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UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION Washington, DC20549

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FORM10-Q

(Mark One)

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

**For the quarterly period ended September 30, 2005**

**or**

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

For the transition period from                     to                     .

Commission File No. 333-119231

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NALCOFINANCE HOLDINGS LLC

(Exact name ofregistrant as specified in its charter)

|                                                               |  |                                        |  |  |  |  |
|---------------------------------------------------------------|--|----------------------------------------|--|--|--|--|
| Delaware                                                      |  | 61-1464558                             |
| (State or other jurisdiction of Incorporation orOrganization) |  | (I.R.S. Employer IdentificationNumber) |
|                                                               |

1601 West Diehl RoadNaperville, IL 60563-1198 (630) 305-1000

(Address, Including Zip Code, and Telephone Number,Including Area Code, of Registrant's Principal ExecutiveOffices)

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

Indicateby check mark whether the registrant is an accelerated filer (asdefined in Rule 12b-2 of the Exchange Act.) Yes     No

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QUARTERLY REPORT ON FORM10-Q NALCO FINANCE HOLDINGS LLC Quarter Ended September 30,2005

TABLE OF CONTENTS

|                                                        |  |                                                                                                                                              |    |        |                            |        |        |        |  |  |
|--------------------------------------------------------|--|----------------------------------------------------------------------------------------------------------------------------------------------|----|--------|----------------------------|--------|--------|--------|--|--|
| **PartI.    FinancialInformation** |  |                                                                                                                                         |    |   |                            |   |   |   |
| Item1.                                                 |  | Financial Statements(Unaudited)                                                                                                              |
|                                                   |  | CondensedConsolidated Balance Sheets –    September 30, 2005 andDecember 31,2004                                   |    |   |     2  |   |
|                                                   |  | Condensed Consolidated Statements of Operations–     Three months and nine months ended September 30,2005 and 2004 |    |   |     3  |   |
|                                                   |  | Condensed Consolidated Statements of Cash Flows–     Nine months ended September 30, 2005 and2004                  |    |   |     4  |   |
|                                                   |  | Notes toCondensed Consolidated Financial Statements –    September 30, 2005                                        |    |   |     5  |   |
| Item 2.                                                |  | Management's Discussion andAnalysis of Financial Condition and     Results ofOperations                                  |    |   |     15 |   |
| Item 3.                                                |  | Quantitative and QualitativeDisclosures About Market Risk                                                                                    |    |   | 27                         |   |
| Item4.                                                 |  | Controls and Procedures                                                                                                                      |    |   | 27                         |   |
| **Part II. OtherInformation**                          |  |                                                                                                                                         |    |   |                            |   |   |   |
| Item1.                                                 |  | Legal Proceedings                                                                                                                            |    |   | 28                         |   |
| Item6.                                                 |  | Exhibits                                                                                                                                     |    |   | 28                         |   |
| **Signature**                                          |  |                                                                                                                                         | 29 |   |
|                                                        |

1

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PART I. FINANCIALINFORMATION

Item 1. Financial Statements (Unaudited)

Nalco Finance Holdings LLC and Subsidiaries CondensedConsolidated Balance Sheets(dollars inmillions)

|                                                                       |  |                             |         |                 |  |        |         |        |  |  |
|-----------------------------------------------------------------------|--|-----------------------------|---------|-----------------|--|--------|---------|--------|--|--|
|                                                                  |  | (Unaudited)September30,2005 |         | December31,2004 |
| **Assets**                                                            |  |                        |    |            |  |   |    |   |
| Currentassets:                                                        |  |                        |    |            |  |   |    |   |
| Cash and cashequivalents                                              |  | $                           | 46.7    |            |  | $      | 33.2    |   |
| Accountsreceivable, less allowances of $20.1 in 2005 and $21.1 in2004 |  |                        | 598.7   |            |  |   | 594.2   |   |
| Inventories:                                                          |  |                        |    |            |  |   |    |   |
| Finishedproducts                                                      |  |                        | 239.0   |            |  |   | 245.4   |   |
| Materialsand work inprocess                                           |  |                        | 70.9    |            |  |   | 68.1    |   |
|                                                                  |  |                        | 309.9   |            |  |   | 313.5   |   |
| Prepaidexpenses, taxes and other currentassets                        |  |                        | 89.9    |            |  |   | 90.1    |   |
| Totalcurrentassets                                                    |  |                        | 1,045.2 |            |  |   | 1,031.0 |   |
| Property,plant, and equipment,net                                     |  |                        | 763.2   |            |  |   | 847.3   |   |
| Intangibleassets:                                                     |  |                        |    |            |  |   |    |   |
| Goodwill                                                              |  |                        | 2,220.8 |            |  |   | 2,368.3 |   |
| Otherintangibles,net                                                  |  |                        | 1,252.2 |            |  |   | 1,323.6 |   |
| Otherassets                                                           |  |                        | 349.4   |            |  |   | 364.3   |   |
| Totalassets                                                           |  | $                           | 5,630.8 |            |  | $      | 5,934.5 |   |
| **Liabilitiesand unitholder'sequity**                                 |  |                        |    |            |  |   |    |   |
| Currentliabilities:                                                   |  |                        |    |            |  |   |    |   |
| Accountspayable                                                       |  | $                           | 266.0   |            |  | $      | 261.9   |   |
| Shortterm debt                                                        |  |                        | 18.5    |            |  |   | 17.7    |   |
| Othercurrentliabilities                                               |  |                        | 267.6   |            |  |   | 311.7   |   |
| Totalcurrentliabilities                                               |  |                        | 552.1   |            |  |   | 591.3   |   |
| Otherliabilities:                                                     |  |                        |    |            |  |   |    |   |
| Long-termdebt                                                         |  |                        | 3,266.3 |            |  |   | 3,424.8 |   |
| Deferredincometaxes                                                   |  |                        | 415.2   |            |  |   | 501.5   |   |
| Accruedpensionbenefits                                                |  |                        | 417.4   |            |  |   | 411.7   |   |
| Otherliabilities                                                      |  |                        | 296.2   |            |  |   | 296.8   |   |
| Minorityinterest                                                      |  |                        | 12.6    |            |  |   | 14.1    |   |
| Unitholder'sequity                                                    |  |                        | 671.0   |            |  |   | 694.3   |   |
| Totalliabilities and unitholder'sequity                               |  | $                           | 5,630.8 |            |  | $      | 5,934.5 |   |
|                                                                       |

Seeaccompanying notes to condensed consolidated financialstatements.

2

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Nalco Finance Holdings LLC andSubsidiaries Condensed Consolidated Statements of Operations(Unaudited)(dollars inmillions)

|                                              |  |                                      |         |                                      |  |                                     |         |                                     |  |        |         |         |  |        |         |         |  |  |
|----------------------------------------------|--|--------------------------------------|---------|--------------------------------------|--|-------------------------------------|---------|-------------------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                         |  | ThreeMonths ended September 30, 2005 |         | ThreeMonths ended September 30, 2004 |  | Nine Monthsended September 30, 2005 |         | Nine Months endedSeptember 30, 2004 |
| Netsales                                     |  | $                                    | 834.9   |                                 |  | $                                   | 774.2   |                                |  | $      | 2,448.8 |    |  | $      | 2,227.9 |    |
| Operatingcosts andexpenses:                  |  |                                 |    |                                 |  |                                |    |                                |  |   |    |    |  |   |    |    |
| Costof productsold                           |  |                                 | 457.6   |                                 |  |                                | 401.3   |                                |  |   | 1,349.9 |    |  |   | 1,147.9 |    |
| Selling,administrative, and researchexpenses |  |                                 | 251.5   |                                 |  |                                | 255.2   |                                |  |   | 773.3   |    |  |   | 770.1   |    |
| Amortizationof intangibleassets              |  |                                 | 20.3    |                                 |  |                                | 23.9    |                                |  |   | 61.4    |    |  |   | 73.0    |    |
| In-processresearch anddevelopment            |  |                                 | — |                                 |  |                                | — |                                |  |   | — |    |  |   | 122.3   |    |
| Businessoptimizationexpenses                 |  |                                 | 3.5     |                                 |  |                                | — |                                |  |   | 21.3    |    |  |   | — |    |
| Totaloperating costs andexpenses             |  |                                 | 732.9   |                                 |  |                                | 680.4   |                                |  |   | 2,205.9 |    |  |   | 2,113.3 |    |
| Operatingearnings                            |  |                                 | 102.0   |                                 |  |                                | 93.8    |                                |  |   | 242.9   |    |  |   | 114.6   |    |
| Otherincome (expense),net                    |  |                                 | — |                                 |  |                                | (1.2    | )                              |  |   | (2.8    | )  |  |   | (6.5    | )  |
| Interestincome                               |  |                                 | 2.1     |                                 |  |                                | 2.3     |                                |  |   | 6.2     |    |  |   | 7.7     |    |
| Interestexpense                              |  |                                 | (65.8   | )                               |  |                                | (64.0   | )                              |  |   | (192.7  | )  |  |   | (187.7  | )  |
| Earnings(loss) before incometaxes            |  |                                 | 38.3    |                                 |  |                                | 30.9    |                                |  |   | 53.6    |    |  |   | (71.9   | )  |
| Incometaxprovision                           |  |                                 | 23.0    |                                 |  |                                | 27.2    |                                |  |   | 31.0    |    |  |   | 46.8    |    |
| Minorityinterests                            |  |                                 | (1.6    | )                               |  |                                | (1.7    | )                              |  |   | (4.4    | )  |  |   | (3.6    | )  |
| Netearnings(loss)                            |  | $                                    | 13.7    |                                 |  | $                                   | 2.0     |                                |  | $      | 18.2    |    |  | $      | (122.3  | )  |
|                                              |

Seeaccompanying notes to condensed consolidated financialstatements.

