UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION Washington, DC20549

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FORM 10-Q

(Mark One)

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|   | QUARTERLY REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

For the quarterly period ended June 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.001-32342

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NALCO HOLDINGCOMPANY(Exact name of registrant as specified in itscharter)

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|---------------------------------------------------------------------------------------------------------------------|--|----------------------------------------------------|--|--|--|--|
| **Delaware**(State or other jurisdiction of Incorporation orOrganization)                                           |  | **16-1701300**(I.R.S.EmployerIdentificationNumber) |
| **1601West Diehl Road Naperville, IL 60563-1198 (630)305-1000**                                                     |
| (Address, Including Zip Code,and Telephone Number, Including Area Code, of Registrant'sPrincipal Executive Offices) |
|                                                                                                                     |

Indicate bycheck mark whether the registrant: (1) has filed all reports requiredto be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period thatthe registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.Yes       No   

Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule12b-2 of the Exchange Act.)Yes       No   

As of July 29, 2005,the number of shares of the registrant's common stock, par value$0.01 per share, outstanding was 141,663,369shares.

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QUARTERLYREPORT ON FORM 10-QNALCO HOLDING COMPANY Quarter Ended June 30,2005

TABLE OF CONTENTS

PartI.    Financial Information

|                                                                                                                                                                           |  |        |        |        |  |  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--------|--------|--------|--|--|
| Item1.  Financial Statements(Unaudited)                                                                                                                         |  |   |   |   |
|       CondensedConsolidated Balance Sheets –    June 30, 2005 and December31, 2004                                |  |   | 2      |   |
|       Condensed Consolidated Statementsof Operations –    Three months and six months ended June30, 2005 and 2004 |  |   | 3      |   |
|       Condensed Consolidated Statementsof Cash Flows –     Six months ended June 30, 2005 and2004                 |  |   | 4      |   |
|       Notes toCondensed Consolidated Financial Statements –    June 30,2005                                       |  |   | 5      |   |
| Item2.  Management's Discussion and Analysis ofFinancial Condition and Results of Operations                                                                    |  |   | 15     |   |
| Item 3.  Quantitative and QualitativeDisclosures About Market Risk                                                                                              |  |   | 27     |   |
| Item4.  Controls and Procedures                                                                                                                                 |  |   | 27     |   |
| **Part II. OtherInformation**                                                                                                                                             |  |
| Item4.  Submission of Matters to a Vote of SecurityHolders                                                                                                      |  |   | 28     |   |
| Item6.  Exhibits                                                                                                                                                |  |   | 28     |   |
| **Signature**                                                                                                                                                             |  |   | 29     |   |
|                                                                                                                                                                           |

1

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PART I. FINANCIALINFORMATION Item 1. Financial Statements (Unaudited)

Nalco Holding Company and Subsidiaries Condensed ConsolidatedBalance Sheets(dollars inmillions)

|                                                                       |  |             |         |                 |  |        |         |        |  |  |
|-----------------------------------------------------------------------|--|-------------|---------|-----------------|--|--------|---------|--------|--|--|
|                                                                  |  | (Unaudited) |         |            |
|                                                                  |  | June30,2005 |         | December31,2004 |
| **Assets**                                                            |  |        |    |            |  |   |    |   |
| Currentassets:                                                        |  |        |    |            |  |   |    |   |
| Cash and cashequivalents                                              |  | $           | 39.4    |            |  | $      | 33.3    |   |
| Accountsreceivable, less allowances of $19.7 in 2005 and $21.1 in2004 |  |        | 604.7   |            |  |   | 594.2   |   |
| Inventories:                                                          |  |        |    |            |  |   |    |   |
| Finishedproducts                                                      |  |        | 227.6   |            |  |   | 245.4   |   |
| Materialsand work inprocess                                           |  |        | 73.3    |            |  |   | 68.1    |   |
|                                                                  |  |        | 300.9   |            |  |   | 313.5   |   |
| Prepaidexpenses, taxes and other currentassets                        |  |        | 75.1    |            |  |   | 90.1    |   |
| Totalcurrentassets                                                    |  |        | 1,020.1 |            |  |   | 1,031.1 |   |
|                                                                  |  |        |    |            |  |   |    |   |
| Property,plant, and equipment,net                                     |  |        | 779.4   |            |  |   | 847.3   |   |
| Intangibleassets:                                                     |  |        |    |            |  |   |    |   |
| Goodwill                                                              |  |        | 2,287.2 |            |  |   | 2,368.3 |   |
| Otherintangibles,net                                                  |  |        | 1,270.4 |            |  |   | 1,323.6 |   |
| Otherassets                                                           |  |        | 352.4   |            |  |   | 363.6   |   |
| Totalassets                                                           |  | $           | 5,709.5 |            |  | $      | 5,933.9 |   |
|                                                                  |  |        |    |            |  |   |    |   |
| **Liabilitiesand shareholders'equity**                                |  |        |    |            |  |   |    |   |
| Currentliabilities:                                                   |  |        |    |            |  |   |    |   |
| Accountspayable                                                       |  | $           | 231.5   |            |  | $      | 261.9   |   |
| Shortterm debt                                                        |  |        | 21.2    |            |  |   | 17.7    |   |
| Othercurrentliabilities                                               |  |        | 232.0   |            |  |   | 311.7   |   |
| Totalcurrentliabilities                                               |  |        | 484.7   |            |  |   | 591.3   |   |
|                                                                  |  |        |    |            |  |   |    |   |
| Otherliabilities:                                                     |  |        |    |            |  |   |    |   |
| Long-termdebt                                                         |  |        | 3,373.5 |            |  |   | 3,424.8 |   |
| Deferredincometaxes                                                   |  |        | 455.2   |            |  |   | 484.8   |   |
| Accruedpensionbenefits                                                |  |        | 415.6   |            |  |   | 411.7   |   |
| Otherliabilities                                                      |  |        | 297.4   |            |  |   | 296.8   |   |
|                                                                  |  |        |    |            |  |   |    |   |
| Minorityinterest                                                      |  |        | 12.6    |            |  |   | 14.1    |   |
|                                                                  |  |        |    |            |  |   |    |   |
| Shareholders'equity                                                   |  |        | 670.5   |            |  |   | 710.4   |   |
| Totalliabilities and shareholders'equity                              |  | $           | 5,709.5 |            |  | $      | 5,933.9 |   |
|                                                                       |

Seeaccompanying notes to condensed consolidated financialstatements.

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Nalco Holding Company andSubsidiaries Condensed Consolidated Statements of Operations(Unaudited)(dollars in millions, except per shareamounts)

|                                              |  |                                |         |                                |  |                              |         |                              |  |        |         |         |  |        |         |         |  |  |
|----------------------------------------------|--|--------------------------------|---------|--------------------------------|--|------------------------------|---------|------------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                         |  | ThreeMonthsended June 30, 2005 |         | Three MonthsendedJune 30, 2004 |  | Six Monthsended June 30,2005 |         | Six Monthsended June 30,2004 |
|                                         |  |                           |    |                           |  |                         |    |                         |  |   |    |    |  |   |    |    |
| Netsales                                     |  | $                              | 836.3   |                           |  | $                            | 740.4   |                         |  | $      | 1,613.9 |    |  | $      | 1,453.7 |    |
| Operatingcosts andexpenses:                  |  |                           |    |                           |  |                         |    |                         |  |   |    |    |  |   |    |    |
| Costof productsold                           |  |                           | 479.9   |                           |  |                         | 372.2   |                         |  |   | 892.3   |    |  |   | 746.6   |    |
| Selling,administrative, and researchexpenses |  |                           | 263.3   |                           |  |                         | 261.6   |                         |  |   | 521.8   |    |  |   | 514.9   |    |
| Amortizationof intangibleassets              |  |                           | 20.5    |                           |  |                         | 24.9    |                         |  |   | 41.1    |    |  |   | 49.1    |    |
| In-processresearch anddevelopment            |  |                           | — |                           |  |                         | — |                         |  |   | — |    |  |   | 122.3   |    |
| Businessoptimizationexpenses                 |  |                           | 17.0    |                           |  |                         | — |                         |  |   | 17.8    |    |  |   | — |    |
| Totaloperating costs andexpenses             |  |                           | 780.7   |                           |  |                         | 658.7   |                         |  |   | 1,473.0 |    |  |   | 1,432.9 |    |
|                                         |  |                           |    |                           |  |                         |    |                         |  |   |    |    |  |   |    |    |
| Operatingearnings                            |  |                           | 55.6    |                           |  |                         | 81.7    |                         |  |   | 140.9   |    |  |   | 20.8    |    |
|                                         |  |                           |    |                           |  |                         |    |                         |  |   |    |    |  |   |    |    |
| Otherincome (expense),net                    |  |                           | (0.1    | )                         |  |                         | (1.8    | )                       |  |   | (3.5    | )  |  |   | (5.3    | )  |
| Interestincome                               |  |                           | 2.0     |                           |  |                         | 2.7     |                         |  |   | 4.1     |    |  |   | 5.4     |    |
| Interestexpense                              |  |                           | (64.8   | )                         |  |                         | (62.7   | )                       |  |   | (126.9  | )  |  |   | (123.7  | )  |
|                                         |  |                           |    |                           |  |                         |    |                         |  |   |    |    |  |   |    |    |
| Earnings(loss) before incometaxes            |  |                           | (7.3    | )                         |  |                         | 19.9    |                         |  |   | 14.6    |    |  |   | (102.8  | )  |
|                                         |  |                           |    |                           |  |                         |    |                         |  |   |    |    |  |   |    |    |
| Incometax provision(benefit)                 |  |                           | (3.1    | )                         |  |                         | 16.6    |                         |  |   | 6.6     |    |  |   | 19.6    |    |
|                                         |  |                           |    |                           |  |                         |    |                         |  |   |    |    |  |   |    |    |
| Minorityinterests                            |  |                           | (1.6    | )                         |  |                         | (0.9    | )                       |  |   | (2.8    | )  |  |   | (1.9    | )  |
| Netearnings(loss)                            |  | $                              | (5.8    | )                         |  | $                            | 2.4     |                         |  | $      | 5.2     |    |  | $      | (124.3  | )  |
|                                         |  |                           |    |                           |  |                         |    |                         |  |   |    |    |  |   |    |    |
| Netearnings (loss) pershare:                 |  |                           |    |                           |  |                         |    |                         |  |   |    |    |  |   |    |    |
| Basic                                        |  | $                              | (0.04   | )                         |  | $                            | 0.03    |                         |  | $      | 0.04    |    |  | $      | (1.37   | )  |
| Diluted                                      |  | $                              | (0.04   | )                         |  | $                            | 0.03    |                         |  | $      | 0.04    |    |  | $      | (1.37   | )  |
| Weighted-averagesharesoutstanding(millions): |  |                           |    |                           |  |                         |    |                         |  |   |    |    |  |   |    |    |
| Basic                                        |  |                           | 141.7   |                           |  |                         | 90.6    |                         |  |   | 141.7   |    |  |   | 90.6    |    |
| Diluted                                      |  |                           | 141.7   |                           |  |                         | 90.6    |                         |  |   | 146.6   |    |  |   | 90.6    |    |
|                                              |

Seeaccompanying notes to condensed consolidated financialstatements.

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Nalco Holding Company andSubsidiaries Condensed Consolidated Statements of Cash Flows(Unaudited)(dollars inmillions)

|                                                                                          |  |                             |         |                             |  |        |        |         |  |  |
|------------------------------------------------------------------------------------------|--|-----------------------------|---------|-----------------------------|--|--------|--------|---------|--|--|
|                                                                                     |  | SixMonthsendedJune 30, 2005 |         | SixMonthsendedJune 30, 2004 |
| **Operatingactivities**                                                                  |  |                        |    |                        |  |   |   |    |
| Net earnings(loss)                                                                       |  | $                           | 5.2     |                        |  | $      | (124.3 | )  |
| Adjustments toreconcile net earnings (loss) to net cash provided by operatingactivities: |  |                        |    |                        |  |   |   |    |
| Depreciation                                                                             |  |                        | 66.7    |                        |  |   | 56.9   |    |
| Amortization                                                                             |  |                        | 41.1    |                        |  |   | 49.1   |    |
| In-processresearch anddevelopment                                                        |  |                        | — |                        |  |   | 122.3  |    |
| Amortizationof deferred financing costs and accretion of senior discountnotes            |  |                        | 19.9    |                        |  |   | 23.3   |    |
| Other,net                                                                                |  |                        | 2.7     |                        |  |   | 0.4    |    |
| Changes inoperating assets andliabilities                                                |  |                        | (105.9  | )                      |  |   | (2.3   | )  |
| Netcash provided by operatingactivities                                                  |  |                        | 29.7    |                        |  |   | 125.4  |    |
|                                                                                     |  |                        |    |                        |  |   |   |    |
| **Investingactivities**                                                                  |  |                        |    |                        |  |   |   |    |
| Purchase priceadjustment on acquisition of Ondeo NalcoGroup                              |  |                        | (3.2    | )                      |  |   | 25.6   |    |
| Additions toproperty, plant, and equipment,net                                           |  |                        | (25.0   | )                      |  |   | (34.9  | )  |
| Other investingactivities                                                                |  |                        | — |                        |  |   | (0.4   | )  |
| Netcash used for investingactivities                                                     |  |                        | (28.2   | )                      |  |   | (9.7   | )  |
|                                                                                     |  |                        |    |                        |  |   |   |    |
| **Financingactivities**                                                                  |  |                        |    |                        |  |   |   |    |
| Changes inshort-term debt,net                                                            |  |                        | 4.4     |                        |  |   | (33.5  | )  |
| Proceeds fromlong-term debt                                                              |  |                        | 24.1    |                        |  |   | 542.9  |    |
| Repaymentsof long-termdebt                                                               |  |                        | (18.2   | )                      |  |   | (184.0 | )  |
| Capitalcontributions                                                                     |  |                        | — |                        |  |   | 9.8    |    |
| