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UNITEDSTATESSECURITIES AND EXCHANGECOMMISSION

Washington, DC20549

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FORM10-Q

(MarkOne)

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|--------|---------------------------------------------------------------------------------------|
|   | QUARTERLY REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934 |

For the quarterly period ended September30,2006

or

|        |                                                                                        |
|--------|----------------------------------------------------------------------------------------|
|   | TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934 |

For the transition periodfrom            to            .

Commission FileNo.333-115560-15

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NALCOHOLDINGS LLC

(Exact name of registrantas specified 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 ZipCode, and Telephone Number, Including Area Code, of Registrant’sPrincipal Executive Offices)

Notapplicable

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

Indicate by check mark whether theregistrant: (1) has filed all reports required to be filed by Section13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was requiredto file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes  No

Indicate by check mark whether the registrant isa large accelerated filer, an accelerated filer, or a non-acceleratedfiler. See definition of ‘‘accelerated filer and largeaccelerated filer’’ 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 LLC Quarter Ended September30,  2006

TABLE OF CONTENTS

Part I. FinancialInformation

|                           |  |  |                                                                                                                       |  |    |  |  |        |  |
|---------------------------|--|--|-----------------------------------------------------------------------------------------------------------------------|--|----|--|--|--------|--|
| Item1.                    |  |  | FinancialStatements (Unaudited)                                                                                       |  |    |  |  |   |  |
|                      |  |  | CondensedConsolidated Balance Sheets – September  30,  2006and December  31,2005                                |  |    |  |  | 2      |  |
|                      |  |  | CondensedConsolidated Statements of Operations – Three months and ninemonths ended September  30,  2006 and2005 |  |    |  |  | 3      |  |
|                      |  |  | CondensedConsolidated Statements of Cash Flows – Nine months endedSeptember  30,  2006 and2005                  |  |    |  |  | 4      |  |
|                      |  |  | Notes to CondensedConsolidated Financial Statements – September  30,2006                                        |  |    |  |  | 5      |  |
| Item2.                    |  |  | Management’s Discussion and Analysis of FinancialCondition and Results ofOperations                             |  |    |  |  | 22     |  |
| Item3.                    |  |  | Quantitative and Qualitative Disclosures About MarketRisk                                                             |  |    |  |  | 35     |  |
| Item 4.                   |  |  | ControlsandProcedures                                                                                                 |  |    |  |  | 35     |  |
| PartII. Other Information |  |  |                                                                                                                  |
| Item1A.                   |  |  | Risk Factors                                                                                                          |  |    |  |  | 37     |  |
| Item6.                    |  |  | Exhibits                                                                                                              |  |    |  |  | 37     |  |
| Signature                 |  |  |                                                                                                                       |  | 38 |  |
|                           |

1

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Table of Contents

PARTI. FINANCIAL INFORMATION

|               |                     |
|---------------|---------------------|
| Item 1.  | FinancialStatements |

Nalco Holdings LLC and SubsidiariesCondensedConsolidated Balance Sheets(dollars inmillions)

|                                                                        |  |  |                              |   |         |                 |  |  |  |   |         |        |
|------------------------------------------------------------------------|--|--|------------------------------|---|---------|-----------------|--|--|--|---|---------|--------|
|                                                                   |  |  | (Unaudited)September30, 2006 |   |         | December31,2005 |
| Assets                                                                 |  |  |                              |   |    |            |  |  |  |   |    |   |
| Currentassets:                                                         |  |  |                              |   |    |            |  |  |  |   |    |   |
| Cash and cashequivalents                                               |  |  |                              | $ | 42.9    |            |  |  |  | $ | 30.8    |   |
| Accountsreceivable, less allowances of $20.3 in 2006 and $16.6 in 2005 |  |  |                              |   | 665.3   |            |  |  |  |   | 622.3   |   |
| Inventories:                                                           |  |  |                              |   |    |            |  |  |  |   |    |   |
| Finishedproducts                                                       |  |  |                              |   | 261.7   |            |  |  |  |   | 242.6   |   |
| Materialsand work inprocess                                            |  |  |                              |   | 76.8    |            |  |  |  |   | 70.6    |   |
|                                                                   |  |  |                              |   | 338.5   |            |  |  |  |   | 313.2   |   |
| Prepaidexpenses, taxes and other currentassets                         |  |  |                              |   | 63.6    |            |  |  |  |   | 83.1    |   |
| Totalcurrentassets                                                     |  |  |                              |   | 1,110.3 |            |  |  |  |   | 1,049.4 |   |
| Property,plant, and equipment,net                                      |  |  |                              |   | 733.1   |            |  |  |  |   | 755.3   |   |
| Intangibleassets:                                                      |  |  |                              |   |    |            |  |  |  |   |    |   |
| Goodwill                                                               |  |  |                              |   | 2,257.3 |            |  |  |  |   | 2,196.7 |   |
| Otherintangibles,net                                                   |  |  |                              |   | 1,183.2 |            |  |  |  |   | 1,227.5 |   |
| Otherassets                                                            |  |  |                              |   | 311.3   |            |  |  |  |   | 325.3   |   |
| Totalassets                                                            |  |  |                              | $ | 5,595.2 |            |  |  |  | $ | 5,554.2 |   |
| Liabilitiesand unitholder’sequity                                |  |  |                              |   |    |            |  |  |  |   |    |   |
| Currentliabilities:                                                    |  |  |                              |   |    |            |  |  |  |   |    |   |
| Accountspayable                                                        |  |  |                              | $ | 271.0   |            |  |  |  | $ | 285.4   |   |
| Short-termdebt                                                         |  |  |                              |   | 141.7   |            |  |  |  |   | 22.6    |   |
| Other currentliabilities                                               |  |  |                              |   | 280.2   |            |  |  |  |   | 235.1   |   |
| Totalcurrentliabilities                                                |  |  |                              |   | 692.9   |            |  |  |  |   | 543.1   |   |
| Otherliabilities:                                                      |  |  |                              |   |    |            |  |  |  |   |    |   |
| Long-termdebt                                                          |  |  |                              |   | 2,682.7 |            |  |  |  |   | 2,890.7 |   |
| Deferredincometaxes                                                    |  |  |                              |   | 371.0   |            |  |  |  |   | 380.7   |   |
| Accruedpensionbenefits                                                 |  |  |                              |   | 393.5   |            |  |  |  |   | 416.4   |   |
| Otherliabilities                                                       |  |  |                              |   | 279.8   |            |  |  |  |   | 278.9   |   |
| Minorityinterest                                                       |  |  |                              |   | 14.1    |            |  |  |  |   | 11.2    |   |
| Unitholder’sequity                                               |  |  |                              |   | 1,161.2 |            |  |  |  |   | 1,033.2 |   |
| Totalliabilities and unitholder’sequity                          |  |  |                              | $ | 5,595.2 |            |  |  |  | $ | 5,554.2 |   |
|                                                                        |

Seeaccompanying notes to condensed consolidated financialstatements.

2

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Nalco Holdings LLC andSubsidiariesCondensed Consolidated Statements of Operations(Unaudited)(dollars inmillions)

|                                                   |  |  |                                     |   |        |                                    |  |  |                                   |   |         |                                   |  |  |  |   |         |         |  |  |  |   |         |         |
|---------------------------------------------------|--|--|-------------------------------------|---|--------|------------------------------------|--|--|-----------------------------------|---|---------|-----------------------------------|--|--|--|---|---------|---------|--|--|--|---|---------|---------|
|                                              |  |  | ThreeMonthsended September 30, 2006 |   |        | ThreeMonthsended September 30,2005 |  |  | NineMonthsended September 30,2006 |   |         | NineMonthsended September 30,2005 |
| Netsales                                          |  |  |                                     | $ | 915.4  |                               |  |  |                                   | $ | 834.9   |                              |  |  |  | $ | 2,655.8 |    |  |  |  | $ | 2,448.8 |    |
| Operatingcosts andexpenses:                       |  |  |                                     |   |   |                               |  |  |                                   |   |    |                              |  |  |  |   |    |    |  |  |  |   |    |    |
| Costof productsold                                |  |  |                                     |   | 502.3  |                               |  |  |                                   |   | 457.9   |                              |  |  |  |   | 1,469.0 |    |  |  |  |   | 1,351.0 |    |
| Selling,administrative, and researchexpenses      |  |  |                                     |   | 277.5  |                               |  |  |                                   |   | 251.2   |                              |  |  |  |   | 823.6   |    |  |  |  |   | 772.2   |    |
| Amortizationof intangibleassets                   |  |  |                                     |   | 17.6   |                               |  |  |                                   |   | 20.3    |                              |  |  |  |   | 52.4    |    |  |  |  |   | 61.4    |    |
| Businessoptimizationexpenses                      |  |  |                                     |   | 3.0    |                               |  |  |                                   |   | 3.5     |                              |  |  |  |   | 8.6     |    |  |  |  |   | 21.3    |    |
| Totaloperating costs andexpenses                  |  |  |                                     |   | 800.4  |                               |  |  |                                   |   | 732.9   |                              |  |  |  |   | 2,353.6 |    |  |  |  |   | 2,205.9 |    |
| Operatingearnings                                 |  |  |                                     |   | 115.0  |                               |  |  |                                   |   | 102.0   |                              |  |  |  |   | 302.2   |    |  |  |  |   | 242.9   |    |
| Otherincome (expense),net                         |  |  |                                     |   | 0.1    |                               |  |  |                                   |   | — |                              |  |  |  |   | (0.5    | )  |  |  |  |   | (2.8    | )  |
| Interestincome                                    |  |  |                                     |   | 2.4    |                               |  |  |                                   |   | 2.1     |                              |  |  |  |   | 6.4     |    |  |  |  |   | 6.2     |    |
| Interestexpense                                   |  |  |                                     |   | (60.7  | )                             |  |  |                                   |   | (58.3   | )                            |  |  |  |   | (179.3  | )  |  |  |  |   | (170.8  | )  |
| Earningsbefore income taxes and minorityinterests |  |  |                                     |   | 56.8   |                               |  |  |                                   |   | 45.8    |                              |  |  |  |   | 128.8   |    |  |  |  |   | 75.5    |    |
| Incometax provision                               |  |  |                                     |   | 19.0   |                               |  |  |                                   |   | 21.0    |                              |  |  |  |   | 47.1    |    |  |  |  |   | 33.9    |    |
| Minorityinterests                                 |  |  |                                     |   | (1.7   | )                             |  |  |                                   |   | (1.6    | )                            |  |  |  |   | (5.2    | )  |  |  |  |   | (4.4    | )  |
| Netearnings                                       |  |  |                                     | $ | 36.1   |                               |  |  |                                   | $ | 23.2    |                              |  |  |  | $ | 76.5    |    |  |  |  | $ | 37.2    |    |
|                                                   |

Seeaccompanying notes to condensed consolidated financialstatements.

3

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Nalco Holdings LLC andSubsidiariesCondensed Consolidated Statements of Cash Flows(Unaudited)(dollars inmillions)

|                                                                                   |  |  |                                    |   |         |                                  |  |  |  |   |        |         |
|-----------------------------------------------------------------------------------|--|--|------------------------------------|---|---------|----------------------------------|--|--|--|---|--------|---------|
|                                                                              |  |  | NineMonths endedSeptember 30, 2006 |   |         | NineMonthsended September30,2005 |
| Operatingactivities                                                               |  |  |                                    |   |    |                             |  |  |  |   |   |    |
| Net earnings                                                                      |  |  |                                    | $ | 76.5    |                             |  |  |  | $ | 37.2   |    |
| Adjustmentsto reconcile net earnings to net cash provided by operatingactivities: |  |  |                                    |   |    |                             |  |  |  |   |   |    |
| Depreciation                                                                      |  |  |                                    |   | 97.5    |                             |  |  |  |   | 100.0  |    |
| Amortization                                                                      |  |  |                                    |   | 52.4    |                             |  |  |  |   | 61.4   |    |
| Amortizationof deferred financing costs                                           |  |  |                                    |   | 8.6     |                             |  |  |  |   | 8.2    |    |
| Other,net                                                                         |  |  |                                    |   | (12.1   | )                           |  |  |  |   | 22.3   |    |
| Changes inoperating assets andliabilities                                         |  |  |                                    |   | (19.8   | )                           |  |  |  |   | (55.1  | )  |
| Netcash provided by operatingactivities                                           |  |  |                                    |   | 203.1   |                             |  |  |  |   | 174.0  |    |
| Investingactivities                                                               |  |  |                                    |   |    |                             |  |  |  |   |   |    |
| Purchase priceadjustment on acquisition of Ondeo NalcoGroup                       |  |  |                                    |   | — |                             |  |  |  |   | (3.2   | )  |
| Additions toproperty, plant, and equipment,net                                    |  |  |                                    |   | (59.6   | )                           |  |  |  |   | (45.3  | )  |
| Other,net                                                                         |  |  |                                    |   | 1.8     |                             |  |  |  |   | (0.9   | )  |
| Netcash used for investingactivities                                              |  |  |                                    |   | (57.8   | )                           |  |  |  |   | (49.4  | )  |
| Financingactivities                                                               |  |  |                                    |   |    |                             |  |  |  |   |   |    |
| Changes inshort-term debt,net                                                     |  |  |                                    |   | 29.3    |                             |  |  |  |   | 1.7    |    |
| Proceeds from long-termdebt                                                       |  |  |                                    |   | — |                             |  |  |  |   | 24.1   |    |
| Repayments oflong-termdebt                                                        |  |  |                                    |   | (159.5  | )                           |  |  |  |   | (130.8 | )  |
| Other,net                                                                         |  |  |                                    |   | (3.4    | )                           |  |  |  |   | (5.6   | )  |
| Netcash used for financingactivities                                              |  |  |                                    |   | (133.6  | )                           |  |  |  |   | (110.6 | )  |
| Effect ofexchange rate changes on cash and cashequivalents                        |  |  |                                    |   | 0.4     |                             |  |  |  |   | (0.5   | )  |
| Increasein cash and cashequivalents                                               |  |  |                                    |   | 12.1    |                             |  |  |  |   | 13.5   |    |
| Cash and cashequivalents at beginning ofperiod                                    |  |  |                                    |   | 30.8    |                             |  |  |  |   | 33.2   |    |
| Cashand cash equivalents at end ofperiod                                          |  |  |                                    | $ | 42.9    |                             |  |  |  | $ | 46.7   |    |
|                                                                                   |

Seeaccompanying notes to condensed consolidated financialstatements.

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NalcoHoldings LLC and SubsidiariesNotes to Condensed ConsolidatedFinancial Statements(Unaudited)

September30,  2006

|          |                                                |
|----------|------------------------------------------------|
| 1.  | Description of Business and Change inOwnership |

Description of Business

NalcoHoldings LLC and subsidiaries (the Company) is engaged in the worldwidemanufacture and sale of highly specialized service chemical programs.This includes production and service related to the sale andapplication of chemicals and technology used in water treatment,pollution control, energy conservation, oil production and refining,steelmaking, papermaking, mining, and other industrialprocesses.

Change in Ownership

OnNovember  4,  2003, Nalco Holdings LLC (the Buyer), anewly-formed entity controlled by affiliates of The Blackstone Group,L.P., Apollo Management, L.P., and The Goldman Sachs Group, Inc.(collectively, the Sponsors), pursuant to a Stock Purchase Agreement,as amended, with Suez S.A. (Suez or Seller) and certain of itsaffiliates, 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.  | Basis of Presentation |

These consolidated financial statements should be read inconjunction with the consolidated and combined financial statements andnotes thereto included in the Annual Report for Nalco Holdings LLC andsubsidiaries for the fiscal year ended December  31,2005.

The accompanying unaudited consolidated financialstatements have been prepared in accordance with generally acceptedaccounting principles for interim financial information. Accordingly,they do not include all of the information and footnotes required byaccounting principles generally accepted in the United States forcomplete financial statements. Management believes these financialstatements include all normal recurring adjustments considerednecessary for a fair presentation of the financial position and resultsof operations of the Company. Operating results for the nine monthsended September  30,  2006 are not necessarily indicativeof results that may be expected for the year ended December31,  2006.

Certain reclassifications have been madeto the prior year data to conform to the current year presentationwhich had no effect on net earnings reported for anyperiod.

5

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Table of Contents

|          |      |
|----------|------|
| 3.  | Debt |

Debt consistsof thefollowing:

|                                              |  |  |                   |   |         |                  |  |  |  |   |         |  |
|----------------------------------------------|--|--|-------------------|---|---------|------------------|--|--|--|---|---------|--|
| (dollarsin millions)                         |  |  | September 30,2006 |   |         | December 31,2005 |
| Short-term                                   |  |  |                   |   |    |                  |  |  |  |   |    |  |
| Checksoutstanding and bankoverdrafts         |  |  |                   | $ | 26.2    |                  |  |  |  | $ | 17.9    |  |
| Notes payableto banks                        |  |  |                   |   | 0.9     |                  |  |  |  |   | 0.9     |  |
| Current maturitiesof long-termdebt           |  |  |                   |   | 17.4    |                  |  |  |  |   | 3.8     |  |
| Securitized tradeaccounts receivablefacility |  |  |                   |   | 97.2    |                  |  |  |  |   | — |  |
|                                         |  |  |                   | $ | 141.7   |                  |  |  |  | $ | 22.6    |  |
| Long-term                                    |  |  |                   |   |    |                  |  |  |  |   |    |  |
| Securitizedtrade accounts receivablefacility |  |  |                   | $ | — |                  |  |  |  | $ | 75.3    |  |
| Term loanA, due November2009                 |  |  |                   |   | 78.0    |                  |  |  |  |   | 107.6   |  |
| Term loan B, dueNovember2010                 |  |  |                   |   | 957.0   |                  |  |  |  |   | 1,081.0 |  |
| Senior notes, dueNovember2011                |  |  |                   |   | 918.2   |                  |  |  |  |   | 900.7   |  |
| Senior subordinatednotes, due November2013   |  |  |                   |   | 718.2   |                  |  |  |  |   | 700.7   |  |
| Unsecured notes,due May2008                  |  |  |                   |   | 27.8    |                  |  |  |  |   | 27.8    |  |
| Other                                        |  |  |                   |   | 0.9     |                  |  |  |  |   | 1.4     |  |
|                                         |  |  |                   |   | 2,700.1 |                  |  |  |  |   | 2,894.5 |  |
| Less:Currentportion                          |  |  |                   |   | 17.4    |                  |  |  |  |   | 3.8     |  |
|                                         |  |  |                   | $ | 2,682.7 |                  |  |  |  | $ | 2,890.7 |  |
|                                              |

|          |                          |
|----------|--------------------------|
| 4.  | Unitholder’sEquity |

Unitholder’s equity consists of thefollowing:

|                                       |  |  |                   |   |         |                   |  |  |  |   |         |   |
|---------------------------------------|--|--|-------------------|---|---------|-------------------|--|--|--|---|---------|---|
| (dollarsin millions)                  |  |  | September 30,2006 |   |         | December 31, 2005 |
| Capitalaccount                        |  |  |                   | $ | 1,014.6 |                   |  |  |  | $ | 1,013.2 |   |
| Retainedearnings (accumulateddeficit) |  |  |                   |   | 16.4    |                   |  |  |  |   | (60.1   | ) |
| Accumulatedother comprehensiveincome  |  |  |                   |   | 130.2   |                   |  |  |  |   | 80.1    |   |
| Totalunitholder’sequity         |  |  |                   | $ | 1,161.2 |                   |  |  |  | $ | 1,033.2 |   |
|                                       |

Thecapital structure of the Company consists of one class of limitedliability company interests represented by Units, which are identicalwith each other in every respect. At September  30,  2006and December  31,  2005, there were 100 Units issued andoutstanding, which were owned by Nalco Finance HoldingsLLC.