3

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Nalco Finance Holdings LLC andSubsidiaries Condensed Consolidated Statements of Cash Flows(Unaudited)(dollars inmillions)

|                                                                                          |  |                                   |         |                                  |  |        |        |         |  |  |
|------------------------------------------------------------------------------------------|--|-----------------------------------|---------|----------------------------------|--|--------|--------|---------|--|--|
|                                                                                     |  | NineMonthsendedSeptember 30, 2005 |         | NineMonthsendedSeptember 30,2004 |
| **Operatingactivities**                                                                  |  |                              |    |                             |  |   |   |    |
| Net earnings(loss)                                                                       |  | $                                 | 18.2    |                             |  | $      | (122.3 | )  |
| Adjustmentsto reconcile net earnings (loss) to net cash provided by operatingactivities: |  |                              |    |                             |  |   |   |    |
| Depreciation                                                                             |  |                              | 100.0   |                             |  |   | 80.7   |    |
| Amortization                                                                             |  |                              | 61.4    |                             |  |   | 73.0   |    |
| In-processresearch anddevelopment                                                        |  |                              | — |                             |  |   | 122.3  |    |
| Amortizationof deferred financing costs and accretion of senior discountnotes            |  |                              | 30.1    |                             |  |   | 36.4   |    |
| Other,net                                                                                |  |                              | 19.4    |                             |  |   | 21.1   |    |
| Changes inoperating assets andliabilities                                                |  |                              | (55.1   | )                           |  |   | 44.9   |    |
| Netcash provided by operatingactivities                                                  |  |                              | 174.0   |                             |  |   | 256.1  |    |
| **Investingactivities**                                                                  |  |                              |    |                             |  |   |   |    |
| Purchase priceadjustment on acquisition of Ondeo NalcoGroup                              |  |                              | (3.2    | )                           |  |   | 25.3   |    |
| Additions toproperty, plant, and equipment,net                                           |  |                              | (45.3   | )                           |  |   | (57.7  | )  |
| Other investingactivities                                                                |  |                              | (0.9    | )                           |  |   | (5.1   | )  |
| Netcash used for investingactivities                                                     |  |                              | (49.4   | )                           |  |   | (37.5  | )  |
| **Financingactivities**                                                                  |  |                              |    |                             |  |   |   |    |
| Changes inshort-term debt,net                                                            |  |                              | 1.7     |                             |  |   | (38.1  | )  |
| Proceeds fromlong-term debt                                                              |  |                              | 24.1    |                             |  |   | 542.9  |    |
| Repaymentsof long-termdebt                                                               |  |                              | (130.8  | )                           |  |   | (318.6 | )  |
| Capitalcontributions                                                                     |  |                              | — |                             |  |   | 9.3    |    |
| Capitaldistributions                                                                     |  |                              | — |                             |  |   | (446.9 | )  |
| Other                                                                                    |  |                              | (5.6    | )                           |  |   | (1.9   | )  |
| Netcash used for financingactivities                                                     |  |                              | (110.6  | )                           |  |   | (253.3 | )  |
| Effect ofexchange rate changes on cash and cashequivalents                               |  |                              | (0.5    | )                           |  |   | (2.2   | )  |
| Increase(decrease) in cash and cashequivalents                                           |  |                              | 13.5    |                             |  |   | (36.9  | )  |
| Cash andcash equivalents at beginning ofperiod                                           |  |                              | 33.2    |                             |  |   | 100.0  |    |
| Cashand cash equivalents at end ofperiod                                                 |  | $                                 | 46.7    |                             |  | $      | 63.1   |    |
|                                                                                          |

Seeaccompanying notes to condensed consolidated financialstatements.

4

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NalcoFinance Holdings LLC and Subsidiaries Notes to CondensedConsolidated Financial Statements(Unaudited)

September 30,2005

1.    Descriptionof Business and Change in Ownership

Description ofBusiness

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

Change in Ownership

On November4, 2003, Nalco Holdings LLC (the Buyer), a newly-formed entitycontrolled by affiliates of The Blackstone Group, L.P., ApolloManagement, L.P., and The Goldman Sachs Group, Inc. (collectively, theSponsors), pursuant to a Stock Purchase Agreement, as amended, withSuez S.A. (Suez or Seller) and certain of its affiliates, acquired thenet assets of Ondeo Nalco Group for $4,127.1 million, including directcosts of the acquisition of $125.6 million, excluding assumed debt of$30.2 million, and subject to certain closing and post-closingadjustments (the Acquisition).

The Buyer was capitalized byequity investments totaling $991.9 million from the Sponsors and $10.0million from Dr. William H. Joyce, the Chairman and Chief ExecutiveOfficer of the Buyer. The equity investments were made to NalcoInvestment Holdings LLC which, in turn, contributed $1,001.9 million tothe Buyer and was its parent company until January 14, 2004. Fundingfor the Acquisition included the equity investments and the issuance ofsenior notes and senior subordinated notes in a private offering, andnew revolving 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 Buyer 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, in exchange for a 99% interest in NalcoFinance Holdings LLC. The remaining 1% interest in Nalco FinanceHoldings LLC was held indirectly by Nalco Investment Holdings LLCthrough its wholly owned subsidiary, Nalco Finance Holdings II Inc. Asof January 14, 2004, Nalco Finance Holdings LLC became the directparent company of the Buyer. Subsequent to that date, the Sponsors andDr. Joyce engaged in a series of transactions that ultimately resultedin a newly formed entity, Nalco LLC, becoming the indirect and ultimateparent company of Nalco Investment Holdings LLC, Nalco Finance HoldingsLLC, and the Buyer. Nalco LLC's interests in Nalco InvestmentHoldings LLC were held through its holdings of 100% of theinterests of each of BCP Nalco I LLC, BCP Nalco II LLC, APV Nalco LLC,GS Nalco LLC and JAG Nalco LLC (collectively, the Sponsor entities),which collectively held 100% of the interests of NalcoInvestment Holdings LLC.

5

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NalcoFinance Holdings LLC and Subsidiaries Notes to CondensedConsolidated Financial Statements(Unaudited)

1.    Descriptionof Business and Change in Ownership (continued)

On June 1, 2004, Nalco Investment HoldingsII LLC was formed as a direct subsidiary of Nalco LLC. On June 7, 2004,Nalco Investment Holdings II LLC merged with each of the Sponsorentities and was the surviving entity of such merger. As a result ofthe merger, Nalco Investment Holdings II LLC owned 100% of theequity interests of Nalco Investment Holdings LLC. On June 17, 2004,Nalco Investment Holdings II LLC was converted into a corporation namedNalco Investment Holdings II Corp. and was subsequently renamed NalcoHolding Company. As entities under common control, the contribution ofNalco Holdings LLC to Nalco Finance Holdings LLC was accounted for in amanner similar to a pooling of interests. Therefore, the results forthe period prior to January 14, 2004 (date of inception) include theconsolidated results of Nalco Holdings LLC and subsidiaries.

Aspart of the allocation of the purchase price for the Acquisition, theCompany recorded a one-time charge for purchased in-process researchand development (IPR&D) expenses of $122.3 million during the ninemonths ended September 30, 2004. The value of purchased IPR&D wascomprised of five ongoing development projects at the date of theAcquisition. Purchased IPR&D was derived by assigning values tothose projects identified by management as having economic value, butthat had not yet reached technological feasibility and had noalternative future use. These products had not been released to themarket as of the date of the Acquisition, but the features andfunctionality of the products had been defined.

The consolidatedstatement of operations for the nine months ended September 30, 2004includes an additional $14.5 million in cost of products sold relatedto the sale of inventory that had been revalued at selling price lesscosts to sell in the allocation of the purchase price for theAcquisition.

In conjunction with the Acquisition, the Companyformulated a plan to exit or restructure certain activities. TheCompany recorded liabilities of $35.5 million, primarily for employeeseverance and related costs, in connection with the Company'splan to exit or restructure certain activities. The Company expects tocomplete these activities by the end of 2005. As of December 31, 2004,$3.8 million remained of this accrual; $0.7 million was charged againstit during the nine months ended September 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 NalcoFinance Holdings LLC and subsidiaries for the fiscal year endedDecember 31, 2004.

The accompanying unaudited consolidatedfinancial statements have been prepared in accordance with generallyaccepted accounting principles for interim financial information.Accordingly, they do not include all of the information and footnotesrequired by accounting principles generally accepted in the UnitedStates for complete financial statements. Management believes thesefinancial statements include all normal recurring adjustmentsconsidered necessary for a fair presentation of the financial positionand results of operations of the Company. Operating results for thenine months ended September 30, 2005 are not necessarily indicative ofresults that may be expected for the year ended December 31, 2005.

Certain reclassifications have been made to the prior year data toconform to the current year presentation which had no effect on netearnings (loss) reported for any period.

6

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NalcoFinance Holdings LLC and Subsidiaries Notes to CondensedConsolidated Financial Statements(Unaudited)

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 and deferred taxadjustments |  |   | (69.7   | )  |
| Effect of foreigncurrencytranslation                               |  |   | (77.8   | )  |
| Balanceas of September 30,2005                                     |  | $      | 2,220.8 |    |
|                                                                    |

TheCompany has substantially completed a review of its accumulateddeferred tax balances and determined that certain deferred taxliabilities were overstated. These liabilities primarily relate todeferred taxes on intangible assets that should have been reversed aspart of the allocation of the purchase price for the Acquisition.Therefore, goodwill and deferred tax liabilities have been reduced by$70.0 million.

The following table reflects intangible assetsand related amortizationinformation:

|                                              |  |                         |         |                         |  |             |         |                         |  |        |         |        |  |        |         |         |  |  |
|----------------------------------------------|--|-------------------------|---------|-------------------------|--|-------------|---------|-------------------------|--|--------|---------|--------|--|--------|---------|---------|--|--|
|                                         |  | Asof September 30, 2005 |         | As of December 31,2004  |
| (dollars inmillions)                         |  | GrossAmount             |         | AccumulatedAmortization |  | GrossAmount |         | AccumulatedAmortization |
| Intangibleassets subject toamortization:     |  |                    |    |                    |  |        |    |                    |  |   |    |   |  |   |    |    |
| Customerrelationships                        |  | $                       | 491.1   |                    |  | $           | (153.5  | )                  |  | $      | 506.6   |   |  | $      | (103.5  | )  |
| Patentsand developedtechnology               |  |                    | 100.5   |                    |  |        | (19.6   | )                  |  |   | 100.5   |   |  |   | (12.2   | )  |
| Other                                        |  |                    | 3.7     |                    |  |        | — |                    |  |   | 2.2     |   |  |   | — |    |
| Intangibleassets not subject toamortization: |  |                    |    |                    |  |        |    |                    |  |   |    |   |  |   |    |    |
| Trademarksand tradenames                     |  |                    | 830.0   |                    |  |        | — |                    |  |   | 830.0   |   |  |   | — |    |
|                                         |  | $                       | 1,425.3 |                    |  | $           | (173.1  | )                  |  | $      | 1,439.3 |   |  | $      | (115.7  | )  |
|                                              |

