|                                                 |

The Free Cash Flow improvementcame despite a use of cash of $34  million to increase ourinventories heading into the summer cooling water season. In additionto taking on the higher working capital use that results from highercost and sales prices, we increased our inventory and receivableslevels from a days held or days outstanding perspective during thequarter. Payables remained on par with year-end results. We expect tosee improvement on inventories and receivables from a days perspectiveduring the course of the year, but we do not plan on the type ofaggressive inventory reduction we delivered in the second quarter of2005.

During the quarter, we made debt payments of$45  million that included retiring the remaining $31.9million on the dollar-denominated portion of Term Loan A. We also madeour only required 2006 principal payment – of $3.1  millionon the Euro-denominated portion of Term Loan A – and paid down$10  million of our Term Loan B obligations that come due in2010.

During the first quarter, lenders agreed to reducethe interest rate on our Term Loan B obligations by 25 basis points to175 basis points over LIBOR. This reduction will save us approximately$2.5  million this year in interest expense compared to priorterms. Despite our debt reduction over the past year, interest expenseis expected to be higher in 2006 than in 2005 because of the higherinterest rate environment.

In early April, we added$45  million to a first quarter U.S. pension plan contribution of$13.5  million. The $58.5  million in contributions completesour 2006 pension funding requirements for our U.S. 

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|--------------|-------------------------------------------------------------------------------------------------------|
| Item2.  | Management’s Discussion and Analysis ofFinancial Condition and Results of Operations(continued) |

plans. The April contribution was paidthrough drawing on the Company’s revolver, a transaction thatresults in net income and EBITDA benefits compared to making equallyphased payments through the year. We make large semi-annual interestpayments in May and November each year. Because of the combination ofinterest and pension payments, we do not plan on Free Cash Flowgeneration in the second quarter.

Finally,hurricane-related lost sales and pre-tax losses are estimated to havebeen $5  million and $3  million in the quarter respectively,out of a total projected 2006 impact of $13  million in lost salesand less than $9  million in pre-tax losses. Energy Services isincurring the largest portion of these impacts due to Gulf of Mexicocustomer rig curtailments. Raw material supplier problems alsocontribute to higher costs.

Nalco is on track, however,to meet its full-year expectations as the fundamental business isstrong and several issues that dampened first quarter results are notexpected to be with us in the balance of the year.

Results ofOperations – Consolidated

Net sales forthe three months ended March  31,  2006 were $849.4million; a 9.2% increase from the $777.6  million reportedfor the three months ended March  31,  2005. On an organicbasis, which excludes the impacts of changes in foreign currencytranslation rates and acquisitions and divestitures, net sales were up11.0%. Of this improvement, 6.1% was attributed to priceincrease, while the remaining 4.9% was driven by favorable salesgrowth broadly spread across our customer base. Although this growthwas partly attributable to lower first quarter 2005 sales due tocustomers making advanced purchases to avoid risking potentialcomplications from a January  2005 systems conversion, newcustomer growth in 2006 also factored into the year-over-yearimprovements.

Gross profit, defined as thedifference between net sales and cost of product sold, of $378.3million for the three months ended March  31,  2006 increasedby $13.5  million, or 3.7%, over the $364.8  millionfor the three months ended March  31,  2005. On an organicbasis, gross profit increased by $20.1  million, or 5.5%.Higher sales volume accounted for most of the increase. Alsocontributing to the improvement was the impact of higher sellingprices, but that was largely offset by the effect of increased costs ofraw and other purchased materials, freight, and changes in product mix.Gross profit margin for the three months ended March  31,2006 was 44.5% compared to 46.9% for the year-agoperiod.

Selling, administrative, and researchexpenses for the three months ended March  31,  2006 of$275.4  million increased $17.3  million, or 6.7%,from $258.1  million for the three months ended March31,  2005. On an organic basis, selling, administrative, andresearch expenses increased $22.0  million. Of this difference,$15.7  million was attributable to selling expense, which wasprimarily due to higher commission expenses ratably in line withincreased sales, bad debts, and outside services. Administrativeexpense increased from the year-ago period due to higher outsideservices, most notably consulting, and insurance.

Business optimization expenses, representing mostlyemployee severance and related costs associated with the continuingredesign and optimization of business and work processes, were$3.8  million for the three months ended March  31,2006, a $3.0  million increase over the $0.8  million for thethree months ended March  31,  2005.

Amortization of intangible assets was $17.3million and $20.6  million for the three months ended March31,  2006 and 2005, respectively. The decrease was attributable tolower amortization of customer relationships, which are amortized usingan accelerated method.

Other income (expense),net favorably changed by $3.5  million from the net expenseof $2.2  million for the three months ended March  31,2005. A $2.4  million impairment loss on a business held for sale

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|--------------|-------------------------------------------------------------------------------------------------------|
| Item2.  | Management’s Discussion and Analysis ofFinancial Condition and Results of Operations(continued) |

recorded during the three months endedMarch  31,  2005, and a $1.0  million favorable changein foreign exchange gains and losses accounted for most of thedifference.

Net interest expense, defined as thecombination of interest income and interest expense, of $56.8million for the three months ended March  31,  2006 increasedby $4.0  million from the $52.8  million reported for thethree months ended March  31,  2005. The impact of higherinterest rates on variable rate borrowings more than offset the impactof a lower average debt level compared to the year-ago period.

The effective tax rate for the three months endedMarch  31,  2006 was 41.8%. The rate varies from theU.S. federal statutory income tax rate of 35% primarily due tothe incremental tax on dividends received from non-U.S. subsidiaries,foreign taxes provided at other than the 35% U.S. statutoryrate, U.S. state income taxes, nondeductible expenses, and otherpermanent differences.

The aforementioned items alsocontributed to the variation between the U.S. federal statutory incometax rate and the Company’s effective income tax rate for thethree months ended March  31,  2005.

Minority interest expense was $0.5  millionhigher than the $1.2  million for the three months endedMarch  31,  2005, reflecting improved results for most of theCompany’s non-wholly owned subsidiaries.

Results ofOperations – Segment Reporting

Net salesby reportable segment for the three months ended March  31,2006 and March  31,  2005 may be compared as follows:

|                                        |  |                    |       |              |  |                                                 |       |                     |  |                           |       |          |  |        |      |          |  |        |         |        |  |        |      |          |  |  |
|----------------------------------------|--|--------------------|-------|--------------|--|-------------------------------------------------|-------|---------------------|--|---------------------------|-------|----------|--|--------|------|----------|--|--------|---------|--------|--|--------|------|----------|--|--|
|                                   |  | Three Months Ended |       |         |  | Attributable to Changes in theFollowing Factors |
| (dollars inmillions)                   |  | March 31,2006      |       | March31,2005 |  | % Change                                        |       | CurrencyTranslation |  | Acquisitions/Divestitures |       | Organic  |
| Industrial &Institutional Services |  | $                  | 378.4 |         |  | $                                               | 341.0 |                |  |                      | 11.0  | %   |  |   | (1.9 | )%  |  |   | — |   |  |   | 12.9 | %   |
| Energy Services                        |  |               | 246.3 |         |  |                                            | 210.6 |                |  |                      | 17.0  | %   |  |   | (1.0 | )%  |  |   | — |   |  |   | 18.0 | %   |
| Paper Services                         |  |               | 175.8 |         |  |                                            | 170.1 |                |  |                      | 3.4   | %   |  |   | (1.3 | )%  |  |   | — |   |  |   | 4.7  | %   |
| Other                                  |  |               | 48.9  |         |  |                                            | 55.9  |                |  |                      | (12.4 | )%  |  |   | (5.6 | )%  |  |   | — |   |  |   | (6.8 | )%  |
| Net sales                              |  | $                  | 849.4 |         |  | $                                               | 777.6 |                |  |                      | 9.2   | %   |  |   | (1.8 | )%  |  |   | — |   |  |   | 11.0 | %   |
|                                        |

The Industrial andInstitutional Services division reported sales of $378.4  millionfor the three months ended March  31,  2006, a $37.4million increase, or 11.0%, over the $341.0  million forthe year-ago period. Price increases contributed to most of the12.9% organic change, with real growth near the corporateaverage. Positive organic improvement was reported by all businessunits within the division.