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|          |                                               |
|----------|-----------------------------------------------|
| 5.  | Pension and Other PostretirementBenefit Plans |

The components of net periodic pension costand the cost of other postretirement benefits for the three months andnine months ended September  30,  2006 and 2005 were asfollows:

|                                  |  |  |                                   |   |         |                                   |  |  |                                  |   |         |                                  |  |  |  |   |       |   |  |  |  |   |         |   |
|----------------------------------|--|--|-----------------------------------|---|---------|-----------------------------------|--|--|----------------------------------|---|---------|----------------------------------|--|--|--|---|-------|---|--|--|--|---|---------|---|
|                             |  |  | PensionBenefits                   |
| (dollarsin millions)             |  |  | ThreeMonthsendedSeptember 30,2006 |   |         | ThreeMonthsendedSeptember 30,2005 |  |  | NineMonthsendedSeptember 30,2006 |   |         | NineMonthsendedSeptember 30,2005 |
| Servicecost                      |  |  |                                   | $ | 7.7     |                                   |  |  |                                  | $ | 7.9     |                                  |  |  |  | $ | 22.3  |   |  |  |  | $ | 21.3    |   |
| Interestcost                     |  |  |                                   |   | 10.8    |                                   |  |  |                                  |   | 10.8    |                                  |  |  |  |   | 31.9  |   |  |  |  |   | 30.3    |   |
| Expectedreturn on planassets     |  |  |                                   |   | (7.5    | )                                 |  |  |                                  |   | (6.9    | )                                |  |  |  |   | (22.2 | ) |  |  |  |   | (19.1   | ) |
| Amortizationof prior servicecost |  |  |                                   |   | 0.1     |                                   |  |  |                                  |   | — |                                  |  |  |  |   | 0.1   |   |  |  |  |   | — |   |
| Recognizednet actuarialloss      |  |  |                                   |   | 0.1     |                                   |  |  |                                  |   | — |                                  |  |  |  |   | 0.3   |   |  |  |  |   | — |   |
| Settlementcharge                 |  |  |                                   |   | — |                                   |  |  |                                  |   | — |                                  |  |  |  |   | 0.4   |   |  |  |  |   | — |   |
| Netperiodiccost                  |  |  |                                   | $ | 11.2    |                                   |  |  |                                  | $ | 11.8    |                                  |  |  |  | $ | 32.8  |   |  |  |  | $ | 32.5    |   |
|                                  |

|                                  |  |  |                                   |   |      |                                   |  |  |                                  |   |         |                                  |  |  |  |   |      |   |  |  |  |   |         |   |
|----------------------------------|--|--|-----------------------------------|---|------|-----------------------------------|--|--|----------------------------------|---|---------|----------------------------------|--|--|--|---|------|---|--|--|--|---|---------|---|
|                             |  |  | Other PostretirementBenefits      |
| (dollarsin millions)             |  |  | ThreeMonthsendedSeptember 30,2006 |   |      | ThreeMonthsendedSeptember 30,2005 |  |  | NineMonthsendedSeptember 30,2006 |   |         | NineMonthsendedSeptember 30,2005 |
| Servicecost                      |  |  |                                   | $ | 1.3  |                                   |  |  |                                  | $ | 1.4     |                                  |  |  |  | $ | 4.1  |   |  |  |  | $ | 4.1     |   |
| Interestcost                     |  |  |                                   |   | 2.1  |                                   |  |  |                                  |   | 2.2     |                                  |  |  |  |   | 6.1  |   |  |  |  |   | 6.5     |   |
| Amortizationof prior servicecost |  |  |                                   |   | (1.0 | )                                 |  |  |                                  |   | (1.0    | )                                |  |  |  |   | (3.0 | ) |  |  |  |   | (3.0    | ) |
| Recognizednet actuarialloss      |  |  |                                   |   | (0.1 | )                                 |  |  |                                  |   | — |                                  |  |  |  |   | (0.2 | ) |  |  |  |   | — |   |
| Netperiodiccost                  |  |  |                                   | $ | 2.3  |                                   |  |  |                                  | $ | 2.6     |                                  |  |  |  | $ | 7.0  |   |  |  |  | $ | 7.6     |   |
|                                  |

|          |                               |
|----------|-------------------------------|
| 6.  | 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 $8.6  million and $21.3million for the nine months ended September  30,  2006 andSeptember  30,  2005,respectively.

|          |                                  |
|----------|----------------------------------|
| 7.  | Summary of Other Income(Expense) |

The components of other income (expense), netfor the three months and nine months ended September  30,2006 and 2005, include thefollowing:

|                                                 |  |  |                                   |   |      |                                   |  |  |                                  |   |         |                                 |  |  |  |   |      |   |  |  |  |   |      |   |
|-------------------------------------------------|--|--|-----------------------------------|---|------|-----------------------------------|--|--|----------------------------------|---|---------|---------------------------------|--|--|--|---|------|---|--|--|--|---|------|---|
| (dollarsin millions)                            |  |  | ThreeMonthsendedSeptember 30,2006 |   |      | ThreeMonthsendedSeptember 30,2005 |  |  | NineMonthsendedSeptember 30,2006 |   |         | NineMonthsendedSeptember30,2005 |
| Franchisetaxes                                  |  |  |                                   | $ | (0.9 | )                                 |  |  |                                  | $ | (0.6    | )                               |  |  |  | $ | (2.4 | ) |  |  |  | $ | (1.9 | ) |
| Equityin earnings of unconsolidatedsubsidiaries |  |  |                                   |   | 0.5  |                                   |  |  |                                  |   | 0.3     |                                 |  |  |  |   | 3.1  |   |  |  |  |   | 1.1  |   |
| Foreigncurrency exchangeadjustments             |  |  |                                   |   | 0.3  |                                   |  |  |                                  |   | 1.9     |                                 |  |  |  |   | (2.7 | ) |  |  |  |   | 3.3  |   |
| Other                                           |  |  |                                   |   | 0.2  |                                   |  |  |                                  |   | (1.6    | )                               |  |  |  |   | 1.5  |   |  |  |  |   | (5.3 | ) |
|                                            |  |  |                                   | $ | 0.1  |                                   |  |  |                                  | $ | — |                                 |  |  |  | $ | (0.5 | ) |  |  |  | $ | (2.8 | ) |
|                                                 |

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|          |              |
|----------|--------------|
| 8.  | Income Taxes |

TheCompany’s effective income tax rate was 36.5% for thenine months ended September  30,  2006. The rate variesfrom the U.S. federal statutory income tax rate of 35% dueprimarily to the incremental tax on dividends received from non-U.S.subsidiaries, foreign taxes provided at other than the 35% U.S.statutory rate, U.S. state income taxes, nondeductible expenses, andother permanent 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 thenine months ended September  30,  2005.

Thefollowing is a reconciliation of the tax derived by applying the U.S.statutory tax rate to the earnings before income taxes and minorityinterest and comparing that to the recorded income taxprovision:

|                       |  |  |                                   |   |      |                                   |  |  |                                  |   |      |                                  |  |  |  |   |      |  |  |  |  |   |      |  |
|-----------------------|--|--|-----------------------------------|---|------|-----------------------------------|--|--|----------------------------------|---|------|----------------------------------|--|--|--|---|------|--|--|--|--|---|------|--|
| (dollarsin millions)  |  |  | ThreeMonthsendedSeptember 30,2006 |   |      | ThreeMonthsendedSeptember 30,2005 |  |  | NineMonthsendedSeptember 30,2006 |   |      | NineMonthsendedSeptember 30,2005 |
| U.S.statutory taxrate |  |  |                                   | $ | 19.9 |                                   |  |  |                                  | $ | 16.0 |                                  |  |  |  | $ | 45.1 |  |  |  |  | $ | 26.4 |  |
| Other                 |  |  |                                   |   | (0.9 | )                                 |  |  |                                  |   | 5.0  |                                  |  |  |  |   | 2.0  |  |  |  |  |   | 7.5  |  |
| Incometax provision   |  |  |                                   | $ | 19.0 |                                   |  |  |                                  | $ | 21.0 |                                  |  |  |  | $ | 47.1 |  |  |  |  | $ | 33.9 |  |
|                       |

TheInternal Revenue Service (the Service) is in the process of completingits examination of the consolidated federal income tax returns of theCompany's subsidiary, Nalco Company, and Nalco Company'ssubsidiaries for the years 2003 and 2004. Recently, the Serviceinformally advised the Company that it is considering the disallowanceof federal tax deductions for a series of expenses, totaling$152  million. These expenses relate to fees paid to the Sponsorsand financial institutions for debt issuance and consulting services.The Company believes that the deductions as reflected in its auditedfinancial statements are proper and will be sustained; accordingly, noreserve has been taken for these amounts. Nonetheless, should theService prevail on the disallowance of any of these expenses, anyincremental tax would offset existing net operating loss carryforwards,rather than require immediate cash payments, and a substantial portionof the disallowed tax benefits would be charged to goodwill, and not tothe tax provision.

|          |                            |
|----------|----------------------------|
| 9.  | Comprehensive Income(Loss) |

Total comprehensive income (loss) and itscomponents, net of related tax, for the three months and nine monthsended September  30,  2006 and 2005, are asfollows:

|                                                       |  |  |                                   |   |        |                                   |  |  |                                  |   |        |                                  |  |  |  |   |        |   |  |  |  |   |        |   |
|-------------------------------------------------------|--|--|-----------------------------------|---|--------|-----------------------------------|--|--|----------------------------------|---|--------|----------------------------------|--|--|--|---|--------|---|--|--|--|---|--------|---|
| (dollarsin millions)                                  |  |  | ThreeMonthsendedSeptember 30,2006 |   |        | ThreeMonthsendedSeptember 30,2005 |  |  | NineMonthsendedSeptember 30,2006 |   |        | NineMonthsendedSeptember 30,2005 |
| Netearnings                                           |  |  |                                   | $ | 36.1   |                                   |  |  |                                  | $ | 23.2   |                                  |  |  |  | $ | 76.5   |   |  |  |  | $ | 37.2   |   |
| Othercomprehensive income (loss), net of incometaxes: |  |  |                                   |   |   |                                   |  |  |                                  |   |   |                                  |  |  |  |   |   |   |  |  |  |   |   |   |
| Derivatives                                           |  |  |                                   |   | (0.6   | )                                 |  |  |                                  |   | (0.4   | )                                |  |  |  |   | (1.2   | ) |  |  |  |   | 0.3    |   |
| Foreigncurrency translationadjustments                |  |  |                                   |   | 3.1    |                                   |  |  |                                  |   | 3.9    |                                  |  |  |  |   | 51.3   |   |  |  |  |   | (42.1  | ) |
| Comprehensiveincome(loss)                             |  |  |                                   | $ | 38.6   |                                   |  |  |                                  | $ | 26.7   |                                  |  |  |  | $ | 126.6  |   |  |  |  | $ | (4.6   | ) |
|                                                       |

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|           |                    |
|-----------|--------------------|
| 10.  | 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 globalwater treatment and process chemical needs of the industrial,institutional, and municipal markets.

EnergyServices   —   This segment serves the processchemicals and water treatment needs of the global petroleum andpetrochemical industries in both upstream and downstreamapplications.

PaperServices   —   This segment serves the processchemicals and water treatment needs of the global pulp and paperindustry.

Other   —   Thissegment serves the alternative channels to market, supply chainactivities, and certain other operating expenses not allocated to asegment. It also includes the Company’s subsidiary in India andthe Katayama Nalco joint venture.

The Company evaluatesthe performance of its segments based on ‘‘directcontribution’’, which is defined as net sales, less costof products sold (excluding variances to standard costs), selling andservice expenses, marketing expenses, research expenses and‘‘capital charges’’ directly attributableto each segment. Each segment is assessed an internal non-GAAP‘‘capital charge’’ based on trade accountsreceivable, inventories and equipment specifically identifiable to thesegment. The capital charges included in each segment’s directcontribution 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:

|                                      |  |  |                                    |   |       |                                    |  |  |                                   |   |       |                                   |  |  |  |   |         |  |  |  |  |   |         |  |
|--------------------------------------|--|--|------------------------------------|---|-------|------------------------------------|--|--|-----------------------------------|---|-------|-----------------------------------|--|--|--|---|---------|--|--|--|--|---|---------|--|
| (dollarsin millions)                 |  |  | Three MonthsendedSeptember 30,2006 |   |       | Three Monthsended September30,2005 |  |  | Nine Monthsended September30,2006 |   |       | Nine Monthsended September30,2005 |
| Industrial and InstitutionalServices |  |  |                                    | $ | 406.3 |                                    |  |  |                                   | $ | 379.5 |                                   |  |  |  | $ | 1,174.1 |  |  |  |  | $ | 1,098.0 |  |
| EnergyServices                       |  |  |                                    |   | 267.1 |                                    |  |  |                                   |   | 223.4 |                                   |  |  |  |   | 772.7   |  |  |  |  |   | 655.5   |  |
| PaperServices                        |  |  |                                    |   | 181.1 |                                    |  |  |                                   |   | 173.9 |                                   |  |  |  |   | 535.0   |  |  |  |  |   | 520.1   |  |
| Other                                |  |  |                                    |   | 60.9  |                                    |  |  |                                   |   | 58.1  |                                   |  |  |  |   | 174.0   |  |  |  |  |   | 175.2   |  |
| Netsales                             |  |  |                                    | $ | 915.4 |                                    |  |  |                                   | $ | 834.9 |                                   |  |  |  | $ | 2,655.8 |  |  |  |  | $ | 2,448.8 |  |
|                                      |

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|           |                                     |
|-----------|-------------------------------------|
| 10.  | SegmentInformation (continued) |

The following table presents directcontribution by reportable segment and reconciles the total segmentdirect contribution to earnings before income taxes and minorityinterests:

|                                                   |  |  |                                    |   |        |                                    |  |  |                                   |   |         |                                   |  |  |  |   |        |   |  |  |  |   |        |   |
|---------------------------------------------------|--|--|------------------------------------|---|--------|------------------------------------|--|--|-----------------------------------|---|---------|-----------------------------------|--|--|--|---|--------|---|--|--|--|---|--------|---|
| (dollarsin millions)                              |  |  | Three MonthsendedSeptember 30,2006 |   |        | Three Monthsended September30,2005 |  |  | Nine Monthsended September30,2006 |   |         | Nine Monthsended September30,2005 |
| Segment directcontribution:                       |  |  |                                    |   |   |                                    |  |  |                                   |   |    |                                   |  |  |  |   |   |   |  |  |  |   |   |   |
| Industrialand InstitutionalServices               |  |  |                                    | $ | 98.7   |                                    |  |  |                                   | $ | 87.5    |                                   |  |  |  | $ | 263.6  |   |  |  |  | $ | 235.9  |   |
| EnergyServices                                    |  |  |                                    |   | 58.0   |                                    |  |  |                                   |   | 42.8    |                                   |  |  |  |   | 161.2  |   |  |  |  |   | 125.5  |   |
| PaperServices                                     |  |  |                                    |   | 28.6   |                                    |  |  |                                   |   | 30.8    |                                   |  |  |  |   | 81.2   |   |  |  |  |   | 88.3   |   |
| Other                                             |  |  |                                    |   | (15.2  | )                                  |  |  |                                   |   | (14.2   | )                                 |  |  |  |   | (49.5  | ) |  |  |  |   | (48.3  | ) |
| Capitalchargeelimination                          |  |  |                                    |   | 19.4   |                                    |  |  |                                   |   | 19.8    |                                   |  |  |  |   | 57.5   |   |  |  |  |   | 59.2   |   |
| Totalsegment directcontribution                   |  |  |                                    |   | 189.5  |                                    |  |  |                                   |   | 166.7   |                                   |  |  |  |   | 514.0  |   |  |  |  |   | 460.6  |   |
| Expensesnot allocated tosegments:                 |  |  |                                    |   |   |                                    |  |  |                                   |   |    |                                   |  |  |  |   |   |   |  |  |  |   |   |   |
| Administrativeexpenses                            |  |  |                                    |   | 53.9   |                                    |  |  |                                   |   | 40.9    |                                   |  |  |  |   | 150.8  |   |  |  |  |   | 135.0  |   |
| Amortizationof intangibleassets                   |  |  |                                    |   | 17.6   |                                    |  |  |                                   |   | 20.3    |                                   |  |  |  |   | 52.4   |   |  |  |  |   | 61.4   |   |
| Businessoptimizationexpenses                      |  |  |                                    |   | 3.0    |                                    |  |  |                                   |   | 3.5     |                                   |  |  |  |   | 8.6    |   |  |  |  |   | 21.3   |   |
| Operatingearnings                                 |  |  |                                    |   | 115.0  |                                    |  |  |                                   |   | 102.0   |                                   |  |  |  |   | 302.2  |   |  |  |  |   | 242.9  |   |
| Otherincome (expense),net                         |  |  |                                    |   | 0.1    |                                    |  |  |                                   |   | — |                                   |  |  |  |   | (0.5   | ) |  |  |  |   | (2.8   | ) |
| Interestincome                                    |  |  |                                    |   | 2.4    |                                    |  |  |                                   |   | 2.1     |                                   |  |  |  |   | 6.4    |   |  |  |  |   | 6.2    |   |
| Interestexpense                                   |  |  |                                    |   | (60.7  | )                                  |  |  |                                   |   | (58.3   | )                                 |  |  |  |   | (179.3 | ) |  |  |  |   | (170.8 | ) |
| Earningsbefore income taxes and minorityinterests |  |  |                                    | $ | 56.8   |                                    |  |  |                                   | $ | 45.8    |                                   |  |  |  | $ | 128.8  |   |  |  |  | $ | 75.5   |   |
|                                                   |

Administrativeexpenses primarily represent the cost of support functions, includinginformation technology, finance, human resources and legal, as well asexpenses for support facilities, executive management and managementincentiveplans.

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

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 andcleaned a raw material spill at its plant near Botany, Australia. 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 $2.0million at September  30,  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

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|           |                                              |
|-----------|----------------------------------------------|
| 11.  | Contingenciesand Litigation (continued) |

activities, a detailed review by the Companyof known conditions, and information about other PRPs. They are notreduced by any possible recoveries from insurance companies or otherPRPs not specifically identified. Although management cannot determinewhether or not a material effect on future operations is reasonablylikely to occur, given the evolving nature of environmentalregulations, it believes that the recorded reserve levels areappropriate estimates of the potential liability. Although settlementwill require future cash outlays, it is not expected that such outlayswill materially impact the Company’s liquidity position.Expenditures for the nine months ended September  30,2006, 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 thefuture.

On November  2,  2005, the U.K. Healthand Safety Executive (‘‘HSE’’) sent noticethat it intends to initiate legal proceedings against theCompany’s U.K. subsidiary under the Health and Safety at WorkAct. The place of these proceedings is not indicated in the notice.This notice references a legionella outbreak from November  2003that is claimed to have originated at cooling towers owned by one ofthe subsidiary’s customers. The HSE indicates that theproceedings will relate to the cleaning of these cooling towers. TheHSE has not initiated the legal proceedings mentioned in the notice,and the Company has not received any specific charges or claims forrelief. The Company will defend and refute any contention that it hasviolated any law.

Beginning on May  16,  2003,the Company received subpoenas from the U.S. Department of Justice fordocuments and testimony relating to its storage of claimed hazardousmaterials, the claimed leakage of wastewater and other matters at itsplant in Garyville, Louisiana. No charges or indictments have beenfiled, but the outcome of this investigation is unknown to theCompany.

In the ordinary course of its business, theCompany is also a party to a number of lawsuits and is subject tovarious claims relating to trademarks, employee matters, contracts,transactions, chemicals and other matters, the outcome of which, in theopinion of management, should not have a material effect on theconsolidated financial position of the Company. However, we cannotpredict the outcome of any litigation or the potential for futurelitigation. Were an unfavorable ruling to occur, there exists thepossibility of a material adverse impact on the results of operationsfor the period in which the ruling occurs. The Company maintainsaccruals where the outcome of the matter is probable and can bereasonablyestimated.

|           |            |
|-----------|------------|
| 12.  | Guarantees |

Nosignificant guarantees were outstanding at September  30,2006, other than subsidiary-related performanceguarantees.

The Company had $42.5  million ofletters of credit outstanding at September  30,2006.

|           |                                 |
|-----------|---------------------------------|
| 13.  | RecentAccounting Pronouncements |

In June  2006, theFinancial Accounting Standards Board (FASB) issued Interpretation No.48 (FIN 48), Accounting for Uncertainty in IncomeTaxes, an interpretation of FASB Statement No. 109, Accountingfor Income Taxes. The interpretation clarifies the accounting foruncertainty in income taxes recognized in an enterprise’sfinancial statements by prescribing a recognition threshold andmeasurement attribute for the financial statement recognition andmeasurement of a tax position 

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|           |                                                  |
|-----------|--------------------------------------------------|
| 13.  | RecentAccounting Pronouncements (continued) |

taken or expected to be taken in a taxreturn. FIN 48 also provides guidance on derecognition, classification,interest and penalties, accounting in interim periods, disclosure, andtransition. The effective date of FIN 48 is no later than fiscal yearsbeginning after December  15,  2006. The Company is in theprocess of determining the effects, if any, that adoption of FIN 48will have on its financial statements.

In September2006, the FASB issued Statement of Financial Accounting Standards(SFAS) No. 157, Fair Value Measurements, which defines fairvalue, establishes a framework for measuring fair value, and expandsdisclosures about fair value measurements. The provisions of SFAS No.157 are effective for the Company as of the beginning of its fiscalyear ended December  31,  2008. The Company is in theprocess of determining the effects, if any, that adoption of SFAS No.157 will have on its financial statements.

InSeptember  2006, the FASB issued SFAS No. 158,Employers' Accounting for Defined Benefit Pension and OtherPostretirement Plans — an amendment of FASB Statements No. 87,88, 106 and 132(R). SFAS No. 158 requires an employer to recognizein its statement of financial position an asset for a plan'soverfunded status or a liability for a plan's underfunded status,measure a plan's assets and its obligations that determine itsfunded status as of the end of the employer's fiscal year, andrecognize changes in the funded status of a defined benefitpostretirement plan in the year in which the changes occur. Thosechanges will be reported in comprehensive income and as a separatecomponent of shareholders’ equity. SFAS No. 158 does not changethe amount of net periodic benefit cost included in net earnings. Therequirement to recognize the funded status of defined benefitpostretirement plans is effective for the Company as of December31,  2006. The requirement to measure plan assets and benefitobligations as of the end of the fiscal year is effective for theCompany no later than December  31,  2008. Retrospectiveapplication of both the recognition and measurement date provisions ofSFAS No. 158 is not permitted. Had the Company applied the recognitionprovisions of SFAS No. 158 as of December  31,  2005,accumulated other comprehensive income would have been reduced by anadditional $2.1  million. However, this impact could changematerially as of December  31,  2006, due to changes in thediscount rates used to measure plan obligations, the actual returns onplan assets, and other factors.

In September  2006,the Securities and Exchange Commission (SEC) issued Staff AccountingBulletin No. 108 (SAB 108), Considering the Effects of PriorYear Misstatements when Quantifying Misstatements in Current YearFinancial Statements, to address diversity in practice inquantifying financial statement misstatements. SAB 108 providesinterpretive guidance on the consideration of the effects of prior yearmisstatements in quantifying current year misstatements for the purposeof a materiality assessment. SAB 108 is effective for the Company inits year ended December  31,  2006, and allows a one-timetransitional cumulative effect adjustment to retained earnings as ofJanuary 1, 2006 for errors that were not previously deemedmaterial, but are material under the guidance in SAB 108.The Company is in the process of determining the effects, if any, thatSAB 108 will have on its financialstatements.

|           |                                                      |
|-----------|------------------------------------------------------|
| 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. The Senior Notes are fully, unconditionallyand jointly and severally guaranteed on an unsecured senior basis andthe Senior Subordinated Notes are fully, unconditionally and jointlyand severally guaranteed on an unsecured senior subordinated basis, ineach case, by Nalco Holdings LLC and by substantially all existing andfuture wholly-owned restricted domestic subsidiaries of Nalco Company(collectively, the ‘‘Guarantors’’). Allother subsidiaries of Nalco Holdings LLC, whether direct or indirect,do not guarantee the Senior Notes and Senior Subordinated Notes(‘‘Non-Guarantors’’). The Guarantors alsounconditionally guarantee the Company’s borrowings under theSenior Secured Credit Facilities on a senior securedbasis.

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|           |                                                                       |
|-----------|-----------------------------------------------------------------------|
| 14.  | SupplementalGuarantor Condensed Financial Statements (continued) |

The following unaudited condensedconsolidating financial statements present the results of operations,financial position and cash flows of (1) the Parent, (2) the Issuer,(3) the Guarantors, (4) the Non-Guarantors and (5)eliminations to arrive at the information for Nalco Holdings LLC on aconsolidated basis. Separate financial statements and other disclosuresconcerning the Guarantors are not presented because management does notbelieve that such information is material toinvestors.

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NalcoHoldings LLC and SubsidiariesCondensed Consolidating BalanceSheet September  30,  2006(dollars inmillions)

|                                                                    |  |  |        |   |         |        |  |  |                       |   |         |                           |  |  |              |   |         |              |  |  |  |   |         |        |  |  |  |   |          |         |  |  |  |   |         |        |
|--------------------------------------------------------------------|--|--|--------|---|---------|--------|--|--|-----------------------|---|---------|---------------------------|--|--|--------------|---|---------|--------------|--|--|--|---|---------|--------|--|--|--|---|----------|---------|--|--|--|---|---------|--------|
|                                                               |  |  | Parent |   |         | Issuer |  |  | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |  | Eliminations |   |         | Consolidated |
| Cash& cashequivalents                                          |  |  |        | $ | — |   |  |  |                       | $ | — |                      |  |  |              | $ | 0.9     |         |  |  |  | $ | 42.0    |   |  |  |  | $ | —  |    |  |  |  | $ | 42.9    |   |
| Tradeaccountsreceivable                                            |  |  |        |   | — |   |  |  |                       |   | (9.2    | )                    |  |  |              |   | 5.1     |         |  |  |  |   | 669.4   |   |  |  |  |   | —  |    |  |  |  |   | 665.3   |   |
| Inventories– finishedproducts                                |  |  |        |   | — |   |  |  |                       |   | 115.3   |                      |  |  |              |   | 1.9     |         |  |  |  |   | 144.5   |   |  |  |  |   | —  |    |  |  |  |   | 261.7   |   |
| Inventories– materials & work inprocess                  |  |  |        |   | — |   |  |  |                       |   | 29.7    |                      |  |  |              |   | — |         |  |  |  |   | 47.1    |   |  |  |  |   | —  |    |  |  |  |   | 76.8    |   |
| Receivablesfrom relatedparties                                     |  |  |        |   | — |   |  |  |                       |   | 56.4    |                      |  |  |              |   | 7.7     |         |  |  |  |   | 20.2    |   |  |  |  |   | (84.3    | )  |  |  |  |   | — |   |
| Prepaidexpenses, taxes, and other currentassets                    |  |  |        |   | — |   |  |  |                       |   | 17.1    |                      |  |  |              |   | 0.2     |         |  |  |  |   | 46.3    |   |  |  |  |   | —  |    |  |  |  |   | 63.6    |   |
| TotalCurrentAssets                                                 |  |  |        |   | — |   |  |  |                       |   | 209.3   |                      |  |  |              |   | 15.8    |         |  |  |  |   | 969.5   |   |  |  |  |   | (84.3    | )  |  |  |  |   | 1,110.3 |   |
| Property,plant, and equipment,net                                  |  |  |        |   | — |   |  |  |                       |   | 301.8   |                      |  |  |              |   | 42.7    |         |  |  |  |   | 388.5   |   |  |  |  |   | 0.1      |    |  |  |  |   | 733.1   |   |
| Investmentinsubsidiaries                                           |  |  |        |   | 1,175.3 |   |  |  |                       |   | 2,086.4 |                      |  |  |              |   | 367.6   |         |  |  |  |   | — |   |  |  |  |   | (3,629.3 | )  |  |  |  |   | — |   |
| Goodwill                                                           |  |  |        |   | — |   |  |  |                       |   | 951.0   |                      |  |  |              |   | 11.0    |         |  |  |  |   | 1,295.3 |   |  |  |  |   | —  |    |  |  |  |   | 2,257.3 |   |
| Intangibles                                                        |  |  |        |   | — |   |  |  |                       |   | 1,030.0 |                      |  |  |              |   | 3.7     |         |  |  |  |   | 149.5   |   |  |  |  |   | —  |    |  |  |  |   | 1,183.2 |   |
| Receivablesfrom relatedparties                                     |  |  |        |   | — |   |  |  |                       |   | — |                      |  |  |              |   | 340.0   |         |  |  |  |   | 312.8   |   |  |  |  |   | (652.8   | )  |  |  |  |   | — |   |
| Otherassets                                                        |  |  |        |   | — |   |  |  |                       |   | 251.7   |                      |  |  |              |   | 18.6    |         |  |  |  |   | 41.0    |   |  |  |  |   | —  |    |  |  |  |   | 311.3   |   |
| TotalAssets                                                        |  |  |        | $ | 1,175.3 |   |  |  |                       | $ | 4,830.2 |                      |  |  |              | $ | 799.4   |         |  |  |  | $ | 3,156.6 |   |  |  |  | $ | (4,366.3 | )  |  |  |  | $ | 5,595.2 |   |
| Accountspayable                                                    |  |  |        | $ | — |   |  |  |                       | $ | 126.2   |                      |  |  |              | $ | 0.5     |         |  |  |  | $ | 144.3   |   |  |  |  | $ | —  |    |  |  |  | $ | 271.0   |   |
| Short-termdebt                                                     |  |  |        |   | — |   |  |  |                       |   | 18.8    |                      |  |  |              |   | — |         |  |  |  |   | 122.9   |   |  |  |  |   | —  |    |  |  |  |   | 141.7   |   |
| Othercurrentliabilities                                            |  |  |        |   | — |   |  |  |                       |   | 118.7   |                      |  |  |              |   | 5.5     |         |  |  |  |   | 156.0   |   |  |  |  |   | —  |    |  |  |  |   | 280.2   |   |
| Intercompanyaccountspayable                                        |  |  |        |   | — |   |  |  |                       |   | 0.2     |                      |  |  |              |   | 26.6    |         |  |  |  |   | 57.5    |   |  |  |  |   | (84.3    | )  |  |  |  |   | — |   |
| TotalCurrentLiabilities                                            |  |  |        |   | — |   |  |  |                       |   | 263.9   |                      |  |  |              |   | 32.6    |         |  |  |  |   | 480.7   |   |  |  |  |   | (84.3    | )  |  |  |  |   | 692.9   |   |
| Long-termdebt                                                      |  |  |        |   | — |   |  |  |                       |   | 2,682.4 |                      |  |  |              |   | — |         |  |  |  |   | 0.3     |   |  |  |  |   | —  |    |  |  |  |   | 2,682.7 |   |
| Deferredincometaxes                                                |  |  |        |   | — |   |  |  |                       |   | 222.4   |                      |  |  |              |   | 53.0    |         |  |  |  |   | 95.6    |   |  |  |  |   | —  |    |  |  |  |   | 371.0   |   |
| Accruedpensionbenefits                                             |  |  |        |   | — |   |  |  |                       |   | 228.8   |                      |  |  |              |   | — |         |  |  |  |   | 164.7   |   |  |  |  |   | —  |    |  |  |  |   | 393.5   |   |
| Intercompanynotes payable-longterm                                 |  |  |        |   | — |   |  |  |                       |   | 652.8   |                      |  |  |              |   | — |         |  |  |  |   | — |   |  |  |  |   | (652.8   | )  |  |  |  |   | — |   |
| Otherliabilities                                                   |  |  |        |   | — |   |  |  |                       |   | 265.4   |                      |  |  |              |   | — |         |  |  |  |   | 14.4    |   |  |  |  |   | —  |    |  |  |  |   | 279.8   |   |
| TotalOtherLiabilities                                              |  |  |        |   | — |   |  |  |                       |   | 4,051.8 |                      |  |  |              |   | 53.0    |         |  |  |  |   | 275.0   |   |  |  |  |   | (652.8   | )  |  |  |  |   | 3,727.0 |   |
| MinorityInterest                                                   |  |  |        |   | 14.1    |   |  |  |                       |   | — |                      |  |  |              |   | — |         |  |  |  |   | 14.1    |   |  |  |  |   | (14.1    | )  |  |  |  |   | 14.1    |   |
| TotalUnitholder’s/ Shareholders’Equity                 |  |  |        |   | 1,161.2 |   |  |  |                       |   | 514.5   |                      |  |  |              |   | 713.8   |         |  |  |  |   | 2,386.8 |   |  |  |  |   | (3,615.1 | )  |  |  |  |   | 1,161.2 |   |
| TotalLiabilities and Unitholder’s/ Shareholders’Equity |  |  |        | $ | 1,175.3 |   |  |  |                       | $ | 4,830.2 |                      |  |  |              | $ | 799.4   |         |  |  |  | $ | 3,156.6 |   |  |  |  | $ | (4,366.3 | )  |  |  |  | $ | 5,595.2 |   |
|                                                                    |