4.    Debt

Debt consists of thefollowing:

|                                              |  |              |         |              |  |        |         |        |  |  |
|----------------------------------------------|--|--------------|---------|--------------|--|--------|---------|--------|--|--|
|                                         |  | September30, |         | December 31, |
| (dollars inmillions)                         |  | 2005         |         | 2004         |
| Short-term                                   |  |         |    |         |  |   |    |   |
| Checksoutstanding and bankoverdrafts         |  | $            | 17.1    |         |  | $      | 16.9    |   |
| Notes payableto banks                        |  |         | 0.7     |         |  |   | — |   |
| Currentmaturities of long-termdebt           |  |         | 0.7     |         |  |   | 0.8     |   |
|                                         |  | $            | 18.5    |         |  | $      | 17.7    |   |
| Long-term                                    |  |         |    |         |  |   |    |   |
| Securitizedtrade accounts receivablefacility |  | $            | 78.7    |         |  | $      | 97.3    |   |
| Term loan A,due November 2009                |  |         | 120.2   |         |  |   | 218.4   |   |
| Termloan B, due November2010                 |  |         | 1,081.0 |         |  |   | 1,081.0 |   |
| Senior notes,due November 2011               |  |         | 905.8   |         |  |   | 937.4   |   |
| Seniorsubordinated notes, due November2013   |  |         | 705.8   |         |  |   | 737.4   |   |
| Unsecured notes,due May 2008                 |  |         | 27.8    |         |  |   | 27.8    |   |
| Seniordiscount notes, due February2014       |  |         | 346.0   |         |  |   | 324.2   |   |
| Other                                        |  |         | 1.7     |         |  |   | 2.1     |   |
|                                         |  |         | 3,267.0 |         |  |   | 3,425.6 |   |
| Less:Currentportion                          |  |         | 0.7     |         |  |   | 0.8     |   |
|                                         |  | $            | 3,266.3 |         |  | $      | 3,424.8 |   |
|                                              |

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NalcoFinance Holdings LLC and Subsidiaries Notes to CondensedConsolidated Financial Statements(Unaudited)

4.    Debt (continued)

On January 21, 2004, Nalco Finance HoldingsLLC and its 100% owned subsidiary, Nalco Finance Holdings Inc.(together, the Issuers), issued $694.0 million aggregate principalamount at maturity of 9.0% senior discount notes due 2014. Priorto February 1, 2009, interest will accrue on the senior discount notesin the form of an increase in the accreted value of such notes.Thereafter, cash interest on the senior discount notes will accrue andbe payable semiannually in arrears on February 1 and August 1 of eachyear, commencing on August 1, 2009, at a rate of 9.0% per annum.The accreted value of each note will increase from the date of issuanceuntil February 1, 2009 at a rate of 9.0% per annum, reflectingthe accrual of non-cash interest, such that the accreted value willequal the principal amount at maturity on February 1, 2009.

InDecember 2004, the Issuers redeemed a portion of the senior discountnotes with an accreted value of $162.3 million using proceeds from theinitial public offering of common stock of Nalco Holding Company. Afterthe partial redemption, the aggregate principal amount at maturity ofthe notes declined to $460.8 million from $694.0 million. At September30, 2005, the senior discount notes had an accreted value ofapproximately $745.85 per $1,000 principal amount at maturity of notes,resulting in a total accreted value of $343.7 million. The $2.3 milliondifference between the carrying value of the notes and the totalaccreted value represents a premium, which is being amortized over theterm of the notes.

The Issuers do not generate any revenue, andNalco Finance Holdings Inc. was incorporated solely to accommodate theissuance of the notes by Nalco Finance Holdings LLC. All of theIssuers' consolidated assets are owned, and all of theIssuers' consolidated net sales are earned, by its direct andindirect subsidiaries. As of September 30, 2005, the Issuers'subsidiaries had $1,013.4 million of restricted net assets.

Theterms of Nalco Company's senior credit agreement fully prohibitNalco Holdings LLC and its subsidiaries from paying dividends orotherwise transferring their assets to the Issuers. Further, the termsof the indentures governing the senior notes and senior subordinatednotes of Nalco Company significantly restrict Nalco Company and theIssuers' other subsidiaries from paying dividends or otherwisetransferring assets to the Issuers. The ability of Nalco Company tomake such payments is governed by a formula based on its consolidatednet income, as well as meeting certain other conditions.Notwithstanding such restrictions, such indentures permit an aggregateof $50.0 million of such payments to be made whether or not there isavailability under the formula or the conditions to its use are met.The Issuers' subsidiaries will be permitted under the terms ofthe senior credit facilities and other indebtedness to incur additionalindebtedness that may severely restrict or prohibit the making ofdistributions, the payment of dividends or the making of loans by suchsubsidiaries to the Issuers.

5.    Unitholder'sEquity

Unitholder's equity consists of thefollowing:

|                                       |  |                   |        |                   |  |        |        |         |  |  |
|---------------------------------------|--|-------------------|--------|-------------------|--|--------|--------|---------|--|--|
| (dollarsin millions)                  |  | September 30,2005 |        | December 31, 2004 |
| Capitalaccount                        |  | $                 | 741.5  |              |  | $      | 741.2  |    |
| Accumulateddeficit                    |  |              | (161.8 | )            |  |   | (180.0 | )  |
| Accumulatedother comprehensiveincome: |  |              |   |              |  |   |   |    |
| Derivatives                           |  |              | 0.1    |              |  |   | (0.2   | )  |
| Foreigncurrency translationadjustment |  |              | 91.2   |              |  |   | 133.3  |    |
| Totalunitholder'sequity               |  | $                 | 671.0  |              |  | $      | 694.3  |    |
|                                       |

8

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NalcoFinance Holdings LLC and Subsidiaries Notes to CondensedConsolidated Financial Statements(Unaudited)

5.    Unitholder'sEquity (continued)

The capital structure of the Companyconsists of one class of limited liability company interestsrepresented by Units, which are identical with each other in everyrespect. At December 31, 2004, there were 100 Units issued andoutstanding, of which 99 were owned by Nalco Investment Holdings LLCand 1 was owned by Nalco Finance Holdings II, Inc. In January 2005,these two companies were merged with their parent company, NalcoHolding Company, which became the direct parent company and unitholderof Nalco Finance Holdings LLC at that date.

6.    Pensionand Other Postretirement Benefit Plans

The components of netperiodic pension cost and the cost of other postretirement benefits forthe three months and nine months ended September 30, 2005 and 2004 wereasfollows:

|                              |  |                                      |      |                                      |  |                                     |      |                                     |  |        |       |         |  |        |       |         |  |  |
|------------------------------|--|--------------------------------------|------|--------------------------------------|--|-------------------------------------|------|-------------------------------------|--|--------|-------|---------|--|--------|-------|---------|--|--|
|                         |  | PensionBenefits                      |
| (dollars inmillions)         |  | Three Months endedSeptember 30, 2005 |      | Three Months ended September30, 2004 |  | Nine Months ended September 30,2005 |      | Nine Months ended September 30,2004 |
| Servicecost                  |  | $                                    | 7.9  |                                 |  | $                                   | 6.6  |                                |  | $      | 21.3  |    |  | $      | 21.1  |    |
| Interestcost                 |  |                                 | 10.8 |                                 |  |                                | 9.0  |                                |  |   | 30.3  |    |  |   | 29.1  |    |
| Expectedreturn on planassets |  |                                 | (6.9 | )                               |  |                                | (6.3 | )                              |  |   | (19.1 | )  |  |   | (19.9 | )  |
| Netperiodiccost              |  | $                                    | 11.8 |                                 |  | $                                   | 9.3  |                                |  | $      | 32.5  |    |  | $      | 30.3  |    |
|                              |

|                                  |  |                                      |      |                                      |  |                                     |         |                                     |  |        |      |         |  |        |         |        |  |  |
|----------------------------------|--|--------------------------------------|------|--------------------------------------|--|-------------------------------------|---------|-------------------------------------|--|--------|------|---------|--|--------|---------|--------|--|--|
|                             |  | OtherPostretirement Benefits         |
| (dollarsin millions)             |  | Three Months endedSeptember 30, 2005 |      | Three Months ended September30, 2004 |  | Nine Months ended September 30,2005 |         | Nine Months ended September 30,2004 |
| Servicecost                      |  | $                                    | 1.4  |                                 |  | $                                   | 1.2     |                                |  | $      | 4.1  |    |  | $      | 4.1     |   |
| Interestcost                     |  |                                 | 2.2  |                                 |  |                                | 1.8     |                                |  |   | 6.5  |    |  |   | 6.2     |   |
| Amortizationof prior servicecost |  |                                 | (1.0 | )                               |  |                                | — |                                |  |   | (3.0 | )  |  |   | — |   |
| Netperiodiccost                  |  | $                                    | 2.6  |                                 |  | $                                   | 3.0     |                                |  | $      | 7.6  |    |  | $      | 10.3    |   |
|                                  |

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 $0.4 million and $0.4 million, respectively, for thenine months ended September 30, 2005.

9

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NalcoFinance Holdings LLC and Subsidiaries Notes to CondensedConsolidated Financial Statements(Unaudited)

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 $3.5million and $21.3 million for the three months and nine months endedSeptember 30, 2005, respectively, and included a $14.2 million accrualfor the restructuring plan announced in June 2005. As of September 30,2005, $3.6 million had been charged against the accrual.

8.    Summary ofOther Income (Expense)

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

|                                                 |  |                                      |         |                                      |  |                                     |         |                                     |  |        |         |         |  |        |         |         |  |  |
|-------------------------------------------------|--|--------------------------------------|---------|--------------------------------------|--|-------------------------------------|---------|-------------------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--|
| (dollarsin millions)                            |  | Three Months endedSeptember 30, 2005 |         | Three Months ended September30, 2004 |  | Nine Months ended September 30,2005 |         | Nine Months ended September 30,2004 |
| Impairment loss on business held forsale        |  | $                                    | — |                                 |  | $                                   | — |                                |  | $      | (2.4    | )  |  | $      | — |    |
| Sponsor monitoringfees                          |  |                                 | — |                                 |  |                                | (2.7    | )                              |  |   | — |    |  |   | (8.4    | )  |
| Franchisetaxes                                  |  |                                 | (0.6    | )                               |  |                                | (0.8    | )                              |  |   | (1.9    | )  |  |   | (2.3    | )  |
| Equityin earnings of unconsolidatedsubsidiaries |  |                                 | 0.3     |                                 |  |                                | 1.1     |                                |  |   | 1.1     |    |  |   | 2.4     |    |
| Foreigncurrency exchangeadjustments             |  |                                 | 1.9     |                                 |  |                                | 0.2     |                                |  |   | 3.3     |    |  |   | (1.0    | )  |
| Other                                           |  |                                 | (1.6    | )                               |  |                                | 1.0     |                                |  |   | (2.9    | )  |  |   | 2.8     |    |
|                                            |  | $                                    | — |                                 |  | $                                   | (1.2    | )                              |  | $      | (2.8    | )  |  | $      | (6.5    | )  |
|                                                 |

9.    IncomeTaxes

The Company's effective income tax rate was57.8% for the nine months ended September 30, 2005. The ratevaries from the U.S. statutory income tax rate of 35% due to thetax treatment of the senior discount note interest expense, theincremental 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 also contributed to thevariation between the U.S. statutory income tax rate and theCompany's effective income tax rate for the nine months endedSeptember 30, 2004. In addition, the effective rate was impacted by thecharge for purchased IPR&D, which is not tax deductible.