The Energy Services divisionreported sales of $246.3  million for the three months endedMarch  31,  2006, a 17.0% gain over the $210.6million for the three months ended March  31,  2005. Organicsales improved strongly by 18.0%, the majority of which wasattributed to real growth. All businesses within Energy Services– Downstream, Adomite, and Oil Field – grew double digitsin the quarter.

The Paper Services division reportedsales of $175.8  million for the three months ended March31,  2006, a 3.4% increase over the $170.1  millionreported in the first quarter of 2005. The Asia Pacific region reportedimpressive double-digit organic growth; however, the division, as awhole, continues to struggle. Sales in North America and Latin Americagrew organically, but nearly all of this growth was attributable toprice increases.

The operating business units in theOther segment, including the Katayama Nalco joint venture, India, andIntegrated Channels, reported favorable organic improvements over lastyear, but these gains were more than offset by the effect of changes inrevenue recognition accruals.

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|--------------|-------------------------------------------------------------------------------------------------------|
| Item2.  | Management’s Discussion and Analysis ofFinancial Condition and Results of Operations(continued) |

Direct contribution isdefined as the difference between net sales and operating costs,including cost of product sold, selling and service expenses, marketingexpenses, research expenses and capital charges.

Directcontribution by reportable segment for the three months endedMarch  31,  2006 and March  31,  2005 may becompared as follows:

|                                        |  |                    |       |              |  |                                                 |       |                     |  |                           |        |          |  |        |      |          |  |        |         |        |  |        |        |          |  |  |
|----------------------------------------|--|--------------------|-------|--------------|--|-------------------------------------------------|-------|---------------------|--|---------------------------|--------|----------|--|--------|------|----------|--|--------|---------|--------|--|--------|--------|----------|--|--|
|                                   |  | Three Months Ended |       |         |  | Attributable to Changes in theFollowing Factors |
| (dollars inmillions)                   |  | March 31,2006      |       | March31,2005 |  | %Change                                         |       | CurrencyTranslation |  | Acquisitions/Divestitures |        | Organic  |
| Industrial &Institutional Services |  | $                  | 79.8  |         |  | $                                               | 65.5  |                |  |                      | 21.8   | %   |  |   | (2.6 | )%  |  |   | — |   |  |   | 24.4   | %   |
| Energy Services                        |  |               | 48.3  |         |  |                                            | 43.0  |                |  |                      | 12.3   | %   |  |   | (1.4 | )%  |  |   | — |   |  |   | 13.7   | %   |
| PaperServices                          |  |               | 26.1  |         |  |                                            | 30.1  |                |  |                      | (13.3  | )%  |  |   | (0.7 | )%  |  |   | — |   |  |   | (12.6  | )%  |
| Other                                  |  |               | (19.4 | )       |  |                                            | (5.2  | )              |  |                      | (273.1 | )%  |  |   | 1.9  | %   |  |   | — |   |  |   | (275.0 | )%  |
| Capital charge elimination             |  |               | 19.2  |         |  |                                            | 19.8  |                |  |                      | (3.0   | )%  |  |   | (2.5 | )%  |  |   | — |   |  |   | (0.5   | )%  |
| Direct contribution                    |  | $                  | 154.0 |         |  | $                                               | 153.2 |                |  |                      | 0.5    | %   |  |   | (1.9 | )%  |  |   | — |   |  |   | 2.4    | %   |
|                                        |

Direct contribution of theIndustrial and Institutional Services division was $79.8  millionfor the three months ended March  31,  2006, an increase of21.8% over the $65.5  million reported for the three monthsended March  31,  2005. Organically, direct contributionimproved 24.4%. The Industrial and Institutional Servicesdivision’s success in implementing price increases andcontrolling operating expenses contributed to the period-on-periodperformance improvement.

The Energy Services divisionreported direct contribution of $48.3  million for the threemonths ended March  31,  2006, a 12.3% increase overthe $43.0  million reported for the prior year period. On anorganic basis, direct contribution increased 13.7%. Higher salesvolume accounted for most of the increase. Lower gross profit marginsdue to lower than planned price increase efforts and higher operatingexpenses, mostly in commissions, outside services and legal accruals,partly offset these increased revenues.