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Nalco Holdings LLC andSubsidiariesCondensed Consolidating Balance SheetDecember  31,  2005(dollars inmillions)

|                                                                    |  |  |        |   |         |        |  |  |                       |   |         |                           |  |  |              |   |         |              |  |  |  |   |         |        |  |  |  |   |          |         |  |  |  |   |         |        |
|--------------------------------------------------------------------|--|--|--------|---|---------|--------|--|--|-----------------------|---|---------|---------------------------|--|--|--------------|---|---------|--------------|--|--|--|---|---------|--------|--|--|--|---|----------|---------|--|--|--|---|---------|--------|
|                                                               |  |  | Parent |   |         | Issuer |  |  | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |  | Eliminations |   |         | Consolidated |
| Cash& cashequivalents                                          |  |  |        | $ | — |   |  |  |                       | $ | — |                      |  |  |              | $ | 1.7     |         |  |  |  | $ | 29.1    |   |  |  |  | $ | —  |    |  |  |  | $ | 30.8    |   |
| Tradeaccountsreceivable                                            |  |  |        |   | — |   |  |  |                       |   | (13.6   | )                    |  |  |              |   | 6.5     |         |  |  |  |   | 629.4   |   |  |  |  |   | —  |    |  |  |  |   | 622.3   |   |
| Inventories– finishedproducts                                |  |  |        |   | — |   |  |  |                       |   | 64.6    |                      |  |  |              |   | 45.1    |         |  |  |  |   | 132.9   |   |  |  |  |   | —  |    |  |  |  |   | 242.6   |   |
| Inventories– materials & work inprocess                  |  |  |        |   | — |   |  |  |                       |   | 15.0    |                      |  |  |              |   | 11.5    |         |  |  |  |   | 44.1    |   |  |  |  |   | —  |    |  |  |  |   | 70.6    |   |
| Receivablesfrom relatedparties                                     |  |  |        |   | — |   |  |  |                       |   | 24.8    |                      |  |  |              |   | 225.4   |         |  |  |  |   | 41.1    |   |  |  |  |   | (291.3   | )  |  |  |  |   | — |   |
| Prepaidexpenses, taxes, and other currentassets                    |  |  |        |   | — |   |  |  |                       |   | 24.1    |                      |  |  |              |   | 13.8    |         |  |  |  |   | 45.2    |   |  |  |  |   | —  |    |  |  |  |   | 83.1    |   |
| TotalCurrentAssets                                                 |  |  |        |   | — |   |  |  |                       |   | 114.9   |                      |  |  |              |   | 304.0   |         |  |  |  |   | 921.8   |   |  |  |  |   | (291.3   | )  |  |  |  |   | 1,049.4 |   |
| Property,plant, and equipment,net                                  |  |  |        |   | — |   |  |  |                       |   | 218.1   |                      |  |  |              |   | 142.9   |         |  |  |  |   | 394.3   |   |  |  |  |   | —  |    |  |  |  |   | 755.3   |   |
| Investmentinsubsidiaries                                           |  |  |        |   | 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 |   |
| Receivablesfrom relatedparties                                     |  |  |        |   | — |   |  |  |                       |   | — |                      |  |  |              |   | 309.4   |         |  |  |  |   | 173.3   |   |  |  |  |   | (482.7   | )  |  |  |  |   | — |   |
| Otherassets                                                        |  |  |        |   | — |   |  |  |                       |   | 268.4   |                      |  |  |              |   | 18.3    |         |  |  |  |   | 38.6    |   |  |  |  |   | —  |    |  |  |  |   | 325.3   |   |
| TotalAssets                                                        |  |  |        | $ | 1,044.4 |   |  |  |                       | $ | 4,769.7 |                      |  |  |              | $ | 1,499.0 |         |  |  |  | $ | 2,926.4 |   |  |  |  | $ | (4,685.3 | )  |  |  |  | $ | 5,554.2 |   |
| Accountspayable                                                    |  |  |        | $ | — |   |  |  |                       | $ | 87.0    |                      |  |  |              | $ | 44.9    |         |  |  |  | $ | 153.5   |   |  |  |  |   | —  |    |  |  |  | $ | 285.4   |   |
| Short-termdebt                                                     |  |  |        |   | — |   |  |  |                       |   | 6.2     |                      |  |  |              |   | 1.0     |         |  |  |  |   | 15.4    |   |  |  |  |   | —  |    |  |  |  |   | 22.6    |   |
| Othercurrentliabilities                                            |  |  |        |   | — |   |  |  |                       |   | 57.4    |                      |  |  |              |   | 35.2    |         |  |  |  |   | 143.8   |   |  |  |  |   | (1.3     | )  |  |  |  |   | 235.1   |   |
| Intercompanyaccountspayable                                        |  |  |        |   | — |   |  |  |                       |   | 155.9   |                      |  |  |              |   | 38.2    |         |  |  |  |   | 95.9    |   |  |  |  |   | (290.0   | )  |  |  |  |   | — |   |
| TotalCurrentLiabilities                                            |  |  |        |   | — |   |  |  |                       |   | 306.5   |                      |  |  |              |   | 119.3   |         |  |  |  |   | 408.6   |   |  |  |  |   | (291.3   | )  |  |  |  |   | 543.1   |   |
| Long-termdebt                                                      |  |  |        |   | — |   |  |  |                       |   | 2,814.7 |                      |  |  |              |   | — |         |  |  |  |   | 76.0    |   |  |  |  |   | —  |    |  |  |  |   | 2,890.7 |   |
| Deferredincometaxes                                                |  |  |        |   | — |   |  |  |                       |   | 303.5   |                      |  |  |              |   | 1.0     |         |  |  |  |   | 76.2    |   |  |  |  |   | —  |    |  |  |  |   | 380.7   |   |
| Accruedpensionbenefits                                             |  |  |        |   | — |   |  |  |                       |   | 227.9   |                      |  |  |              |   | 42.4    |         |  |  |  |   | 146.1   |   |  |  |  |   | —  |    |  |  |  |   | 416.4   |   |
| Intercompanynotes payable-longterm                                 |  |  |        |   | — |   |  |  |                       |   | 482.7   |                      |  |  |              |   | — |         |  |  |  |   | — |   |  |  |  |   | (482.7   | )  |  |  |  |   | — |   |
| Otherliabilities                                                   |  |  |        |   | — |   |  |  |                       |   | 231.8   |                      |  |  |              |   | 26.7    |         |  |  |  |   | 20.4    |   |  |  |  |   | —  |    |  |  |  |   | 278.9   |   |
| TotalOtherLiabilities                                              |  |  |        |   | — |   |  |  |                       |   | 4,060.6 |                      |  |  |              |   | 70.1    |         |  |  |  |   | 318.7   |   |  |  |  |   | (482.7   | )  |  |  |  |   | 3,966.7 |   |
| MinorityInterest                                                   |  |  |        |   | 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 |   |
| TotalLiabilities and Unitholder’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 andSubsidiariesCondensed Consolidating Statement ofOperationsThree Months ended September  30,  2006(dollars inmillions)

|                                              |  |  |        |   |         |         |  |  |                       |   |         |                           |  |  |              |   |         |              |  |  |  |   |        |         |  |  |  |   |         |         |  |  |  |   |        |         |
|----------------------------------------------|--|--|--------|---|---------|---------|--|--|-----------------------|---|---------|---------------------------|--|--|--------------|---|---------|--------------|--|--|--|---|--------|---------|--|--|--|---|---------|---------|--|--|--|---|--------|---------|
|                                         |  |  | Parent |   |         | Issuer  |  |  | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |  | Eliminations |   |         | Consolidated |
| Netsales                                     |  |  |        | $ | — |    |  |  |                       | $ | 446.5   |                      |  |  |              | $ | 7.6     |         |  |  |  | $ | 506.7  |    |  |  |  | $ | (45.4   | )  |  |  |  | $ | 915.4  |    |
| Operatingcosts andexpenses:                  |  |  |        |   |    |    |  |  |                       |   |    |                      |  |  |              |   |    |         |  |  |  |   |   |    |  |  |  |   |    |    |  |  |  |   |   |    |
| Costof productsold                           |  |  |        |   | — |    |  |  |                       |   | 266.4   |                      |  |  |              |   | 5.1     |         |  |  |  |   | 276.2  |    |  |  |  |   | (45.4   | )  |  |  |  |   | 502.3  |    |
| Selling,administrative, and researchexpenses |  |  |        |   | — |    |  |  |                       |   | 138.4   |                      |  |  |              |   | 1.0     |         |  |  |  |   | 138.1  |    |  |  |  |   | — |    |  |  |  |   | 277.5  |    |
| Amortizationof intangibleassets              |  |  |        |   | — |    |  |  |                       |   | 9.6     |                      |  |  |              |   | — |         |  |  |  |   | 8.0    |    |  |  |  |   | — |    |  |  |  |   | 17.6   |    |
| Businessoptimizationexpenses                 |  |  |        |   | — |    |  |  |                       |   | 0.9     |                      |  |  |              |   | — |         |  |  |  |   | 2.1    |    |  |  |  |   | — |    |  |  |  |   | 3.0    |    |
| Totaloperating costs andexpenses             |  |  |        |   | — |    |  |  |                       |   | 415.3   |                      |  |  |              |   | 6.1     |         |  |  |  |   | 424.4  |    |  |  |  |   | (45.4   | )  |  |  |  |   | 800.4  |    |
| Operatingearnings                            |  |  |        |   | — |    |  |  |                       |   | 31.2    |                      |  |  |              |   | 1.5     |         |  |  |  |   | 82.3   |    |  |  |  |   | — |    |  |  |  |   | 115.0  |    |
| Otherincome (expense),net                    |  |  |        |   | 37.8    |    |  |  |                       |   | 17.3    |                      |  |  |              |   | 6.7     |         |  |  |  |   | (20.1  | )  |  |  |  |   | (41.6   | )  |  |  |  |   | 0.1    |    |
| Interestincome                               |  |  |        |   | — |    |  |  |                       |   | 1.6     |                      |  |  |              |   | 4.4     |         |  |  |  |   | 16.5   |    |  |  |  |   | (20.1   | )  |  |  |  |   | 2.4    |    |
| Interestexpense                              |  |  |        |   | — |    |  |  |                       |   | (78.6   | )                    |  |  |              |   | — |         |  |  |  |   | (2.2   | )  |  |  |  |   | 20.1    |    |  |  |  |   | (60.7  | )  |
| Earnings(loss) before incometaxes            |  |  |        |   | 37.8    |    |  |  |                       |   | (28.5   | )                    |  |  |              |   | 12.6    |         |  |  |  |   | 76.5   |    |  |  |  |   | (41.6   | )  |  |  |  |   | 56.8   |    |
| Incometax provision(benefit)                 |  |  |        |   | — |    |  |  |                       |   | (6.8    | )                    |  |  |              |   | 4.4     |         |  |  |  |   | 21.4   |    |  |  |  |   | — |    |  |  |  |   | 19.0   |    |
| Minorityinterests                            |  |  |        |   | (1.7    | )  |  |  |                       |   | — |                      |  |  |              |   | — |         |  |  |  |   | (1.7   | )  |  |  |  |   | 1.7     |    |  |  |  |   | (1.7   | )  |
| Netearnings(loss)                            |  |  |        | $ | 36.1    |    |  |  |                       | $ | (21.7   | )                    |  |  |              | $ | 8.2     |         |  |  |  | $ | 53.4   |    |  |  |  | $ | (39.9   | )  |  |  |  | $ | 36.1   |    |
|                                              |

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Nalco Holdings LLC andSubsidiariesCondensed Consolidating Statement ofOperationsThree Months ended September  30,  2005(dollars inmillions)

|                                              |  |  |        |   |         |         |  |  |                       |   |         |                           |  |  |              |   |         |              |  |  |  |   |        |         |  |  |  |   |         |         |  |  |  |   |         |         |
|----------------------------------------------|--|--|--------|---|---------|---------|--|--|-----------------------|---|---------|---------------------------|--|--|--------------|---|---------|--------------|--|--|--|---|--------|---------|--|--|--|---|---------|---------|--|--|--|---|---------|---------|
|                                         |  |  | Parent |   |         | Issuer  |  |  | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |  | Eliminations |   |         | Consolidated |
| Netsales                                     |  |  |        | $ | — |    |  |  |                       | $ | 300.4   |                      |  |  |              | $ | 149.7   |         |  |  |  | $ | 459.3  |    |  |  |  | $ | (74.5   | )  |  |  |  | $ | 834.9   |    |
| Operatingcosts andexpenses:                  |  |  |        |   |    |    |  |  |                       |   |    |                      |  |  |              |   |    |         |  |  |  |   |   |    |  |  |  |   |    |    |  |  |  |   |    |    |
| Costof productsold                           |  |  |        |   | — |    |  |  |                       |   | 187.6   |                      |  |  |              |   | 99.1    |         |  |  |  |   | 245.7  |    |  |  |  |   | (74.5   | )  |  |  |  |   | 457.9   |    |
| Selling,administrative, and researchexpenses |  |  |        |   | — |    |  |  |                       |   | 94.4    |                      |  |  |              |   | 28.3    |         |  |  |  |   | 128.5  |    |  |  |  |   | — |    |  |  |  |   | 251.2   |    |
| Amortizationof intangibleassets              |  |  |        |   | — |    |  |  |                       |   | 8.4     |                      |  |  |              |   | 2.7     |         |  |  |  |   | 9.2    |    |  |  |  |   | — |    |  |  |  |   | 20.3    |    |
| Businessoptimizationexpenses                 |  |  |        |   | — |    |  |  |                       |   | 0.9     |                      |  |  |              |   | — |         |  |  |  |   | 2.6    |    |  |  |  |   | — |    |  |  |  |   | 3.5     |    |
| Totaloperating costs andexpenses             |  |  |        |   | — |    |  |  |                       |   | 291.3   |                      |  |  |              |   | 130.1   |         |  |  |  |   | 386.0  |    |  |  |  |   | (74.5   | )  |  |  |  |   | 732.9   |    |
| Operatingearnings                            |  |  |        |   | — |    |  |  |                       |   | 9.1     |                      |  |  |              |   | 19.6    |         |  |  |  |   | 73.3   |    |  |  |  |   | — |    |  |  |  |   | 102.0   |    |
| Otherincome (expense),net                    |  |  |        |   | 24.8    |    |  |  |                       |   | 16.2    |                      |  |  |              |   | 8.5     |         |  |  |  |   | (19.1  | )  |  |  |  |   | (30.4   | )  |  |  |  |   | — |    |
| Interestincome                               |  |  |        |   | — |    |  |  |                       |   | 1.7     |                      |  |  |              |   | 3.5     |         |  |  |  |   | 10.8   |    |  |  |  |   | (13.9   | )  |  |  |  |   | 2.1     |    |
| Interestexpense                              |  |  |        |   | — |    |  |  |                       |   | (67.0   | )                    |  |  |              |   | (3.4    | )       |  |  |  |   | (1.8   | )  |  |  |  |   | 13.9    |    |  |  |  |   | (58.3   | )  |
| Earnings(loss) before incometaxes            |  |  |        |   | 24.8    |    |  |  |                       |   | (40.0   | )                    |  |  |              |   | 28.2    |         |  |  |  |   | 63.2   |    |  |  |  |   | (30.4   | )  |  |  |  |   | 45.8    |    |
| Incometax provision(benefit)                 |  |  |        |   | — |    |  |  |                       |   | (1.1    | )                    |  |  |              |   | 9.7     |         |  |  |  |   | 12.4   |    |  |  |  |   | — |    |  |  |  |   | 21.0    |    |
| Minorityinterests                            |  |  |        |   | (1.6    | )  |  |  |                       |   | — |                      |  |  |              |   | — |         |  |  |  |   | (1.7   | )  |  |  |  |   | 1.7     |    |  |  |  |   | (1.6    | )  |
| Netearnings(loss)                            |  |  |        | $ | 23.2    |    |  |  |                       | $ | (38.9   | )                    |  |  |              | $ | 18.5    |         |  |  |  | $ | 49.1   |    |  |  |  | $ | (28.7   | )  |  |  |  | $ | 23.2    |    |
|                                              |

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NalcoHoldings LLC and SubsidiariesCondensed Consolidating Statement ofOperationsNine Months ended September  30,2006(dollars inmillions)

|                                              |  |  |        |   |         |         |  |  |                       |   |         |                           |  |  |              |   |         |              |  |  |  |   |         |         |  |  |  |   |         |         |  |  |  |   |         |         |
|----------------------------------------------|--|--|--------|---|---------|---------|--|--|-----------------------|---|---------|---------------------------|--|--|--------------|---|---------|--------------|--|--|--|---|---------|---------|--|--|--|---|---------|---------|--|--|--|---|---------|---------|
|                                         |  |  | Parent |   |         | Issuer  |  |  | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |  | Eliminations |   |         | Consolidated |
| Netsales                                     |  |  |        | $ | — |    |  |  |                       | $ | 1,334.7 |                      |  |  |              | $ | 19.6    |         |  |  |  | $ | 1,451.3 |    |  |  |  | $ | (149.8  | )  |  |  |  | $ | 2,655.8 |    |
| Operatingcosts andexpenses:                  |  |  |        |   |    |    |  |  |                       |   |    |                      |  |  |              |   |    |         |  |  |  |   |    |    |  |  |  |   |    |    |  |  |  |   |    |    |
| Costof productsold                           |  |  |        |   | — |    |  |  |                       |   | 815.6   |                      |  |  |              |   | 14.9    |         |  |  |  |   | 788.3   |    |  |  |  |   | (149.8  | )  |  |  |  |   | 1,469.0 |    |
| Selling,administrative, and researchexpenses |  |  |        |   | — |    |  |  |                       |   | 406.8   |                      |  |  |              |   | 4.0     |         |  |  |  |   | 412.8   |    |  |  |  |   | — |    |  |  |  |   | 823.6   |    |
| Amortizationof intangibleassets              |  |  |        |   | — |    |  |  |                       |   | 28.6    |                      |  |  |              |   | 0.1     |         |  |  |  |   | 23.7    |    |  |  |  |   | — |    |  |  |  |   | 52.4    |    |
| Businessoptimizationexpenses                 |  |  |        |   | — |    |  |  |                       |   | 1.5     |                      |  |  |              |   | — |         |  |  |  |   | 7.1     |    |  |  |  |   | — |    |  |  |  |   | 8.6     |    |
| Totaloperating costs andexpenses             |  |  |        |   | — |    |  |  |                       |   | 1,252.5 |                      |  |  |              |   | 19.0    |         |  |  |  |   | 1,231.9 |    |  |  |  |   | (149.8  | )  |  |  |  |   | 2,353.6 |    |
| Operatingearnings                            |  |  |        |   | — |    |  |  |                       |   | 82.2    |                      |  |  |              |   | 0.6     |         |  |  |  |   | 219.4   |    |  |  |  |   | — |    |  |  |  |   | 302.2   |    |
| Otherincome (expense),net                    |  |  |        |   | 81.7    |    |  |  |                       |   | 51.9    |                      |  |  |              |   | 21.5    |         |  |  |  |   | (64.2   | )  |  |  |  |   | (91.4   | )  |  |  |  |   | (0.5    | )  |
| Interestincome                               |  |  |        |   | — |    |  |  |                       |   | 4.6     |                      |  |  |              |   | 11.6    |         |  |  |  |   | 45.5    |    |  |  |  |   | (55.3   | )  |  |  |  |   | 6.4     |    |
| Interestexpense                              |  |  |        |   | — |    |  |  |                       |   | (227.8  | )                    |  |  |              |   | — |         |  |  |  |   | (6.8    | )  |  |  |  |   | 55.3    |    |  |  |  |   | (179.3  | )  |
| Earnings(loss) before incometaxes            |  |  |        |   | 81.7    |    |  |  |                       |   | (89.1   | )                    |  |  |              |   | 33.7    |         |  |  |  |   | 193.9   |    |  |  |  |   | (91.4   | )  |  |  |  |   | 128.8   |    |
| Incometax provision(benefit)                 |  |  |        |   | — |    |  |  |                       |   | (28.7   | )                    |  |  |              |   | 12.4    |         |  |  |  |   | 63.4    |    |  |  |  |   | — |    |  |  |  |   | 47.1    |    |
| Minorityinterests                            |  |  |        |   | (5.2    | )  |  |  |                       |   | — |                      |  |  |              |   | — |         |  |  |  |   | (5.2    | )  |  |  |  |   | 5.2     |    |  |  |  |   | (5.2    | )  |
| Netearnings(loss)                            |  |  |        | $ | 76.5    |    |  |  |                       | $ | (60.4   | )                    |  |  |              | $ | 21.3    |         |  |  |  | $ | 125.3   |    |  |  |  | $ | (86.2   | )  |  |  |  | $ | 76.5    |    |
|                                              |

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Nalco Holdings LLC andSubsidiariesCondensed Consolidating Statement ofOperationsNine Months ended September  30,2005(dollars inmillions)

|                                              |  |  |        |   |         |         |  |  |                       |   |         |                           |  |  |              |   |         |              |  |  |  |   |         |         |  |  |  |   |         |         |  |  |  |   |         |         |
|----------------------------------------------|--|--|--------|---|---------|---------|--|--|-----------------------|---|---------|---------------------------|--|--|--------------|---|---------|--------------|--|--|--|---|---------|---------|--|--|--|---|---------|---------|--|--|--|---|---------|---------|
|                                         |  |  | Parent |   |         | Issuer  |  |  | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |  | Eliminations |   |         | Consolidated |
| Netsales                                     |  |  |        | $ | — |    |  |  |                       | $ | 862.8   |                      |  |  |              | $ | 457.9   |         |  |  |  | $ | 1,360.1 |    |  |  |  | $ | (232.0  | )  |  |  |  | $ | 2,448.8 |    |
| Operatingcosts andexpenses:                  |  |  |        |   |    |    |  |  |                       |   |    |                      |  |  |              |   |    |         |  |  |  |   |    |    |  |  |  |   |    |    |  |  |  |   |    |    |
| Costof productsold                           |  |  |        |   | — |    |  |  |                       |   | 562.0   |                      |  |  |              |   | 302.9   |         |  |  |  |   | 718.1   |    |  |  |  |   | (232.0  | )  |  |  |  |   | 1,351.0 |    |
| Selling,administrative, and researchexpenses |  |  |        |   | — |    |  |  |                       |   | 290.5   |                      |  |  |              |   | 87.7    |         |  |  |  |   | 394.0   |    |  |  |  |   | — |    |  |  |  |   | 772.2   |    |
| Amortizationof intangibleassets              |  |  |        |   | — |    |  |  |                       |   | 25.0    |                      |  |  |              |   | 8.0     |         |  |  |  |   | 28.4    |    |  |  |  |   | — |    |  |  |  |   | 61.4    |    |
| Businessoptimizationexpenses                 |  |  |        |   | — |    |  |  |                       |   | 3.9     |                      |  |  |              |   | 0.5     |         |  |  |  |   | 16.9    |    |  |  |  |   | — |    |  |  |  |   | 21.3    |    |
| Totaloperating costs andexpenses             |  |  |        |   | — |    |  |  |                       |   | 881.4   |                      |  |  |              |   | 399.1   |         |  |  |  |   | 1,157.4 |    |  |  |  |   | (232.0  | )  |  |  |  |   | 2,205.9 |    |
| Operatingearnings(loss)                      |  |  |        |   | — |    |  |  |                       |   | (18.6   | )                    |  |  |              |   | 58.8    |         |  |  |  |   | 202.7   |    |  |  |  |   | — |    |  |  |  |   | 242.9   |    |
| Otherincome (expense),net                    |  |  |        |   | 41.6    |    |  |  |                       |   | 60.1    |                      |  |  |              |   | 20.2    |         |  |  |  |   | (58.7   | )  |  |  |  |   | (66.0   | )  |  |  |  |   | (2.8    | )  |
| Interestincome                               |  |  |        |   | — |    |  |  |                       |   | 5.1     |                      |  |  |              |   | 8.4     |         |  |  |  |   | 30.2    |    |  |  |  |   | (37.5   | )  |  |  |  |   | 6.2     |    |
| Interestexpense                              |  |  |        |   | — |    |  |  |                       |   | (192.4  | )                    |  |  |              |   | (9.9    | )       |  |  |  |   | (6.0    | )  |  |  |  |   | 37.5    |    |  |  |  |   | (170.8  | )  |
| Earnings(loss) before incometaxes            |  |  |        |   | 41.6    |    |  |  |                       |   | (145.8  | )                    |  |  |              |   | 77.5    |         |  |  |  |   | 168.2   |    |  |  |  |   | (66.0   | )  |  |  |  |   | 75.5    |    |
| Incometax provision(benefit)                 |  |  |        |   | — |    |  |  |                       |   | (28.4   | )                    |  |  |              |   | 13.6    |         |  |  |  |   | 48.7    |    |  |  |  |   | — |    |  |  |  |   | 33.9    |    |
| Minorityinterests                            |  |  |        |   | (4.4    | )  |  |  |                       |   | — |                      |  |  |              |   | — |         |  |  |  |   | (4.5    | )  |  |  |  |   | 4.5     |    |  |  |  |   | (4.4    | )  |
| Netearnings(loss)                            |  |  |        | $ | 37.2    |    |  |  |                       | $ | (117.4  | )                    |  |  |              | $ | 63.9    |         |  |  |  | $ | 115.0   |    |  |  |  | $ | (61.5   | )  |  |  |  | $ | 37.2    |    |
|                                              |

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Nalco Holdings LLC andSubsidiariesCondensed Consolidating Statement of Cash FlowsNine Months ended September  30,  2006(dollars inmillions)

|                                                    |  |  |        |   |         |         |  |  |                       |   |         |                           |  |  |              |   |         |              |  |  |  |   |        |         |  |  |  |   |         |         |  |  |  |   |         |         |
|----------------------------------------------------|--|--|--------|---|---------|---------|--|--|-----------------------|---|---------|---------------------------|--|--|--------------|---|---------|--------------|--|--|--|---|--------|---------|--|--|--|---|---------|---------|--|--|--|---|---------|---------|
|                                               |  |  | Parent |   |         | Issuer  |  |  | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |  | Eliminations |   |         | Consolidated |
| Operatingactivities                                |  |  |        |   |    |    |  |  |                       |   |    |                      |  |  |              |   |    |         |  |  |  |   |   |    |  |  |  |   |    |    |  |  |  |   |    |    |
| Netearnings(loss)                                  |  |  |        | $ | 76.5    |    |  |  |                       | $ | (60.4   | )                    |  |  |              | $ | 21.3    |         |  |  |  | $ | 125.2  |    |  |  |  | $ | (86.1   | )  |  |  |  | $ | 76.5    |    |
| Non-cashadjustments                                |  |  |        |   | (76.5   | )  |  |  |                       |   | 33.2    |                      |  |  |              |   | 13.8    |         |  |  |  |   | 95.8   |    |  |  |  |   | 80.1    |    |  |  |  |   | 146.4   |    |
| Changesin operating assets andliabilities          |  |  |        |   | — |    |  |  |                       |   | 62.7    |                      |  |  |              |   | (1.1    | )       |  |  |  |   | (81.4  | )  |  |  |  |   | — |    |  |  |  |   | (19.8   | )  |
| Netcash provided by (used for) operatingactivities |  |  |        |   | — |    |  |  |                       |   | 35.5    |                      |  |  |              |   | 34.0    |         |  |  |  |   | 139.6  |    |  |  |  |   | (6.0    | )  |  |  |  |   | 203.1   |    |
| Investingactivities                                |  |  |        |   |    |    |  |  |                       |   |    |                      |  |  |              |   |    |         |  |  |  |   |   |    |  |  |  |   |    |    |  |  |  |   |    |    |
| Additionsto property, plant, and equipment,net     |  |  |        |   | — |    |  |  |                       |   | (32.1   | )                    |  |  |              |   | (0.2    | )       |  |  |  |   | (27.3  | )  |  |  |  |   | — |    |  |  |  |   | (59.6   | )  |
| Businesspurchases/sales,net                        |  |  |        |   |    |    |  |  |                       |   | (3.7    | )                    |  |  |              |   | — |         |  |  |  |   | (10.6  | )  |  |  |  |   | 14.3    |    |  |  |  |   | — |    |
| Otherinvestingactivities                           |  |  |        |   | — |    |  |  |                       |   | (13.0   | )                    |  |  |              |   | (33.7   | )       |  |  |  |   | (126.6 | )  |  |  |  |   | 175.1   |    |  |  |  |   | 1.8     |    |
| Netcash provided by (used for) investingactivities |  |  |        |   | — |    |  |  |                       |   | (48.8   | )                    |  |  |              |   | (33.9   | )       |  |  |  |   | (164.5 | )  |  |  |  |   | 189.4   |    |  |  |  |   | (57.8   | )  |
| Financingactivities                                |  |  |        |   |    |    |  |  |                       |   |    |                      |  |  |              |   |    |         |  |  |  |   |   |    |  |  |  |   |    |    |  |  |  |   |    |    |
| Cashdividends                                      |  |  |        |   | — |    |  |  |                       |   | — |                      |  |  |              |   | (0.9    | )       |  |  |  |   | (5.1   | )  |  |  |  |   | 6.0     |    |  |  |  |   | — |    |
| Netborrowings (repayments) ofdebt                  |  |  |        |   | — |    |  |  |                       |   | 14.1    |                      |  |  |              |   | — |         |  |  |  |   | 30.8   |    |  |  |  |   | (175.1  | )  |  |  |  |   | (130.2  | )  |
| Capitalcontributions                               |  |  |        |   | — |    |  |  |                       |   | — |                      |  |  |              |   | — |         |  |  |  |   | 14.3   |    |  |  |  |   | (14.3   | )  |  |  |  |   | — |    |
| Otherfinancingactivities                           |  |  |        |   | — |    |  |  |                       |   | (0.8    | )                    |  |  |              |   | — |         |  |  |  |   | (2.6   | )  |  |  |  |   | — |    |  |  |  |   | (3.4    | )  |
| Netcash provided by (used for) financingactivities |  |  |        |   | — |    |  |  |                       |   | 13.3    |                      |  |  |              |   | (0.9    | )       |  |  |  |   | 37.4   |    |  |  |  |   | (183.4  | )  |  |  |  |   | (133.6  | )  |
| Effectof exchange rate changes oncash              |  |  |        |   | — |    |  |  |                       |   | — |                      |  |  |              |   | — |         |  |  |  |   | 0.4    |    |  |  |  |   | — |    |  |  |  |   | 0.4     |    |
| Increase(decrease) incash                          |  |  |        |   | — |    |  |  |                       |   | — |                      |  |  |              |   | (0.8    | )       |  |  |  |   | 12.9   |    |  |  |  |   | — |    |  |  |  |   | 12.1    |    |
| Cashat beginning ofperiod                          |  |  |        |   | — |    |  |  |                       |   | — |                      |  |  |              |   | 1.7     |         |  |  |  |   | 29.1   |    |  |  |  |   | — |    |  |  |  |   | 30.8    |    |
| Cashat end ofperiod                                |  |  |        | $ | — |    |  |  |                       | $ | — |                      |  |  |              | $ | 0.9     |         |  |  |  | $ | 42.0   |    |  |  |  | $ | — |    |  |  |  | $ | 42.9    |    |
|                                                    |

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Nalco Holdings LLC andSubsidiariesCondensed Consolidating Statement of Cash FlowsNine Months ended September  30,  2005(dollars inmillions)

|                                                    |  |  |        |   |         |         |  |  |                       |   |         |                           |  |  |              |   |         |              |  |  |  |   |         |         |  |  |  |   |         |         |  |  |  |   |         |         |
|----------------------------------------------------|--|--|--------|---|---------|---------|--|--|-----------------------|---|---------|---------------------------|--|--|--------------|---|---------|--------------|--|--|--|---|---------|---------|--|--|--|---|---------|---------|--|--|--|---|---------|---------|
|                                               |  |  | Parent |   |         | Issuer  |  |  | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |  | Eliminations |   |         | Consolidated |
| Operatingactivities                                |  |  |        |   |    |    |  |  |                       |   |    |                      |  |  |              |   |    |         |  |  |  |   |    |    |  |  |  |   |    |    |  |  |  |   |    |    |
| Netearnings(loss)                                  |  |  |        | $ | 37.2    |    |  |  |                       | $ | (117.4  | )                    |  |  |              | $ | 63.9    |         |  |  |  | $ | 115.0   |    |  |  |  | $ | (61.5   | )  |  |  |  | $ | 37.2    |    |
| Non-cashadjustments                                |  |  |        |   | (37.2   | )  |  |  |                       |   | 65.7    |                      |  |  |              |   | 42.2    |         |  |  |  |   | 81.9    |    |  |  |  |   | 39.3    |    |  |  |  |   | 191.9   |    |
| Changesin operating assets andliabilities          |  |  |        |   | — |    |  |  |                       |   | 88.0    |                      |  |  |              |   | (85.9   | )       |  |  |  |   | (57.2   | )  |  |  |  |   | — |    |  |  |  |   | (55.1   | )  |
| Netcash provided by (used for) operatingactivities |  |  |        |   | — |    |  |  |                       |   | 36.3    |                      |  |  |              |   | 20.2    |         |  |  |  |   | 139.7   |    |  |  |  |   | (22.2   | )  |  |  |  |   | 174.0   |    |
| Investingactivities                                |  |  |        |   |    |    |  |  |                       |   |    |                      |  |  |              |   |    |         |  |  |  |   |    |    |  |  |  |   |    |    |  |  |  |   |    |    |
| Acquisitionof Ondeo NalcoGroup                     |  |  |        |   | — |    |  |  |                       |   | (3.2    | )                    |  |  |              |   | — |         |  |  |  |   | — |    |  |  |  |   | — |    |  |  |  |   | (3.2    | )  |
| Additionsto property, plant, and equipment,net     |  |  |        |   | — |    |  |  |                       |   | (15.6   | )                    |  |  |              |   | (6.9    | )       |  |  |  |   | (22.8   | )  |  |  |  |   | — |    |  |  |  |   | (45.3   | )  |
| Otherinvestingactivities                           |  |  |        |   | — |    |  |  |                       |   | (4.2    | )                    |  |  |              |   | (10.3   | )       |  |  |  |   | (68.1   | )  |  |  |  |   | 81.7    |    |  |  |  |   | (0.9    | )  |
| Netcash provided by (used for) investingactivities |  |  |        |   | — |    |  |  |                       |   | (23.0   | )                    |  |  |              |   | (17.2   | )       |  |  |  |   | (90.9   | )  |  |  |  |   | 81.7    |    |  |  |  |   | (49.4   | )  |
| Financingactivities                                |  |  |        |   |    |    |  |  |                       |   |    |                      |  |  |              |   |    |         |  |  |  |   |    |    |  |  |  |   |    |    |  |  |  |   |    |    |
| Cashdividends                                      |  |  |        |   | — |    |  |  |                       |   | — |                      |  |  |              |   | (2.7    | )       |  |  |  |   | (19.5   | )  |  |  |  |   | 22.2    |    |  |  |  |   | — |    |
| Netborrowings (repayments) ofdebt                  |  |  |        |   | — |    |  |  |                       |   | (11.6   | )                    |  |  |              |   | 1.0     |         |  |  |  |   | (15.0   | )  |  |  |  |   | (79.4   | )  |  |  |  |   | (105.0  | )  |
| Capitalcontributions                               |  |  |        |   | — |    |  |  |                       |   | — |                      |  |  |              |   | — |         |  |  |  |   | 2.3     |    |  |  |  |   | (2.3    | )  |  |  |  |   | — |    |
| Otherfinancingactivities                           |  |  |        |   | — |    |  |  |                       |   | (1.3    | )                    |  |  |              |   | 0.1     |         |  |  |  |   | (4.4    | )  |  |  |  |   | — |    |  |  |  |   | (5.6    | )  |
| Netcash used for financingactivities               |  |  |        |   | — |    |  |  |                       |   | (12.9   | )                    |  |  |              |   | (1.6    | )       |  |  |  |   | (36.6   | )  |  |  |  |   | (59.5   | )  |  |  |  |   | (110.6  | )  |
| Effectof exchange rate changes oncash              |  |  |        |   | — |    |  |  |                       |   | — |                      |  |  |              |   | — |         |  |  |  |   | (0.5    | )  |  |  |  |   | — |    |  |  |  |   | (0.5    | )  |
| Increaseincash                                     |  |  |        |   | — |    |  |  |                       |   | 0.4     |                      |  |  |              |   | 1.4     |         |  |  |  |   | 11.7    |    |  |  |  |   | — |    |  |  |  |   | 13.5    |    |
| Cashat beginning ofperiod                          |  |  |        |   | — |    |  |  |                       |   | 1.3     |                      |  |  |              |   | 0.8     |         |  |  |  |   | 31.1    |    |  |  |  |   | — |    |  |  |  |   | 33.2    |    |
| Cashat end ofperiod                                |  |  |        | $ | — |    |  |  |                       | $ | 1.7     |                      |  |  |              | $ | 2.2     |         |  |  |  | $ | 42.8    |    |  |  |  | $ | — |    |  |  |  | $ | 46.7    |    |
|                                                    |

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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 theAcquisition.

The statements in the discussion andanalysis regarding industry outlook, our expectations regarding theperformance of our business and the other non-historical statements inthe discussion and analysis are forward-looking statements. Theseforward-looking statements are subject to numerous risks anduncertainties. Our actual results may differ materially from thosecontained in or implied by any forward-looking statements. You shouldread the following discussion together with the consolidated financialstatements of Nalco Holdings LLC included elsewhere in thisreport.