Thetaxable income and expenses of Nalco Finance Holdings LLC flow directlyto its owner for U.S. tax purposes. As a result, the Company'sowner recognizes the tax benefit on the senior discount note interestexpense.

10

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NalcoFinance Holdings LLC and Subsidiaries Notes to CondensedConsolidated Financial Statements(Unaudited)

9.    IncomeTaxes (continued)

The effective rate of the provision forincome taxes differs from the U.S. statutory tax rate due to thefollowingitems:

|                                              |  |                                      |         |                                      |  |                                     |         |                                     |  |        |         |        |  |        |       |         |  |  |
|----------------------------------------------|--|--------------------------------------|---------|--------------------------------------|--|-------------------------------------|---------|-------------------------------------|--|--------|---------|--------|--|--------|-------|---------|--|--|
| (dollars inmillions)                         |  | Three Months endedSeptember 30, 2005 |         | Three Months ended September30, 2004 |  | Nine Months ended September 30,2005 |         | Nine Months ended September 30,2004 |
| U.S. statutory taxrate                       |  | $                                    | 13.4    |                                 |  | $                                   | 10.8    |                                |  | $      | 18.8    |   |  | $      | (25.2 | )  |
| IPR&D                                    |  |                                 | — |                                 |  |                                | — |                                |  |   | — |   |  |   | 42.8  |    |
| Interestexpense – senior discountnotes |  |                                 | 2.7     |                                 |  |                                | 3.6     |                                |  |   | 7.7     |   |  |   | 9.8   |    |
| Other                                        |  |                                 | 6.9     |                                 |  |                                | 12.8    |                                |  |   | 4.5     |   |  |   | 19.4  |    |
| Incometaxprovision                           |  | $                                    | 23.0    |                                 |  | $                                   | 27.2    |                                |  | $      | 31.0    |   |  | $      | 46.8  |    |
|                                              |

TheAmerican Jobs Creation Act of 2004 (the Jobs Creation Act) created aone-time incentive for American companies to repatriate earnings fromtheir foreign subsidiaries. The Company has completed a comparison ofthe benefits available to it under the Jobs Creation Act to those underother strategies for global cash and debt management, and it hascompared the benefits of implementing the incentive to the costsrequired to implement it. Based upon this analysis, the Company hasdecided not to structure its earnings repatriation under the provisionsof the Jobs Creation Act.

10.    ComprehensiveIncome (Loss)

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

|                                                       |  |                                      |        |                                      |  |                                     |         |                                     |  |        |        |         |  |        |         |         |  |  |
|-------------------------------------------------------|--|--------------------------------------|--------|--------------------------------------|--|-------------------------------------|---------|-------------------------------------|--|--------|--------|---------|--|--------|---------|---------|--|--|
| (dollars inmillions)                                  |  | Three Months endedSeptember 30, 2005 |        | Three Months ended September30, 2004 |  | Nine Months ended September 30,2005 |         | Nine Months ended September 30,2004 |
| Net earnings(loss)                                    |  | $                                    | 13.7   |                                 |  | $                                   | 2.0     |                                |  | $      | 18.2   |    |  | $      | (122.3  | )  |
| Othercomprehensive income (loss), net of incometaxes: |  |                                 |   |                                 |  |                                |    |                                |  |   |   |    |  |   |    |    |
| Derivatives                                           |  |                                 | (0.4   | )                               |  |                                | — |                                |  |   | 0.3    |    |  |   | — |    |
| Foreigncurrency translationadjustments                |  |                                 | 3.9    |                                 |  |                                | 44.3    |                                |  |   | (42.1  | )  |  |   | (18.3   | )  |
| Comprehensiveincome(loss)                             |  | $                                    | 17.2   |                                 |  | $                                   | 46.3    |                                |  | $      | (23.6  | )  |  | $      | (140.6  | )  |
|                                                       |

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.

11

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NalcoFinance Holdings LLC and Subsidiaries Notes to CondensedConsolidated Financial Statements(Unaudited)

11.    SegmentInformation (continued)

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

Paper Services – Thissegment serves the process chemicals and water treatment needs of theglobal pulp and paper industry.

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

The Company evaluates theperformance of its segments based on "directcontribution", which is defined as net sales, less cost ofproducts sold (excluding variances to standard costs), selling andservice expenses, marketing expenses and research expenses directlyattributable to each segment. There are no intersegment revenues. Prioryear data have been reclassified between segments to conform to thecurrent year presentation.

Net sales by reportable segment wereasfollows:

|                                      |  |                                      |       |                                      |  |                                     |       |                                    |  |        |         |        |  |        |         |        |  |  |
|--------------------------------------|--|--------------------------------------|-------|--------------------------------------|--|-------------------------------------|-------|------------------------------------|--|--------|---------|--------|--|--------|---------|--------|--|--|
| (dollarsin millions)                 |  | Three Months endedSeptember 30, 2005 |       | Three Months ended September30, 2004 |  | Nine Months ended September 30,2005 |       | Nine Months endedSeptember 30,2004 |
| Industrial and InstitutionalServices |  | $                                    | 382.4 |                                 |  | $                                   | 354.0 |                               |  | $      | 1,106.6 |   |  | $      | 1,032.4 |   |
| EnergyServices                       |  |                                 | 222.7 |                                 |  |                                | 200.4 |                               |  |   | 653.4   |   |  |   | 593.0   |   |
| PaperServices                        |  |                                 | 174.2 |                                 |  |                                | 164.6 |                               |  |   | 520.8   |   |  |   | 489.9   |   |
| Other                                |  |                                 | 55.6  |                                 |  |                                | 55.2  |                               |  |   | 168.0   |   |  |   | 112.6   |   |
| Netsales                             |  | $                                    | 834.9 |                                 |  | $                                   | 774.2 |                               |  | $      | 2,448.8 |   |  | $      | 2,227.9 |   |
|                                      |

Thefollowing table presents direct contribution by reportable segment andreconciles the total segment direct contribution to earnings (loss)before income taxes:

|                                     |  |                                      |         |                                      |  |                                     |         |                                    |  |        |         |         |  |        |         |         |  |  |
|-------------------------------------|--|--------------------------------------|---------|--------------------------------------|--|-------------------------------------|---------|------------------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--|
| (dollarsin millions)                |  | Three Months endedSeptember 30, 2005 |         | Three Months ended September30, 2004 |  | Nine Months ended September 30,2005 |         | Nine Months endedSeptember 30,2004 |
| Segment directcontribution:         |  |                                 |    |                                 |  |                                |    |                               |  |   |    |    |  |   |    |    |
| Industrialand InstitutionalServices |  | $                                    | 98.0    |                                 |  | $                                   | 88.2    |                               |  | $      | 267.2   |    |  | $      | 258.7   |    |
| EnergyServices                      |  |                                 | 47.3    |                                 |  |                                | 42.1    |                               |  |   | 138.7   |    |  |   | 130.4   |    |
| PaperServices                       |  |                                 | 35.1    |                                 |  |                                | 37.0    |                               |  |   | 101.6   |    |  |   | 115.5   |    |
| Other                               |  |                                 | (14.3   | )                               |  |                                | (7.9    | )                             |  |   | (48.5   | )  |  |   | (56.3   | )  |
| Totalsegment directcontribution     |  |                                 | 166.1   |                                 |  |                                | 159.4   |                               |  |   | 459.0   |    |  |   | 448.3   |    |
| Expensesnot allocated tosegments:   |  |                                 |    |                                 |  |                                |    |                               |  |   |    |    |  |   |    |    |
| Administrativeexpenses              |  |                                 | 40.3    |                                 |  |                                | 41.7    |                               |  |   | 133.4   |    |  |   | 138.4   |    |
| Amortizationof intangibleassets     |  |                                 | 20.3    |                                 |  |                                | 23.9    |                               |  |   | 61.4    |    |  |   | 73.0    |    |
| In-processresearch anddevelopment   |  |                                 | — |                                 |  |                                | — |                               |  |   | — |    |  |   | 122.3   |    |
| Businessoptimizationexpenses        |  |                                 | 3.5     |                                 |  |                                | — |                               |  |   | 21.3    |    |  |   | — |    |
| Operatingearnings                   |  |                                 | 102.0   |                                 |  |                                | 93.8    |                               |  |   | 242.9   |    |  |   | 114.6   |    |
| Otherincome (expense),net           |  |                                 | — |                                 |  |                                | (1.2    | )                             |  |   | (2.8    | )  |  |   | (6.5    | )  |
| Interestincome                      |  |                                 | 2.1     |                                 |  |                                | 2.3     |                               |  |   | 6.2     |    |  |   | 7.7     |    |
| Interestexpense                     |  |                                 | (65.8   | )                               |  |                                | (64.0   | )                             |  |   | (192.7  | )  |  |   | (187.7  | )  |
| Earnings(loss) before incometaxes   |  | $                                    | 38.3    |                                 |  | $                                   | 30.9    |                               |  | $      | 53.6    |    |  | $      | (71.9   | )  |
|                                     |

12

----

NalcoFinance Holdings LLC and Subsidiaries Notes to CondensedConsolidated Financial Statements(Unaudited)

11.    SegmentInformation (continued)

Total segment direct contribution for thenine months ended September 30, 2005 includes inventory write-offs of$9.0 million. Of this amount, $4.0 million, $2.9 million, $1.7 million,and $0.4 million was charged to Paper Services, Other, Energy Services,and Industrial and Institutional 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 September 30, 2005.

Theseenvironmental reserves represent management's current estimate ofits proportional clean-up costs and are based upon negotiation andagreement with enforcement agencies, its previous experience withrespect to clean-up activities, a detailed review by the Company ofknown conditions, and information about other PRPs. They are notreduced by any possible recoveries from insurance companies or otherPRPs not specifically identified. Although management cannot determinewhether or not a material effect on future operations is reasonablylikely to occur, given the evolving nature of environmentalregulations, it believes that the recorded reserve levels areappropriate estimates of the potential liability. Although settlementwill require future cash outlays, it is not expected that such outlayswill materially impact the Company's liquidity position.Expenditures for the nine months ended September 30, 2005, relating toenvironmental compliance and clean up activities, were notsignificant.

