UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION Washington, DC20549

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FORM 10-Q

(Mark One)

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

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|--------|---------------------------------------------|
|   | For the quarterly period ended June 30,2005 |

or

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|--------|-----------------------------------------------------------------------------------------|
|   | TRANSITION REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

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|--------|-------------------------------------------------------------------------------------------------------------------------------------|
|   | For the transition period from         to         . |

Commission File No.333-115560-15

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NALCO HOLDINGSLLC

(Exact name of registrant as specified inits charter)

  

Delaware

(State or other jurisdiction ofIncorporation or Organization)

73-1683500

(I.R.S. Employer IdentificationNumber)

    

1601 WestDiehl Road Naperville, IL 60563-1198 (630) 305-1000

(Address, Including Zip Code, andTelephone Number, Including Area Code, of Registrant'sPrincipal Executive Offices)

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 isan accelerated filer (as defined in Rule 12b-2 of the ExchangeAct.)    Yes       No   

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QUARTERLY REPORTON FORM 10-QNALCO HOLDINGS LLCQuarter Ended June 30, 2005

TABLE OFCONTENTS

|                                 |  |                                                                                                                                      |        |        |        |        |  |  |  |  |
|---------------------------------|--|--------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--|--|--|--|
| **PartI. FinancialInformation** |  |                                                                                                                                 |   |   |
|                            |  |                                                                                                                                 |        |   |   |   |
| Item1.                          |  | Financial Statements(Unaudited)                                                                                                      |        |   |   |   |
|                            |  | Condensed ConsolidatedBalance Sheets –     June 30, 2005 and December 31,2004                              |        |   | 2      |   |
|                            |  | CondensedConsolidated Statements of Operations –    Three monthsand six months ended June 30, 2005 and2004 |        |   | 3      |   |
|                            |  | Condensed ConsolidatedStatements of Cash Flows –    Six months ended June 30,2005 and 2004                 |        |   | 4      |   |
|                            |  | Notes to CondensedConsolidated Financial Statements –    June 30,2005                                      |        |   | 5      |   |
| Item 2.                         |  | Management'sDiscussion and Analysis of Financial Condition and     Resultsof Operations                          |        |   | 21     |   |
| Item3.                          |  | Quantitative and Qualitative Disclosures About MarketRisk                                                                            |        |   | 32     |   |
| Item 4.                         |  | Controls andProcedures                                                                                                               |        |   | 32     |   |
|                            |  |                                                                                                                                 |        |   |   |   |
| **PartII. OtherInformation**    |  |                                                                                                                                 |   |   |
|                            |  |                                                                                                                                 |        |   |   |   |
| Item6.                          |  | Exhibits                                                                                                                             |        |   | 33     |   |
|                            |  |                                                                                                                                 |        |   |   |   |
| **Signature**                   |  |                                                                                                                       |        |   | 34     |   |
|                                 |

1

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PART I. FINANCIALINFORMATION

Item 1. Financial Statements (Unaudited)

Nalco Holdings LLC and Subsidiaries Condensed ConsolidatedBalance Sheets(dollars inmillions)

|                                                                        |  |                        |         |                  |  |        |         |        |  |  |
|------------------------------------------------------------------------|--|------------------------|---------|------------------|--|--------|---------|--------|--|--|
|                                                                   |  | (Unaudited)June30,2005 |         | December 31,2004 |
| **Assets**                                                             |  |                   |    |             |  |   |    |   |
| Currentassets:                                                         |  |                   |    |             |  |   |    |   |
| Cash andcashequivalents                                                |  | $                      | 39.4    |             |  | $      | 33.2    |   |
| Accountsreceivable, less allowances of $19.7 in 2005 and $21.1 in 2004 |  |                   | 604.7   |             |  |   | 594.2   |   |
| Inventories:                                                           |  |                   |    |             |  |   |    |   |
| Finishedproducts                                                       |  |                   | 227.6   |             |  |   | 245.4   |   |
| Materialsand work inprocess                                            |  |                   | 73.3    |             |  |   | 68.1    |   |
|                                                                   |  |                   | 300.9   |             |  |   | 313.5   |   |
| Prepaidexpenses, taxes and other currentassets                         |  |                   | 75.1    |             |  |   | 90.1    |   |
| Totalcurrentassets                                                     |  |                   | 1,020.1 |             |  |   | 1,031.0 |   |
|                                                                   |  |                   |    |             |  |   |    |   |
| Property,plant, and equipment,net                                      |  |                   | 779.4   |             |  |   | 847.3   |   |
| Intangibleassets:                                                      |  |                   |    |             |  |   |    |   |
| Goodwill                                                               |  |                   | 2,287.2 |             |  |   | 2,368.3 |   |
| Otherintangibles,net                                                   |  |                   | 1,270.4 |             |  |   | 1,323.6 |   |
| Otherassets                                                            |  |                   | 353.0   |             |  |   | 363.5   |   |
| Totalassets                                                            |  | $                      | 5,710.1 |             |  | $      | 5,933.7 |   |
|                                                                   |  |                   |    |             |  |   |    |   |
| **Liabilitiesand unitholder'sequity**                                  |  |                   |    |             |  |   |    |   |
| Currentliabilities:                                                    |  |                   |    |             |  |   |    |   |
| Accountspayable                                                        |  | $                      | 231.5   |             |  | $      | 261.9   |   |
| Shortterm debt                                                         |  |                   | 21.2    |             |  |   | 17.7    |   |
| Othercurrentliabilities                                                |  |                   | 232.0   |             |  |   | 311.7   |   |
| Totalcurrentliabilities                                                |  |                   | 484.7   |             |  |   | 591.3   |   |
|                                                                   |  |                   |    |             |  |   |    |   |
| Otherliabilities:                                                      |  |                   |    |             |  |   |    |   |
| Long-termdebt                                                          |  |                   | 3,035.0 |             |  |   | 3,100.6 |   |
| Deferred incometaxes                                                   |  |                   | 478.2   |             |  |   | 501.5   |   |
| Accrued pensionbenefits                                                |  |                   | 415.6   |             |  |   | 411.7   |   |
| Otherliabilities                                                       |  |                   | 297.4   |             |  |   | 296.8   |   |
|                                                                   |  |                   |    |             |  |   |    |   |
| Minorityinterest                                                       |  |                   | 12.6    |             |  |   | 14.1    |   |
| Unitholder'sequity                                                     |  |                   | 986.6   |             |  |   | 1,017.7 |   |
| Totalliabilities and unitholder'sequity                                |  | $                      | 5,710.1 |             |  | $      | 5,933.7 |   |
|                                                                        |

Seeaccompanying notes to condensed consolidated financialstatements.

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

|                                              |  |                                |         |                                 |  |                               |         |                              |  |        |         |         |  |        |         |         |  |  |
|----------------------------------------------|--|--------------------------------|---------|---------------------------------|--|-------------------------------|---------|------------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                         |  | ThreeMonthsended June 30, 2005 |         | Three Monthsended June 30, 2004 |  | Six Months ended June 30,2005 |         | Six Monthsended June 30,2004 |
|                                         |  |                           |    |                            |  |                          |    |                         |  |   |    |    |  |   |    |    |
| Netsales                                     |  | $                              | 836.3   |                            |  | $                             | 740.4   |                         |  | $      | 1,613.9 |    |  | $      | 1,453.7 |    |
| Operatingcosts andexpenses:                  |  |                           |    |                            |  |                          |    |                         |  |   |    |    |  |   |    |    |
| Costof productsold                           |  |                           | 479.9   |                            |  |                          | 372.2   |                         |  |   | 892.3   |    |  |   | 746.6   |    |
| Selling,administrative, and researchexpenses |  |                           | 263.3   |                            |  |                          | 261.6   |                         |  |   | 521.8   |    |  |   | 514.9   |    |
| Amortizationof intangibleassets              |  |                           | 20.5    |                            |  |                          | 24.9    |                         |  |   | 41.1    |    |  |   | 49.1    |    |
| In-processresearch anddevelopment            |  |                           | — |                            |  |                          | — |                         |  |   | — |    |  |   | 122.3   |    |
| Businessoptimizationexpenses                 |  |                           | 17.0    |                            |  |                          | — |                         |  |   | 17.8    |    |  |   | — |    |
| Totaloperating costs andexpenses             |  |                           | 780.7   |                            |  |                          | 658.7   |                         |  |   | 1,473.0 |    |  |   | 1,432.9 |    |
|                                         |  |                           |    |                            |  |                          |    |                         |  |   |    |    |  |   |    |    |
| Operatingearnings                            |  |                           | 55.6    |                            |  |                          | 81.7    |                         |  |   | 140.9   |    |  |   | 20.8    |    |
|                                         |  |                           |    |                            |  |                          |    |                         |  |   |    |    |  |   |    |    |
| Otherincome (expense),net                    |  |                           | (0.6    | )                          |  |                          | (1.8    | )                       |  |   | (2.8    | )  |  |   | (5.3    | )  |
| Interestincome                               |  |                           | 2.0     |                            |  |                          | 2.7     |                         |  |   | 4.1     |    |  |   | 5.4     |    |
| Interestexpense                              |  |                           | (57.6   | )                          |  |                          | (52.7   | )                       |  |   | (112.5  | )  |  |   | (106.0  | )  |
|                                         |  |                           |    |                            |  |                          |    |                         |  |   |    |    |  |   |    |    |
| Earnings(loss) before incometaxes            |  |                           | (0.6    | )                          |  |                          | 29.9    |                         |  |   | 29.7    |    |  |   | (85.1   | )  |
|                                         |  |                           |    |                            |  |                          |    |                         |  |   |    |    |  |   |    |    |
| Incometax provision(benefit)                 |  |                           | (0.1    | )                          |  |                          | 16.6    |                         |  |   | 12.9    |    |  |   | 19.6    |    |
|                                         |  |                           |    |                            |  |                          |    |                         |  |   |    |    |  |   |    |    |
| Minorityinterests                            |  |                           | (1.6    | )                          |  |                          | (0.9    | )                       |  |   | (2.8    | )  |  |   | (1.9    | )  |
| Netearnings(loss)                            |  | $                              | (2.1    | )                          |  | $                             | 12.4    |                         |  | $      | 14.0    |    |  | $      | (106.6  | )  |
|                                         |  |                           |    |                            |  |                          |    |                         |  |   |    |    |  |   |    |    |
|                                         |  |                           |    |                            |  |                          |    |                         |  |   |    |    |  |   |    |    |
|                                         |  |                           |    |                            |  |                          |    |                         |  |   |    |    |  |   |    |    |
|                                         |  |                           |    |                            |  |                          |    |                         |  |   |    |    |  |   |    |    |
|                                         |  |                           |    |                            |  |                          |    |                         |  |   |    |    |  |   |    |    |
|                                         |  |                           |    |                            |  |                          |    |                         |  |   |    |    |  |   |    |    |
|                                         |  |                           |    |                            |  |                          |    |                         |  |   |    |    |  |   |    |    |
|                                              |

Seeaccompanying notes to condensed consolidated financialstatements.

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

|                                                                                          |  |                             |         |                            |  |        |        |         |  |  |
|------------------------------------------------------------------------------------------|--|-----------------------------|---------|----------------------------|--|--------|--------|---------|--|--|
|                                                                                     |  | SixMonthsendedJune 30, 2005 |         | SixMonthsendedJune 30,2004 |
|                                                                                     |  |                        |    |                       |  |   |   |    |
| **Operatingactivities**                                                                  |  |                        |    |                       |  |   |   |    |
| Net earnings(loss)                                                                       |  | $                           | 14.0    |                       |  | $      | (106.6 | )  |
| Adjustmentsto reconcile net earnings (loss) to net cash provided by operatingactivities: |  |                        |    |                       |  |   |   |    |
| Depreciation                                                                             |  |                        | 66.7    |                       |  |   | 56.9   |    |
| Amortization                                                                             |  |                        | 41.1    |                       |  |   | 49.1   |    |
| In-processresearch anddevelopment                                                        |  |                        | — |                       |  |   | 122.3  |    |
| Amortizationof deferred financingcosts                                                   |  |                        | 5.5     |                       |  |   | 5.6    |    |
| Other,net                                                                                |  |                        | 9.0     |                       |  |   | 0.4    |    |
| Changes in operatingassets andliabilities                                                |  |                        | (105.9  | )                     |  |   | (2.3   | )  |
| Netcash provided by operatingactivities                                                  |  |                        | 30.4    |                       |  |   | 125.4  |    |
|                                                                                     |  |                        |    |                       |  |   |   |    |
| **Investingactivities**                                                                  |  |                        |    |                       |  |   |   |    |
| Purchase priceadjustment on acquisition of Ondeo NalcoGroup                              |  |                        | (3.2    | )                     |  |   | 25.6   |    |
| Additions toproperty, plant, and equipment,net                                           |  |                        | (25.0   | )                     |  |   | (34.9  | )  |
| Other investingactivities                                                                |  |                        | (0.6    | )                     |  |   | (0.4   | )  |
| Netcash used for investingactivities                                                     |  |                        | (28.8   | )                     |  |   | (9.7   | )  |
|                                                                                     |  |                        |    |                       |  |   |   |    |
| **Financingactivities**                                                                  |  |                        |    |                       |  |   |   |    |
| Changes inshort-term debt,net                                                            |  |                        | 4.4     |                       |  |   | (33.5  | )  |
| Proceeds fromlong-term debt                                                              |  |                        | 24.1    |                       |  |   | 93.0   |    |
| Repaymentsof long-termdebt                                                               |  |                        | (18.2   | )                     |  |   | (184.0 | )  |
| Capitalcontributions                                                                     |  |                        | — |                       |  |   | 9.8    |    |
| Other                                                                                    |  |                        | (4.4    | )                     |  |   | (0.7   | )  |
| Netcash provided by (used for) financingactivities                                       |  |                        | 5.9     |                       |  |   | (115.4 | )  |
| Effect ofexchange rate changes on cash and cashequivalents                               |  |                        | (1.3    | )                     |  |   | (3.1   | )  |
| Increase(decrease) in cash and cashequivalents                                           |  |                        | 6.2     |                       |  |   | (2.8   | )  |
| Cash and cashequivalents at beginning ofperiod                                           |  |                        | 33.2    |                       |  |   | 100.0  |    |
| Cashand cash equivalents at end ofperiod                                                 |  | $                           | 39.4    |                       |  | $      | 97.2   |    |
|                                                                                          |

Seeaccompanying notes to condensed consolidated financialstatements.

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NalcoHoldings LLC and Subsidiaries Notes to Condensed ConsolidatedFinancial Statements (Unaudited)

June 30, 2005

1.    Descriptionof Business and Change in Ownership

Description ofBusiness

Nalco Holdings LLC and subsidiaries (the Company) isengaged in the worldwide manufacture and sale of highly specializedservice chemical programs. This includes production and service relatedto the sale and application of chemicals and technology used in watertreatment, pollution control, energy conservation, oil production andrefining, steelmaking, papermaking, mining, and other industrialprocesses.