‘‘Safe Harbor’’Statement Under Private Securities Litigation Reform Act of1995

This Quarterly Report for the fiscal quarter endedSeptember  30,  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,’’ orfuture 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, amongothers:

|  |              |                          |
|--|--------------|--------------------------|
|  | •  | our substantialleverage; |

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

|  |              |                                                                          |
|--|--------------|--------------------------------------------------------------------------|
|  | •  | increases in interest ratesas a result of our variable rateindebtedness; |

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

|  |              |                                                                                                                                                                                                      |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | changes to, or eliminationof, legal or regulatory requirements imposed upon our customers whichcould adversely affect portions of our business, such as that whichserves the synthetic-fuelindustry; |

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

|  |              |                                               |
|--|--------------|-----------------------------------------------|
|  | •  | risks associated with ournon-U.S. operations; |

|  |              |                                         |
|--|--------------|-----------------------------------------|
|  | •  | fluctuations incurrency exchange rates; |

|  |              |                                                    |
|--|--------------|----------------------------------------------------|
|  | •  | highcompetition in the markets in which weoperate; |

|  |              |                                                                |
|--|--------------|----------------------------------------------------------------|
|  | •  | adverse changes toenvironmental, health and safetyregulations; |

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

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

|  |              |                                           |
|--|--------------|-------------------------------------------|
|  | •  | inability toachieve expected costsavings; |

|  |              |                                                   |
|--|--------------|---------------------------------------------------|
|  | •  | difficulties in securing theraw materials we use; |

|  |              |                                                                                              |
|--|--------------|----------------------------------------------------------------------------------------------|
|  | •  | our significantpension benefit obligations and the current underfunding in our pensionplans; |

|  |              |                                                                |
|--|--------------|----------------------------------------------------------------|
|  | •  | our ability to realize the fullvalue of our intangible assets; |

|  |              |                                                                                                                                  |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------|
|  | •  | ourability to attract and retain skilled employees, particularly researchscientists, technical sales professionals andengineers; |

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

|  |              |                                                                                  |
|--|--------------|----------------------------------------------------------------------------------|
|  | •  | thepossibility that our owners’ interests will conflict with oursor yours. |

There may be other factors that may cause ouractual results to differ materially from the forward-lookingstatements. For further information regarding risk factors, pleaserefer to Part I, Item 1A in the Company’s Annual Report on Form10-K for the year ended December  31,  2005, Part II, Item1A of the Quarterly Report on Form 10-Q for the quarter endedJune  30,  2006, and Part II, Item 1A of this QuarterlyReport.

All forward-looking statements attributable to usor persons acting on our behalf apply only as of the date of thisQuarterly Report and are expressly qualified in their entirety by thecautionary statements included in this Quarterly Report. We undertakeno obligation to update or revise forward-looking statements which maybe made to reflect events or circumstances that arise after the datemade or to reflect the occurrence of unanticipated events.

Useof Non-GAAP Financial Measures

EBITDA, Adjusted EBITDAand Free Cash Flow are measures used by management to measure operatingperformance. Adjusted EBITDA is also used to determine our compliancewith financial covenants and our ability to engage in certainactivities such as incurring additional debt and making certainpayments.

EBITDA is defined as net earnings plusinterest, taxes, depreciation and amortization. Adjusted EBITDA isdefined as EBITDA further adjusted for certain cash and non-cashcharges, as permitted under our senior discount note, senior note andsenior subordinated note indentures and our senior credit facility.Free Cash Flow is defined as net cash provided by operating activities,less capital expenditures and minority interest charges.

We believe EBITDA is useful to the investors because it isfrequently used by securities analysts, investors and other interestedparties in the evaluation of companies in our industry. We consider theinclusion of supplementary adjustments to EBITDA applied in presentingAdjusted EBITDA appropriate to provide additional information toinvestors to demonstrate compliance with our financing covenants. Webelieve Free Cash Flow provides investors with a measure of our abilityto generate cash for the repayment of debt.

EBITDA,Adjusted EBITDA and Free Cash Flow are not recognized terms under U.S.GAAP and do not purport to be alternatives to net earnings (loss) as anindicator of operating performance or to cash flows from operatingactivities as a measure of liquidity. The most direct comparable GAAPfinancial measures of each non-GAAP financial measure, as well as thereconciliation between each non-GAAP financial measure and the GAAPfinancial measure, are presented in the discussions of the non-GAAPfinancial measures. Because not all companies use identicalcalculations, our measures may not be comparable to other similarlytitled measures of other companies.

Executive LevelOverview

Third quarter sales increased 9.7% to$915.4  million, including 7.8% organic growth and1.9% in favorable foreign currency translation rate changes,from prior-year revenues of $834.9 milion. Organic 

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

growth excludes the impacts of changes inforeign currency translation rates and acquisitions and divestitures.In addition to obtaining 3.8% price improvement, real salesgrowth – organic growth less price that simply passes on highercosts – was 4.0% which moves Nalco closer to our generalexpectations for 5% real growth in base business sales.

Energy Services again led Nalco’s growth efforts,delivering its third straight quarter of 15% or better organicrevenue growth, with 17.4% improvement in the quarter endedSeptember  30. Strong product portfolios and substantialinvestments we made training new sales engineers and servicetechnicians ahead of growth are key contributors to expansion in theEnergy Services segment.

Our Downstream refinery andpetrochemical business continues to grow at the nearly 15%organic rate delivered year-to-date. The Adomite well-service businesswas up just over 20% in the third quarter. While price was animportant contributor to the organic sales increase, real growth wasalso ahead of the 11.3% average growth pace for rig counts inthe quarter. Our Oil Field services business grew at a 20%organic pace in the quarter ended September  30, an accelerationfrom the 15% organic growth pace achieved through the first sixmonths of 2006. This acceleration largely results from not repeatingthe closures of deepwater Gulf of Mexico platforms prior to andfollowing hurricanes Katrina and Rita last year.

Priceimprovement played a role in the 250 basis points direct contributionmargin expansion in Energy Services versus the prior year. In addition,segment results include an initial $1.5  million businessinterruption insurance recovery from last year’s hurricanes. Wecontinue to work toward additional insurance recoveries. At its currentpace, Energy Services should pass the $1  billion mark in salesbefore year-end.

Industrial and Institutional Services(I&IS) sales grew 5.1% organically. Among the higher-growthregions and/or industries were: Asia/Pacific mining, global marine,North American chemical and food and beverage, Latin America, EasternEurope, Africa and the Middle East. The chemical business in the UnitedStates benefited from Gulf Coast chemical plants being fullyoperational this year.

High oil prices in the early partof the third quarter contributed to a significant decline in synfuelsales. Those sales began to return in September as oil prices droppedunder the $70 per barrel mark. The I&IS business expanded itsdirect contribution margins in the quarter by 120 basis points comparedto the prior year.

Paper Services sales increased2.1% organically – on pace with year-to-date growth of2.2%. All of the increase comes from price. Latin America grewnicely, Asia/Pacific improved and North America is nearly stable, butEuropean paper declined both organically and in real terms. PaperServices direct contribution margin improved from first half results,but remains well below year-ago levels and even further behind what weconsider normal performance levels.

Our price achievementin the Paper market is well below necessary levels given the pace ofpurchased material and freight cost increases since mid-2004. Werecently announced additional price increases for the Paper Servicessegment.

Third quarter net earnings increased to$36.1  million from 2005 third quarter earnings of $23.2million.

Adjusted EBITDA, which is used to determinecompliance with the Company’s debt covenants, increased11.3% to $183.1  million from $164.5  million in thethird quarter of 2005. During the third quarter, price contributedabout $31  million to improvement from the prior year, whilepurchased material and freight costs increased $18  million overthat same period. This is the first time that we have succeeded inreducing the lag between our price increases and cost increases to lessthan one quarter since mid-2004. The price-cost differential accountsfor nearly all of our Adjusted EBITDA improvement.

Wehave made strong progress this year in developing the right structuresfor our business – minimizing the impact of double-taxation towhich some of our earnings stream had been exposed in 

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

our immediate, post-LBO structure. We nowestimate our effective income tax rate for the year to be 37.0%.Our third quarter rate of 33.3% includes some one-time impacts,so our year-to-date effective tax rate stands at 36.5%.

Free Cash Flow, which we define as cash flow from operationsless net capital expenditures and minority interest charges, was$117.5  million in the third quarter. With our Free Cash Flow inthe quarter, we repaid $114.0  million of Term Loan B debt in thequarter ended September  30. In addition, we more fully utilizedour receivables securitization facility to pay off the $25million that had been outstanding on our revolver at the end of thesecond quarter. Net cash provided by operating activities is reconciledto Free Cash Flow as follows:

|                                                |  |  |                                    |   |       |                                   |  |  |  |   |       |         |
|------------------------------------------------|--|--|------------------------------------|---|-------|-----------------------------------|--|--|--|---|-------|---------|
| (dollarsin millions)                           |  |  | Three MonthsendedSeptember 30,2006 |   |       | Three MonthsendedSeptember30,2005 |
| Net cash provided by operatingactivities       |  |  |                                    | $ | 141.3 |                              |  |  |  | $ | 143.6 |    |
| Minorityinterests                              |  |  |                                    |   | (1.7  | )                            |  |  |  |   | (1.6  | )  |
| Additions toproperty, plant, and equipment,net |  |  |                                    |   | (22.1 | )                            |  |  |  |   | (20.3 | )  |
| Freecashflow                                   |  |  |                                    | $ | 117.5 |                              |  |  |  | $ | 121.7 |    |
|                                                |

Operatingworking capital continues to require a use of cash. While inventoriesand payables remained stable in the third quarter, we used additionalworking capital for receivables. We expect to end the year with workingcapital requiring a use of cash of somewhat more than the $40million previously estimated. However, we will drive improvement– primarily in payables and receivables –  beforeyear-end.

Year-to-date Results andOutlook

Through nine months, Nalco sales of$2.66  billion are up 8.5% from $2.45  billion inthe first three quarters of 2005, including real growth of 3.7%and 4.5% price improvement. We expect to end the year above our7% organic growth target.

Geographically, LatinAmerica continues to be our fastest growth region in nominal terms,followed by Asia/Pacific, North America and then Europe, Africa and theMiddle East. Year-to-date, currency translations boosted Latin Americansales, but were drags in Europe and several Asianmarkets.

Our focus in the fourth quarter is on deliveringa strong finish to 2006, making further progress toward targeted5% real growth in our base business while continuing to obtainprice. This outlook assumes that cost increases will moderate, and thatour most concentrated efforts to obtain additional price will be in thePaper industry. Our oil field and chemical businesses in and around theGulf of Mexico should improve in the fourth quarter, as a substantialnumber of Gulf platforms and nearby chemical plants did not reopenpost-hurricanes until late in the fourth quarter 2005 and some wellinto 2006.

At $76.5  million, Septemberyear-to-date net earnings are more than double September  2005year-to-date net earnings of $37.2  million.

Year-to-date adjusted EBITDA is up 10.7% to$487.1  million from $440.0  million, and remains on trackto reach our 12% growth target for the year. We expect fourthquarter results to be modestly ahead of the third quarter, providingthe 3 percent sequential improvement needed to deliver on our targeted12% growth in Adjusted EBITDA this year. This would put thefourth quarter 15% ahead of the same quarter of 2005. Inaddition to not repeating raw material cost spikes and sales lossesfrom last year’s hurricanes, we expect real growth, price andcost improvement programs to allow us to reach our Adjusted EBITDAtarget. Included in the forecast is an accrual for variablecompensation programs in the fourth quarter, an increase of $8million compared to the same period of 2005. In the quarter endedSeptember  30, our variable compensation accrual was anadditional $9  million above the same period of 2005.

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

Since costs began escalating in thethird quarter of 2004, purchased material and freight increases havetotaled about $270  million across the Company. Price actionssince that time have recovered about $261  million. As a Company,we expect cumulative price capture to catch up to purchased materialand freight cost increases by year-end.

While generallypleased with the performance of the business, we have fallen behind inachieving planned cost savings. Year-to-date cost savings stand at$36  million compared to our full-year target of $75million. We are late generating savings from two major projects –a new order entry process and a new customer service center in Europe.While late, both of these projects are expected to hit their plannedsavings targets. It is very unlikely now that we will hit our$75  million cost savings target, after delivering $88 and$89  million in the past two years,respectively.

Contributing to the cost impact is a seriesof investments we made in sales engineers and R&D to support highgrowth in Energy Services and developing countries that have alreadyexceeded the $17  million investment target we established at thebeginning of the year.

At year-end, we expect our annualeffective tax rate to be at 37.0%. Going forward, we believethat our effective tax rate for 2006 of 37.0% should representthe upper limit of our rate. We continue to work on programs to makefurther improvements.

Year-to-date Free Cash Flow standsat $138.3  million, and we have left our target unchanged for theyear at $170  million. While we expect some cash tax benefitsfrom our reduced tax rate, these gains may be partly offset byexpectations for higher-than-planned business process optimizationexpenses in the fourth quarter. Net cash provided by operatingactivities is reconciled to Free Cash Flow asfollows:

|                                                |  |  |                                   |   |       |                                    |  |  |  |   |       |         |
|------------------------------------------------|--|--|-----------------------------------|---|-------|------------------------------------|--|--|--|---|-------|---------|
| (dollars inmillions)                           |  |  | Nine MonthsendedSeptember 30,2006 |   |       | Nine Monthsended September30, 2005 |
| Net cash provided by operatingactivities       |  |  |                                   | $ | 203.1 |                               |  |  |  | $ | 174.0 |    |
| Minorityinterests                              |  |  |                                   |   | (5.2  | )                             |  |  |  |   | (4.4  | )  |
| Additions toproperty, plant, and equipment,net |  |  |                                   |   | (59.6 | )                             |  |  |  |   | (45.3 | )  |
| Freecashflow                                   |  |  |                                   | $ | 138.3 |                               |  |  |  | $ | 124.3 |    |
|                                                |

Ourcapital expenditure program, about $60  million through threequarters, would appear to be well below the $105  million spendwe projected this year. Last year, however, we spent roughly 40%of our capital in the fourth quarter. Heavy fourth quarter capitalspending is typical of Nalco. A similar spend rate this year would putus at about $100  million in capital expenditures, or very nearto our expected spend level this year.

Results of Operations– Consolidated

Quarter Ended September30,  2006 Compared to the Quarter Ended September30,  2005

Net sales for the threemonths ended September  30,  2006 were $915.4million, a 9.7% increase from the $834.9  million reportedfor the three months ended September  30,  2005. On anorganic basis, which excludes the impacts of changes in foreigncurrency translation rates and acquisitions and divestitures, net saleswere up 7.8%. Of this improvement, 3.8% was attributed toprice increase, while the remaining 4.0% was driven by realgrowth.

Gross profit, defined as thedifference between net sales and cost of product sold, of $413.1million for the three months ended September  30,  2006increased by $36.1  million, or 9.6%, over the$377.0  million for the three months ended September30,  2005. On an organic basis, gross profit increased by7.7%. Contributing to the improvement was the impact of higherselling prices and sales 

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

volumes, partly offset by the effect ofincreased costs of raw and other purchased materials. An initialbusiness interruption recovery of $1.5  million related to lastyear’s hurricanes was recognized during the three months endedSeptember  30,  2006, which also contributed to theincrease in gross profit. Gross profit margin for the three monthsended September  30,  2006 was 45.1% compared to45.2% for the year-ago period.

Selling,administrative, and research expenses for the three months endedSeptember  30,  2006 of $277.5  million increased$26.3  million, or 10.5%, from $251.2  million forthe three months ended September  30,  2005. On an organicbasis, selling, administrative, and research expenses increased8.6%. This was mostly attributable to higher salaries, employeeincentive plan expenses, employee benefits, travel, and outsideconsulting related to our work process redesign initiatives and therationalization of our legal entitystructure.

Amortization of intangible assets was$17.6  million and $20.3  million for the three monthsended September  30,  2006 and 2005, respectively. Thedecrease was attributable to lower amortization of customerrelationships, which are amortized using an acceleratedmethod.

Business optimization expenses,representing mostly employee severance and related costs associatedwith the continuing redesign and optimization of business and workprocesses, were $3.0  million for the three months endedSeptember  30,  2006, a $0.5  million decrease fromthe $3.5  million for the three months ended September30,  2005.

Other income (expense), netfavorably changed by $0.1  million. This was largely the resultof higher earnings of our affiliated entities.

Netinterest expense, defined as the combination of interest incomeand interest expense, of $58.3  million for the three monthsended September  30,  2006 increased by $2.1  millionfrom the $56.2  million reported for the three months endedSeptember  30,  2005. The impact of higher interest rateson variable rate borrowings more than offset the impact of a loweraverage debt level compared to the year-ago period.

The effective tax rate for the three months endedSeptember  30,  2006 was 33.3%. The rate varies fromthe U.S. federal statutory income tax rate of 35% primarily dueto the incremental tax on dividends received from non-U.S.subsidiaries, foreign taxes provided at other than the 35% U.S.statutory rate, U.S. state income taxes, nondeductible expenses, andother permanent 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 September  30,2005.

During the three months ended September30,  2006, the income tax provision was favorably affected by areduction in the estimate of the annual effective tax rate. The taxprovision was also reduced by the recognition of certain discrete itemsin the quarter, which lowered the effective tax rate for the thirdquarter 2006 by 2.4 percentage-points.

Minorityinterest expense was $0.1  million higher than the$1.6  million for the three months ended September30,  2005, which was due to mixed results for theCompany’s non-wholly owned subsidiaries.

Nine MonthsEnded September  30,  2006 Compared to the Nine MonthsEnded September  30,  2005

Netsales for the nine months ended September  30,  2006were $2,655.8  million, an 8.5% increase from the$2,448.8  million reported for the nine months endedSeptember  30,  2005. On an organic basis, which excludesthe impacts of changes in foreign currency translation rates andacquisitions and divestitures, net sales were up 8.2%. Of thisimprovement, 4.5% was attributed to price increase, while theremaining 3.7% was driven by real growth.

Grossprofit, defined as the difference between net sales andcost of product sold, of $1,186.8  million for the nine monthsended September  30,  2006 increased by $89.0million, or 8.1%, over the 

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

$1,097.8  million for the nine monthsended September  30,  2005. On an organic basis, grossprofit increased by 7.9%. Higher sales volume and the impact ofhigher selling prices, partly offset by the effect of increased costsof raw and other purchased materials, contributed to this change. Theimprovement was also partly attributable to an inventory write-off of$9.0  million during the nine months ended September30,  2005. Also contributing to the improvement was an initialbusiness interruption recovery of $1.5  million related to lastyear’s hurricanes that was recognized in 2006. Gross profitmargin for the nine months ended September  30,  2006 was44.7% compared to 44.8% for the year-agoperiod.

Selling, administrative, and researchexpenses for the nine months ended September  30,2006 of $823.6  million increased $51.4  million, or6.7%, from $772.2  million for the nine months endedSeptember  30,  2005. On an organic basis, selling,administrative, and research expenses increased 6.6%. This wasmainly attributable to selling expense, which was primarily due tohigher salaries, commission expenses, employee benefits, bad debts, andoutside services. Administrative expense increased from the year-agoperiod due to higher employee incentive plan expenses, employeebenefits, and outside consulting related to our work process redesigninitiatives and the rationalization of our legal entitystructure.

Amortization of intangible assets was$52.4  million and $61.4  million for the nine months endedSeptember  30,  2006 and 2005, respectively. The decreasewas attributable to lower amortization of customer relationships, whichare amortized using an accelerated method.

Businessoptimization expenses, representing mostly employee severance andrelated costs associated with the continuing redesign and optimizationof business and work processes, were $8.6  million for the ninemonths ended September  30,  2006, a $12.7  milliondecrease from the $21.3  million for the nine months endedSeptember  30,  2005. The nine months endedSeptember  30,  2005 included a $14.2  million chargeto support a plan to delayer our management structure and reduce costsin lower-performing business units.

Other income(expense), net favorably changed by $2.3  million from thenet expense of $2.8  million for the nine months endedSeptember  30,  2005. A $2.4  million impairment losson a business held for sale recognized in 2005 and a $2.0million increase in equity in earnings of unconsolidated subsidiariescontributed to the improvement. Partly offsetting these favorableyear-over-year changes was an unfavorable change in foreign exchangegains and losses due to the weakening of the U.S. dollar versus theeuro during 2006.

Net interest expense, definedas the combination of interest income and interest expense, of$172.9  million for the nine months ended September30,  2006 increased by $8.3  million from the $164.6million reported for the nine months ended September  30,2005. The impact of higher interest rates on variable rate borrowingsmore than offset the impact of a lower average debt level compared tothe year-ago period.

The effective tax rate forthe nine months ended September  30,  2006 was36.5%. The rate varies from the U.S. federal statutory incometax rate of 35% primarily due to the incremental tax ondividends received from non-U.S. subsidiaries, foreign taxes providedat other than the 35% U.S. statutory rate, U.S. state incometaxes, nondeductible expenses, and other permanentdifferences.

The aforementioned items also contributed tothe variation between the U.S. federal statutory income tax rate andthe Company’s effective income tax rate for the nine monthsended September  30,  2005.

During the ninemonths ended September  30,  2006, the income tax provisionwas favorably affected by a reduction in the estimate of the annualeffective tax rate. The tax provision was also reduced by therecognition of certain discrete items in the period, which lowered theeffective tax rate for the nine months ended September30,  2006 by 1.3 percentage-points.

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

Minority interest expensewas $0.8  million higher than the $4.4  million for thenine months ended September  30,  2005, reflecting improvedresults for the Company’s non-wholly owned subsidiaries inSpain, Saudi Arabia, and Japan.

Results of Operations –Segment Reporting

Quarter Ended September  30,2006 Compared to the Quarter Ended September  30,2005

Net sales by reportable segment forthe three months ended September  30,  2006 andSeptember  30,  2005 may be compared asfollows:

|                                       |  |  |                   |   |       |                    |  |  |                                                |   |       |                     |  |  |                           |  |      |         |  |  |  |  |      |          |  |  |  |  |         |        |  |  |  |  |      |         |
|---------------------------------------|--|--|-------------------|---|-------|--------------------|--|--|------------------------------------------------|---|-------|---------------------|--|--|---------------------------|--|------|---------|--|--|--|--|------|----------|--|--|--|--|---------|--------|--|--|--|--|------|---------|
|                                  |  |  | ThreeMonths Ended |   |       |               |  |  | Attributableto Changes in the FollowingFactors |
| (dollarsin millions)                  |  |  | September 30,2006 |   |       | September 30, 2005 |  |  | %Change                                        |   |       | CurrencyTranslation |  |  | Acquisitions/Divestitures |  |      | Organic |
| Industrial& InstitutionalServices |  |  |                   | $ | 406.3 |               |  |  |                                                | $ | 379.5 |                |  |  |                           |  | 7.1  | %  |  |  |  |  | 2.0  | %   |  |  |  |  | — |   |  |  |  |  | 5.1  | %  |
| EnergyServices                        |  |  |                   |   | 267.1 |               |  |  |                                                |   | 223.4 |                |  |  |                           |  | 19.6 | %  |  |  |  |  | 2.2  | %   |  |  |  |  | — |   |  |  |  |  | 17.4 | %  |
| PaperServices                         |  |  |                   |   | 181.1 |               |  |  |                                                |   | 173.9 |                |  |  |                           |  | 4.2  | %  |  |  |  |  | 2.1  | %   |  |  |  |  | — |   |  |  |  |  | 2.1  | %  |
| Other                                 |  |  |                   |   | 60.9  |               |  |  |                                                |   | 58.1  |                |  |  |                           |  | 4.8  | %  |  |  |  |  | (0.9 | )%  |  |  |  |  | — |   |  |  |  |  | 5.7  | %  |
| Netsales                              |  |  |                   | $ | 915.4 |               |  |  |                                                | $ | 834.9 |                |  |  |                           |  | 9.7  | %  |  |  |  |  | 1.9  | %   |  |  |  |  | — |   |  |  |  |  | 7.8  | %  |
|                                       |

TheIndustrial and Institutional Services division reported sales of$406.3  million for the three months ended September30,  2006, a 7.1% increase over the $379.5  millionfor the year-ago-period. Price increases accounted for approximatelytwo-thirds of the 5.1% organic change. Double-digit real growthwas reported by our Asian mining and global marine businesses, as wellas in the emerging markets in Eastern Europe, the Middle East andAfrica.

The Energy Services division reported sales of$267.1  million for the three months ended September30,  2006, a 19.6% gain over the $223.4  million forthe three months ended September  30,  2005. Organically,sales improved by 17.4%, with about three-fourths of thisincrease attributed to real growth. All businesses within EnergyServices grew double digits in the quarter, with our Upstream oil fieldproduction and Downstream refinery and petrochemical businessesexpanding at faster-than-market growth rates.

The PaperServices division reported sales of $181.1  million for the threemonths ended September  30,  2006, a 4.2% increaseover the $173.9  million reported for the third quarter of 2005.The North American region reported positive organic growth as a resultof price increases, while solid organic improvements in Latin Americaand Asia were mostly the result of real growth. The European regioncontinues to struggle with customer closures and lost business due tothe price-increase initiatives.

Directcontribution is defined as the difference between net sales andoperating costs, including cost of product sold, selling and serviceexpenses, marketing expenses, research expenses and capital charges.Direct contribution by reportable segment for the three months endedSeptember  30,  2006 and September  30,  2005may be compared asfollows:

|                                        |  |  |                   |   |       |                    |  |  |                                                |   |       |                     |  |  |                           |  |      |          |  |  |  |  |      |          |  |  |  |  |         |        |  |  |  |  |      |          |
|----------------------------------------|--|--|-------------------|---|-------|--------------------|--|--|------------------------------------------------|---|-------|---------------------|--|--|---------------------------|--|------|----------|--|--|--|--|------|----------|--|--|--|--|---------|--------|--|--|--|--|------|----------|
|                                   |  |  | ThreeMonths Ended |   |       |               |  |  | Attributableto Changes in the FollowingFactors |
| (dollarsin millions)                   |  |  | September 30,2006 |   |       | September 30, 2005 |  |  | %Change                                        |   |       | CurrencyTranslation |  |  | Acquisitions/Divestitures |  |      | Organic  |
| Industrial & InstitutionalServices |  |  |                   | $ | 98.7  |               |  |  |                                                | $ | 87.5  |                |  |  |                           |  | 12.8 | %   |  |  |  |  | 2.1  | %   |  |  |  |  | — |   |  |  |  |  | 10.7 | %   |
| EnergyServices                         |  |  |                   |   | 58.0  |               |  |  |                                                |   | 42.8  |                |  |  |                           |  | 35.5 | %   |  |  |  |  | 2.7  | %   |  |  |  |  | — |   |  |  |  |  | 32.8 | %   |
| PaperServices                          |  |  |                   |   | 28.6  |               |  |  |                                                |   | 30.8  |                |  |  |                           |  | (6.9 | )%  |  |  |  |  | 1.9  | %   |  |  |  |  | — |   |  |  |  |  | (8.8 | )%  |
| Other                                  |  |  |                   |   | (15.2 | )             |  |  |                                                |   | (14.2 | )              |  |  |                           |  | (6.9 | )%  |  |  |  |  | (4.6 | )%  |  |  |  |  | — |   |  |  |  |  | (2.3 | )%  |
|                                        |

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

Direct contribution of theIndustrial and Institutional Services division was $98.7  millionfor the three months ended September  30,  2006, anincrease of 12.8% over the $87.5  million reported for thethree months ended September  30,  2005. Sales growthaccounted for the 10.7% organic improvement in directcontribution.

The Energy Services division reported directcontribution of $58.0  million for the three months endedSeptember  30,  2006, a 35.5% increase over the$42.8  million reported for the year-ago period. On an organicbasis, direct contribution increased 32.8%. Higher sales volumeaccounted for most of the increase. Gross profit margins improved asplanned price increases took effect. An initial business interruptioninsurance recovery of $1.5  million related to last year’shurricanes was recognized during the three months endedSeptember  30,  2006, which also contributed to theincrease over the year-ago period.

The Paper Servicesdivision reported direct contribution of $28.6  million for thethree months ended September  30,  2006, a 6.9%decrease from the direct contribution reported for the three monthsended September  30,  2005. Organically, directcontribution was down 8.8%, as costs of raw and other purchasedmaterials continued to exceed price increases.

The directcontribution loss of $15.2  million reported in‘‘Other’’ for the three months endedSeptember  30,  2006, represented an increase of$1.0  million from the $14.2  million direct contributionloss reported in the third quarter 2005.

Nine Months EndedSeptember  30,  2006 Compared to Nine Months EndedSeptember  30,  2005

Net salesby reportable segment for the nine months ended September30,  2006 and September  30,  2005 may be compared asfollows:

|                                        |  |  |                   |   |         |                    |  |  |                                                |   |         |                     |  |  |                           |  |      |          |  |  |  |  |      |          |  |  |  |  |         |        |  |  |  |  |      |         |
|----------------------------------------|--|--|-------------------|---|---------|--------------------|--|--|------------------------------------------------|---|---------|---------------------|--|--|---------------------------|--|------|----------|--|--|--|--|------|----------|--|--|--|--|---------|--------|--|--|--|--|------|---------|
|                                   |  |  | NineMonths Ended  |   |         |               |  |  | Attributableto Changes in the FollowingFactors |
| (dollarsin millions)                   |  |  | September 30,2006 |   |         | September 30, 2005 |  |  | %Change                                        |   |         | CurrencyTranslation |  |  | Acquisitions/Divestitures |  |      | Organic  |
| Industrial & InstitutionalServices |  |  |                   | $ | 1,174.1 |               |  |  |                                                | $ | 1,098.0 |                |  |  |                           |  | 6.9  | %   |  |  |  |  | 0.3  | %   |  |  |  |  | — |   |  |  |  |  | 6.6  | %  |
| EnergyServices                         |  |  |                   |   | 772.7   |               |  |  |                                                |   | 655.5   |                |  |  |                           |  | 17.9 | %   |  |  |  |  | 0.7  | %   |  |  |  |  | — |   |  |  |  |  | 17.2 | %  |
| PaperServices                          |  |  |                   |   | 535.0   |               |  |  |                                                |   | 520.1   |                |  |  |                           |  | 2.8  | %   |  |  |  |  | 0.6  | %   |  |  |  |  | — |   |  |  |  |  | 2.2  | %  |
| Other                                  |  |  |                   |   | 174.0   |               |  |  |                                                |   | 175.2   |                |  |  |                           |  | (0.7 | )%  |  |  |  |  | (3.0 | )%  |  |  |  |  | — |   |  |  |  |  | 2.3  | %  |
| Netsales                               |  |  |                   | $ | 2,655.8 |               |  |  |                                                | $ | 2,448.8 |                |  |  |                           |  | 8.5  | %   |  |  |  |  | 0.3  | %   |  |  |  |  | — |   |  |  |  |  | 8.2  | %  |
|                                        |

TheIndustrial and Institutional Services division posted sales of$1,174.1  million for the nine months ended September30,  2006, an increase of 6.9% over the $1,098.0million for the year-ago-period. Price increases accounted for aboutthree-fourths of the 6.6% organic increase insales.

The Energy Services division reported sales of$772.7  million for the nine months ended September30,  2006, a 17.9% gain over the $655.5  million forthe nine months ended September  30,  2005. Sales improvedby 17.2% on an organic basis, with slightly more that two-thirdsof this improvement attributed to real growth.

The PaperServices division posted sales of $535.0  million for the ninemonths ended September  30,  2006, a 2.8% increaseover the $520.1  million reported for the year-ago period. TheNorth American region reported positive organic growth as a result ofprice increases, while organic improvements in Latin America and Asiawere primarily the result of real growth. These organic growth gainswere partly offset by a decline in the European region.

The 2.3% organic growth in sales reported by the Othersegment was attributable to price increases by our Integrated Channelsbusiness and real growth by our subsidiary inIndia.

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

Direct contribution byreportable segment for the nine months ended September30,  2006 and September  30,  2005 may be compared asfollows:

|                                        |  |  |                   |   |       |                    |  |  |                                                |   |       |                     |  |  |                           |  |      |          |  |  |  |  |      |          |  |  |  |  |         |        |  |  |  |  |      |          |
|----------------------------------------|--|--|-------------------|---|-------|--------------------|--|--|------------------------------------------------|---|-------|---------------------|--|--|---------------------------|--|------|----------|--|--|--|--|------|----------|--|--|--|--|---------|--------|--|--|--|--|------|----------|
|                                   |  |  | NineMonths Ended  |   |       |               |  |  | Attributableto Changes in the FollowingFactors |
| (dollarsin millions)                   |  |  | September 30,2006 |   |       | September 30, 2005 |  |  | %Change                                        |   |       | CurrencyTranslation |  |  | Acquisitions/Divestitures |  |      | Organic  |
| Industrial & InstitutionalServices |  |  |                   | $ | 263.6 |               |  |  |                                                | $ | 235.9 |                |  |  |                           |  | 11.7 | %   |  |  |  |  | 0.3  | %   |  |  |  |  | — |   |  |  |  |  | 11.4 | %   |
| EnergyServices                         |  |  |                   |   | 161.2 |               |  |  |                                                |   | 125.5 |                |  |  |                           |  | 28.5 | %   |  |  |  |  | 0.9  | %   |  |  |  |  | — |   |  |  |  |  | 27.6 | %   |
| PaperServices                          |  |  |                   |   | 81.2  |               |  |  |                                                |   | 88.3  |                |  |  |                           |  | (8.0 | )%  |  |  |  |  | 0.9  | %   |  |  |  |  | — |   |  |  |  |  | (8.9 | )%  |
| Other                                  |  |  |                   |   | (49.5 | )             |  |  |                                                |   | (48.3 | )              |  |  |                           |  | (2.5 | )%  |  |  |  |  | (1.7 | )%  |  |  |  |  | — |   |  |  |  |  | (0.8 | )%  |
|                                        |

Directcontribution of the Industrial and Institutional Services division was$263.6  million for the nine months ended September30,  2006, an increase of 11.7% over the $235.9million reported for the nine months ended September  30,2005. Organically, direct contribution improved 11.4%. TheIndustrial and Institutional Services division’s success inimplementing price increases and controlling operating expensescontributed to the period-on-period performance improvement.

The Energy Services division reported direct contribution of$161.2  million for the nine months ended September30,  2006, a 28.5% increase over the $125.5  millionreported for the prior year period. On an organic basis, directcontribution increased 27.6%. Higher sales volume and the impactof price increases accounted for most of the improvement. An initialbusiness interruption insurance recovery of $1.5  million relatedto last year’s hurricanes recognized in 2006 also contributed tothe increase.

The Paper Services division reported directcontribution of $81.2  million for the nine months endedSeptember  30,  2006, an 8.0% decrease from the$88.3  million reported for the year-ago period. Organically,direct contribution was down 8.9%, as costs of raw and otherpurchased materials continued to exceed price increases. Due to tightcontrols on spending, operating expenses were flat on a year-over-yearbasis despite a significant increase in bad debts.

Thedirect contribution loss of $49.5  million reported in‘‘Other’’ for the nine months endedSeptember  30,  2006, represented an increase of$1.2  million from the $48.3  million direct contributionloss reported for the nine months ended September  30,2005. Significant contributors to the year-over-year change includesupply chain variances that benefited 2006 results and favorableadjustments in 2005 for commissions and insurance/legal claims that didnot recur in 2006.

Liquidity and CapitalResources

Operatingactivities.    Historically, the Company’s mainsource of liquidity has been its solid cash flow generated by operatingactivities. For the nine months ended September  30,  2006,cash provided by operating activities was $203.1  million, anincrease of $29.1  million from the same period last year. Theimprovement was mainly the result of the increase in net earnings andnot making any payments in 2006 for 2005 variable incentive plans.Partly offsetting these improvements were higher contributions to theprincipal U.S. pension plan and higher cash requirements forinventories and accounts payable.

Investingactivities.    Cash used for investing activities was$57.8  million for the nine months ended September30,  2006, which was mostly attributable to net propertyadditions of $59.6  million.

Cash used forinvesting activities was $49.4  million for the nine months endedSeptember  30,  2005. This was mostly the result of netproperty additions of $45.3  million.

Financingactivities.    Net cash used for financing activitiestotaled $133.6  million and $110.6  million during the ninemonths ended September  30,  2006 and 2005, respectively,which was mostly attributable to a net decrease 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 

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

investment. Our primary source of liquiditywill continue to be cash flow generated from operations, but we alsohave availability under a $250  million revolving credit facilityand a $100  million receivables facility, in each case subject tocertain conditions. We believe that our financial position andfinancing structure will provide flexibility in worldwide financingactivities and permit us to respond to changing conditions in creditmarkets.

Senior credit facilities.    OnNovember  4,  2003, we entered into senior creditfacilities which provided for a revolving credit facility, a$300  million six-year term loan A facility (which includes an€88.0  million tranche) which matures inNovember  2009 and a $1,300  million seven-year term loan Bfacility which matures in November  2010. Borrowings under thesenior credit facilities bear interest at a floating base rate plus anapplicable margin. The applicable margin for borrowings under therevolving credit facility and the term loan A facility is 1.50%with respect to base rate borrowings and 2.50% with respect toLIBOR or Eurocurrency borrowings and may be reduced subject to ourattaining certain leverage ratios. The applicable margin for borrowingsunder the term loan B facility is 0.75% with respect to baserate borrowings and 1.75% with respect to LIBOR or Eurocurrencyborrowings. The applicable margin for borrowings under the term loan Bfacility is not subject to adjustment.