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

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

13

----

NalcoFinance Holdings LLC and Subsidiaries Notes to CondensedConsolidated Financial Statements(Unaudited)

12.    Contingenciesand Litigation (continued)

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 September 30, 2005,other than subsidiary-related performance guarantees.

TheCompany had $37.0 million of letters of credit outstanding at September30, 2005.

14

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|              |                                                                                     |
|--------------|-------------------------------------------------------------------------------------|
| Item2.  | Management's Discussion and Analysis ofFinancial Condition and Results ofOperations |

On November 4,2003, Nalco Holdings LLC, our subsidiary and 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 FinanceHoldings LLC included elsewhere in this report.

"Safe Harbor" Statement Under PrivateSecurities Litigation Reform Act of 1995

This Quarterly Reportfor the fiscal quarter ended September 30, 2005 (the"Quarterly Report") includes"forward-looking statements" within themeaning of Section 27A of the Securities Act of 1933 and Section 21E ofthe Securities Exchange Act of 1934. These forward-looking statementsinclude statements concerning our plans, objectives, goals, strategies,future events, future revenue or performance, capital expenditures,financing needs, plans or intentions relating to acquisitions, businesstrends and other information that is not historical information. Whenused 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:

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| •  | our substantialleverage; |

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|--------------|--------------------------------------------------------------------------------------|
| •  | limitations on flexibilityin operating our business contained in our debtagreements; |

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| •  | increases in interestrates as a result of our variable rateindebtedness; |

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|--------------|-------------------------------------|
| •  | pricing pressure fromour customers; |

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

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

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

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

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

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

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

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| Item2.  | Management's Discussion and Analysis ofFinancial Condition and Results ofOperations (continued) |

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

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

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

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

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

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

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|--------------|----------------------------------------------------------------------------|
| •  | thepossibility that our owners' interests will conflict with ours oryours. |

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

All forward-looking statements attributable to us or persons actingon our behalf apply only as of the date of this Quarterly Report andare expressly 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

Our sales grew 7.8% for the three months endedSeptember 30, 2005 to $834.9 million, including 6.4% in organicimprovement that excludes foreign currency and divestiture impacts. Ofthis organic improvement, price represents 5.4%, orapproximately $42 million. We have consistently reminded our salesforce that our goal this year is to ensure that we capture pricing, andnot just incremental service and product volume, to offset higher costswe continue to experience. Changes in foreign currency translationrates added 1.5% to sales growth in the third quarter, whiledivestitures reduced sales by 0.1%.

Energy Servicessegment sales jumped 11.1% in the third quarter, including9.5% organic improvement. Customer operation shutdowns in theGulf of Mexico prior to and following the hurricanes limited growth inour oil field service business – including a HurricaneDennis-initiated delay of the operational start of a large new platformwe had expected to begin serving in the fourth quarter. However, wegrew at double-digit paces in our exploration service, refinery andpetrochemical units.

Industrial and Institutional Services salesincreased 8.0% in the third quarter, of which 6.5% wasorganic. Strong organic sales growth in North America, Latin Americaand the Pacific region contributed to this improvement. Areas ofweakness included the U.S. chemical sector, again impacteddisproportionately by the hurricanes, and our water treatmentoperations in Europe. In North America, water treatment sales wereparticularly strong in our Power and Institutional segments. Several ofthe global process application groups in the segment recordeddouble-digit organic growth rates.

Paper Services segment salesincreased 5.8%, of which 4.3% was organic. Strong growthin Asia, and particularly in China, led this expansion. Organic salesto Paper customers in North America and Latin America also grew atmid-single-digit rates, offsetting a sales decline in Europe. Therevenue decline in Europe was primarily caused by continued slowproduction following the conclusion of the Finnish labor strike and bythe closure of a large customer.

Organic and nominal sales grewfaster in the three months ended September 30, 2005 than for the firstnine months of 2005 for the Energy Services and Industrial andInstitutional Services segments, but slower in the Paper segment.

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| Item2.  | Management's Discussion and Analysis ofFinancial Condition and Results ofOperations (continued) |

Third quarter sales in the Other segmentwere flat, despite double-digit growth in India and good growth in analternate channels business. Year-to-date, sales in the Other segmentare up 15.2% organically, but 49.2% overall. Nominalsales growth was higher than organic sales growth primarily as a resultof the creation of the Katayama Nalco joint venture in Japan, which wasinitiated June 1, 2004.

Through the first nine months of 2005,total Company revenues grew 9.9% on a nominal basis, with6.6% of the sales growth coming from organic sales improvement.Price contributed 4.3% of the 6.6% improvement. Duringthe first nine months, price increases added approximately $95 millionto sales, while costs for raw and purchased materials and freightincreased by about $123 million.

Net earnings rose to $13.7million in the three months ended September 30, 2005 from $2.0 millionin the three months ended September 30, 2004. Pre-tax earnings werereduced by an estimated $6 million as a result of hurricane-relatedcost increases and lost sales incurred during the quarter. No potentialinsurance recoveries related to the hurricanes are factored into ourresults.

Net earnings for the year-to-date improved to $18.2million from a year-ago loss of $122.3 million. The year-ago lossincluded a $122.3 million, non-cash purchase accounting-related expensefor In Process Research and Development.

Gross margin levelsimproved from 42.6% in the second quarter to 45.2% in thethird quarter in part on the strength of price improvement. For thefirst time this year, quarterly price increases of about $42 millionexceeded higher raw material, purchased material and freight costs inthe quarter of approximately $40 million. Versus the year-ago quarter,however, gross margins were 300 basis points lower. About 220 points ofthe margin deterioration was caused by price increases only beingmodestly above year-on-year cost increases for the quarter.

Inaddition to increases in cost pressures, raw material availabilityconstraints are also creating operational inefficiencies. Currently,raw materials that face supply constraints include: caustic soda, someethylene-based materials and some solvents and alcohols.

Weakness in Europe also impacted the Company's third quarterresults and its near-term performance expectations.

Total debtwas reduced by $109.9 million and cash increased by $7.3 million duringthe three months ended September 30, 2005. We repaid $88 million onTerm Loan A and $24 million in revolver debt that was outstanding atJune 30. Interest continues to accrete to our senior discount notes.Cash generated by operating activities during the period was elevatedby the benefits of our second quarter inventory reduction program.

During October, we received approval from our creditors to simplifyour organizational structure overseas to more closely match thereporting structures of our organization. These changes will alsofacilitate movement of working capital and may improve our cashmovement by reducing withholding tax levels on dividends we repatriateto service debt.

During the three months ended September 30,2005, we substantially completed a review of the accumulated deferredtax balances and determined that certain deferred tax liabilities wereoverstated. These liabilities primarily relate to deferred taxes onintangible assets that should have been reversed as part of purchaseaccounting. Therefore, deferred tax liabilities and goodwill were eachadjusted downward by $70 million.

Our estimated effective taxrate for 2005 is now 57.8%, and we have made the necessaryadjustment in the third quarter to put the year-to-date income taxprovision at this level. This rate is higher than our prior projectionof 52.3%. The tax cost of repatriating certain foreign earningsis relatively unchanged, and is the primary reason our income taxprovision does not decrease proportionately with decreases in projectedpre-tax earnings.

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| Item2.  | Management's Discussion and Analysis ofFinancial Condition and Results ofOperations (continued) |

Outlook

Gulf of Mexico oiland gas production, and on-shore refining and petrochemical operationsare taking longer to re-start than originally expected. We project thattotal lost sales as a result of these closures will now totalapproximately $12 million in the fourth quarter. Hurricanes Katrina,Rita and Dennis all were responsible for portions of the expected saleslosses. Some rig closures in the Gulf of Mexico now look like they willextend into 2006. We also expect pre-tax earnings to be reduced by $26million, bringing the total estimated 2005 hurricane pre-tax earningsimpact to $32 million.

On a global basis, we have seen this yearthe largest push-through of raw material costs in at least 30 years,combined with hurricanes that have had the largest impact on Nalco ofany natural events as far as we can find in the 77-year history of theCompany. Growth in the face of this year's challenges shows thestrength of our business model.

As we restore margins throughcontinued pricing moves and program upgrades and substitutions, we arealso refocusing our sales engineers on selling efforts to restorevolume growth rates. Our water and process programs by designfrequently play an important role in reducing customer energyconsumption, and this environment of extraordinarily high energy costsis conducive to promoting our fundamental value proposition.

Forexample, our 3D TRASAR® cooling water stress management systemprovides a much higher level of contaminant control in cooling towers,significantly reducing energy requirements in cooling tower operationsversus competitive offerings. A new SMART SolutionsTM forEfficiency offering we recently introduced to Paper Services customersprovides up to 10% to 15% energy savings on each ton ofpaper produced, in addition to other efficiency benefits. Scale andfouling control programs in boilers, refinery processes and othercustomer operations also reduce energy consumption, while cuttingmaintenance costs, extending the life of assets, and providing othercustomer benefits.

Results of Operations

Quarter Ended September 30, 2005 Compared to the QuarterEnded September 30, 2004

Net sales for the three months endedSeptember 30, 2005 and September 30, 2004 may be compared asfollows:

|  |
|--|
|  |  |
|  |

|                                       |  |                   |       |                  |  |                                               |       |                     |  |                           |      |         |  |        |     |         |  |        |         |          |  |        |     |         |  |  |
|---------------------------------------|--|-------------------|-------|------------------|--|-----------------------------------------------|-------|---------------------|--|---------------------------|------|---------|--|--------|-----|---------|--|--------|---------|----------|--|--------|-----|---------|--|--|
|                                  |  | ThreeMonths ended |       |             |  | Attributable toChangesin the FollowingFactors |
| (dollars inmillions)                  |  | September30, 2005 |       | September30,2004 |  | %Change                                       |       | CurrencyTranslation |  | Acquisitions/Divestitures |      | Organic |
| Industrial& InstitutionalServices |  | $                 | 382.4 |             |  | $                                             | 354.0 |                |  |                      | 8.0  | %  |  |   | 1.5 | %  |  |   | — | %   |  |   | 6.5 | %  |
| EnergyServices                        |  |              | 222.7 |             |  |                                          | 200.4 |                |  |                      | 11.1 | %  |  |   | 1.6 | %  |  |   | — | %   |  |   | 9.5 | %  |
| PaperServices                         |  |              | 174.2 |             |  |                                          | 164.6 |                |  |                      | 5.8  | %  |  |   | 1.5 | %  |  |   | — | %   |  |   | 4.3 | %  |
| Other                                 |  |              | 55.6  |             |  |                                          | 55.2  |                |  |                      | 0.9  | %  |  |   | 1.5 | %  |  |   | (1.6    | %)  |  |   | 1.0 | %  |
| Netsales                              |  | $                 | 834.9 |             |  | $                                             | 774.2 |                |  |                      | 7.8  | %  |  |   | 1.5 | %  |  |   | (0.1    | %)  |  |   | 6.4 | %  |
|                                       |