Change in Ownership

On November 4,2003, Nalco Holdings LLC (the Buyer), a newly-formed entity controlledby 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 its affiliates, acquired the net assetsof Ondeo Nalco Group for $4,127.1 million, including direct costs ofthe acquisition of $125.6 million, excluding assumed debt of $30.2million, and subject to certain closing and post-closing adjustments(the Acquisition).

The Buyer was capitalized by equityinvestments totaling $991.9 million from the Sponsors and $10.0 millionfrom Dr. William H. Joyce, the Chairman and Chief Executive Officer ofthe Company. The equity investments were made to Nalco InvestmentHoldings LLC, which, in turn, contributed $1,001.9 million to the Buyerand was its parent company until January 14, 2004. Funding for theAcquisition included the equity investments and the issuance of seniornotes and senior subordinated notes in a private offering, and newrevolving credit and term loan facilities by the Buyer, through its100% owned subsidiary, Nalco Company.

The Stock PurchaseAgreement provided for certain adjustments of the purchase price,including adjustments based on the closing working capital andindebtedness (as both are defined in the Stock Purchase Agreement) ofthe Ondeo Nalco Group at the date of the Acquisition. On March 25,2004, the Buyer and Suez agreed to a $25.6 million working capitaladjustment payable to the Buyer plus interest. The Buyer recorded thepurchase price adjustment in 2004 by decreasing goodwill.

TheStock Purchase Agreement also provided for adjustments of the purchaseprice for taxes paid, or tax refunds received, by the Buyer for periodsprior to the Acquisition, to the extent not already taken into accountin the closing working capital at the date of the Acquisition. Duringthe year ended December 31, 2004, such purchase price adjustmentsresulted in a net payment of $0.3 million by the Buyer, which wasrecorded as an increase to goodwill. An additional purchase priceadjustment of $3.2 million paid by the Company in January 2005 was alsoaccrued and reflected as an increase to goodwill in 2004.

OnJanuary 14, 2004, Nalco Investment Holdings LLC contributed its100% interest in the Buyer to a newly formed entity, NalcoFinance Holdings LLC. As of that date, Nalco Finance Holdings LLCbecame the direct parent company of the Buyer. Subsequent to that date,the Sponsors and Dr. Joyce engaged in a series of transactions thatultimately resulted in a newly formed entity, Nalco LLC, becoming thedirect parent company of another newly formed entity, Nalco InvestmentHoldings II Corp., which, in turn, became the direct parent company ofNalco Investment Holdings LLC. Nalco Investment Holdings II Corp. wassubsequently renamed Nalco Holding Company.

As part of theallocation of the purchase price for the Acquisition, the Companyrecorded a one-time charge for purchased in-process research anddevelopment (IPR&D) expenses of $122.3 million during 

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1.    Descriptionof Business and Change in Ownership (continued)

the six months ended June 30, 2004. The valueof purchased IPR&D was comprised of five ongoing developmentprojects at the date of the Acquisition. Purchased IPR&D wasderived by assigning values to those projects identified by managementas having economic value, but that had not yet reached technologicalfeasibility and had no alternative future use. These products had notbeen released to the market as of the date of the Acquisition, but thefeatures and functionality of the products had been defined.

Theconsolidated statement of operations for the six months ended June 30,2005 includes an additional $14.5 million in cost of products soldrelated to the sale of inventory that had been revalued at sellingprice less costs to sell in the allocation of the purchase price forthe Acquisition.

In conjunction with the Acquisition, theCompany formulated a plan to exit or restructure certain activities.The Company recorded liabilities of $35.5 million, primarily foremployee severance and related costs, in connection with theCompany's plan to exit or restructure certain activities. TheCompany expects to complete these activities by the end of 2005. As ofDecember 31, 2004, $3.8 million remained of this accrual; $0.3 millionwas charged against it during the six months ended June 30, 2005.

2.    Basis ofPresentation

These consolidated financial statements should beread in conjunction with the consolidated and combined financialstatements and notes thereto included in the Annual Report for NalcoHoldings LLC and subsidiaries for the fiscal year ended December 31,2004.

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 six monthsended June 30, 2005 are not necessarily indicative of results that maybe expected for the year ended December 31, 2005.

Certainreclassifications have been made to the prior year data to conform tothe current year presentation which had no effect on net earnings(loss) reported for any period.

3.    Goodwilland Other Intangible Assets

The changes in goodwill for theperiod were asfollows:

|                                        |  |        |         |         |  |  |
|----------------------------------------|--|--------|---------|---------|--|--|
| (dollarsin millions)                   |  |   |
| Balance as of December 31,2004         |  | $      | 2,368.3 |    |
| Preacquisition income taxuncertainties |  |   | 0.4     |    |
| Effect of foreign currencytranslation  |  |   | (81.5   | )  |
| Balance as ofJune 30,2005              |  | $      | 2,287.2 |    |
|                                        |

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3.    Goodwilland Other Intangible Assets (continued)

The following table reflects intangibleassets and related amortizationinformation:

|                                              |  |                    |         |                         |  |             |         |                         |  |        |         |        |  |        |         |         |  |  |
|----------------------------------------------|--|--------------------|---------|-------------------------|--|-------------|---------|-------------------------|--|--------|---------|--------|--|--------|---------|---------|--|--|
|                                         |  | Asof June 30, 2005 |         | As of December 31,2004  |
| (dollars inmillions)                         |  | GrossAmount        |         | AccumulatedAmortization |  | GrossAmount |         | AccumulatedAmortization |
| Intangibleassets subject toamortization:     |  |               |    |                    |  |        |    |                    |  |   |    |   |  |   |    |    |
| Customerrelationships                        |  | $                  | 490.4   |                    |  | $           | (135.6  | )                  |  | $      | 506.6   |   |  | $      | (103.5  | )  |
| Patentsand developedtechnology               |  |               | 100.5   |                    |  |        | (17.2   | )                  |  |   | 100.5   |   |  |   | (12.2   | )  |
| Other                                        |  |               | 2.3     |                    |  |        | — |                    |  |   | 2.2     |   |  |   | — |    |
| Intangibleassets not subject toamortization: |  |               |    |                    |  |        |    |                    |  |   |    |   |  |   |    |    |
| Trademarksand tradenames                     |  |               | 830.0   |                    |  |        | — |                    |  |   | 830.0   |   |  |   | — |    |
|                                         |  | $                  | 1,423.2 |                    |  | $           | (152.8  | )                  |  | $      | 1,439.3 |   |  | $      | (115.7  | )  |
|                                              |

4.    Debt

Debt consists of thefollowing:

|                                              |  |             |         |                 |  |        |         |        |  |  |
|----------------------------------------------|--|-------------|---------|-----------------|--|--------|---------|--------|--|--|
|                                         |  | June30,2005 |         | December31,2004 |
| (dollars inmillions)                         |  |        |         |            |
| **Short-term**                               |  |        |    |            |  |   |    |   |
| Checksoutstanding and bankoverdrafts         |  | $           | 19.9    |            |  | $      | 16.9    |   |
| Currentmaturities of long-termdebt           |  |        | 1.3     |            |  |   | 0.8     |   |
|                                         |  | $           | 21.2    |            |  | $      | 17.7    |   |
| **Long-term**                                |  |        |    |            |  |   |    |   |
| Securitizedtrade accounts receivablefacility |  | $           | 79.4    |            |  | $      | 97.3    |   |
| Revolvingcredit facility                     |  |        | 24.0    |            |  |   | — |   |
| Termloan A, due November2009                 |  |        | 208.5   |            |  |   | 218.4   |   |
| Term loan B, dueNovember 2010                |  |        | 1,081.0 |            |  |   | 1,081.0 |   |
| Seniornotes, due November2011                |  |        | 906.6   |            |  |   | 937.4   |   |
| Senior subordinatednotes, due November2013   |  |        | 706.6   |            |  |   | 737.4   |   |
| Unsecured notes,due May2008                  |  |        | 27.8    |            |  |   | 27.8    |   |
| Other                                        |  |        | 2.4     |            |  |   | 2.1     |   |
|                                         |  |        | 3,036.3 |            |  |   | 3,101.4 |   |
| Less:Currentportion                          |  |        | 1.3     |            |  |   | 0.8     |   |
|                                         |  | $           | 3,035.0 |            |  | $      | 3,100.6 |   |
|                                              |

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5.    Unitholder's Equity

Unitholder's equity consists of thefollowing:

|                                       |  |              |         |                   |  |        |         |         |  |  |
|---------------------------------------|--|--------------|---------|-------------------|--|--------|---------|---------|--|--|
| (dollarsin millions)                  |  | June 30,2005 |         | December 31, 2004 |
| Capitalaccount                        |  | $            | 1,013.1 |              |  | $      | 1,012.9 |    |
| Accumulateddeficit                    |  |         | (114.3  | )            |  |   | (128.3  | )  |
| Accumulatedother comprehensiveincome: |  |         |    |              |  |   |    |    |
| Derivatives                           |  |         | 0.5     |              |  |   | (0.2    | )  |
| Foreigncurrency translationadjustment |  |         | 87.3    |              |  |   | 133.3   |    |
| Totalunitholder'sequity               |  | $            | 986.6   |              |  | $      | 1,017.7 |    |
|                                       |

6.    Pensionand Other Postretirement Benefit Plans

The components of netperiodic pension cost and the cost of other postretirement benefits forthe three months and six months ended June 30, 2005 and 2004 were asfollows:

|                              |  |                                 |      |                                 |  |                               |      |                               |  |        |       |         |  |        |       |         |  |  |
|------------------------------|--|---------------------------------|------|---------------------------------|--|-------------------------------|------|-------------------------------|--|--------|-------|---------|--|--------|-------|---------|--|--|
|                         |  | PensionBenefits                 |
| (dollars inmillions)         |  | Three Monthsended June 30, 2005 |      | Three Months endedJune 30, 2004 |  | Six Months ended June30, 2005 |      | Six Months ended June 30,2004 |
| Servicecost                  |  | $                               | 6.3  |                            |  | $                             | 8.0  |                          |  | $      | 13.4  |    |  | $      | 14.5  |    |
| Interestcost                 |  |                            | 9.3  |                            |  |                          | 11.1 |                          |  |   | 19.5  |    |  |   | 20.1  |    |
| Expectedreturn on planassets |  |                            | (5.7 | )                          |  |                          | (7.7 | )                        |  |   | (12.2 | )  |  |   | (13.6 | )  |
| Netperiodiccost              |  | $                               | 9.9  |                            |  | $                             | 11.4 |                          |  | $      | 20.7  |    |  | $      | 21.0  |    |
|                              |

|                                  |  |                                 |      |                                 |  |                              |         |                              |  |        |      |         |  |        |         |        |  |  |
|----------------------------------|--|---------------------------------|------|---------------------------------|--|------------------------------|---------|------------------------------|--|--------|------|---------|--|--------|---------|--------|--|--|
|                             |  | OtherPostretirement Benefits    |
| (dollars inmillions)             |  | Three Monthsended June 30, 2005 |      | Three Months endedJune 30, 2004 |  | SixMonths ended June 30,2005 |         | SixMonths ended June 30,2004 |
| Servicecost                      |  | $                               | 1.4  |                            |  | $                            | 1.2     |                         |  | $      | 2.7  |    |  | $      | 2.9     |   |
| Interestcost                     |  |                            | 2.2  |                            |  |                         | 1.8     |                         |  |   | 4.3  |    |  |   | 4.4     |   |
| Amortizationof prior servicecost |  |                            | (1.1 | )                          |  |                         | — |                         |  |   | (2.0 | )  |  |   | — |   |
| Netperiodiccost                  |  | $                               | 2.5  |                            |  | $                            | 3.0     |                         |  | $      | 5.0  |    |  | $      | 7.3     |   |
|                                  |

InJanuary 2005, final regulations implementing the Medicare PrescriptionDrug, Improvement, and Modernization Act of 2003 (the Act) were issuedby the Centers for Medicare & Medicaid Services (CMS) of the U.S.Department of Health and Human Services. The final regulations clarifyhow companies providing retiree prescription drug benefits shoulddetermine if those benefits are actuarially equivalent to Medicare PartD coverage. Under the Act, a federal subsidy is available, beginning inJanuary 2006, to those companies providing prescription drug benefitsthat are actuarially equivalent to Medicare Part D coverage.

Based on the proposed regulations issued by CMS in July 2004, theCompany concluded that its retiree prescription drug benefit plan wasnot actuarially equivalent to Medicare Part D coverage and that it didnot qualify for the subsidy provided by the Act. However, as a resultof the final regulations issued in January 2005, the Company hasdetermined that its plan is actuarially equivalent, and the Companywill qualify for the subsidy.

As a result of qualifying for thesubsidy, the accumulated benefit obligation for the Company'sdefined postretirement benefit plans other than pensions has beenreduced by approximately $25.4 million as of January 2005. The serviceand interest cost components of other postretirement benefits expensewas reduced by $0.3 million and $0.3 million, respectively, for the sixmonths ended June 30, 2005.

8

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7.    BusinessOptimization Expenses

In addition to the Company's planto exit or restructure certain activities that was formulated inconjunction with the Acquisition, the Company is continuing to redesignand optimize its business and work processes. In June 2005, the Companyalso announced a plan to de-layer its management structure and toreduce costs in lower-performing business units. The plan calls for theelimination of approximately 220 positions, primarily in Europe andNorth America.

Business process optimization expenses,consisting mostly of employee severance and related costs, were $17.0million and $17.8 million for the three months and six months endedJune 30, 2005, respectively, and included a $14.0 million accrual forthe restructuring plan announced in June 2005. No payments have beencharged against the accrual as of June 30, 2005.

8.    Summary ofOther Income (Expense)

The components of other income(expense), net for the three months and six months ended June 30, 2005and 2004, include thefollowing:

|                                                 |  |                                 |         |                                 |  |                               |         |                               |  |        |         |         |  |        |         |         |  |  |
|-------------------------------------------------|--|---------------------------------|---------|---------------------------------|--|-------------------------------|---------|-------------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--|
| (dollarsin millions)                            |  | Three Monthsended June 30, 2005 |         | Three Months ended June30, 2004 |  | Six Months ended June 30,2005 |         | Six Months ended June 30,2004 |
| Impairment loss on business held forsale        |  | $                               | — |                            |  | $                             | — |                          |  | $      | (2.4    | )  |  | $      | — |    |
| Sponsor monitoringfees                          |  |                            | — |                            |  |                          | (3.2    | )                        |  |   | — |    |  |   | (5.7    | )  |
| Franchisetaxes                                  |  |                            | (0.6    | )                          |  |                          | (0.7    | )                        |  |   | (1.3    | )  |  |   | (1.5    | )  |
| Equityin earnings of unconsolidatedsubsidiaries |  |                            | — |                            |  |                          | 0.6     |                          |  |   | 0.8     |    |  |   | 1.3     |    |
| Foreigncurrency exchangeadjustments             |  |                            | 2.1     |                            |  |                          | (0.3    | )                        |  |   | 1.4     |    |  |   | (1.2    | )  |
| Other                                           |  |                            | (2.1    | )                          |  |                          | 1.8     |                          |  |   | (1.3    | )  |  |   | 1.8     |    |
|                                            |  | $                               | (0.6    | )                          |  | $                             | (1.8    | )                        |  | $      | (2.8    | )  |  | $      | (5.3    | )  |
|                                                 |

9.    IncomeTaxes

The Company's effective income tax rate was43.4% for the six months ended June 30, 2005. The rate variesfrom the U.S. statutory income tax rate of 35% due primarily tothe incremental tax on dividends received from non-U.S. subsidiaries,foreign taxes provided at less than the 35% U.S. statutory rate,U.S. state income taxes, nondeductible expenses, and other permanentdifferences.