The PaperServices division reported direct contribution of $26.1  millionfor the three months ended March  31,  2006, a 13.3%decrease from the direct contribution reported for the three monthsended March  31,  2005. Organically, direct contribution wasdown 12.6%, as costs of raw and other purchased materialscontinued to exceed price increases, while operating expenses werenearly flat on a period-on-period basis.

The directcontribution loss of $19.4  million reported in‘‘Other’’ for the three months endedMarch  31,  2006, represented an increase of $14.2million from the $5.2 direct contribution loss reported in the firstquarter 2005. Significant contributors to the year-over-year changeinclude supply chain variances that benefited 2005 first quarterresults, an increase in revenue deferrals due to higher volumes shippedin late March  2006 versus March  2005, and favorableadjustments in 2005 for commissions and insurance/legal claims that didnot recur in 2006.

Beginning with the period endedMarch  31,  2006, the Company initiated a capital chargeallocation to each of the reporting segments. These charges forreceivables, customer-consigned inventory, and equipment are intendedto ensure that business managers recognize the full costs of eachbusiness decision and better manage the balance sheet. The capitalcharge elimination represents the elimination adjustment to offset thecapital charge allocated to the segments.

Liquidity and CapitalResources

Operatingactivities.    Historically, the Company’s main sourceof liquidity has been its solid cash flow generated by operatingactivities. For the three months ended March  31,  2006, cashprovided by operating activities was $58.9  million, a $42.0million increase from the same period last year. The improvement wasmainly the result of having made no payments in 2006 under variableincentive plans for 2005.

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|--------------|-------------------------------------------------------------------------------------------------------|
| Item2.  | Management’s Discussion and Analysis ofFinancial Condition and Results of Operations(continued) |

Investingactivities.    Cash used for investing activities was$15.0  million for the three months ended March  31,2006, which was mostly attributable to net property additions of$14.6  million.

Cash used for investing activitieswas $17.1  million for the three months ended March31,  2005. This was mostly the result of net property additions of$12.3  million.

Financingactivities.    Net cash used for financing activities totaled$32.3  million during the three months ended March  31,2006, which was mostly attributable to a net decrease inborrowings.

Net cash provided by financing activitiestotaled $1.9  million during the three months ended March31,  2005. This was primarily comprised of a net increase inborrowings.

Since the Transactions, we have been highlyleveraged. Our liquidity requirements are significant, primarily due todebt service requirements as well as research and development andcapital investment. Our primary source of liquidity will continue to becash flow generated from operations, but we also have availabilityunder a $250  million revolving credit facility and a $100million receivables facility, in each case subject to certainconditions. We believe that our financial position and financingstructure will provide flexibility in worldwide financing activitiesand permit us to respond to changing conditions in credit markets.

Senior credit facilities.    On November4,  2003, we entered into senior credit facilities which providedfor a revolving credit facility, a $300  million six-year termloan A facility (which includes an €88.0  milliontranche) which matures in November  2009 and a $1,300million seven-year term loan B facility which matures in November2010. Borrowings under the senior credit facilities bear interest at afloating base rate plus an applicable margin. The applicable margin forborrowings under the revolving credit facility and the term loan Afacility is 1.50% with respect to base rate borrowings and2.50% with respect to LIBOR or Eurocurrency borrowings and maybe reduced subject to our attaining certain leverage ratios. Theapplicable margin for borrowings under the term loan B facility is0.75% with respect to base rate borrowings and 1.75% withrespect to LIBOR or Eurocurrency borrowings. The applicable margin forborrowings under the term loan B facility is not subject toadjustment.

In addition to paying interest on outstandingprincipal under the senior credit facilities, we are required to pay acommitment fee to the lenders under the revolving credit facility inrespect of the unutilized commitments at a rate equal to 0.50%.We also pay customary letter of credit fees.

The termloan A facility will amortize each year in quarterly amounts at a rateof 5% per annum in year one, 10% per annum in year two,15% per annum in year three, 20% per annum in year fourand 25% per annum in each of years five and six.

The term loan B facility will amortize each year in an amountequal to 1% per annum in equal quarterly installments for thefirst six years and nine months, with the remaining amount payable onNovember  4,  2010.

At March  31,2006, the outstanding balance of the term loan A and term loan Bfacilities was $74.4  million and $1,071.0  million,respectively.

Principal amounts outstanding under therevolving credit facility will be due and payable in full at maturityon November  4,  2009. There were no outstanding borrowingsunder the revolving credit facility as of March  31,2006.

The senior credit facilities contain a number ofcovenants that, among other things, restrict, subject to certainexceptions, our ability and the ability of our subsidiaries (includingNalco Company) to sell assets, incur additional indebtedness or issuepreferred stock, repay other indebtedness, pay dividends anddistributions or repurchase certain capital stock, create liens onassets, make investments, loans or advances, make certain acquisitions,engage in mergers or consolidations, enter into sale and leasebacktransactions, engage in certain transactions with affiliates, amendcertain material agreements 

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|--------------|-------------------------------------------------------------------------------------------------------|
| Item2.  | Management’s Discussion and Analysis ofFinancial Condition and Results of Operations(continued) |

governing our indebtedness, change thebusiness conducted by us and our subsidiaries (including Nalco Company)and enter into hedging agreements. In addition, the senior creditfacilities require Nalco Company to maintain the following significantfinancial covenants: a maximum total leverage ratio, a minimum interestcoverage ratio and a maximum capital expenditures limitation. We werein compliance with all covenants at March  31,  2006.

Senior notes and senior subordinated notes.    Aspart of the Transactions in November  2003, Nalco Company issued$665  million aggregate principal amount of73⁄4% U.S. dollar-denominated senior notes due2011, €200  million aggregate principal amount of73⁄4% euro-denominated senior notes due 2011,$465  million aggregate principal amount of8 7/8% U.S. dollar-denominated seniorsubordinated notes due 2013 and €200  millionaggregate principal amount of 9% euro-denominated seniorsubordinated notes due 2013.

The indentures governing thesenior notes and the senior subordinated notes limit our ability andthe ability of our restricted subsidiaries to:

|  |              |                               |
|--|--------------|-------------------------------|
|  | •  | incur additionalindebtedness; |

|  |              |                                                                                  |
|--|--------------|----------------------------------------------------------------------------------|
|  | •  | pay dividendson or make other distributions or repurchase certain capital stock; |

|  |              |                           |
|--|--------------|---------------------------|
|  | •  | make certain investments; |

|  |              |                                                          |
|--|--------------|----------------------------------------------------------|
|  | •  | enter into certain types oftransactions with affiliates; |

|  |              |                                                                  |
|--|--------------|------------------------------------------------------------------|
|  | •  | limit dividends or otherpayments by our restricted subsidiaries; |

|  |              |                                                  |
|--|--------------|--------------------------------------------------|
|  | •  | use assets as security in othertransactions; and |

|  |              |                                                           |
|--|--------------|-----------------------------------------------------------|
|  | •  | sellcertain assets or merge with or into other companies. |

Subject to certain exceptions, the indentures governing thesenior notes and the senior subordinated notes permit the Company andour restricted subsidiaries to incur additional indebtedness, includingsecured indebtedness.

Covenantcompliance.    The breach of covenants in our senior creditagreement that are tied to ratios based on Adjusted EBITDA could resultin a default under that agreement and the lenders could elect todeclare all amounts borrowed due and payable. Any such accelerationwould also result in a default under our indentures. Additionally,under our debt agreements, our ability to engage in activities such asincurring additional indebtedness, making investments and payingdividends is also tied to ratios based on Adjusted EBITDA.

Adjusted EBITDA is used to determine our compliance with manyof the covenants contained in the indentures governing the notes and inour senior credit agreement. Adjusted EBITDA is defined as EBITDAfurther adjusted to exclude unusual items and other adjustmentspermitted in calculating covenant compliance under the indentures andour senior credit facility. We believe that the inclusion ofsupplementary adjustments to EBITDA applied in presenting AdjustedEBITDA are appropriate to provide additional information to investorsto demonstrate compliance with our financing covenants.

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|--------------|-------------------------------------------------------------------------------------------------------|
| Item2.  | Management’s Discussion and Analysis ofFinancial Condition and Results of Operations(continued) |

Adjusted EBITDA is calculated asfollows:

|                                  |  |                                 |       |                                 |  |        |       |         |  |  |
|----------------------------------|--|---------------------------------|-------|---------------------------------|--|--------|-------|---------|--|--|
| (dollars inmillions)             |  | Three Monthsended March31, 2006 |       | Three Monthsended March 31,2005 |
| Net earnings                     |  | $                               | 13.6  |                            |  | $      | 16.1  |    |
| Interest, net                    |  |                            | 56.8  |                            |  |   | 52.8  |    |
| Income tax provision             |  |                            | 11.0  |                            |  |   | 13.0  |    |
| Depreciation                     |  |                            | 32.4  |                            |  |   | 33.2  |    |
| Amortization                     |  |                            | 17.3  |                            |  |   | 20.6  |    |
| EBITDA                           |  | $                               | 131.1 |                            |  | $      | 135.7 |    |
| Non-cash charges(1)              |  |                            | 9.5   |                            |  |   | 10.1  |    |
| Business optimizationexpenses(2) |  |                            | 3.8   |                            |  |   | 0.8   |    |
| Unusual items(3)                 |  |                            | 0.6   |                            |  |   | 0.7   |    |
| Other adjustments(4)             |  |                            | (1.1  | )                          |  |   | (1.8  | )  |
| Adjusted EBITDA                  |  | $                               | 143.9 |                            |  | $      | 145.5 |    |
|                                  |

|     |                                                              |
|-----|--------------------------------------------------------------|
| (1) | Non-cashcharges are further detailed on the following table: |

|                                                 |  |                               |     |                               |  |        |      |        |  |  |
|-------------------------------------------------|--|-------------------------------|-----|-------------------------------|--|--------|------|--------|--|--|
| (dollars inmillions)                            |  | Three MonthsendedMarch31,2006 |     | Three MonthsendedMarch31,2005 |
| Asset write-offs                                |  | $                             | 0.9 |                          |  | $      | 2.4  |   |
| Profit sharing expense and 401(k) fundedby Suez |  |                          | 5.4 |                          |  |   | 5.6  |   |
| Other                                           |  |                          | 3.2 |                          |  |   | 2.1  |   |
| Non-cashcharges                                 |  | $                             | 9.5 |                          |  | $      | 10.1 |   |
|                                                 |

Profit Sharing and 401(k) ExpenseFunded by Suez

In conjunction with the Acquisition, weentered into an agreement with Suez whereby Suez will reimburse us forcertain profit-sharing and 401(k) matching contributions made by us tothe Profit-Sharing Trust.

Other

Other non-cashcharges include the non-cash impact on earnings of our equityinvestments and minority interests. Non-cash charges also includes thenon-cash portion of rent expense under the sublease that we enteredinto with Suez in conjunction with the Acquisition.

|     |                                                                                                                                                        |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Business optimization expenses includecosts associated with the redesign and optimization of work processes.See note 7 to Item 1 for more information. |

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|              |                                                                                                       |
|--------------|-------------------------------------------------------------------------------------------------------|
| Item2.  | Management’s Discussion and Analysis ofFinancial Condition and Results of Operations(continued) |

|     |                                                           |
|-----|-----------------------------------------------------------|
| (3) | Unusual itemsare further detailed on the following table: |

|                                      |  |                               |     |                               |  |        |         |        |  |  |
|--------------------------------------|--|-------------------------------|-----|-------------------------------|--|--------|---------|--------|--|--|
| (dollars inmillions)                 |  | Three MonthsendedMarch31,2006 |     | Three MonthsendedMarch31,2005 |
| Pension settlement                   |  | $                             | 0.3 |                          |  | $      | — |   |
| Loss (gain) on sales, net ofexpenses |  |                          | 0.1 |                          |  |   | 0.5     |   |
| Other unusualitems                   |  |                          | 0.2 |                          |  |   | 0.2     |   |
|                                 |  | $                             | 0.6 |                          |  | $      | 0.7     |   |
|                                      |

|     |                                                                                                    |
|-----|----------------------------------------------------------------------------------------------------|
| (4) | We arerequired to make adjustments to EBITDA for franchise taxes and 401(k)matching contributions. |

Our covenant levels andratios for the four quarters ended March  31,  2006 are asfollows:

|                                                                                                            |  |                              |        |        |  |        |        |        |  |  |
|------------------------------------------------------------------------------------------------------------|--|------------------------------|--------|--------|--|--------|--------|--------|--|--|
|                                                                                                       |  | CovenantLevel atMarch31,2006 |        | Ratios |
| Seniorcredit facility(1)                                                                                   |  |                         |   |   |  |   |   |   |
| Minimum AdjustedEBITDA to cash interest ratio                                                              |  |                         | 1.75x  |   |  |   | 2.82x  |   |
| Maximum net debt to Adjusted EBITDA ratio                                                                  |  |                         | 6.00x  |   |  |   | 4.74x  |   |
| Indentures(2)                                                                                              |  |                         |   |   |  |   |   |   |
| Minimum AdjustedEBITDA to fixed charge ratio required to incur additional debt pursuantto ratio provisions |  |                         | 2.00x  |   |  |   | 2.82x  |   |
|                                                                                                            |

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

|  |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (1) | During 2006, our senior credit facility requires usto maintain an Adjusted EBITDA to cash interest ratio at a minimum of1.75x and a net debt to Adjusted EBITDA ratio at a maximum of 6.00x, ineach case for the most recent four quarter period. Failure to satisfythese ratio requirements would constitute a default under the seniorcredit agreement. If our lenders failed to waive any such default, ourrepayment obligations under the senior credit agreement could beaccelerated, which would also constitute a default under ourindentures. |

|  |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (2) | Our ability to incur additional debt and makecertain restricted payments under our indentures, subject to specifiedexceptions, is tied to an Adjusted EBITDA to fixed charge ratio of atleast 2.0 to 1, except that we may incur certain debt and make certainrestricted payments and certain permitted investments without regard tothe ratio, such as up to an aggregate principal amount of $1,950million (including $1,145.4  million that was outstanding underour term loan facilities as of March  31,  2006) andinvestments in similar business and other investments equal to6% of Nalco Holdings LLC consolidated assets. |

Local lines of credit.    Certain of our non-U.S.subsidiaries have lines of credit to support local requirements. As ofMarch  31,  2006, the aggregate outstanding balance underthese local lines of credit was approximately $29.1  million.Certain of these lines of credit are equally and ratably secured withobligations under our senior credit facilities.

Receivables facility.    Nalco Company entered intoa receivables facility on June  25,  2004 that provides up to$100  million in funding from a commercial paper conduit sponsoredby JPMorgan Chase Bank, one of the lenders under Nalco Company’ssenior credit facilities, based on availability of eligible receivablesand satisfaction of other customary conditions.

Availability of funding under the receivables facilitydepends primarily upon the outstanding trade accounts receivablebalance from time to time. Aggregate availability is determined byusing a 

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|              |                                                                                                       |
|--------------|-------------------------------------------------------------------------------------------------------|
| Item2.  | Management’s Discussion and Analysis ofFinancial Condition and Results of Operations(continued) |

formula that reduces the gross receivablesbalance by factors that take into account historical default anddilution rates, excessive concentrations and average days outstandingand the costs of the facility. Based on the terms of this facility andon the criteria described above, as of March  31,  2006,approximately $169.9  million of our accounts receivable balancewas considered eligible for financing under the program, of whichapproximately $82.9  million would have been available forfunding. As of March  31,  2006, we had $78.6  millionof outstanding borrowings under this facility.

Thisfacility is treated as a general financing agreement resulting in thefunding and related receivables being shown as liabilities and assets,respectively, on our consolidated balance sheet and the costsassociated with the receivables facility being recorded as interestexpense.

|               |                                                           |
|---------------|-----------------------------------------------------------|
| Item 3.  | Quantitative andQualitative Disclosures About Market Risk |

There havebeen no material changes to the Company’s exposures to marketrisk since December  31,  2005.

|              |                         |
|--------------|-------------------------|
| Item4.  | Controls and Procedures |

|           |                                                  |
|-----------|--------------------------------------------------|
| (a)  | Evaluation of disclosure controls andprocedures. |