Netsales for the three months ended September 30, 2005 were $834.9million, a 7.8% increase from the $774.2 million reported forthe three months ended September 30, 2004. On an organic basis, whichexcludes the impacts of changes in foreign currency translation ratesand acquisitions and divestitures, net sales were up 6.4%. Ofthis improvement, 5.4% was attributed to price increases. Theremaining 1.0% was driven by sales growth, which was reduced byan estimated 0.5% due to hurricane-related sales losses. TheEnergy Services division posted strong organic growth in sales of9.5%, with slightly more than half of this improvement theresult of price increases. The Energy Services division was the mostaffected by the Gulf hurricanes, and organic growth would have been

18

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| Item2.  | Management's Discussion and Analysis ofFinancial Condition and Results ofOperations (continued) |

an estimated 1.6% higher if sales hadnot been lost due to the hurricanes. The Industrial and InstitutionalServices division reported organic growth of 6.5%. While thisimprovement was mostly attributable to price increases, solid growthwas posted by our water treatment business in the Latin American andPacific regions and certain of our North American water treatment andglobal process service units. Lower water treatment sales in Europeoffset a portion of these gains. Organically, Paper Services divisionsales were up 4.3% compared to a year ago, as continued stronggrowth in the Pacific region and a more modest gain in North Americamore than offset a sales decline in Europe caused by continued slowproduction following the conclusion of the Finnish labor strike and theclosure of a large customer in the U.K. Price increases alsocontributed to organic growth in Paper Services sales in North Americaand Latin America. The organic increase in"other" sales was attributable to improvedalternative channel sales and our subsidiary company in India, partlyoffset by the effects of a variation in revenue recognition adjustmentsand a decision made in late 2003 to reduce certain low-margin businesswith a major customer.

Gross profit, defined as thedifference between net sales and cost of product sold, of $377.3million for the three months ended September 30, 2005 increased by $4.4million, or 1.2%, from the $372.9 million reported for thequarter ended September 30, 2004. On an organic basis, gross profitdecreased by $0.5 million, with unfavorable manufacturing volumevariances accounting for this change. The gross profit margin was45.2% for the three months ended September 30, 2005 compared to48.2% for the year-ago period, as increases in the sellingprices of our products were largely offset by higher costs of raw andother purchased materials.

Selling, administrative, andresearch expenses for the three months ended September 30, 2005 of$251.5 million decreased by $3.7 million, or 1.5%, from $255.2million for the three months ended September 30, 2004. On an organicbasis, selling, administrative, and research expenses decreased by $6.6million, or 2.6%, reflecting further initiatives to reduce andcontrol spending. This decrease was partly offset by the effect ofchanges in foreign currency translation rates.

Amortizationof intangible assets was $20.3 million and $23.9 million for thethree months ended September 30, 2005 and 2004, respectively. Thedecrease was attributable to lower amortization of customerrelationships, which are amortized using an accelerated method.

Business optimization expenses, representing mostlyemployee severance and related costs, were $3.5 million for the threemonths ended September 30, 2005.

Other income (expense),net was nil for the three months ended September 30, 2005 and anet expense of $1.2 million for the three months ended September 30,2004. In November 2004, the Company terminated the monitoring servicesprovided to the Company by affiliates of the Sponsors. Monitoring feesfor such services were $2.7 million for the three months endedSeptember 30, 2004. Also contributing to the variance from the year-agoquarter were higher foreign currency transaction gains of $1.7 million.Partly offsetting these favorable variations were losses from assetdisposals of $2.6 million and a $0.8 million decrease in equity inearnings of unconsolidated subsidiaries.

Net interestexpense, defined as the combination of interest income andinterest expense, of $63.7 million for the three months ended September30, 2005 increased by $2.0 million from the $61.7 million reported forthe three months ended September 30, 2004. The impact of higherinterest rates on variable rate borrowings more than offset the impactof a lower average debt level compared to the year-ago period.

The effective tax rate for the three months ended September30, 2005 was 60.1%. The rate varies from the U.S. statutoryincome tax rate of 35% primarily due to the tax treatment of thesenior discount note interest expense, the incremental tax on dividendsreceived from non-U.S. subsidiaries, foreign taxes provided at lessthan the 35% U.S. statutory rate, U.S. state income taxes,nondeductible expenses, and other permanent differences.

Theaforementioned 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 September 30, 2004.

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| Item2.  | Management's Discussion and Analysis ofFinancial Condition and Results ofOperations (continued) |

The taxable income and expenses of NalcoFinance Holdings LLC flow directly to its owner for U.S. tax purposes.As a result, the Company's owner recognizes the tax benefit ofthe senior discount note interest expense.

The American JobsCreation Act of 2004 (the "Jobs CreationAct") created a one-time incentive for American companiesto repatriate earnings from their foreign subsidiaries. We havecompleted a comparison of the benefits available under the JobsCreation Act to those under other strategies for global cash and debtmanagement, and we have compared the benefits of implementing theincentive to the costs required to implement it. Based upon thisanalysis, we have decided not to structure our earnings repatriationunder the provisions of the Jobs Creation Act.

Minorityinterest expense of $1.6 million for the three months endedSeptember 30, 2005 was slightly lower than the $1.7 million for theyear-ago quarter.

Nine months Ended September 30, 2005Compared to the Nine Months Ended September 30, 2004

Net salesfor the nine months ended September 30, 2005 and September 30, 2004 maybe compared asfollows:

|  |
|--|
|  |  |
|  |

|                                       |  |                   |         |                  |  |                                               |         |                     |  |                           |      |         |  |        |     |         |  |        |      |          |  |        |      |         |  |  |
|---------------------------------------|--|-------------------|---------|------------------|--|-----------------------------------------------|---------|---------------------|--|---------------------------|------|---------|--|--------|-----|---------|--|--------|------|----------|--|--------|------|---------|--|--|
|                                  |  | NineMonths ended  |         |             |  | Attributable toChangesin the FollowingFactors |
| (dollars inmillions)                  |  | September30, 2005 |         | September30,2004 |  | %Change                                       |         | CurrencyTranslation |  | Acquisitions/Divestitures |      | Organic |
| Industrial& InstitutionalServices |  | $                 | 1,106.6 |             |  | $                                             | 1,032.4 |                |  |                      | 7.2  | %  |  |   | 2.2 | %  |  |   | (0.2 | )%  |  |   | 5.2  | %  |
| EnergyServices                        |  |              | 653.4   |             |  |                                          | 593.0   |                |  |                      | 10.2 | %  |  |   | 2.1 | %  |  |   | (0.9 | )%  |  |   | 9.0  | %  |
| PaperServices                         |  |              | 520.8   |             |  |                                          | 489.9   |                |  |                      | 6.3  | %  |  |   | 2.4 | %  |  |   | (0.7 | )%  |  |   | 4.6  | %  |
| Other                                 |  |              | 168.0   |             |  |                                          | 112.6   |                |  |                      | 49.2 | %  |  |   | 3.0 | %  |  |   | 31.0 | %   |  |   | 15.2 | %  |
| Netsales                              |  | $                 | 2,448.8 |             |  | $                                             | 2,227.9 |                |  |                      | 9.9  | %  |  |   | 2.2 | %  |  |   | 1.1  | %   |  |   | 6.6  | %  |
|                                       |

Netsales for the nine months ended September 30, 2005 were $2,448.8million, a 9.9% increase from the $2,227.9 million reported forthe nine months ended September 30, 2004. On an organic basis, whichexcludes the impacts of changes in foreign currency translation ratesand acquisitions and divestitures, net sales were up 6.6%. Ofthis improvement, 4.3% was attributed to price increases, whilethe remaining 2.3% was driven by favorable sales growth broadlyspread across our customer base. The Energy Services division reporteda strong organic improvement in sales of 9.0%, more than half ofwhich represented growth. The Industrial and Institutional Servicesdivision reported organic growth of 5.2%, which was mostlyattributable to price increases. However, solid gains, exclusive ofprice increases, were posted by our water treatment business in theLatin American and Pacific regions, as well as our Pacific regionmining business. These gains were offset by sales declines, exclusiveof price increases, in North America and, more notably, Europe.Difficulties in adapting work processes following our SAP systemconversion in Europe on January 1, 2005 and the generally slowereconomy in our largest western European markets were among the causesof the sales decline in Europe. Higher sales during the three monthsended December 31, 2004 was another contributing factor, as Europeancustomers purchased in advance to avoid risking any potentialcomplications from the system conversion. Solid growth in the LatinAmerica and Pacific regions and a more modest improvement in NorthAmerica contributed to the 4.6% organic growth in Paper Servicesdivision sales. These improvements were partly offset by lower PaperServices sales in Europe, resulting from labor strikes faced by ourFinnish customers and the aforementioned factors that affectedIndustrial and Institutional Services sales in the region. Most of theorganic improvement in "other" sales wasattributable to alternate channel sales, our subsidiary company inIndia, and our Japanese joint venture, Katayama Nalco. The increase in"other" sales attributable toacquisitions/divestitures represents the incremental impact of salesfor the first five months of 2005 by Katayama Nalco, which was formedwith Katayama Chemical Inc. on June 1, 2004.

20

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| Item2.  | Management's Discussion and Analysis ofFinancial Condition and Results ofOperations (continued) |

Gross profit**,**defined asthe difference between net sales and cost of product sold, of $1,098.9million for the nine months ended September 30, 2005 increased by $18.9million, or 1.8%, over the $1,080.0 million reported for thenine months ended September 30, 2004. On an organic basis and excludingthe impact of a $14.5 million charge to cost of product sold during thenine months ended September 30, 2004 resulting from the sale ofinventory that had been revalued at selling price less costs to sell inpurchase accounting at the date of the Acquisition, gross profitdecreased by $29.3 million. This was primarily attributable to highercosts of raw and other purchased materials, partly offset by the impactof increases in the selling prices of our products. Gross profit marginfor the nine months ended September 30, 2005 was 44.9% comparedto 48.5% for the year-ago period. Gross profit margin for thenine months ended September 30, 2004 was reduced approximately 65 basispoints as a result of the aforementioned $14.5 million charge resultingfrom purchase accounting.

Selling, administrative, andresearch expenses for the nine months ended September 30, 2005 of$773.3 million increased by $3.2 million, or 0.4%, from $770.1million for the nine months ended September 30, 2004. On an organicbasis, selling, administrative, and research expenses decreased by$20.5 million, or 2.7%, reflecting continuing efforts to reduceand control spending. This decrease was more than offset by the effectof changes in foreign currency translation rates and the incrementalimpact of expenses of Katayama Nalco for the first five months of2005.

Amortization of intangible assets was $61.4million and $73.0 million for the nine months ended September 30, 2005and 2004, respectively. The decrease was attributable to loweramortization of customer relationships, which are amortized using anaccelerated method.

In-process research and developmentwas a one-time charge of $122.3 million recorded during the nine monthsended September 30, 2004, as a result of purchase accounting related tothe Acquisition. 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 $21.3 million for the ninemonths ended September 30, 2005, and included a $14.2 million chargerecorded in June to support a plan to de-layer our management structureand reduce costs in lower-performing business units. The plan calls forthe elimination of approximately 220 positions, primarily in Europe andNorth America.

Other income (expense), net was a netexpense of $2.8 million and $6.5 million for the nine months endedSeptember 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 $8.4million for the nine months ended September 30, 2004. Also contributingto the decrease in net other expense was a favorable change in foreigncurrency transaction gains and losses of $4.3 million. A $2.4 millionimpairment charge in 2005 related to a business held for sale, anincrease in losses from asset write-offs and disposals of $5.9 million,and a $1.3 decrease in equity in earnings of unconsolidatedsubsidiaries partly offset these favorable variations.

Netinterest expense, defined as the combination of interest incomeand interest expense, of $186.5 million for the nine months endedSeptember 30, 2005 increased by $6.5 million from the $180.0 millionreported for the nine months ended September 30, 2004. The impact ofhigher interest rates on variable rate borrowings more than offset theimpact of a lower average debt level compared to the year-agoperiod.

The effective tax rate for the nine monthsended September 30, 2005 was 57.8%. The rate varies from theU.S. statutory income tax rate of 35% primarily due to the taxtreatment of the senior discount note interest expense, the incrementaltax on dividends received from non-U.S. subsidiaries, foreign taxesprovided at less than the 35% U.S. statutory rate, U.S. stateincome taxes, nondeductible expenses, and other permanentdifferences.

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| Item2.  | Management's Discussion and Analysis ofFinancial Condition and Results ofOperations (continued) |

The aforementioned items also contributedto the variation between the U.S. statutory income tax rate and theCompany's effective income tax rate for the nine months endedSeptember 30, 2004. In addition, the effective rate was impacted by thecharge for purchased IPR&D, which is not tax deductible.

Thetaxable income and expenses of Nalco Finance Holdings LLC flow directlyto its owner for U.S. tax purposes. As a result, the Company'sowner recognizes the tax benefit of the senior discount note interestexpense.

Minority interest expense was $0.8 millionhigher than the $3.6 million for the nine months ended September 30,2004, reflecting improved results for most of the Company'snon-wholly owned subsidiaries.

Liquidity and CapitalResources

Operating activities. Historically, theCompany's main source of liquidity has been its solid cash flowgenerated by operating activities. For the nine months ended September30, 2005, cash provided by operating activities was $174.0 million, adecrease of $82.1 million from the same period last year. This decreasewas mostly attributable to higher working capital requirements, mostnotably for accounts payable. Also contributing was the payment ofyear-end incentive plan and commission accruals.

Investingactivities. Cash used for investing activities was $49.4million for the nine months ended September 30, 2005, which was mostlyattributable to net property additions of $45.3 million.

Cashused for investing activities was $37.5 million for the nine monthsended September 30, 2004. This was mostly the result of net propertyadditions of $57.7 million, partly offset by $25.3 million of netpurchase price adjustments received from Suez related to theAcquisition. Approximately 40% of the capital spending wasattributable to our SAP information systems project in Europe.

Financing activities**.** Net cash used for financingactivities totaled $110.6 million during the nine months endedSeptember 30, 2005, which was mostly attributable to a net decrease inborrowings.

Net cash used for financing activities totaled$253.3 million during the nine months ended September 30, 2004. Thiswas primarily comprised of repayment of borrowings since the proceedsof the senior discount notes issued in January 2004 were used to make areturn of capital distribution to the Company's sole shareholderat the time of the distribution and to pay fees and expenses related tothat offering.

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

Seniorcredit facilities. On November 4, 2003, we entered into seniorcredit facilities which provided for a revolving credit facility, a$300 million six-year term loan A facility (which includes an€88.0 million tranche) which matures in November 2009 anda $1,300 million seven-year term loan B facility which matures inNovember 2010. Borrowings under the senior credit facilities bearinterest at a floating base rate plus an applicable margin. Theapplicable margin for borrowings under the revolving credit facilityand the term loan A facility is 1.50% with respect to base rateborrowings and 2.50% with respect to LIBOR or Eurocurrencyborrowings and may be reduced subject to our attaining certain leverageratios. The applicable margin for borrowings under the term loan Bfacility is 1.50% with respect to base rate borrowings and2.00% with respect to LIBOR or Eurocurrency borrowings. Theapplicable margin for borrowings under the term loan B facility is notsubject to adjustment.

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

In addition to paying interest onoutstanding principal under the senior credit facilities, we arerequired to pay a commitment fee to the lenders under the revolvingcredit facility in respect of the unutilized commitments at a rateequal to 0.50%. We also pay customary letter of credit fees.

The term loan A facility will amortize each year in quarterlyamounts at a rate of 5% per annum in year one, 10% perannum in year two, 15% per annum in year three, 20% perannum in year four and 25% per annum in each of years five andsix.

The term loan B facility will amortize each year in anamount equal to 1% per annum in equal quarterly installments forthe first six years and nine months, with the remaining amount payableon November 4, 2010.

At September 30, 2005, the outstandingbalance of the term loan A and term loan B facilities was $120.2million and $1,081.0 million, respectively.

Principal amountsoutstanding under the revolving credit facility will be due and payablein full at maturity on November 4, 2009. At September 30, 2005, noborrowings were outstanding under the revolving credit facility.

The senior credit facilities contain a number of covenants that,among other things, restrict, subject to certain exceptions, ourability and the ability of our subsidiaries (including Nalco Company)to sell assets, incur additional indebtedness or issue preferred stock,repay other indebtedness, pay dividends and distributions or repurchasecertain capital stock, create liens on assets, make investments, loansor advances, make certain acquisitions, engage in mergers orconsolidations, enter into sale and leaseback transactions, engage incertain transactions with affiliates, amend certain material agreementsgoverning our indebtedness, change the business conducted by us and oursubsidiaries (including Nalco Company) and enter into hedgingagreements. In addition, the senior credit facilities require NalcoCompany to maintain the following significant financial covenants: amaximum total leverage ratio, a minimum interest coverage ratio and amaximum capital expenditures limitation. We were in compliance with allcovenants at September 30, 2005.

Senior notes, seniorsubordinated notes and senior discount notes. As part of theTransactions in November 2003, Nalco Company issued $665 millionaggregate principal amount of 73⁄4% U.S. dollar-denominatedsenior notes due 2011, €200 million aggregate principalamount of 73⁄4% euro-denominated senior notes due 2011,$465 million aggregate 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.

On January21, 2004, our subsidiaries, Nalco Finance Holdings LLC and NalcoFinance Holdings Inc., issued $694.0 million aggregate principal amountat maturity of 9.0% senior discount notes due 2014. Prior toFebruary 1, 2009, interest will accrue on the notes in the form of anincrease in the accreted value of such notes. The accreted value ofeach note will increase from the date of issuance until February 1,2009 at a rate of 9.0% per annum, reflecting the accrual ofnon-cash interest, such that the accreted value will equal theprincipal amount at maturity on February 1, 2009. Cash interestpayments on the notes will be due and payable beginning in 2009. Ourprimary source of liquidity for such payments will be cash flowgenerated from the operations of subsidiaries, including Nalco HoldingsLLC and Nalco Company. However, the terms of Nalco Company'ssenior credit agreement fully prohibit Nalco Holdings LLC and our othersubsidiaries from paying dividends or otherwise transferring assets tothe issuers. In addition, the terms of certain of the indenturesgoverning the existing senior notes and senior subordinated notes ofNalco Company significantly restrict Nalco Company and our othersubsidiaries from paying dividends, making distributions and otherwisetransferring assets to the issuers of the senior discount notes. Forexample, the ability of Nalco Company to make such payments is governedby a formula based on 50% of its consolidated net income (which,as defined in such indentures, excludes impairment charges,amortization charges from purchase accounting and any after-taxextraordinary, unusual or nonrecurring gains and losses). In

23

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

addition, as a condition to making suchpayments to the issuers based on such formula, Nalco Holdings LLC musthave an Adjusted EBITDA to interest expense ratio of at least 2.0 to 1after giving effect to any such payments. Notwithstanding suchrestrictions, such indentures permit an aggregate of $50.0 million ofsuch payments to be made whether or not there is availability under theformula or the conditions to its use are met.

In December 2004,Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. redeemed aportion of the senior discount notes with an accreted value of $162.3million using proceeds from the November 2004 initial public offeringof common stock of Nalco Holding Company. After the partial redemption,the aggregate principal amount at maturity of the notes declined to$460.8 million from $694.0 million.

The indentures governing thesenior notes, the senior subordinated notes and senior discount noteslimit our ability and the ability of our restricted subsidiariesto:

|              |                                |
|--------------|--------------------------------|
| •  | incur additional indebtedness; |

|              |                                                                                  |
|--------------|----------------------------------------------------------------------------------|
| •  | pay dividends on or make other distributions orrepurchase certain capital stock; |

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

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

|              |                                                                  |
|--------------|------------------------------------------------------------------|
| •  | limit dividends orother 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, thesenior subordinated notes, and the senior discount notes permit theCompany and our restricted subsidiaries to incur additionalindebtedness, including secured indebtedness.

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

Adjusted EBITDA is used to determine our compliance with many of thecovenants contained in the indentures governing the notes and in oursenior credit agreement. Adjusted EBITDA is defined as EBITDA furtheradjusted to exclude unusual items and other adjustments permitted incalculating covenant compliance under the indentures and our seniorcredit facility. We believe that the inclusion of supplementaryadjustments to EBITDA applied in presenting Adjusted EBITDA areappropriate to provide additional information to investors todemonstrate compliance with our financing covenants.