The aforementioned items contributed to thevariation between the U.S. statutory income tax rate and theCompany's effective income tax rate for the six months ended June30, 2004. In addition, the effective rate was impacted by the chargefor purchased IPR&D, which is not tax deductible.

Theeffective rate of the provision for income taxes differs from the U.S.statutory tax rate due to the followingitems:

|                              |  |                                |         |                                |  |                               |         |                              |  |        |         |        |  |        |       |         |  |  |
|------------------------------|--|--------------------------------|---------|--------------------------------|--|-------------------------------|---------|------------------------------|--|--------|---------|--------|--|--------|-------|---------|--|--|
| (dollarsin millions)         |  | Three MonthsendedJune 30, 2005 |         | Three Monthsended June 30,2004 |  | Six Monthsended June 30, 2005 |         | SixMonthsended June 30, 2004 |
| U.S. statutorytaxrate        |  | $                              | (0.2    | )                         |  | $                             | 10.4    |                         |  | $      | 10.4    |   |  | $      | (29.8 | )  |
| IPR&D                    |  |                           | — |                           |  |                          | — |                         |  |   | — |   |  |   | 42.8  |    |
| Other                        |  |                           | 0.1     |                           |  |                          | 6.2     |                         |  |   | 2.5     |   |  |   | 6.6   |    |
| Incometax provision(benefit) |  | $                              | (0.1    | )                         |  | $                             | 16.6    |                         |  | $      | 12.9    |   |  | $      | 19.6  |    |
|                              |

9

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10.    ComprehensiveIncome (Loss)

Total comprehensive income (loss) and itscomponents, net of related tax, for the three months and six monthsended June 30, 2005 and 2004, are asfollows:

|                                                       |  |                                |        |                                 |  |                                |         |                               |  |        |        |         |  |        |         |         |  |  |
|-------------------------------------------------------|--|--------------------------------|--------|---------------------------------|--|--------------------------------|---------|-------------------------------|--|--------|--------|---------|--|--------|---------|---------|--|--|
| (dollarsin millions)                                  |  | Three MonthsendedJune 30, 2005 |        | Three Months ended June 30,2004 |  | Six Months ended June 30, 2005 |         | SixMonths ended June 30, 2004 |
| Net earnings(loss)                                    |  | $                              | (2.1   | )                          |  | $                              | 12.4    |                          |  | $      | 14.0   |    |  | $      | (106.6  | )  |
| Othercomprehensive income (loss), net of incometaxes: |  |                           |   |                            |  |                           |    |                          |  |   |   |    |  |   |    |    |
| Derivatives                                           |  |                           | 0.2    |                            |  |                           | — |                          |  |   | 0.7    |    |  |   | — |    |
| Foreigncurrency translationadjustments                |  |                           | (24.9  | )                          |  |                           | (72.1   | )                        |  |   | (46.0  | )  |  |   | (62.6   | )  |
| Comprehensiveloss                                     |  | $                              | (26.8  | )                          |  | $                              | (59.7   | )                        |  | $      | (31.3  | )  |  | $      | (169.2  | )  |
|                                                       |

11.    SegmentInformation

The Company provides integrated water treatment andprocess improvement services for industrial and institutionalapplications, using technologically advanced solutions, combiningchemical products and equipment, and consistent, reliable on-siteservice 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 the endmarkets it serves. The organization is comprised of the followingreportable segments:

Industrial and Institutional Services– This segment serves the global water treatment and processchemical needs of the industrial, institutional, and municipalmarkets.

Energy Services – This segment servesthe process chemicals and water treatment needs of the global petroleumand petrochemical industries in both upstream and downstreamapplications.

Paper Services – This segmentserves the process chemicals and water treatment needs of the globalpulp and paper industry.

Other – This segmentserves the alternative channels to market, supply chain activities, andcertain other operating expenses not allocated to a segment. It alsoincludes the Company's subsidiary in India and the Katayama Nalcojoint venture.

The Company evaluates the performance of itssegments based on "direct contribution",which is defined as net sales, less cost of products sold (excludingvariances to standard costs), selling and service expenses, marketingexpenses and research expenses directly attributable to each segment.There are no intersegment revenues. Prior year data have beenreclassified between segments to conform to the current yearpresentation.

Net sales by reportable segment were asfollows:

|                                     |  |                                 |       |                                 |  |                                |       |                              |  |        |         |        |  |        |         |        |  |  |
|-------------------------------------|--|---------------------------------|-------|---------------------------------|--|--------------------------------|-------|------------------------------|--|--------|---------|--------|--|--------|---------|--------|--|--|
| (dollarsin millions)                |  | Three Months endedJune 30, 2005 |       | Three Months ended June 30,2004 |  | Six Months ended June 30, 2005 |       | SixMonths endedJune 30, 2004 |
| Industrial andInstitutionalServices |  | $                               | 380.5 |                            |  | $                              | 349.1 |                         |  | $      | 724.2   |   |  | $      | 678.4   |   |
| EnergyServices                      |  |                            | 220.8 |                            |  |                           | 198.4 |                         |  |   | 430.7   |   |  |   | 392.6   |   |
| PaperServices                       |  |                            | 176.3 |                            |  |                           | 161.2 |                         |  |   | 346.6   |   |  |   | 325.3   |   |
| Other                               |  |                            | 58.7  |                            |  |                           | 31.7  |                         |  |   | 112.4   |   |  |   | 57.4    |   |
| Netsales                            |  | $                               | 836.3 |                            |  | $                              | 740.4 |                         |  | $      | 1,613.9 |   |  | $      | 1,453.7 |   |
|                                     |

10

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11.    SegmentInformation (continued)

The following table presents directcontribution by reportable segment and reconciles the total segmentdirect contribution to earnings (loss) before incometaxes:

|                                     |  |                                 |         |                                 |  |                                |         |                              |  |        |         |         |  |        |         |         |  |  |
|-------------------------------------|--|---------------------------------|---------|---------------------------------|--|--------------------------------|---------|------------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--|
| (dollarsin millions)                |  | Three Months endedJune 30, 2005 |         | Three Months ended June 30,2004 |  | Six Months ended June 30, 2005 |         | SixMonths endedJune 30, 2004 |
| Segment directcontribution:         |  |                            |    |                            |  |                           |    |                         |  |   |    |    |  |   |    |    |
| Industrialand InstitutionalServices |  | $                               | 93.3    |                            |  | $                              | 90.6    |                         |  | $      | 169.2   |    |  | $      | 170.5   |    |
| EnergyServices                      |  |                            | 43.9    |                            |  |                           | 44.0    |                         |  |   | 91.4    |    |  |   | 88.3    |    |
| PaperServices                       |  |                            | 31.8    |                            |  |                           | 36.4    |                         |  |   | 66.5    |    |  |   | 78.5    |    |
| Other                               |  |                            | (28.8   | )                          |  |                           | (13.5   | )                       |  |   | (34.2   | )  |  |   | (48.4   | )  |
| Totalsegment directcontribution     |  |                            | 140.2   |                            |  |                           | 157.5   |                         |  |   | 292.9   |    |  |   | 288.9   |    |
|                                |  |                            |    |                            |  |                           |    |                         |  |   |    |    |  |   |    |    |
| Expensesnot allocated tosegments:   |  |                            |    |                            |  |                           |    |                         |  |   |    |    |  |   |    |    |
| Administrativeexpenses              |  |                            | 47.1    |                            |  |                           | 50.9    |                         |  |   | 93.1    |    |  |   | 96.7    |    |
| Amortizationof intangibleassets     |  |                            | 20.5    |                            |  |                           | 24.9    |                         |  |   | 41.1    |    |  |   | 49.1    |    |
| In-processresearch anddevelopment   |  |                            | — |                            |  |                           | — |                         |  |   | — |    |  |   | 122.3   |    |
| Businessoptimizationexpenses        |  |                            | 17.0    |                            |  |                           | — |                         |  |   | 17.8    |    |  |   | — |    |
| Operatingearnings(loss)             |  |                            | 55.6    |                            |  |                           | 81.7    |                         |  |   | 140.9   |    |  |   | 20.8    |    |
| Otherincome (expense),net           |  |                            | (0.6    | )                          |  |                           | (1.8    | )                       |  |   | (2.8    | )  |  |   | (5.3    | )  |
| Interestincome                      |  |                            | 2.0     |                            |  |                           | 2.7     |                         |  |   | 4.1     |    |  |   | 5.4     |    |
| Interestexpense                     |  |                            | (57.6   | )                          |  |                           | (52.7   | )                       |  |   | (112.5  | )  |  |   | (106.0  | )  |
| Earnings(loss) before incometaxes   |  | $                               | (0.6    | )                          |  | $                              | 29.9    |                         |  | $      | 29.7    |    |  | $      | (85.1   | )  |
|                                     |

Totalsegment direct contribution for the three months ended June 30, 2005includes inventory write-offs of $10.7 million. Of this amount, $4.0million, $3.1 million, $2.4 million, and $1.2 million was charged toPaper Services, Other, Energy Services, and Industrial andInstitutional Services, respectively.

12.    Contingenciesand Litigation

Various claims, lawsuits and administrativeproceedings are pending or threatened against the Company and itssubsidiaries, arising from the ordinary course of business with respectto commercial, intellectual property, product liability, employee andenvironmental matters. Historically, these matters have not had amaterial impact on the consolidated financial position of the Company.However, the Company cannot predict the outcome of any litigation orthe potential for future litigation.

The Company has been namedas a potentially responsible party (PRP) by the EnvironmentalProtection Agency or state enforcement agencies at three waste siteswhere some financial contribution is or may be required. These agencieshave also identified many other parties who may be responsible forclean up costs at these waste disposal sites. The Company'sfinancial contribution to remediate these sites is expected to beminor. There has been no significant financial impact on the Company upto the present, nor is it anticipated that there will be in the future,as a result of these matters. The Company has made and will continue tomake provisions for these costs if the Company's liabilitybecomes probable and when costs can be reasonably estimated. TheCompany's undiscounted reserves for known environmental clean upcosts were $2.0 million at June 30, 2005.

These environmentalreserves represent management's current estimate of itsproportional clean-up costs and are based upon negotiation andagreement with enforcement agencies, its previous 

11

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12.    Contingenciesand Litigation (continued)

experience with respect to clean-upactivities, a detailed review by the Company of known conditions, andinformation about other PRPs. They are not reduced by any possiblerecoveries from insurance companies or other PRPs not specificallyidentified. Although management cannot determine whether or not amaterial effect on future operations is reasonably likely to occur,given the evolving nature of environmental regulations, it believesthat the recorded reserve levels are appropriate estimates of thepotential liability. Although settlement will require future cashoutlays, it is not expected that such outlays will materially impactthe Company's liquidity position. Expenditures for the six monthsended June 30, 2005, relating to environmental compliance and clean upactivities, were not significant.

The Company has been named asa defendant in lawsuits based on claimed involvement in the supply ofallegedly defective or hazardous materials. The plaintiffs in thesecases seek damages for alleged personal injury or potential injuryresulting from exposure to our products or other chemicals. Thesematters have had a de minimis impact on the Company's businesshistorically and the Company does not anticipate these matters topresent any material risk to the Company's business in thefuture. Notwithstanding, the Company cannot predict the outcome of anysuch lawsuits or the involvement the Company might have in thesematters in the future.

The Company has received subpoenas fromthe U.S. Department of Justice for documents and testimony relating toits storage of claimed hazardous materials, the claimed leakage ofwastewater and other matters at its plant in Garyville, Louisiana. Nocharges or indictments have been filed, but the outcome of thisinvestigation is unknown to the Company.

In the ordinary courseof its business, the Company is also a party to a number of lawsuitsand is subject to various claims relating to trademarks, employeematters, contracts, transactions, chemicals and other matters, theoutcome of which, in the opinion of management, should not have amaterial effect on the consolidated financial position of the Company.However, we cannot predict the outcome of any litigation or thepotential for future litigation. Were an unfavorable ruling to occur,there exists the possibility of a material adverse impact on theresults of operations for the period in which the ruling occurs. TheCompany maintains accruals where the outcome of the matter is probableand can be reasonably estimated.

13.    Guarantees

No significant guarantees were outstanding at June 30, 2005, otherthan subsidiary-related performance guarantees.

The Company had$36.0 million of letters of credit outstanding at June 30, 2005.

14.    SupplementalGuarantor Condensed Financial Statements

In connection with theAcquisition, Nalco Holdings LLC (presented as Parent in the followingtables), through its wholly owned subsidiary, Nalco Company (presentedas Issuer in the following tables), issued Senior Notes and SeniorSubordinated Notes as further described in Note 4. The Senior Notes arefully, unconditionally and jointly and severally guaranteed on anunsecured senior basis and the Senior Subordinated Notes are fully,unconditionally and jointly and severally guaranteed on an unsecuredsenior subordinated basis, in each case, by Nalco Holdings LLC and bysubstantially all existing and future wholly-owned restricted domesticsubsidiaries of Nalco Company (collectively, the"Guarantors"). All other subsidiaries ofNalco Holdings LLC, whether direct or indirect, do not guarantee theSenior Notes and Senior Subordinated Notes("Non-Guarantors"). The Guarantors alsounconditionally guarantee the Company's borrowings under theSenior Secured Credit Facilities on a senior secured basis.

Thefollowing unaudited condensed consolidating financial statementspresent the results of operations, financial position and cash flows of(1) the Parent, (2) the Issuer, (3) the Guarantors, (4) theNon-Guarantors and (5) eliminations to arrive at the information forNalco Holdings LLC on a consolidated basis. Separate financialstatements and other disclosures concerning the Guarantors are notpresented because management does not believe that such information ismaterial to investors.

12

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Nalco HoldingsLLC and Subsidiaries Condensed Consolidating Balance SheetJune 30, 2005(dollars inmillions)

|                                                           |  |        |         |        |  |                       |         |                           |  |              |         |              |  |        |         |        |  |        |          |         |  |        |         |        |  |  |
|-----------------------------------------------------------|--|--------|---------|--------|--|-----------------------|---------|---------------------------|--|--------------|---------|--------------|--|--------|---------|--------|--|--------|----------|---------|--|--------|---------|--------|--|--|
|                                                      |  | Parent |         | Issuer |  | GuarantorSubsidiaries |         | Non-GuarantorSubsidiaries |  | Eliminations |         | Consolidated |
| Cash& cash equivalents                                |  | $      | — |   |  | $                     | 0.1     |                      |  | $            | 2.3     |         |  | $      | 37.0    |   |  | $      | —  |    |  | $      | 39.4    |   |
| Trade accountsreceivable                                  |  |   | — |   |  |                  | (15.5   | )                    |  |         | 5.2     |         |  |   | 615.0   |   |  |   | —  |    |  |   | 604.7   |   |
| Inventories– finishedproducts                       |  |   | — |   |  |                  | 58.2    |                      |  |         | 39.0    |         |  |   | 130.4   |   |  |   | —  |    |  |   | 227.6   |   |
| Inventories– materials & work inprocess         |  |   | — |   |  |                  | 11.1    |                      |  |         | 14.3    |         |  |   | 47.9    |   |  |   | —  |    |  |   | 73.3    |   |
| Receivablesfrom relatedparties                            |  |   | — |   |  |                  | 34.5    |                      |  |         | 171.8   |         |  |   | 22.0    |   |  |   | (228.3   | )  |  |   | — |   |
| Prepaidexpenses, taxes, and other currentassets           |  |   | — |   |  |                  | 23.2    |                      |  |         | 6.3     |         |  |   | 45.6    |   |  |   | —  |    |  |   | 75.1    |   |
| **TotalCurrentAssets**                                    |  |   | — |   |  |                  | 111.6   |                      |  |         | 238.9   |         |  |   | 897.9   |   |  |   | (228.3   | )  |  |   | 1,020.1 |   |
| Property,plant, and equipment,net                         |  |   | — |   |  |                  | 252.3   |                      |  |         | 147.5   |         |  |   | 379.6   |   |  |   | —  |    |  |   | 779.4   |   |
| Investmentinsubsidiaries                                  |  |   | 999.2   |   |  |                  | 2,439.4 |                      |  |         | 368.5   |         |  |   | — |   |  |   | (3,807.1 | )  |  |   | — |   |
| Goodwill                                                  |  |   | — |   |  |                  | 719.7   |                      |  |         | 318.2   |         |  |   | 1,249.3 |   |  |   | —  |    |  |   | 2,287.2 |   |
| Intangibles                                               |  |   | — |   |  |                  | 1,031.1 |                      |  |         | 53.3    |         |  |   | 186.0   |   |  |   | —  |    |  |   | 1,270.4 |   |
| Otherassets                                               |  |   | — |   |  |                  | 293.1   |                      |  |         | 308.3   |         |  |   | 152.8   |   |  |   | (401.2   | )  |  |   | 353.0   |   |
| **TotalAssets**                                           |  | $      | 999.2   |   |  | $                     | 4,847.2 |                      |  | $            | 1,434.7 |         |  | $      | 2,865.6 |   |  | $      | (4,436.6 | )  |  | $      | 5,710.1 |   |
|                                                      |  |   |    |   |  |                  |    |                      |  |         |    |         |  |   |    |   |  |   |     |    |  |   |    |   |
| Accountspayable                                           |  | $      | — |   |  | $                     | 71.2    |                      |  | $            | 30.3    |         |  | $      | 130.0   |   |  | $      | —  |    |  | $      | 231.5   |   |
| Short-termdebt                                            |  |   | — |   |  |                  | 1.0     |                      |  |         | 0.8     |         |  |   | 19.4    |   |  |   | —  |    |  |   | 21.2    |   |
| Othercurrentliabilities                                   |  |   | — |   |  |                  | 42.4    |                      |  |         | 31.0    |         |  |   | 158.6   |   |  |   | —  |    |  |   | 232.0   |   |
| Intercompanyaccountspayable                               |  |   | — |   |  |                  | 81.6    |                      |  |         | 37.8    |         |  |   | 108.9   |   |  |   | (228.3   | )  |  |   | — |   |
| **TotalCurrentLiabilities**                               |  |   | — |   |  |                  | 196.2   |                      |  |         | 99.9    |         |  |   | 416.9   |   |  |   | (228.3   | )  |  |   | 484.7   |   |
| Long-termdebt                                             |  |   | — |   |  |                  | 2,954.5 |                      |  |         | — |         |  |   | 80.5    |   |  |   | —  |    |  |   | 3,035.0 |   |
| Deferredincometaxes                                       |  |   | — |   |  |                  | 396.3   |                      |  |         | 0.2     |         |  |   | 81.7    |   |  |   | —  |    |  |   | 478.2   |   |
| Accruedpensionbenefits                                    |  |   | — |   |  |                  | 236.5   |                      |  |         | 40.2    |         |  |   | 138.9   |   |  |   | —  |    |  |   | 415.6   |   |
| Intercompanynotes payable-longterm                        |  |   | — |   |  |                  | 400.7   |                      |  |         | 0.1     |         |  |   | 0.4     |   |  |   | (401.2   | )  |  |   | — |   |
| Otherliabilities                                          |  |   | — |   |  |                  | 245.3   |                      |  |         | 26.9    |         |  |   | 25.2    |   |  |   | —  |    |  |   | 297.4   |   |
| **TotalOtherLiabilities**                                 |  |   | — |   |  |                  | 4,233.3 |                      |  |         | 67.4    |         |  |   | 326.7   |   |  |   | (401.2   | )  |  |   | 4,226.2 |   |
| **MinorityInterest**                                      |  |   | 12.6    |   |  |                  | — |                      |  |         | — |         |  |   | 12.6    |   |  |   | (12.6    | )  |  |   | 12.6    |   |
| **TotalUnitholder's/Shareholders'Equity**                 |  |   | 986.6   |   |  |                  | 417.7   |                      |  |         | 1,267.4 |         |  |   | 2,109.4 |   |  |   | (3,794.5 | )  |  |   | 986.6   |   |
| **TotalLiabilities and Unitholder's/Shareholders'Equity** |  | $      | 999.2   |   |  | $                     | 4,847.2 |                      |  | $            | 1,434.7 |         |  | $      | 2,865.6 |   |  | $      | (4,436.6 | )  |  | $      | 5,710.1 |   |
|                                                           |

13

----

Nalco Holdings LLC and SubsidiariesCondensed Consolidating Balance Sheet December 31, 2004(dollars inmillions)

|                                                           |  |        |         |        |  |                       |         |                           |  |              |         |              |  |        |         |        |  |        |          |         |  |        |         |        |  |  |
|-----------------------------------------------------------|--|--------|---------|--------|--|-----------------------|---------|---------------------------|--|--------------|---------|--------------|--|--------|---------|--------|--|--------|----------|---------|--|--------|---------|--------|--|--|
|                                                      |  | Parent |         | Issuer |  | GuarantorSubsidiaries |         | Non-GuarantorSubsidiaries |  | Eliminations |         | Consolidated |
| Cash& cash equivalents                                |  | $      | — |   |  | $                     | 1.3     |                      |  | $            | 0.8     |         |  | $      | 31.1    |   |  | $      | —  |    |  | $      | 33.2    |   |
| Trade accountsreceivable                                  |  |   | — |   |  |                  | (16.4   | )                    |  |         | 4.4     |         |  |   | 606.2   |   |  |   | —  |    |  |   | 594.2   |   |
| Inventories– finishedproducts                       |  |   | — |   |  |                  | 70.6    |                      |  |         | 47.8    |         |  |   | 127.0   |   |  |   | —  |    |  |   | 245.4   |   |
| Inventories– materials & work inprocess         |  |   | — |   |  |                  | 13.9    |                      |  |         | 15.6    |         |  |   | 38.6    |   |  |   | —  |    |  |   | 68.1    |   |
| Notesreceivable from relatedparties                       |  |   | — |   |  |                  | 17.4    |                      |  |         | 133.7   |         |  |   | 24.3    |   |  |   | (175.4   | )  |  |   | — |   |
| Otherreceivables from relatedparties                      |  |   | — |   |  |                  | 1.2     |                      |  |         | 296.4   |         |  |   | 95.4    |   |  |   | (393.0   | )  |  |   | — |   |
| Prepaidexpenses, taxes, and other currentassets           |  |   | — |   |  |                  | 36.4    |                      |  |         | 6.9     |         |  |   | 46.8    |   |  |   | —  |    |  |   | 90.1    |   |
| **TotalCurrentAssets**                                    |  |   | — |   |  |                  | 124.4   |                      |  |         | 505.6   |         |  |   | 969.4   |   |  |   | (568.4   | )  |  |   | 1,031.0 |   |
| Property,plant, and equipment,net                         |  |   | — |   |  |                  | 270.4   |                      |  |         | 152.3   |         |  |   | 424.6   |   |  |   | —  |    |  |   | 847.3   |   |
| Investmentinsubsidiaries                                  |  |   | 1,031.8 |   |  |                  | 2,437.6 |                      |  |         | 368.9   |         |  |   | — |   |  |   | (3,838.3 | )  |  |   | — |   |
| Goodwill                                                  |  |   | — |   |  |                  | 719.3   |                      |  |         | 318.2   |         |  |   | 1,330.8 |   |  |   | —  |    |  |   | 2,368.3 |   |
| Intangibles                                               |  |   | — |   |  |                  | 1,047.6 |                      |  |         | 58.6    |         |  |   | 217.4   |   |  |   | —  |    |  |   | 1,323.6 |   |
| Otherassets                                               |  |   | — |   |  |                  | 300.1   |                      |  |         | 19.9    |         |  |   | 43.5    |   |  |   | —  |    |  |   | 363.5   |   |
| **TotalAssets**                                           |  | $      | 1,031.8 |   |  | $                     | 4,899.4 |                      |  | $            | 1,423.5 |         |  | $      | 2,985.7 |   |  | $      | (4,406.7 | )  |  | $      | 5,933.7 |   |
|                                                      |  |   |    |   |  |                  |    |                      |  |         |    |         |  |   |    |   |  |   |     |    |  |   |    |   |
| Accountspayable                                           |  | $      | — |   |  | $                     | 77.4    |                      |  | $            | 39.9    |         |  | $      | 144.6   |   |  | $      | —  |    |  | $      | 261.9   |   |
| Short-termdebt                                            |  |   | — |   |  |                  | 4.2     |                      |  |         | 0.4     |         |  |   | 13.1    |   |  |   | —  |    |  |   | 17.7    |   |
| Othercurrentliabilities                                   |  |   | — |   |  |                  | 50.5    |                      |  |         | 62.6    |         |  |   | 198.6   |   |  |   | —  |    |  |   | 311.7   |   |
| Intercompanyaccountspayable                               |  |   | — |   |  |                  | 53.7    |                      |  |         | 35.9    |         |  |   | 85.8    |   |  |   | (175.4   | )  |  |   | — |   |
| **TotalCurrentLiabilities**                               |  |   | — |   |  |                  | 185.8   |                      |  |         | 138.8   |         |  |   | 442.1   |   |  |   | (175.4   | )  |  |   | 591.3   |   |
| Long-termdebt                                             |  |   | — |   |  |                  | 3,002.1 |                      |  |         | — |         |  |   | 98.5    |   |  |   | —  |    |  |   | 3,100.6 |   |
| Deferredincometaxes                                       |  |   | — |   |  |                  | 401.0   |                      |  |         | (2.6    | )       |  |   | 103.1   |   |  |   | —  |    |  |   | 501.5   |   |
| Accruedpensionbenefits                                    |  |   | — |   |  |                  | 226.4   |                      |  |         | 37.2    |         |  |   | 148.1   |   |  |   | —  |    |  |   | 411.7   |   |
| Intercompanynotes payable-longterm                        |  |   | — |   |  |                  | 391.6   |                      |  |         | — |         |  |   | 1.4     |   |  |   | (393.0   | )  |  |   | — |   |
| Otherliabilities                                          |  |   | — |   |  |                  | 241.9   |                      |  |         | 27.3    |         |  |   | 27.6    |   |  |   | —  |    |  |   | 296.8   |   |
| **TotalOtherLiabilities**                                 |  |   | — |   |  |                  | 4,263.0 |                      |  |         | 61.9    |         |  |   | 378.7   |   |  |   | (393.0   | )  |  |   | 4,310.6 |   |
| **MinorityInterest**                                      |  |   | 14.1    |   |  |                  | — |                      |  |         | — |         |  |   | 14.1    |   |  |   | (14.1    | )  |  |   | 14.1    |   |
| **Unitholder's/Shareholders'Equity**                      |  |   | 1,017.7 |   |  |                  | 450.6   |                      |  |         | 1,222.8 |         |  |   | 2,150.8 |   |  |   | (3,824.2 | )  |  |   | 1,017.7 |   |
| **TotalLiabilities and Unitholder's/Shareholders'Equity** |  | $      | 1,031.8 |   |  | $                     | 4,899.4 |                      |  | $            | 1,423.5 |         |  | $      | 2,985.7 |   |  | $      | (4,406.7 | )  |  | $      | 5,933.7 |   |
|                                                           |

14

----

Nalco Holdings LLC and SubsidiariesCondensed Consolidating Statement of Operations Three Months endedJune 30, 2005(dollars inmillions)

|                                              |  |        |         |         |  |                       |         |                           |  |              |         |              |  |        |        |         |  |        |         |         |  |        |        |         |  |  |
|----------------------------------------------|--|--------|---------|---------|--|-----------------------|---------|---------------------------|--|--------------|---------|--------------|--|--------|--------|---------|--|--------|---------|---------|--|--------|--------|---------|--|--|
|                                         |  | Parent |         | Issuer  |  | GuarantorSubsidiaries |         | Non-GuarantorSubsidiaries |  | Eliminations |         | Consolidated |
| **Netsales**                                 |  | $      | — |    |  | $                     | 287.3   |                      |  | $            | 159.7   |         |  | $      | 470.2  |    |  | $      | (80.9   | )  |  | $      | 836.3  |    |
| Operatingcosts andexpenses:                  |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |   |    |  |   |    |    |  |   |   |    |
| Costof productsold                           |  |   | — |    |  |                  | 196.1   |                      |  |         | 108.9   |         |  |   | 255.8  |    |  |   | (80.9   | )  |  |   | 479.9  |    |
| Selling,administrative, and researchexpenses |  |   | — |    |  |                  | 98.6    |                      |  |         | 29.9    |         |  |   | 134.8  |    |  |   | — |    |  |   | 263.3  |    |
| Amortizationof intangibleassets              |  |   | — |    |  |                  | 8.3     |                      |  |         | 2.6     |         |  |   | 9.6    |    |  |   | — |    |  |   | 20.5   |    |
| Businessoptimizationexpenses                 |  |   | — |    |  |                  | 2.6     |                      |  |         | 0.5     |         |  |   | 13.9   |    |  |   | — |    |  |   | 17.0   |    |
| Totaloperating costs andexpenses             |  |   | — |    |  |                  | 305.6   |                      |  |         | 141.9   |         |  |   | 414.1  |    |  |   | (80.9   | )  |  |   | 780.7  |    |
| **Operatingearnings(loss)**                  |  |   | — |    |  |                  | (18.3   | )                    |  |         | 17.8    |         |  |   | 56.1   |    |  |   | — |    |  |   | 55.6   |    |
|                                         |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |   |    |  |   |    |    |  |   |   |    |
| Otherincome (expense),net                    |  |   | (0.5    | )  |  |                  | 15.8    |                      |  |         | 6.1     |         |  |   | (21.0  | )  |  |   | (1.0    | )  |  |   | (0.6   | )  |
| Interestincome                               |  |   | — |    |  |                  | 1.6     |                      |  |         | 2.7     |         |  |   | 10.2   |    |  |   | (12.5   | )  |  |   | 2.0    |    |
| Interestexpense                              |  |   | — |    |  |                  | (64.3   | )                    |  |         | (3.4    | )       |  |   | (2.4   | )  |  |   | 12.5    |    |  |   | (57.6  | )  |
| Earnings(loss) before incometaxes            |  |   | (0.5    | )  |  |                  | (65.2   | )                    |  |         | 23.2    |         |  |   | 42.9   |    |  |   | (1.0    | )  |  |   | (0.6   | )  |
|                                         |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |   |    |  |   |    |    |  |   |   |    |
| Incometax provision(benefit)                 |  |   | — |    |  |                  | (17.9   | )                    |  |         | 2.2     |         |  |   | 15.6   |    |  |   | — |    |  |   | (0.1   | )  |
|                                         |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |   |    |  |   |    |    |  |   |   |    |
| Minorityinterests                            |  |   | (1.6    | )  |  |                  | — |                      |  |         | — |         |  |   | (1.6   | )  |  |   | 1.6     |    |  |   | (1.6   | )  |
| **Netearnings(loss)**                        |  | $      | (2.1    | )  |  | $                     | (47.3   | )                    |  | $            | 21.0    |         |  | $      | 25.7   |    |  | $      | 0.6     |    |  | $      | (2.1   | )  |
|                                              |