In addition topaying interest on outstanding principal under the senior creditfacilities, we are required to pay a commitment fee to the lendersunder the revolving credit facility in respect of the unutilizedcommitments at a rate equal to 0.50%. We also pay customaryletter of credit fees.

The term loan A facility willamortize each year in quarterly amounts at a rate of 5% perannum in year one, 10% per annum in year two, 15% perannum in year three, 20% per annum in year four and 25%per annum in each of years five and six.

The term loan Bfacility will amortize each year in an amount equal to 1% perannum in equal quarterly installments for the first six years and ninemonths, with the remaining amount payable on November  4,2010.

At September  30,  2006, theoutstanding balance of the term loan A and term loan B facilities was$78.0  million and $957.0  million,respectively.

Principal amounts outstanding under therevolving credit facility will be due and payable in full at maturityon November  4,  2009. At September  30,  2006,no borrowings were outstanding under the revolving credit facility.

The senior credit facilities contain a number of covenantsthat, among other things, restrict, subject to certain exceptions, ourability and the ability of our subsidiaries (including Nalco Company)to sell assets, incur additional indebtedness or issue preferred stock,repay other indebtedness, pay dividends and distributions or repurchasecertain capital stock, create liens on assets, make investments, loansor advances, make certain acquisitions, engage in mergers orconsolidations, enter into sale and leaseback transactions, engage incertain transactions with affiliates, amend certain material agreementsgoverning our indebtedness, change the business conducted by us and oursubsidiaries (including Nalco Company) and enter into hedgingagreements. In addition, the senior credit facilities require NalcoCompany to maintain the following significant financial covenants: amaximum total leverage ratio, a minimum interest coverage ratio and amaximum capital expenditures limitation. We were in compliance with allcovenants at September  30,  2006.

Seniornotes and senior subordinated notes.    As part of theTransactions in November  2003, Nalco Company issued $665million aggregate principal amount of 73⁄4%U.S. dollar-denominated senior notes due 2011, €200million aggregate principal amount of 73⁄4%euro-denominated senior notes due 2011, $465  million aggregateprincipal amount of 8 7/8% U.S.dollar-denominated senior subordinated notes due 2013 and€200  million aggregate principal amount of9% euro-denominated senior subordinated notes due2013.

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

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

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

|  |              |                                                                                 |
|--|--------------|---------------------------------------------------------------------------------|
|  | •  | pay dividends on or makeother distributions or repurchase certain capitalstock; |

|  |              |                          |
|--|--------------|--------------------------|
|  | •  | make certaininvestments; |

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

|  |              |                                                                 |
|--|--------------|-----------------------------------------------------------------|
|  | •  | limitdividends or other payments by our restrictedsubsidiaries; |

|  |              |                                                  |
|--|--------------|--------------------------------------------------|
|  | •  | use assets as security inother transactions; and |

|  |              |                                                           |
|--|--------------|-----------------------------------------------------------|
|  | •  | sell certainassets or merge with or into other companies. |

Subject tocertain exceptions, the indentures governing the senior notes and thesenior subordinated notes permit the Company and our restrictedsubsidiaries to incur additional indebtedness, including securedindebtedness.

Covenant compliance.    Thebreach of covenants in our senior credit agreement that are tied toratios based on Adjusted EBITDA could result in a default under thatagreement and the lenders could elect to declare all amounts borroweddue and payable. Any such acceleration would also result in a defaultunder our indentures. Additionally, under our debt agreements, ourability to engage in activities such as incurring additionalindebtedness, making investments and paying dividends is also tied toratios based on Adjusted EBITDA.

Adjusted EBITDA is usedto determine our compliance with many of the covenants contained in theindentures governing the notes and in our senior credit agreement.Adjusted EBITDA is defined as EBITDA further adjusted to excludeunusual items and

other adjustments permitted incalculating covenant compliance under the indentures and our seniorcredit facility. We believe that the inclusion of supplementaryadjustments to EBITDA applied in presenting Adjusted EBITDA areappropriate to provide additional information to investors todemonstrate compliance with our financingcovenants.

Adjusted EBITDA is calculated asfollows:

|                                 |  |  |                                     |   |       |                                     |  |  |                                   |   |       |                                   |  |  |  |   |       |         |  |  |  |   |       |         |
|---------------------------------|--|--|-------------------------------------|---|-------|-------------------------------------|--|--|-----------------------------------|---|-------|-----------------------------------|--|--|--|---|-------|---------|--|--|--|---|-------|---------|
| (dollarsin millions)            |  |  | Three Months endedSeptember 30,2006 |   |       | Three Months ended September30,2005 |  |  | Nine Monthsended September30,2006 |   |       | Nine Monthsended September30,2005 |
| Net earnings                    |  |  |                                     | $ | 36.1  |                                |  |  |                                   | $ | 23.2  |                              |  |  |  | $ | 76.5  |    |  |  |  | $ | 37.2  |    |
| Interest,net                    |  |  |                                     |   | 58.3  |                                |  |  |                                   |   | 56.2  |                              |  |  |  |   | 172.9 |    |  |  |  |   | 164.6 |    |
| Incometax provision             |  |  |                                     |   | 19.0  |                                |  |  |                                   |   | 21.0  |                              |  |  |  |   | 47.1  |    |  |  |  |   | 33.9  |    |
| Depreciation                    |  |  |                                     |   | 32.8  |                                |  |  |                                   |   | 33.3  |                              |  |  |  |   | 97.5  |    |  |  |  |   | 100.0 |    |
| Amortization                    |  |  |                                     |   | 17.6  |                                |  |  |                                   |   | 20.3  |                              |  |  |  |   | 52.4  |    |  |  |  |   | 61.4  |    |
| EBITDA                          |  |  |                                     | $ | 163.8 |                                |  |  |                                   | $ | 154.0 |                              |  |  |  | $ | 446.4 |    |  |  |  | $ | 397.1 |    |
| Non-cashcharges(1)              |  |  |                                     |   | 10.7  |                                |  |  |                                   |   | 5.0   |                              |  |  |  |   | 26.7  |    |  |  |  |   | 20.8  |    |
| Businessoptimizationexpenses(2) |  |  |                                     |   | 3.0   |                                |  |  |                                   |   | 3.5   |                              |  |  |  |   | 8.6   |    |  |  |  |   | 21.3  |    |
| Unusualitems(3)                 |  |  |                                     |   | 6.8   |                                |  |  |                                   |   | 3.1   |                              |  |  |  |   | 9.4   |    |  |  |  |   | 4.9   |    |
| Otheradjustments(4)             |  |  |                                     |   | (1.2  | )                              |  |  |                                   |   | (1.1  | )                            |  |  |  |   | (4.0  | )  |  |  |  |   | (4.1  | )  |
| AdjustedEBITDA                  |  |  |                                     | $ | 183.1 |                                |  |  |                                   | $ | 164.5 |                              |  |  |  | $ | 487.1 |    |  |  |  | $ | 440.0 |    |
|                                 |

|  |
|--|
|  |  |
|  |

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

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

|                                                |  |  |                                     |   |      |                                     |  |  |                                   |   |         |                                   |  |  |  |   |      |        |  |  |  |   |      |        |
|------------------------------------------------|--|--|-------------------------------------|---|------|-------------------------------------|--|--|-----------------------------------|---|---------|-----------------------------------|--|--|--|---|------|--------|--|--|--|---|------|--------|
| (dollarsin millions)                           |  |  | Three Months endedSeptember 30,2006 |   |      | Three Months ended September30,2005 |  |  | Nine Monthsended September30,2006 |   |         | Nine Monthsended September30,2005 |
| Assetwrite-offs                                |  |  |                                     | $ | 0.3  |                                |  |  |                                   | $ | — |                              |  |  |  | $ | 1.4  |   |  |  |  | $ | 4.9  |   |
| Profitsharing expense and 401(k) funded bySuez |  |  |                                     |   | 7.0  |                                |  |  |                                   |   | 1.1     |                              |  |  |  |   | 18.8 |   |  |  |  |   | 10.9 |   |
| Other                                          |  |  |                                     |   | 3.4  |                                |  |  |                                   |   | 3.9     |                              |  |  |  |   | 6.5  |   |  |  |  |   | 5.0  |   |
| Non-cashcharges                                |  |  |                                     | $ | 10.7 |                                |  |  |                                   | $ | 5.0     |                              |  |  |  | $ | 26.7 |   |  |  |  | $ | 20.8 |   |
|                                                |

ProfitSharing and 401(k) Expense Funded by Suez

In conjunction withthe Acquisition, we entered into an agreement with Suez whereby Suezwill reimburse us for certain profit-sharing and 401(k) matchingcontributions made by us to the Profit-SharingTrust.

Other

Other non-cash charges include the non-cashimpact on earnings of our equity investments and minority interests.Non-cash charges also includes the non-cash portion of rent expenseunder the sublease that we entered into with Suez in conjunction withthe Acquisition.

|     |                                                                                                                                                       |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Business optimization expensesinclude costs associated with the redesign and optimization of workprocesses. See note 6 to Item 1 for moreinformation. |

|     |                                                          |
|-----|----------------------------------------------------------|
| (3) | Unusual items are furtherdetailed on the followingtable: |

|                                     |  |  |                                     |   |         |                                     |  |  |                                   |   |         |                                   |  |  |  |   |     |        |  |  |  |   |         |        |
|-------------------------------------|--|--|-------------------------------------|---|---------|-------------------------------------|--|--|-----------------------------------|---|---------|-----------------------------------|--|--|--|---|-----|--------|--|--|--|---|---------|--------|
| (dollarsin millions)                |  |  | Three Months endedSeptember 30,2006 |   |         | Three Months ended September30,2005 |  |  | Nine Monthsended September30,2006 |   |         | Nine Monthsended September30,2005 |
| Pensionsettlement                   |  |  |                                     | $ | — |                                |  |  |                                   | $ | — |                              |  |  |  | $ | 0.4 |   |  |  |  | $ | — |   |
| Loss(gain) on sales, net ofexpenses |  |  |                                     |   | 1.7     |                                |  |  |                                   |   | 2.6     |                              |  |  |  |   | 2.3 |   |  |  |  |   | 3.7     |   |
| Otherunusual items                  |  |  |                                     |   | 5.1     |                                |  |  |                                   |   | 0.5     |                              |  |  |  |   | 6.7 |   |  |  |  |   | 1.2     |   |
|                                |  |  |                                     | $ | 6.8     |                                |  |  |                                   | $ | 3.1     |                              |  |  |  | $ | 9.4 |   |  |  |  | $ | 4.9     |   |
|                                     |

|     |                                                                                                    |
|-----|----------------------------------------------------------------------------------------------------|
| (4) | Weare required to make adjustments to EBITDA for franchise taxes and401(k) matching contributions. |

Our covenant levelsand ratios for the four quarters ended September  30,  2006are asfollows:

|                                                                                                           |  |  |                                    |  |        |        |  |  |  |  |        |        |
|-----------------------------------------------------------------------------------------------------------|--|--|------------------------------------|--|--------|--------|--|--|--|--|--------|--------|
|                                                                                                      |  |  | CovenantLevel at September 30,2006 |  |        | Ratios |
| Seniorcreditfacility(1)                                                                                   |  |  |                                    |  |   |   |  |  |  |  |   |   |
| MinimumAdjusted EBITDA to cash interestratio                                                              |  |  |                                    |  | 1.75x  |   |  |  |  |  | 2.99x  |   |
| Maximumnet debt to Adjusted EBITDAratio                                                                   |  |  |                                    |  | 6.00x  |   |  |  |  |  | 4.28x  |   |
| Indentures(2)                                                                                             |  |  |                                    |  |   |   |  |  |  |  |   |   |
| MinimumAdjusted EBITDA to fixed charge ratio required to incur additional debtpursuant to ratioprovisions |  |  |                                    |  | 2.00x  |   |  |  |  |  | 2.99x  |   |
|                                                                                                           |

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

|  |     |                                                                                                                                                                                                                                                                     |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (1) | During2006, our senior credit facility requires us to maintain an AdjustedEBITDA to cash interest ratio at a minimum of 1.75x and a net debt toAdjusted EBITDA ratio at a maximum of 6.00x, in each case for the mostrecent four quarter period. Failure to satisfy |

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

|  |  |                                                                                                                                                                                                                                                                                  |
|--|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | these ratio requirements would constitute adefault under the senior credit agreement. If our lenders failed towaive any such default, our repayment obligations under the seniorcredit agreement could be accelerated, which would also constitute adefault under ourindentures. |

|  |           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (2)  | Our ability toincur additional debt and make certain restricted payments under ourindentures, subject to specified exceptions, is tied to an AdjustedEBITDA to fixed charge ratio of at least 2.0 to 1, except that we mayincur certain debt and make certain restricted payments and certainpermitted investments without regard to the ratio, such as up to anaggregate principal amount of $1,950  million (including$1,035.0  million that was outstanding under our term loanfacilities as of September  30,  2006) and investments insimilar business and other investments equal to 6% of NalcoHoldings LLC consolidated assets. |

Local lines ofcredit.    Certain of our non-U.S. subsidiaries have lines ofcredit to support local requirements. As of September  30,2006, the aggregate outstanding balance under these local lines ofcredit was approximately $25.9  million. Certain of these linesof credit are equally and ratably secured with obligations under oursenior credit facilities.

Receivablesfacility.    Nalco Company entered into a receivables facilityon September  25,  2004 that provides up to $100million in funding from a commercial paper conduit sponsored byJPMorgan 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 formula that reduces the gross receivables balance by factorsthat take into account historical default and dilution rates, excessiveconcentrations and average days outstanding and the costs of thefacility. Based on the terms of this facility and on the criteriadescribed above, as of September  30,  2006, approximately$183.2  million of our accounts receivable balance was consideredeligible for financing under the program, of which approximately$120.4  million would have been available for funding. As ofSeptember  30,  2006, we had $97.2  million ofoutstanding borrowings under this facility.

This facilityis treated as a general financing agreement resulting in the borrowingsand 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. The facility expires in June  2007.

RecentAccounting Pronouncements

See Note 13 to the condensedconsolidated financial statements, included in Part I, Item 1, forinformation on recent accounting pronouncements.

|              |                                                           |
|--------------|-----------------------------------------------------------|
| Item3.  | Quantitative and Qualitative Disclosures AboutMarket Risk |

There have been no material changes to theCompany’s exposures to market risk since December31,2005.

|              |                        |
|--------------|------------------------|
| Item4.  | Controls andProcedures |

|           |                                                  |
|-----------|--------------------------------------------------|
| (a)  | Evaluation of disclosure controlsand procedures. |

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 Actof 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period,have concluded that the Company’s disclosure controls andprocedures were effective as of September  30,2006.

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|              |                                         |
|--------------|-----------------------------------------|
| Item4.  | Controls andProcedures (continued) |

|           |                                                       |
|-----------|-------------------------------------------------------|
| (b)  | Changes in internalcontrols over financial reporting. |

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

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PARTII. OTHER INFORMATION 

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

Changes haveoccurred to the following risk factor that was 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 ourbusiness.

We sponsor various pension plans worldwidethat are underfunded and require significant cash payments. Forexample, in 2004 and 2005, we contributed $13.7  million and$30.0  million, respectively, to our pension plans. We arerequired to contribute at least $58.5  million to the U.S.pension plan in 2006. In early April  2006, we added $45.0million in funding to our first quarter 2006 U.S. pension plancontribution of $13.5  million, completing our 2006 U.S. pensionfunding requirements ahead of schedule. We may also opt to makeadditional voluntary contributions to various pension plans worldwidein 2006.

As of December  31,  2005, ourworldwide 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. pension plans are subject to theEmployee Retirement Income Security Act of 1974, or ERISA. Under ERISA,the Pension Benefit Guaranty Corporation, or PBGC, has the authority toterminate an underfunded pension plan under certain circumstances. Inthe event our U.S. pension plans are terminated for any reason whilethe plans are underfunded, we will incur a liability to the PBGC thatmay be equal to the entire amount of the underfunding. Prior to theclosing of the Acquisition, the PBGC requested and received informationfrom us regarding our business, the Transactions and our pension plans.The PBGC took no further action with respect to theirinquiry.

On August  17,  2006, the Presidentsigned into law new pension reform legislation – the PensionProtection Act of 2006 (PPA). The PPA affects defined benefit anddefined contribution plans, the employers who sponsor such plans, andplan participants. The PPA will influence the amount and timing of ourpension funding requirements, our decisions regarding pension funding,and the timing of payouts to those of our employees who are planparticipants. The changes resulting from the PPA might impact ouremployees and influence their employment decisions.

Item 6.Exhibits

|           |                                   |
|-----------|-----------------------------------|
| (a)  | The following are includedherein: |

|  |                    |                                                                                                   |
|--|--------------------|---------------------------------------------------------------------------------------------------|
|  | Exhibit 31.1  | Certification ofChief Executive Officer, Pursuant to Section 302 of the Sarbanes-OxleyAct of 2002 |

|  |                   |                                                                                                   |
|--|-------------------|---------------------------------------------------------------------------------------------------|
|  | Exhibit31.2  | Certification of Chief Financial Officer,Pursuant to Section 302 of the Sarbanes-Oxley Act of2002 |

|  |                    |                                                                                                                       |
|--|--------------------|-----------------------------------------------------------------------------------------------------------------------|
|  | Exhibit 32.1  | CertificationsPursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906of the Sarbanes-Oxley Act of 2002 |

37

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SIGNATURE

TheCompany has duly caused this report to be signed on its behalf by theundersigned thereunto dulyauthorized.

|                          |  |  |                                                                                                                                                                                                                                  |
|--------------------------|--|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     |  |  | NALCO HOLDINGS LLC                                                                                                                                                                                                               |
|                     |  |  | /s/BRADLEY J. BELL                                                                                                                                                                                                               |
|                     |  |  | Name:    Bradley J.BellTitle:      Executive Vice Presidentand               Chief FinancialOfficer |
| Dated:November  7,  2006 |  |  |                                                                                                                                                                                                                             |
|                          |

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