24

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

Adjusted EBITDA is calculated asfollows:

|                                  |  |                                     |       |                                     |  |                                   |         |                                   |  |        |       |         |  |        |         |         |  |  |
|----------------------------------|--|-------------------------------------|-------|-------------------------------------|--|-----------------------------------|---------|-----------------------------------|--|--------|-------|---------|--|--------|---------|---------|--|--|
| (dollarsin millions)             |  | Three Months endedSeptember 30,2005 |       | Three Months ended September30,2004 |  | Nine Monthsended September30,2005 |         | Nine Monthsended September30,2004 |
| Net earnings(loss)               |  | $                                   | 13.7  |                                |  | $                                 | 2.0     |                              |  | $      | 18.2  |    |  | $      | (122.3  | )  |
| Interest,net                     |  |                                | 63.7  |                                |  |                              | 61.7    |                              |  |   | 186.5 |    |  |   | 180.0   |    |
| Incometaxprovision               |  |                                | 23.0  |                                |  |                              | 27.2    |                              |  |   | 31.0  |    |  |   | 46.8    |    |
| Depreciation                     |  |                                | 33.3  |                                |  |                              | 23.8    |                              |  |   | 100.0 |    |  |   | 80.7    |    |
| Amortization                     |  |                                | 20.3  |                                |  |                              | 23.9    |                              |  |   | 61.4  |    |  |   | 73.0    |    |
| EBITDA                           |  | $                                   | 154.0 |                                |  | $                                 | 138.6   |                              |  | $      | 397.1 |    |  | $      | 258.2   |    |
| Non-cashcharges(1)               |  |                                | 5.0   |                                |  |                              | 14.5    |                              |  |   | 20.8  |    |  |   | 167.5   |    |
| Businessoptimization expenses(2) |  |                                | 3.5   |                                |  |                              | — |                              |  |   | 21.3  |    |  |   | — |    |
| Unusualitems(3)                  |  |                                | 3.1   |                                |  |                              | 2.2     |                              |  |   | 4.9   |    |  |   | 6.7     |    |
| Otheradjustments(4)              |  |                                | (1.1  | )                              |  |                              | 1.9     |                              |  |   | (4.1  | )  |  |   | 5.6     |    |
| AdjustedEBITDA                   |  | $                                   | 164.5 |                                |  | $                                 | 157.2   |                              |  | $      | 440.0 |    |  | $      | 438.0   |    |
|                                  |

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

|                                                |
|------------------------------------------------|
|                                                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (dollarsin millions)                           |  | Three Months endedSeptember 30,2005 |  | Three Months ended September30,2004 |  | Nine Monthsended September30,2005 |  | Nine Monthsended September30,2004 |
| In-process research anddevelopment             |  | $ | — |   |  | $ | — |   |  | $ | — |   |  | $ | 122.3 |   |
| Inventorystep-up                               |  |   | — |   |  |   | — |   |  |   | — |   |  |   | 14.5 |   |
| Assetwrite-offs                                |  |   | — |   |  |   | — |   |  |   | 4.9 |   |  |   | — |   |
| Profitsharing expense and 401(k) funded bySuez |  |   | 1.1 |   |  |   | 8.0 |   |  |   | 10.9 |   |  |   | 24.0 |   |
| Other                                          |  |   | 3.9 |   |  |   | 6.5 |   |  |   | 5.0 |   |  |   | 6.7 |   |
| Non-cashcharges                                |  | $ | 5.0 |   |  | $ | 14.5 |   |  | $ | 20.8 |   |  | $ | 167.5 |   |
|                                                |

|        |                                    |
|--------|------------------------------------|
|   | In-processResearch and Development |

|        |                                                                                                                                                                                                           |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | In-process research anddevelopment was a one time charge of $122.3 million recorded during thenine months ended September 30, 2004, as a result of purchaseaccounting entries related to the Acquisition. |

|        |                   |
|--------|-------------------|
|   | Inventory Step-Up |

|        |                                                                                                                                                                                |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | As a result ofpurchase accounting for the Acquisition, we wrote up our inventory tofair value and subsequently charged the write up to cost of sales asthe inventory was sold. |

|        |                                                 |
|--------|-------------------------------------------------|
|   | Profit Sharing and 401(k)Expense Funded by Suez |

|        |                                                                                                                                                                                                              |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | In conjunction with theAcquisition, we entered into an agreement with Suez whereby Suez willreimburse us for certain profit-sharing and 401(k) matchingcontributions made by us to the Profit-Sharing Trust. |

|        |       |
|--------|-------|
|   | Other |

|        |                                                                                                                                                                                                                                                                         |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Other non-cash charges includethe non-cash impact on earnings of our equity investments and minorityinterests. Non-cash charges also includes the non-cash portion of rentexpense under the sublease that we entered into with Suez inconjunction with the Acquisition. |

|           |                                                                                                                                                                                                                                                                    |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  | Business optimization expenses for 2005include costs associated with the de-layering of our managementstructure, cost reductions in lower-performing business units, and theredesign and optimization of work processes. See note 7 to Item 1 formore information. |

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

|           |                                                          |
|-----------|----------------------------------------------------------|
| (3)  | Unusual items arefurther detailed on the followingtable: |

|                                      |  |                                     |     |                                     |  |                                   |         |                                   |  |        |     |        |  |        |         |        |  |  |
|--------------------------------------|--|-------------------------------------|-----|-------------------------------------|--|-----------------------------------|---------|-----------------------------------|--|--------|-----|--------|--|--------|---------|--------|--|--|
| (dollarsin millions)                 |  | Three Months endedSeptember 30,2005 |     | Three Months ended September30,2004 |  | Nine Monthsended September30,2005 |         | Nine Monthsended September30,2004 |
| Loss (gain) on sales, net ofexpenses |  | $                                   | 2.6 |                                |  | $                                 | — |                              |  | $      | 3.7 |   |  | $      | — |   |
| Other unusual items(a)               |  |                                | 0.5 |                                |  |                              | 2.2     |                              |  |   | 1.2 |   |  |   | 6.7     |   |
|                                 |  | $                                   | 3.1 |                                |  | $                                 | 2.2     |                              |  | $      | 4.9 |   |  | $      | 6.7     |   |
|                                      |

|        |     |                                                                                                                                                                                                                                                                |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (a) | Otherunusual items for the nine months ended September 30, 2005 mostlyrepresent certain inventory write-offs. Other unusual items for thethree months and nine months ended September 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 covenantlevels and ratios for the four quarters ended September 30, 2005 are asfollows:

|                                                                                                           |
|-----------------------------------------------------------------------------------------------------------|
|                                                                                                           |  |  |  |  |  |  |  |  |  |  |
|                                                                                                      |  | CovenantLevel at September30,2005 |  | Ratios |
| **Senior creditfacility** (1)                                                                             |  |   |   |   |  |   |   |   |
| MinimumAdjusted EBITDA to cash interestratio                                                              |  |   | 1.70x |   |  |   | 2.85x |   |
| Maximum netdebt to Adjusted EBITDAratio                                                                   |  |   | 6.50x |   |  |   | 4.92x |   |
| **Indentures**(2)                                                                                         |  |   |   |   |  |   |   |   |
| Minimum Adjusted EBITDAto fixed charge ratio required to incur additional debt pursuant toratioprovisions |  |   | 2.00x |   |  |   | 2.47x |   |
|                                                                                                           |

|        |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (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 $1,201.2million that was outstanding under our term loan facilities as ofSeptember 30, 2005) and investments in similar business and otherinvestments equal to 6% of Nalco Finance Holdings LLCconsolidated assets. |

Local lines of credit.    Certainof our non-U.S. subsidiaries have lines of credit to support localrequirements. As of September 30, 2005, the aggregate outstandingbalance under these local lines of credit was approximately $18.3million. Certain of these lines of credit are equally and ratablysecured with obligations under our senior credit facilities.

Receivables facility.    Nalco Company entered into areceivables facility on June 25, 2004 that provides up to $100 millionin funding from a commercial paper conduit sponsored by JPMorgan ChaseBank, one of the lenders under Nalco Company's senior creditfacilities, based on availability of eligible receivables andsatisfaction of other customary conditions.

Availability offunding under the receivables facility depends primarily upon theoutstanding trade accounts receivable balance from time to time.Aggregate availability is determined by using a 

26

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

formula that reduces the gross receivablesbalance by factors that take into account historical default anddilution rates, excessive concentrations and average days outstandingand the costs of the facility. Based on the terms of this facility andon the criteria described above, as of September 30, 2005,approximately $163.6 million of our accounts receivable balance wasconsidered eligible for financing under the program, of whichapproximately $87.0 million would have been available for funding. Asof September 30, 2005, we had $78.7 million of outstanding borrowingsunder this facility.

This facility is treated as a generalfinancing agreement resulting in the borrowings and related receivablesbeing shown as liabilities and assets, respectively, on ourconsolidated balance sheet and the costs associated with thereceivables facility being recorded as interest expense.

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 of disclosurecontrols and procedures. |

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The Company'schief executive officer and chief financial officer, after evaluatingthe effectiveness of the Company's "disclosurecontrols and procedures" (as defined in the SecuritiesExchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end ofthe period, have concluded that the Company's disclosure controlsand procedures were adequate and designed to ensure that materialinformation relating to the Company and its consolidated subsidiarieswould be made known to them by others within those entities asappropriate to allow timely decisions regarding requireddisclosures. |

|           |                                                       |
|-----------|-------------------------------------------------------|
| (b)  | Changes in internal controlsover financial reporting. |

|        |                                                                                                                                                                                                                                                                     |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | There were nochanges in the Company's internal controls over financialreporting that occurred during the third quarter of 2005 that havematerially affected, or are reasonably likely to materially affect, theCompany's internal controls over financialreporting. |

27

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PART II. OTHERINFORMATION

Item 1. Legal Proceedings

The U.K.Health and Safety Executive ("HSE") has sentnotice that it intends to initiate legal proceedings against theCompany's U.K. subsidiary under the Health and Safety at WorkAct. The place of these proceedings is not indicated in the notice.This notice references a legionella outbreak that is claimed to haveoriginated at cooling towers owned by one of the subsidiary'scustomers. The HSE indicates that the proceedings will relate to thecleaning of these cooling towers. The Company has not received anyspecific charges or claims for relief, but will, in any event, defendand refute any contention that it has violated any law.

**Item 6. Exhibits**

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

Exhibit 10.1 Material Contracts – Amendment No.3 to the Receivables Transfer Agreement

Exhibit10.2 Material Contracts – Amendment No. 3 to Credit Agreement

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

|                   |                                                                                                    |
|-------------------|----------------------------------------------------------------------------------------------------|
| Exhibit31.2  | Certification of Chief Financial Officer,Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |

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

28

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SIGNATURE

The Company hasduly caused this report to be signed on its behalf by the undersignedthereunto duly authorized.

NALCO FINANCE HOLDINGSLLC

/s/ BRADLEY J.BELL                    

Name:   BradleyJ. Bell

Title:     ExecutiveVice President and

               ChiefFinancial Officer

Dated: November 10,2005

29

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