15

----

Nalco Holdings LLC and SubsidiariesCondensed Consolidating Statement of Operations Three Months endedJune 30, 2004(dollars inmillions)

|                                              |  |        |         |         |  |                       |         |                           |  |              |         |              |  |        |        |         |  |        |         |         |  |        |        |         |  |  |
|----------------------------------------------|--|--------|---------|---------|--|-----------------------|---------|---------------------------|--|--------------|---------|--------------|--|--------|--------|---------|--|--------|---------|---------|--|--------|--------|---------|--|--|
|                                         |  | Parent |         | Issuer  |  | GuarantorSubsidiaries |         | Non-GuarantorSubsidiaries |  | Eliminations |         | Consolidated |
| **Netsales**                                 |  | $      | — |    |  | $                     | 272.7   |                      |  | $            | 136.9   |         |  | $      | 399.6  |    |  | $      | (68.8   | )  |  | $      | 740.4  |    |
| Operatingcosts andexpenses:                  |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |   |    |  |   |    |    |  |   |   |    |
| Costof productsold                           |  |   | — |    |  |                  | 160.2   |                      |  |         | 84.4    |         |  |   | 196.4  |    |  |   | (68.8   | )  |  |   | 372.2  |    |
| Selling,administrative, and researchexpenses |  |   | — |    |  |                  | 110.8   |                      |  |         | 27.7    |         |  |   | 123.1  |    |  |   | — |    |  |   | 261.6  |    |
| Amortizationof intangibleassets              |  |   | — |    |  |                  | 9.7     |                      |  |         | 3.5     |         |  |   | 11.7   |    |  |   | — |    |  |   | 24.9   |    |
| Totaloperating costs andexpenses             |  |   | — |    |  |                  | 280.7   |                      |  |         | 115.6   |         |  |   | 331.2  |    |  |   | (68.8   | )  |  |   | 658.7  |    |
| **Operatingearnings(loss)**                  |  |   | — |    |  |                  | (8.0    | )                    |  |         | 21.3    |         |  |   | 68.4   |    |  |   | — |    |  |   | 81.7   |    |
|                                         |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |   |    |  |   |    |    |  |   |   |    |
| Otherincome (expense),net                    |  |   | 13.4    |    |  |                  | 22.8    |                      |  |         | 3.6     |         |  |   | (20.1  | )  |  |   | (21.5   | )  |  |   | (1.8   | )  |
| Interestincome                               |  |   | — |    |  |                  | 2.1     |                      |  |         | 1.1     |         |  |   | 1.1    |    |  |   | (1.6    | )  |  |   | 2.7    |    |
| Interestexpense                              |  |   | — |    |  |                  | (52.7   | )                    |  |         | (0.3    | )       |  |   | (1.3   | )  |  |   | 1.6     |    |  |   | (52.7  | )  |
| Earnings(loss) before incometaxes            |  |   | 13.4    |    |  |                  | (35.8   | )                    |  |         | 25.7    |         |  |   | 48.1   |    |  |   | (21.5   | )  |  |   | 29.9   |    |
|                                         |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |   |    |  |   |    |    |  |   |   |    |
| Incometax provision(benefit)                 |  |   | — |    |  |                  | (7.3    | )                    |  |         | (0.2    | )       |  |   | 24.0   |    |  |   | 0.1     |    |  |   | 16.6   |    |
|                                         |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |   |    |  |   |    |    |  |   |   |    |
| Minorityinterests                            |  |   | (0.9    | )  |  |                  | — |                      |  |         | — |         |  |   | (1.1   | )  |  |   | 1.1     |    |  |   | (0.9   | )  |
| **Netearnings(loss)**                        |  | $      | 12.5    |    |  | $                     | (28.5   | )                    |  | $            | 25.9    |         |  | $      | 23.0   |    |  | $      | (20.5   | )  |  | $      | 12.4   |    |
|                                              |

16

----

Nalco HoldingsLLC and SubsidiariesCondensed Consolidating Statement ofOperationsSix Months ended June 30, 2005(dollars inmillions)

|                                              |  |        |         |         |  |                       |         |                           |  |              |         |              |  |        |        |         |  |        |         |         |  |        |         |         |  |  |
|----------------------------------------------|--|--------|---------|---------|--|-----------------------|---------|---------------------------|--|--------------|---------|--------------|--|--------|--------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                         |  | Parent |         | Issuer  |  | GuarantorSubsidiaries |         | Non-GuarantorSubsidiaries |  | Eliminations |         | Consolidated |
| **Netsales**                                 |  | $      | — |    |  | $                     | 562.4   |                      |  | $            | 308.2   |         |  | $      | 900.8  |    |  | $      | (157.5  | )  |  | $      | 1,613.9 |    |
| Operatingcosts andexpenses:                  |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |   |    |  |   |    |    |  |   |    |    |
| Costof productsold                           |  |   | — |    |  |                  | 374.4   |                      |  |         | 203.8   |         |  |   | 471.6  |    |  |   | (157.5  | )  |  |   | 892.3   |    |
| Selling,administrative, and researchexpenses |  |   | — |    |  |                  | 196.1   |                      |  |         | 59.4    |         |  |   | 266.3  |    |  |   | — |    |  |   | 521.8   |    |
| Amortizationof intangibleassets              |  |   | — |    |  |                  | 16.6    |                      |  |         | 5.3     |         |  |   | 19.2   |    |  |   | — |    |  |   | 41.1    |    |
| Businessoptimizationexpenses                 |  |   | — |    |  |                  | 3.0     |                      |  |         | 0.5     |         |  |   | 14.3   |    |  |   | — |    |  |   | 17.8    |    |
| Totaloperating costs andexpenses             |  |   | — |    |  |                  | 590.1   |                      |  |         | 269.0   |         |  |   | 771.4  |    |  |   | (157.5  | )  |  |   | 1,473.0 |    |
| **Operatingearnings(loss)**                  |  |   | — |    |  |                  | (27.7   | )                    |  |         | 39.2    |         |  |   | 129.4  |    |  |   | — |    |  |   | 140.9   |    |
|                                         |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |   |    |  |   |    |    |  |   |    |    |
| Otherincome (expense),net                    |  |   | 16.8    |    |  |                  | 43.9    |                      |  |         | 11.7    |         |  |   | (39.6  | )  |  |   | (35.6   | )  |  |   | (2.8    | )  |
| Interestincome                               |  |   | — |    |  |                  | 3.4     |                      |  |         | 4.9     |         |  |   | 19.4   |    |  |   | (23.6   | )  |  |   | 4.1     |    |
| Interestexpense                              |  |   | — |    |  |                  | (125.4  | )                    |  |         | (6.5    | )       |  |   | (4.2   | )  |  |   | 23.6    |    |  |   | (112.5  | )  |
| Earnings(loss) before incometaxes            |  |   | 16.8    |    |  |                  | (105.8  | )                    |  |         | 49.3    |         |  |   | 105.0  |    |  |   | (35.6   | )  |  |   | 29.7    |    |
|                                         |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |   |    |  |   |    |    |  |   |    |    |
| Incometax provision(benefit)                 |  |   | — |    |  |                  | (27.3   | )                    |  |         | 3.9     |         |  |   | 36.3   |    |  |   | — |    |  |   | 12.9    |    |
|                                         |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |   |    |  |   |    |    |  |   |    |    |
| Minorityinterests                            |  |   | (2.8    | )  |  |                  | — |                      |  |         | — |         |  |   | (2.8   | )  |  |   | 2.8     |    |  |   | (2.8    | )  |
| **Netearnings(loss)**                        |  | $      | 14.0    |    |  | $                     | (78.5   | )                    |  | $            | 45.4    |         |  | $      | 65.9   |    |  | $      | (32.8   | )  |  | $      | 14.0    |    |
|                                              |

17

----

Nalco Holdings LLC and SubsidiariesCondensed Consolidating Statement of Operations Six Months endedJune 30, 2004(dollars inmillions)

|                                              |  |        |         |         |  |                       |         |                           |  |              |        |              |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|----------------------------------------------|--|--------|---------|---------|--|-----------------------|---------|---------------------------|--|--------------|--------|--------------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                         |  | Parent |         | Issuer  |  | GuarantorSubsidiaries |         | Non-GuarantorSubsidiaries |  | Eliminations |        | Consolidated |
| **Netsales**                                 |  | $      | — |    |  | $                     | 532.1   |                      |  | $            | 262.9  |         |  | $      | 788.0   |    |  | $      | (129.3  | )  |  | $      | 1,453.7 |    |
| Operatingcosts andexpenses:                  |  |   |    |    |  |                  |    |                      |  |         |   |         |  |   |    |    |  |   |    |    |  |   |    |    |
| Costof productsold                           |  |   | — |    |  |                  | 310.8   |                      |  |         | 159.5  |         |  |   | 405.6   |    |  |   | (129.3  | )  |  |   | 746.6   |    |
| Selling,administrative, and researchexpenses |  |   | — |    |  |                  | 216.0   |                      |  |         | 56.7   |         |  |   | 242.2   |    |  |   | — |    |  |   | 514.9   |    |
| Amortizationof intangibleassets              |  |   | — |    |  |                  | 19.9    |                      |  |         | 6.5    |         |  |   | 22.7    |    |  |   | — |    |  |   | 49.1    |    |
| In-processresearch anddevelopment            |  |   | — |    |  |                  | 108.6   |                      |  |         | 13.7   |         |  |   | — |    |  |   | — |    |  |   | 122.3   |    |
| Totaloperating costs andexpenses             |  |   | — |    |  |                  | 655.3   |                      |  |         | 236.4  |         |  |   | 670.5   |    |  |   | (129.3  | )  |  |   | 1,432.9 |    |
| **Operatingearnings(loss)**                  |  |   | — |    |  |                  | (123.2  | )                    |  |         | 26.5   |         |  |   | 117.5   |    |  |   | — |    |  |   | 20.8    |    |
|                                         |  |   |    |    |  |                  |    |                      |  |         |   |         |  |   |    |    |  |   |    |    |  |   |    |    |
| Otherincome (expense),net                    |  |   | (104.7  | )  |  |                  | 31.0    |                      |  |         | 10.0   |         |  |   | (38.1   | )  |  |   | 96.5    |    |  |   | (5.3    | )  |
| Interestincome                               |  |   | — |    |  |                  | 4.9     |                      |  |         | 2.1    |         |  |   | 1.5     |    |  |   | (3.1    | )  |  |   | 5.4     |    |
| Interestexpense                              |  |   | — |    |  |                  | (106.2  | )                    |  |         | (0.5   | )       |  |   | (2.4    | )  |  |   | 3.1     |    |  |   | (106.0  | )  |
| Earnings(loss) before incometaxes            |  |   | (104.7  | )  |  |                  | (193.5  | )                    |  |         | 38.1   |         |  |   | 78.5    |    |  |   | 96.5    |    |  |   | (85.1   | )  |
|                                         |  |   |    |    |  |                  |    |                      |  |         |   |         |  |   |    |    |  |   |    |    |  |   |    |    |
| Incometax provision(benefit)                 |  |   | — |    |  |                  | (17.0   | )                    |  |         | 1.5    |         |  |   | 35.1    |    |  |   | — |    |  |   | 19.6    |    |
|                                         |  |   |    |    |  |                  |    |                      |  |         |   |         |  |   |    |    |  |   |    |    |  |   |    |    |
| Minorityinterests                            |  |   | (1.9    | )  |  |                  | — |                      |  |         | 0.2    |         |  |   | (2.1    | )  |  |   | 1.9     |    |  |   | (1.9    | )  |
| **Netearnings(loss)**                        |  | $      | (106.6  | )  |  | $                     | (176.5  | )                    |  | $            | 36.8   |         |  | $      | 41.3    |    |  | $      | 98.4    |    |  | $      | (106.6  | )  |
|                                              |