The Company’s chief executiveofficer and chief financial officer, after evaluating the effectivenessof the Company’s ‘‘disclosure controls andprocedures’’ (as defined in the Securities Exchange Act of1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period, haveconcluded that the Company’s disclosure controls and procedureswere effective as of March  31,  2006.

|           |                                                       |
|-----------|-------------------------------------------------------|
| (b)  | Changes in internal controls overfinancial reporting. |

There were no changes in theCompany’s internal controls over financial reporting thatoccurred during the first quarter of 2006 that have materiallyaffected, or are reasonably likely to materially affect, theCompany’s internal controls over financial reporting.

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PART II.OTHER INFORMATION 

|               |              |
|---------------|--------------|
| Item1A.  | Risk Factors |

Changes haveoccurred to the following risk factors that were included in theCompany’s Annual Report on Form 10-K for the year endedDecember  31,  2005:

Our pension plans arecurrently underfunded and we may have to make significant cash paymentsto the plans, reducing the cash available for our business.

We sponsor various pension plans worldwide that areunderfunded and require significant cash payments. For example, in 2004and 2005, we contributed $13.7  million and $30.0  million,respectively, to our pension plans. We are required to contribute atleast $65.9  million to the U.S. pension plan in 2006. We may alsoopt to make additional voluntary contributions to various pension plansworldwide in 2006.

As of December  31,  2005,our worldwide pension plans were underfunded by $434.2  million(based on the actuarial assumptions used for purposes of Statement ofFinancial Accounting Standards  (SFAS) No. 87,Employers’ Accounting for Pensions). Our U.S. pensionplans are subject to the Employee Retirement Income Security Act of1974, or ERISA. Under ERISA, the Pension Benefit Guaranty Corporation,or PBGC, has the authority to terminate an underfunded pension planunder certain circumstances. In the event our U.S. pension plans areterminated for any reason while the plans are underfunded, we willincur a liability to the PBGC that may be equal to the entire amount ofthe underfunding. Prior to the closing of the Acquisition, the PBGCrequested and received information from us regarding our business, theTransactions and our pension plans. The PBGC took no further actionwith respect to their inquiry.

Congress is currentlyconsidering changes to pension legislation that could also impact theamount and timing of our pension funding requirements and our decisionsregarding pension funding. Such pending legislation might also addressthe timing of payouts to pension plan participants, and our employeeswho are participants in our pension plans could be impacted by suchlegislation.

Our Sponsors have significant influence on usand may have conflicts of interest with us or you in thefuture.

As a result of the sale of shares by ourSponsors during the three months ended March  31,  2006, ourSponsors beneficially own approximately 26.7% of the commonstock of our indirect parent company, Nalco Holding Company.

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|               |          |
|---------------|----------|
| Item 6.  | Exhibits |

|           |                                    |
|-----------|------------------------------------|
| (a)  | The following are included herein: |

|  |                    |                                                                                                   |
|--|--------------------|---------------------------------------------------------------------------------------------------|
|  | Exhibit 31.1  | Certification of ChiefExecutive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of2002 |

|  |                    |                                                                                                   |
|--|--------------------|---------------------------------------------------------------------------------------------------|
|  | Exhibit 31.2  | Certification ofChief Financial Officer, Pursuant to Section 302 of the Sarbanes-OxleyAct of 2002 |

|  |                   |                                                                                                                       |
|--|-------------------|-----------------------------------------------------------------------------------------------------------------------|
|  | Exhibit32.1  | Certifications Pursuant to 18 U.S.C. Section1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of2002 |

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SIGNATURE

The Company has duly caused this report to be signed on itsbehalf by the undersigned thereunto duly authorized.

|                       |  |                                                                                                                                                                                                                                  |  |  |  |  |
|-----------------------|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
|                  |  | NALCO HOLDINGS LLC                                                                                                                                                                                                               |
|                  |  | /s/BRADLEY J. BELL                                                                                                                                                                                                               |
|                  |  | Name:    Bradley J.BellTitle:      Executive Vice Presidentand               Chief FinancialOfficer |
| Dated: May  10,  2006 |  |                                                                                                                                                                                                                             |
|                       |

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