18

----

Nalco Holdings LLC and SubsidiariesCondensed Consolidating Statement of Cash Flows Six Months endedJune 30, 2005(dollars inmillions)

|                                                    |  |        |         |         |  |                       |         |                           |  |              |         |              |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|----------------------------------------------------|--|--------|---------|---------|--|-----------------------|---------|---------------------------|--|--------------|---------|--------------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                               |  | Parent |         | Issuer  |  | GuarantorSubsidiaries |         | Non-GuarantorSubsidiaries |  | Eliminations |         | Consolidated |
| **Operatingactivities**                            |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |    |    |  |   |    |    |  |   |    |    |
| Netearnings(loss)                                  |  | $      | 14.0    |    |  | $                     | (78.5   | )                    |  | $            | 45.4    |         |  | $      | 66.0    |    |  | $      | (32.9   | )  |  | $      | 14.0    |    |
| Non-cashadjustments                                |  |   | (14.0   | )  |  |                  | 38.7    |                      |  |         | 24.3    |         |  |   | 58.5    |    |  |   | 14.8    |    |  |   | 122.3   |    |
| Changesin operating assets andliabilities          |  |   | — |    |  |                  | 8.5     |                      |  |         | (55.5   | )       |  |   | (58.7   | )  |  |   | (0.2    | )  |  |   | (105.9  | )  |
| Netcash provided by (used for) operatingactivities |  |   | — |    |  |                  | (31.3   | )                    |  |         | 14.2    |         |  |   | 65.8    |    |  |   | (18.3   | )  |  |   | 30.4    |    |
|                                               |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |    |    |  |   |    |    |  |   |    |    |
| **Investingactivities**                            |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |    |    |  |   |    |    |  |   |    |    |
| Acquisitionof Ondeo NalcoGroup                     |  |   | — |    |  |                  | (3.2    | )                    |  |         | — |         |  |   | — |    |  |   | — |    |  |   | (3.2    | )  |
| Additionsto property, plant, and equipment,net     |  |   | — |    |  |                  | (8.4    | )                    |  |         | (4.8    | )       |  |   | (11.8   | )  |  |   | — |    |  |   | (25.0   | )  |
| Otherinvestingactivities                           |  |   | — |    |  |                  | (2.1    | )                    |  |         | (7.1    | )       |  |   | (16.5   | )  |  |   | 25.1    |    |  |   | (0.6    | )  |
| Netcash provided by (used for) investingactivities |  |   | — |    |  |                  | (13.7   | )                    |  |         | (11.9   | )       |  |   | (28.3   | )  |  |   | 25.1    |    |  |   | (28.8   | )  |
|                                               |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |    |    |  |   |    |    |  |   |    |    |
| **Financingactivities**                            |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |    |    |  |   |    |    |  |   |    |    |
| Cashdividends                                      |  |   | — |    |  |                  | — |                      |  |         | (1.3    | )       |  |   | (16.8   | )  |  |   | 18.1    |    |  |   | — |    |
| Netborrowings (repayments) ofdebt                  |  |   | — |    |  |                  | 45.1    |                      |  |         | 0.5     |         |  |   | (12.1   | )  |  |   | (23.2   | )  |  |   | 10.3    |    |
| Capitalcontributions                               |  |   | — |    |  |                  | — |                      |  |         | — |         |  |   | 1.7     |    |  |   | (1.7    | )  |  |   | — |    |
| Otherfinancingactivities                           |  |   | — |    |  |                  | (1.3    | )                    |  |         | — |         |  |   | (3.1    | )  |  |   | — |    |  |   | (4.4    | )  |
| Netcash provided by (used for) financingactivities |  |   | — |    |  |                  | 43.8    |                      |  |         | (0.8    | )       |  |   | (30.3   | )  |  |   | (6.8    | )  |  |   | 5.9     |    |
| Effectof exchange rate changes oncash              |  |   | — |    |  |                  | — |                      |  |         | — |         |  |   | (1.3    | )  |  |   | — |    |  |   | (1.3    | )  |
| Increase(decrease) incash                          |  |   | — |    |  |                  | (1.2    | )                    |  |         | 1.5     |         |  |   | 5.9     |    |  |   | — |    |  |   | 6.2     |    |
| Cashat beginning ofperiod                          |  |   | — |    |  |                  | 1.3     |                      |  |         | 0.8     |         |  |   | 31.1    |    |  |   | — |    |  |   | 33.2    |    |
| Cashat end of period                               |  | $      | — |    |  | $                     | 0.1     |                      |  | $            | 2.3     |         |  | $      | 37.0    |    |  | $      | — |    |  | $      | 39.4    |    |
|                                                    |

19

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Nalco Holdings LLC and SubsidiariesCondensed Consolidating Statement of Cash Flows Six Months endedJune 30, 2004(dollars inmillions)

|                                                    |  |        |         |         |  |                       |         |                           |  |              |         |              |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|----------------------------------------------------|--|--------|---------|---------|--|-----------------------|---------|---------------------------|--|--------------|---------|--------------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                               |  | Parent |         | Issuer  |  | GuarantorSubsidiaries |         | Non-GuarantorSubsidiaries |  | Eliminations |         | Consolidated |
| **Operatingactivities**                            |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |    |    |  |   |    |    |  |   |    |    |
| Netearnings(loss)                                  |  | $      | (106.6  | )  |  | $                     | (176.5  | )                    |  | $            | 36.8    |         |  | $      | 41.3    |    |  | $      | 98.4    |    |  | $      | (106.6  | )  |
| Noncashadjustments                                 |  |   | 106.6   |    |  |                  | 170.2   |                      |  |         | 33.0    |         |  |   | 31.1    |    |  |   | (106.6  | )  |  |   | 234.3   |    |
| Changesin operating assets andliabilities          |  |   | (4.0    | )  |  |                  | 80.3    |                      |  |         | 2.4     |         |  |   | (81.0   | )  |  |   | — |    |  |   | (2.3    | )  |
| Netcash provided by (used for) operatingactivities |  |   | (4.0    | )  |  |                  | 74.0    |                      |  |         | 72.2    |         |  |   | (8.6    | )  |  |   | (8.2    | )  |  |   | 125.4   |    |
|                                               |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |    |    |  |   |    |    |  |   |    |    |
| **Investingactivities**                            |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |    |    |  |   |    |    |  |   |    |    |
| Acquisitionof Ondeo NalcoGroup                     |  |   | — |    |  |                  | 25.6    |                      |  |         | — |         |  |   | — |    |  |   | — |    |  |   | 25.6    |    |
| Additionsto property, plant, and equipment,net     |  |   | — |    |  |                  | (7.0    | )                    |  |         | (1.4    | )       |  |   | (26.5   | )  |  |   | — |    |  |   | (34.9   | )  |
| Businesspurchases/sales,net                        |  |   | (9.8    | )  |  |                  | (2.5    | )                    |  |         | — |         |  |   | — |    |  |   | 12.3    |    |  |   | — |    |
| Otherinvestingactivities                           |  |   | — |    |  |                  | 84.6    |                      |  |         | (12.2   | )       |  |   | (14.9   | )  |  |   | (57.9   | )  |  |   | (0.4    | )  |
| Netcash provided by (used for) investingactivities |  |   | (9.8    | )  |  |                  | 100.7   |                      |  |         | (13.6   | )       |  |   | (41.4   | )  |  |   | (45.6   | )  |  |   | (9.7    | )  |
|                                               |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |    |    |  |   |    |    |  |   |    |    |
| **Financingactivities**                            |  |   |    |    |  |                  |    |                      |  |         |    |         |  |   |    |    |  |   |    |    |  |   |    |    |
| Cashdividends                                      |  |   | — |    |  |                  | — |                      |  |         | (1.2    | )       |  |   | (7.0    | )  |  |   | 8.2     |    |  |   | — |    |
| Netborrowings (repayments) ofdebt                  |  |   | — |    |  |                  | (187.4  | )                    |  |         | (55.0   | )       |  |   | 60.0    |    |  |   | 57.9    |    |  |   | (124.5  | )  |
| Capitalcontributions                               |  |   | 9.8     |    |  |                  | 9.8     |                      |  |         | 0.5     |         |  |   | 2.0     |    |  |   | (12.3   | )  |  |   | 9.8     |    |
| Otherfinancingactivities                           |  |   | — |    |  |                  | — |                      |  |         | — |         |  |   | (0.7    | )  |  |   | — |    |  |   | (0.7    | )  |
| Netcash provided by (used for) financingactivities |  |   | 9.8     |    |  |                  | (177.6  | )                    |  |         | (55.7   | )       |  |   | 54.3    |    |  |   | 53.8    |    |  |   | (115.4  | )  |
| Effectof exchange rate changes oncash              |  |   | — |    |  |                  | — |                      |  |         | — |         |  |   | (3.1    | )  |  |   | — |    |  |   | (3.1    | )  |
| Increase(decrease) incash                          |  |   | (4.0    | )  |  |                  | (2.9    | )                    |  |         | 2.9     |         |  |   | 1.2     |    |  |   | — |    |  |   | (2.8    | )  |
| Cashat beginning ofperiod                          |  |   | 4.0     |    |  |                  | 22.5    |                      |  |         | 1.8     |         |  |   | 71.7    |    |  |   | — |    |  |   | 100.0   |    |
| Cashat end of period                               |  | $      | — |    |  | $                     | 19.6    |                      |  | $            | 4.7     |         |  | $      | 72.9    |    |  | $      | — |    |  | $      | 97.2    |    |
|                                                    |

20

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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 by TheBlackstone Group, Apollo Management, L.P. and GS Capital Partners (the"Sponsors"), purchased all of the outstandingshares of capital stock of Ondeo Nalco Company (which is now known asNalco Company) and the Nalco International SAS Subsidiaries, which hadbeen operated as a single business unit, from subsidiaries of Suez S.A.(Suez). In the following discussion and analysis, we refer to thisacquisition as the "Acquisition," and theterm "Transactions" means, collectively, theAcquisition and the related financings to fund the Acquisition.

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

"SafeHarbor" Statement Under Private Securities LitigationReform Act of 1995

This Quarterly Report for the fiscal quarterended June 30, 2005 (the "Quarterly Report")includes "forward-looking statements" withinthe meaning of Section 27A of the Securities Act of 1933 and Section21E of the Securities Exchange Act of 1934. These forward-lookingstatements include statements concerning our plans, objectives, goals,strategies, future events, future revenue or performance, capitalexpenditures, financing needs, plans or intentions relating toacquisitions, business trends and other information that is nothistorical information. When used in this Quarterly Report, the words"estimates,""expects,""anticipates,""projects,""plans," "intends,"" believes,""forecasts," or future or conditional verbs,such as "will,""should," "could"or "may," and variations of such words orsimilar expressions are intended to identify forward-lookingstatements. All forward-looking statements, including, withoutlimitation, management's examination of historical operatingtrends and data are based upon our current expectations and variousassumptions. Our expectations, beliefs and projections are expressed ingood faith and we believe there is a reasonable basis for them.However, there can be no assurance that management'sexpectations, beliefs and projections will be achieved.

Thereare a number of risks and uncertainties that could cause our actualresults to differ materially from the forward-looking statementscontained in this Quarterly Report. Additionally, important factorscould cause our actual results to differ materially from theforward-looking statements we make in this Quarterly Report. As statedelsewhere in this Quarterly Report, such risks, uncertainties and otherimportant factors include, among others:

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

|  |              |                                                                                      |
|--|--------------|--------------------------------------------------------------------------------------|
|  | •  | limitations onflexibility in operating our business contained in our debtagreements; |

|  |              |                                                                          |
|--|--------------|--------------------------------------------------------------------------|
|  | •  | increases ininterest rates as a result of our variable rateindebtedness; |

|  |              |                                    |
|--|--------------|------------------------------------|
|  | •  | pricing pressurefrom ourcustomers; |

|  |              |                                     |
|--|--------------|-------------------------------------|
|  | •  | technologicalchange and innovation; |

|  |              |                                              |
|--|--------------|----------------------------------------------|
|  | •  | risksassociated with our non-U.S.operations; |

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

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

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

|  |              |                                               |
|--|--------------|-----------------------------------------------|
|  | •  | operating hazardsin our productionfacilities; |

|  |              |                                            |
|--|--------------|--------------------------------------------|
|  | •  | inability toachieve expected cost savings; |

21

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

|  |              |                                                  |
|--|--------------|--------------------------------------------------|
|  | •  | difficultiesin securing the raw materials weuse; |

|  |              |                                                                                              |
|--|--------------|----------------------------------------------------------------------------------------------|
|  | •  | our significant pensionbenefit obligations and the current underfunding in our pensionplans; |

|  |              |                                                               |
|--|--------------|---------------------------------------------------------------|
|  | •  | our ability to realizethe full value of our intangibleassets; |

|  |              |                                                                                                                                  |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------|
|  | •  | our ability to attractand retain skilled employees, particularly research scientists,technical sales professionals andengineers; |

|  |              |                                                            |
|--|--------------|------------------------------------------------------------|
|  | •  | our ability toprotect our intellectual property rights;and |

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

Theremay be other factors that may cause our actual results to differmaterially from the forward-looking statements.

Allforward-looking statements attributable to us or persons acting on ourbehalf apply only as of the date of this Quarterly Report and areexpressly qualified in their entirety by the cautionary statementsincluded in this Quarterly Report. We undertake no obligation to updateor revise forward-looking statements which may be made to reflectevents or circumstances that arise after the date made or to reflectthe occurrence of unanticipated events.

Executive LevelOverview

For the three months ended June 30, 2005, we increasednominal sales 13.0% to $836.3 million, with organic sales up8.6% compared to the three months ended June 30, 2004. Organicsales growth included 4.8% in price increases, or $36 million.This doubles the result of price increases from the $18 millionachieved in the three months ended March 31, 2005. The remainder of our13% nominal sales growth came from foreign currency increases of2.9% and a 1.5% increase from Katayama Nalco sales. June1, 2005 marked the one-year anniversary of the Katayama Nalco jointventure's formation.

Business process optimization chargesof $17.0 million, including a previously announced $14.0 millionrestructuring charge, drove otherwise positive earnings to a net lossof $2.1 million versus a $12.4 million profit in the three months endedJune 30, 2004.

All four segments generated strong nominal salesgrowth in the three months ended June 30, 2005. Energy Services grew11.3%, followed by Paper Services, up 9.4%, andIndustrial and Institutional Services, up 9.0%. Other segmentsales nearly doubled through the impact of strong organic growth andour Katayama Nalco joint venture. Sales were also strong on an organicbasis across the segments. Energy Services grew 9.9% for thethree months ended June 30, 2005, followed by Paper Services at7.1% and Industrial and Institutional Services at 6.2%.Other segment sales grew 33.5% organically. Each segmentimproved organic sales performance from the three months ended March31, 2005.

Costs continued to increase during the first sixmonths of 2005 compared to 2004 levels. Raw and other purchasedmaterial costs have stabilized, but were still ahead of priceimprovement in the three months ended June 30, 2005. For the first sixmonths of 2005, raw and other purchased material costs grew by $80million, roughly divided evenly between the three months ended March31, 2005 and the three months ended June 30, 2005. Our previouslyannounced inventory reduction plans also increased costs in the threemonths ended June 30, 2005. Reduced production volumes causedapproximately $7 million in higher-than-normal in-period recognition ofsupply chain costs. In addition, as we worked to properly valueremotely held inventories, we took a write-off of $10.7 million in thethree months ended June 30, 2005. This was part of the $51.6 million inreported inventory reduction during the three months ended June 30,2005.

While the inventory reduction had a temporarily negativeearnings impact, inventory levels at June  30, 2005 totaled$300.9 million, down $51.6 million from our March 31, 2005 level anddown $12.6 million from the December 31, 2004 total, which was lowerthan we had initially targeted. Cash benefits from 

22

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

the non-write-off inventory reductions werenot immediately realized, however, as these reductions initiallyresulted in higher cash requirements for working capital, most notablyfor accounts payable.

During June 2005, we sold our1,000th 3D TRASAR® cooling water stressmanagement unit to a large microelectronics manufacturer. The salecomes approximately one year after the conclusion of sales training inNorth America and as initial rollout activities are being completed inother regions. We have experienced substantial demand for 3D TRASAR andintend to increase production levels.

During the six monthsended June 30, 2005, sales grew 11.0% to $1,613.9 millioncompared to revenues of $1,453.7 million for the six months ended June30, 2004. Net earnings for the six months ended June 30, 2005 increasedto $14.0 million compared to a loss of $106.6 million for the sixmonths ended June 30, 2004. The loss in 2004 was driven largely by aone-time, non-cash expense related to purchase accounting of $122.3million for in-process research and development.

Outlook

We expect that price increases agreedupon with customers will be approximately $150 million, or about5% of revenues, for 2005, with $96 million expected to berealized in the second half of 2005. We expect raw materials and otherpurchased material costs to be up $145 million for 2005. In the marketsand product lines where pricing does not reflect increased raw materialcosts, we will also press for selective price increases through theremainder of 2005.

We believe that these price increases,coupled with cost reduction activities and stable raw material andother purchased materials costs, should drive better results in thesecond half of 2005. We expect that cost reduction activities willgenerate $83 million in 2005 savings with run-rate benefits of $97million. These savings actions are targeted to more than offset highercompensation, inflationary and research and sales engineer investmentcosts. We expect to begin realizing the cash benefits of our inventoryreduction efforts in the three months ended September 30, 2005, as theinitial impact of reducing inventory was to reduce payables.

Results of Operations

Quarter Ended June 30,2005 Compared to the Quarter Ended June 30, 2004

Net sales forthe three months ended June 30, 2005 and June 30, 2004 may be comparedasfollows:

|                                       |  |                  |       |              |  |                                               |       |                     |  |                           |      |         |  |        |     |         |  |        |      |          |  |        |      |         |  |  |
|---------------------------------------|--|------------------|-------|--------------|--|-----------------------------------------------|-------|---------------------|--|---------------------------|------|---------|--|--------|-----|---------|--|--------|------|----------|--|--------|------|---------|--|--|
|                                  |  | ThreeMonthsended |       |         |  | Attributable toChangesin the FollowingFactors |
| ((dollars inmillions)                 |  | June 30, 2005    |       | June30, 2004 |  | % Change                                      |       | CurrencyTranslation |  | Acquisitions/Divestitures |      | Organic |
| Industrial& InstitutionalServices |  | $                | 380.5 |         |  | $                                             | 349.1 |                |  |                      | 9.0  | %  |  |   | 3.0 | %  |  |   | (0.2 | )%  |  |   | 6.2  | %  |
| EnergyServices                        |  |             | 220.8 |         |  |                                          | 198.4 |                |  |                      | 11.3 | %  |  |   | 2.5 | %  |  |   | (1.1 | )%  |  |   | 9.9  | %  |
| PaperServices                         |  |             | 176.3 |         |  |                                          | 161.2 |                |  |                      | 9.4  | %  |  |   | 3.1 | %  |  |   | (0.8 | )%  |  |   | 7.1  | %  |
| Other                                 |  |             | 58.7  |         |  |                                          | 31.7  |                |  |                      | 85.2 | %  |  |   | 4.7 | %  |  |   | 47.0 | %   |  |   | 33.5 | %  |
| Netsales                              |  | $                | 836.3 |         |  | $                                             | 740.4 |                |  |                      | 13.0 | %  |  |   | 2.9 | %  |  |   | 1.5  | %   |  |   | 8.6  | %  |
|                                       |

Net salesfor the three months ended June 30, 2005 were $836.3 million, a13.0% increase from the $740.4 million reported for the threemonths ended June 30, 2004. On an organic basis, which excludes theimpacts of changes in foreign currency translation rates andacquisitions and divestitures, net sales were up 8.6%. Of thisimprovement, 4.8% was attributed to price increases, while theremaining 3.8% was driven by favorable sales growth broadlyspread across our customer base. The Energy Services division postedsignificant organic growth in sales of 9.9% over the same periodlast year. Organically, Paper Services division sales were up7.1% compared to a year ago, reflecting continued strong growthin the Latin America and Pacific regions and a more modest gain inNorth 

23

----

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

America. Paper Services sales in Europecontinue to suffer, resulting in part from management vs. laborchallenges faced by our Finnish customers. The Industrial andInstitutional Services division reported organic growth of 6.2%.While most of the improvement was due to price increases, solid gainscontinue to be posted by our global mining business and our watertreatment business in the Latin American and Pacific regions. Most ofthe organic improvement in "other" sales wasattributable to our subsidiary company in India and our Japanese jointventure, Katayama Nalco, which reported improved sales in the month ofJune over last year. The increase in "other"sales attributable to acquisitions/divestitures represents theincremental impact of April and May 2005 sales of Katayama Nalco, whichwas formed with Katayama Chemical Inc. on June 1, 2004.

Gross profit**,**defined as the difference between netsales and cost of product sold, of $356.4 million for the three monthsended June 30, 2005 decreased by $11.8 million, or 3.2%, fromthe $368.2 million reported for the quarter ended June 30, 2004. On anorganic basis, gross profit decreased by $26.3 million. Unfavorablemanufacturing volume variances attributable to our plan to reduceinventory levels during the quarter and an inventory write-offaccounted for most of this change. These two factors were primarilyresponsible for the change in the gross profit margin, which was42.6% for the three months ended June 30, 2005 compared to49.7% for the year-ago period. Higher costs of raw and otherpurchased materials were largely offset by increases in the sellingprices of our products.

Selling, administrative, andresearch expenses for the three months ended June 30, 2005 of$263.3 million increased by $1.7 million, or 0.6%, from $261.6million for the three months ended June 30, 2004. On an organic basis,selling, administrative, and research expenses decreased by $8.5million, or 3.2%, reflecting further initiatives to reduce andcontrol spending.

Amortization of intangible assets was$20.5 million and $24.9 million for the three months ended June 30,2005 and 2004, respectively. The decrease was attributable to loweramortization of customer relationships, which are amortized using anaccelerated method.

Business optimization expenses,representing mostly employee severance and related costs, were$17.0 million for the three months ended June 30, 2005, and included a$14.0 million charge to support a plan to de-layer our managementstructure and reduce costs in lower-performing business units. The plancalls for the elimination of approximately 220 positions, primarily inEurope and North America.

Other income (expense), netwas a net expense of $0.6 million and $1.8 million for the three monthsended June 30, 2005 and 2004, respectively. In November 2004, theCompany terminated the monitoring services provided to the Company byaffiliates of the Sponsors. Monitoring fees for such services were $3.2million for the three months ended June 30, 2004.

Netinterest expense, defined as the combination of interest incomeand interest expense, of $55.6 million for the three months ended June30, 2005 increased by $5.6 million from the $50.0 million reported forthe three months ended June 30, 2004. The impact of higher interestrates on variable rate borrowings more than offset the impact of alower average debt level compared to the year-ago period.

The effective tax rate for the three months ended June 30,2005 was 16.7%. The rate varies from the U.S. statutory incometax rate of 35% primarily due to the incremental tax ondividends received from non-U.S. subsidiaries, foreign taxes providedat less than the 35% U.S. statutory rate, U.S. state incometaxes, nondeductible expenses, and other permanent differences.

These items also contributed to the variation between the U.S.statutory income tax rate and the Company's effective income taxrate for the three months ended June 30, 2004.

The year-to-dateeffective tax rate changed from 42.9% for the three months endedMarch 31, 2005 to 43.4% for the six months ended June 30, 2005.Because the three months ended June 30, 2005 is a pre-tax loss, thischange results in a reduced tax benefit for the quarter.

Minority interest expense was $0.7 million higher than the$0.9 million for the three months ended June 30, 2004, reflectingimproved results for most of the Company's non-wholly ownedsubsidiaries.

24

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

Six Months Ended June 30,2005 Compared to the Six Months Ended June 30, 2004

Net salesfor the six months ended June 30, 2005 and June 30, 2004 may becompared asfollows:

|                                       |  |                |         |              |  |                                               |         |                     |  |                           |      |         |  |        |     |         |  |        |      |          |  |        |      |         |  |  |
|---------------------------------------|--|----------------|---------|--------------|--|-----------------------------------------------|---------|---------------------|--|---------------------------|------|---------|--|--------|-----|---------|--|--------|------|----------|--|--------|------|---------|--|--|
|                                  |  | SixMonthsended |         |         |  | Attributable toChangesin the FollowingFactors |
| ((dollars inmillions)                 |  | June 30, 2005  |         | June30, 2004 |  | % Change                                      |         | CurrencyTranslation |  | Acquisitions/Divestitures |      | Organic |
| Industrial& InstitutionalServices |  | $              | 724.2   |         |  | $                                             | 678.4   |                |  |                      | 6.8  | %  |  |   | 2.5 | %  |  |   | (0.2 | )%  |  |   | 4.5  | %  |
| EnergyServices                        |  |           | 430.7   |         |  |                                          | 392.6   |                |  |                      | 9.7  | %  |  |   | 2.3 | %  |  |   | (1.4 | )%  |  |   | 8.8  | %  |
| PaperServices                         |  |           | 346.6   |         |  |                                          | 325.3   |                |  |                      | 6.5  | %  |  |   | 2.9 | %  |  |   | (1.2 | )%  |  |   | 4.8  | %  |
| Other                                 |  |           | 112.4   |         |  |                                          | 57.4    |                |  |                      | 95.8 | %  |  |   | 4.5 | %  |  |   | 62.6 | %   |  |   | 28.7 | %  |
| Netsales                              |  | $              | 1,613.9 |         |  | $                                             | 1,453.7 |                |  |                      | 11.0 | %  |  |   | 2.6 | %  |  |   | 1.7  | %   |  |   | 6.7  | %  |
|                                       |

Net salesfor the six months ended June 30, 2005 were $1,613.9 million, a11.0% increase from the $1,453.7 million reported for the sixmonths ended June 30, 2004. On an organic basis, which excludes theimpacts of changes in foreign currency translation rates andacquisitions and divestitures, net sales were up 6.7%. Of thisimprovement, 3.7% was attributed to price increases, while theremaining 3.0% was driven by favorable sales growth broadlyspread across our customer base. The Energy Services division reportedstrong organic growth in sales of 8.8% over the same period lastyear. Solid double-digit growth in the Latin America and Pacificregions and a more modest improvement in North America contributed tothe 4.8% organic growth in Paper Services division salescompared to a year ago. These improvements were partly offset by lowerPaper Services sales in Europe, due to management vs. labor challengesfaced by our Finnish customers and advance purchases made by customersduring the three months ended December 31, 2004. Customers purchased inadvance to avoid risking any potential complications from ourinformation systems conversion in Europe on January 1, 2005. TheIndustrial and Institutional Services division reported organic growthof 4.5%, which was mostly attributable to price increases.However, solid gains, exclusive of price increases, were posted by ourglobal mining business and our water treatment business in the LatinAmerican and Pacific regions. These gains were partly offset by lowersales reported in Europe, which was partly the result of higher salesduring the three months ended December 31, 2004, due to advancepurchases made by customers in that region. The generally slowereconomy in our largest western European markets was also a contributingfactor. Most of the organic improvement in"other" sales was attributable to alternatechannel sales, our subsidiary company in India, and our Japanese jointventure, Katayama Nalco, which reported improved sales in the month ofJune over last year. The increase in "other"sales attributable to acquisitions/divestitures represents theincremental impact of sales for the first five months of 2005 byKatayama Nalco, which was formed with Katayama Chemical Inc. on June 1,2004.

Gross profit**,**defined as the differencebetween net sales and cost of product sold, of $721.6 million for thesix months ended June 30, 2005 increased by $14.5 million, or2.0%, over the $707.1 million reported for the six months endedJune 30, 2004. On an organic basis and excluding the impact of a $14.5million charge to cost of product sold during the six months ended June30, 2004 resulting from the sale of inventory that had been revalued atselling price less costs to sell in purchase accounting at the date ofthe Acquisition, gross profit decreased by $28.8 million. This wasmostly attributable to higher costs of raw and other purchasedmaterials, partly offset by the impact of increases in the sellingprices of our products. Gross profit margin for the six months endedJune 30, 2005 was 44.7% compared to 48.6% for theyear-ago period. Gross profit margin for the six months ended June 30,2004 was reduced approximately 100 basis points as a result of theaforementioned $14.5 million charge resulting from purchaseaccounting.

Selling, administrative, and researchexpenses for the six months ended June 30, 2005 of $521.8 millionincreased by $6.9 million, or 1.3%, from $514.9 million for thesix months ended June 30, 2004. This increase was attributable tochanges in foreign currency translation rates and the incrementalexpenses 

25

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

of Katayama Nalco for the first five monthsof 2005. On an organic basis, selling, administrative, and researchexpenses decreased by $13.9 million, or 2.7%, reflectingcontinuing efforts to reduce and control spending.

Amortization of intangible assets was $41.1 million and$49.1 million for the six months ended June 30, 2005 and 2004,respectively. The decrease was attributable to lower amortization ofcustomer relationships, which are amortized using an acceleratedmethod.

In-process research and development was aone-time charge of $122.3 million recorded during the six months endedJune 30, 2004, as a result of purchase accounting related to theAcquisition. The value of purchased IPR&D was comprised of fiveongoing development projects at the date of the Acquisition. PurchasedIPR&D was derived by assigning values to those projects identifiedby management as having economic value, but that had not yet reachedtechnological feasibility and had no alternative future use.

Business optimization expenses, representing mostlyemployee severance and related costs, were $17.8 million for the sixmonths ended June 30, 2005, and included a $14.0 million chargerecorded at the end of the period to support a plan to de-layer ourmanagement structure and reduce costs in lower-performing businessunits. The plan calls for the elimination of approximately 220positions, primarily in Europe and North America.

Otherincome (expense), net was a net expense of $2.8 million and $5.3million for the six months ended June 30, 2005 and 2004, respectively.In November 2004, the Company terminated the monitoring servicesprovided to the Company by affiliates of the Sponsors. Monitoring feesfor such services were $5.7 million for the six months ended June 30,2004. The resulting favorable variance was offset by a $2.4 millionimpairment charge recorded during the six months ended June 30, 2005related to a business held for sale.

Net interestexpense, defined as the combination of interest income andinterest expense, of $108.4 million for the six months ended June 30,2005 increased by $7.8 million from the $100.6 million reported for thesix months ended June 30, 2004. The impact of higher interest rates onvariable rate borrowings more than offset the impact of a lower averagedebt level compared to the year-ago period.

The effectivetax rate for the six months ended June 30, 2005 was 43.4%.The rate varies from the U.S. statutory income tax rate of 35%primarily due to the incremental tax on dividends received fromnon-U.S. subsidiaries, foreign taxes provided at less than the35% U.S. statutory rate, U.S. state income taxes, nondeductibleexpenses, and other permanent differences.

These itemscontributed to the variation between the U.S. statutory income tax rateand the Company's effective income tax rate for the six monthsended June 30, 2004. In addition, the effective rate was impacted bythe charge for purchased IPR&D, which is not tax deductible.

Minority interest expense was $0.9 million higher than the$1.9 million for the six months ended June 30, 2004, reflectingimproved results for most of the Company's non-wholly ownedsubsidiaries.

Liquidity and Capital Resources

Operating activities.    Historically, theCompany's main source of liquidity has been its solid cash flowgenerated by operating activities. For the six months ended June 30,2005, cash provided by operating activities was $30.4 million, a $95.0million decrease from the same period last year. This decrease wasmostly attributable to higher working capital requirements, mostnotably for accounts payable, which directly resulted from our effortsto significantly reduce inventory levels during the second quarter of2005. Also contributing was the payment of year-end incentive plan andcommission accruals.

Investing activities.    Cashused for investing activities was $28.8 million for the six monthsended June 30, 2005, which was mostly attributable to net propertyadditions of $25.0 million.

26

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

Cash used for investing activities was$9.7 million for the six months ended June 30, 2004. This was mostlythe result of net property additions of $34.9 million, partly offset bya $25.6 million purchase price adjustment received from Suez related tothe Acquisition. Approximately half of the capital spending wasattributable to our information systems project in Europe.

Financing activities.    Net cash provided by financingactivities totaled $5.9 million during the six months ended June 30,2005, which was mostly attributable to a net increase inborrowings.

Net cash used for financing activities totaled$115.4 million during the six months ended June 30, 2004. This wasprimarily comprised of repayment of term loan borrowings.

Sincethe Transactions, we have been highly leveraged. Our liquidityrequirements are significant, primarily due to debt servicerequirements as well as research and development and capitalinvestment. Our primary source of liquidity will continue to be cashflow generated from operations, but we also have availability under a$250 million revolving credit facility and a $100 million receivablesfacility, in each case subject to certain conditions. We believe thatour financial position and financing structure will provide flexibilityin worldwide financing activities and permit us to respond to changingconditions in credit markets.

Senior credit facilities.On November 4, 2003, we entered into senior credit facilities whichprovided for a revolving credit facility, a $300 million six-year termloan A facility (which includes an €88.0 million tranche)which matures in November 2009 and a $1,300 million seven-year termloan B facility 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 1.50% with respect to baserate borrowings and 2.00% with respect to LIBOR or Eurocurrencyborrowings. The applicable margin for borrowings under the term loan Bfacility is not subject to adjustment.

In addition to payinginterest on outstanding principal under the senior credit facilities,we are required to pay a commitment fee to the lenders under therevolving credit facility in respect of the unutilized commitments at arate equal to 0.50%. We also pay customary letter of creditfees.

The term loan A facility will amortize each year inquarterly amounts at a rate of 5% per annum in year one,10% per annum in year two, 15% per annum in year three,20% per annum in year four and 25% per annum in each ofyears five and six.

The term loan B facility will amortize eachyear in an amount equal to 1% per annum in equal quarterlyinstallments for the first six years and nine months, with theremaining amount payable on November 4, 2010.

At June 30, 2005,the outstanding balance of the term loan A and term loan B facilitieswas $208.5 million and $1,081.0 million, respectively.

Principalamounts outstanding under the revolving credit facility will be due andpayable in full at maturity on November 4, 2009. At June 30, 2005, ouroutstanding borrowing under the revolving credit facility was $24.0million.

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

27

----

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

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 June 30, 2005.

Senior notes and seniorsubordinated notes.    As part of the Transactions in November2003, Nalco Company issued $665 million aggregate principal amount of73⁄4% U.S. dollar-denominated senior notes due 2011,€200 million aggregate principal amount of73⁄4% euro-denominated senior notes due 2011, $465 millionaggregate principal amount of 8 7/8% U.S.dollar-denominated senior subordinated notes due 2013 and€200 million aggregate principal amount of 9%euro-denominated senior subordinated notes due 2013.

Theindentures governing the senior notes and the senior subordinated noteslimit our ability and the ability of our restricted subsidiariesto:

|  |              |                               |
|--|--------------|-------------------------------|
|  | •  | incuradditional indebtedness; |

|  |              |                                                                                 |
|--|--------------|---------------------------------------------------------------------------------|
|  | •  | paydividends on or make other distributions or repurchase certain capitalstock; |

|  |              |                          |
|--|--------------|--------------------------|
|  | •  | makecertain investments; |

|  |              |                                                          |
|--|--------------|----------------------------------------------------------|
|  | •  | enterinto certain types of transactions with affiliates; |

|  |              |                                                                  |
|--|--------------|------------------------------------------------------------------|
|  | •  | limitdividends or other payments by our restricted subsidiaries; |

|  |              |                                                  |
|--|--------------|--------------------------------------------------|
|  | •  | useassets as security in other transactions; and |

|  |              |                                                           |
|--|--------------|-----------------------------------------------------------|
|  | •  | sellcertain assets 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.    The breach ofcovenants in our senior credit agreement that are tied to ratios basedon Adjusted EBITDA could result in a default under that agreement andthe lenders could elect to declare all amounts borrowed due andpayable. Any such acceleration would also result in a default under ourindentures. Additionally, under our debt agreements, our ability toengage in activities such as incurring additional indebtedness, makinginvestments and paying dividends is also tied to ratios based onAdjusted EBITDA.

Adjusted EBITDA is used to determine ourcompliance with many of the covenants contained in the indenturesgoverning the notes and in our senior credit agreement. Adjusted EBITDAis defined as EBITDA further adjusted to exclude unusual items andother adjustments permitted in calculating covenant compliance underthe indentures and our senior credit facility. We believe that theinclusion of supplementary adjustments to EBITDA applied in presentingAdjusted EBITDA are appropriate to provide additional information toinvestors to demonstrate compliance with our financing covenants.

28

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

Adjusted EBITDA is calculated asfollows:

|                                  |  |                                 |       |                                 |  |                                |         |                               |  |        |       |         |  |        |         |         |  |  |
|----------------------------------|--|---------------------------------|-------|---------------------------------|--|--------------------------------|---------|-------------------------------|--|--------|-------|---------|--|--------|---------|---------|--|--|
| ((dollarsin millions)            |  | Three Months endedJune 30, 2005 |       | Three Months ended June 30,2004 |  | Six Months ended June 30, 2005 |         | SixMonths ended June 30, 2004 |
| Net earnings(loss)               |  | $                               | (2.1  | )                          |  | $                              | 12.4    |                          |  | $      | 14.0  |    |  | $      | (106.6  | )  |
| Interest,net                     |  |                            | 55.6  |                            |  |                           | 50.0    |                          |  |   | 108.4 |    |  |   | 100.6   |    |
| Incometax provision(benefit)     |  |                            | (0.1  | )                          |  |                           | 16.6    |                          |  |   | 12.9  |    |  |   | 19.6    |    |
| Depreciation                     |  |                            | 33.5  |                            |  |                           | 28.2    |                          |  |   | 66.7  |    |  |   | 56.9    |    |
| Amortization                     |  |                            | 20.5  |                            |  |                           | 24.9    |                          |  |   | 41.1  |    |  |   | 49.1    |    |
| EBITDA                           |  | $                               | 107.4 |                            |  | $                              | 132.1   |                          |  | $      | 243.1 |    |  | $      | 119.6   |    |
| Non-cashcharges(1)               |  |                            | 5.7   |                            |  |                           | 7.6     |                          |  |   | 15.8  |    |  |   | 153.0   |    |
| Businessoptimization expenses(2) |  |                            | 17.0  |                            |  |                           | — |                          |  |   | 17.8  |    |  |   | — |    |
| Unusualitems(3)                  |  |                            | 1.1   |                            |  |                           | 3.4     |                          |  |   | 1.8   |    |  |   | 4.5     |    |
| Otheradjustments(4)              |  |                            | (1.2  | )                          |  |                           | 2.4     |                          |  |   | (3.0  | )  |  |   | 3.7     |    |
| AdjustedEBITDA                   |  | $                               | 130.0 |                            |  | $                              | 145.5   |                          |  | $      | 275.5 |    |  | $      | 280.8   |    |
|                                  |

|  |
|--|
|  |  |
|  |

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

|                                                |
|------------------------------------------------|
|                                                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| ((dollarsin millions)                          |  | Three Months endedJune 30, 2005 |  | Three Months ended June 30,2004 |  | Six Months ended June 30, 2005 |  | SixMonths ended June 30, 2004 |
| In-processresearch and development             |  | $ | — |   |  | $ | — |   |  | $ | — |   |  | $ | 122.3 |   |
| Inventorystep-up                               |  |   | — |   |  |   | 0.4 |   |  |   | — |   |  |   | 14.5 |   |
| Assetwrite-offs                                |  |   | 2.5 |   |  |   | — |   |  |   | 4.9 |   |  |   | — |   |
| Profitsharing expense and 401(k) funded bySuez |  |   | 4.2 |   |  |   | 9.9 |   |  |   | 9.8 |   |  |   | 16.0 |   |
| Other                                          |  |   | (1.0 | )  |  |   | (2.7 | )  |  |   | 1.1 |   |  |   | 0.2 |   |
| Non-cashcharges                                |  | $ | 5.7 |   |  | $ | 7.6 |   |  | $ | 15.8 |   |  | $ | 153.0 |   |
|                                                |

In-processResearch and Development

In-process researchand development was a one time charge of $122.3 million recorded duringthe six months ended June 30, 2004, as a result of purchase accountingentries related to the Acquisition.

InventoryStep-Up

As a result of purchase accounting forthe Acquisition, we wrote up our inventory to fair value andsubsequently charged the write up to cost of sales as the inventory wassold.

Profit Sharing and 401(k) Expense Funded bySuez

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

Other

Other non-cash charges include the non-cash impacton earnings of our equity investments and minority interests. Non-cashcharges also includes the non-cash portion of rent expense under thesublease that we entered into with Suez in conjunction with theAcquisition.

29

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

|     |                                                                                                                                                                                                                                                                    |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Business optimizationexpenses for 2005 include costs associated with the de-layering of ourmanagement structure, cost reductions in lower-performing businessunits, and the redesign and optimization of work processes. See note 7to Item 1 for more information. |

|     |                                                          |
|-----|----------------------------------------------------------|
| (3) | Unusualitems are further detailed on the followingtable: |

|                                      |
|--------------------------------------|
|                                      |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| ((dollarsin millions)                |  | Three Months endedJune 30, 2005 |  | Three Months ended June 30,2004 |  | Six Months ended June 30, 2005 |  | SixMonths ended June 30, 2004 |
| Loss (gain) onsales, net of expenses |  | $ | 0.6 |   |  | $ | — |   |  | $ | 1.1 |   |  | $ | — |   |
| Other unusualitems(a)                |  |   | 0.5 |   |  |   | 3.4 |   |  |   | 0.7 |   |  |   | 4.5 |   |
|                                 |  | $ | 1.1 |   |  | $ | 3.4 |   |  | $ | 1.8 |   |  | $ | 4.5 |   |
|                                      |

|  |
|--|
|  |  |
|  |

|  |     |                                                                                                                                                                                                                                                                     |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (a) | Otherunusual items for the three months and six months ended June 30, 2005mostly represent certain inventory write-offs. Other unusual items forthe three months and six months ended June 30, 2004 primarily includecertain costs associated with theTransactions. |

|     |                                                                                                                                           |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------|
| (4) | We are required to makeadjustments to EBITDA for monitoring fees paid to the Sponsors,franchise taxes, and 401(k) matching contributions. |

Our covenant levels and ratios for the four quartersended June 30, 2005 are asfollows:

|                                                                                                           |
|-----------------------------------------------------------------------------------------------------------|
|                                                                                                           |  |  |  |  |  |  |  |  |  |  |
|                                                                                                      |  | CovenantLevel at June 30,2005 |  | Ratios |
| Seniorcredit facility (1)                                                                                 |  |   |   |   |  |   |   |   |
| MinimumAdjusted EBITDA to cash interestratio                                                              |  |   | 1.70x |   |  |   | 2.87x |   |
| Maximum netdebt to Adjusted EBITDAratio                                                                   |  |   | 6.50x |   |  |   | 5.20x |   |
| Indentures(2)                                                                                             |  |   |   |   |  |   |   |   |
| Minimum Adjusted EBITDAto fixed charge ratio required to incur additional debt pursuant toratioprovisions |  |   | 2.00x |   |  |   | 2.87x |   |
|                                                                                                           |

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

|  |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (1) | During2005, our senior credit facility requires us to maintain an AdjustedEBITDA to cash interest ratio at a minimum of 1.70x and a net debt toAdjusted EBITDA ratio at a maximum of 6.50x, in each case for the mostrecent four quarter period. Failure to satisfy these ratio requirementswould constitute a default under the senior credit agreement. If ourlenders failed to waive any such default, our repayment obligationsunder the senior credit agreement could be accelerated, which wouldalso constitute a default under ourindentures. |

|  |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (2) | Our ability to incuradditional 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 $1,289.5million that was outstanding under our term loan facilities as of June30, 2005) and investments in similar business and other investmentsequal to 6% of Nalco Holdings LLC consolidated assets. |

Local lines of credit.    Certain of our non-U.S.subsidiaries have lines of credit to support local requirements. As ofJune 30, 2005, the aggregate outstanding balance under these locallines of credit was approximately $20.5 million. Certain of these linesof credit are equally and ratably secured with obligations under oursenior credit facilities.

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

Receivables facility.    NalcoCompany entered into a receivables facility on June 25, 2004 thatprovides up to $100 million in funding from a commercial paper conduitsponsored by JPMorgan Chase Bank, one of the lenders under NalcoCompany's senior credit facilities, based on availability ofeligible receivables and satisfaction of other customaryconditions.

Availability of funding under the receivablesfacility depends primarily upon the outstanding trade accountsreceivable balance from time to time. Aggregate availability isdetermined by using a formula that reduces the gross receivablesbalance by factors that take into account historical default anddilution rates, excessive concentrations and average days outstandingand the costs of the facility. Based on the terms of this facility andon the criteria described above, as of June 30, 2005, approximately$163.2 million of our accounts receivable balance was consideredeligible for financing under the program, of which approximately $83.2million would have been available for funding. As of June 30, 2005, wehad $79.4 million of outstanding borrowings under this facility.

This facility is treated as a general financing agreement resultingin the borrowings and related receivables being shown as liabilitiesand assets, respectively, on our consolidated balance sheet and thecosts associated with the receivables facility being recorded asinterest expense.

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Item3.    Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the Company's exposuresto market risk since December 31, 2004.

Item 4.    Controlsand Procedures

|           |                                                  |
|-----------|--------------------------------------------------|
| (a)  | Evaluation ofdisclosure controls and procedures. |

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | TheCompany's chief executive officer and chief financial officer,after evaluating the effectiveness of the Company's"disclosure controls and procedures" (asdefined in the Securities Exchange Act of 1934 Rules 13a-15(e) and15d-15(e)) as of the end of the period, have concluded that theCompany's disclosure controls and procedures were adequate anddesigned to ensure that material information relating to the Companyand its consolidated subsidiaries would be made known to them by otherswithin those entities as appropriate to allow timely decisionsregarding requireddisclosures. |

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

|        |                                                                                                                                                                                                                                                                       |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Therewere no changes in the Company's internal controls over financialreporting that occurred during the second quarter of 2005 that havematerially affected, or are reasonably likely to materially affect, theCompany's internal controls over financial reporting. |

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PART II.    OTHER INFORMATION

Item 6.    Exhibits

|           |                                   |
|-----------|-----------------------------------|
| (a)  | Thefollowing are included herein: |

|  |                   |                                                                                 |
|--|-------------------|---------------------------------------------------------------------------------|
|  | Exhibit10.1  | Material Contracts – Amendment No. 2 tothe Receivables Transfer Agreement |

|  |                   |                                                                                                    |
|--|-------------------|----------------------------------------------------------------------------------------------------|
|  | Exhibit31.1  | Certification of Chief Executive Officer,Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |

|  |                    |                                                                                                   |
|--|--------------------|---------------------------------------------------------------------------------------------------|
|  | Exhibit 31.2  | Certification of ChiefFinancial 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 |

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SIGNATURE

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

|  | NALCO HOLDINGS LLC |
|--|--------------------|

|  | /s/   BRADLEY J.BELL                                     |
|--|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | Name:   Bradley J. Bell Title:  Executive Vice President and  ChiefFinancial Officer |
|--|-------------------------------------------------------------------------------------------------------------------------|

Dated:   August 12,2005

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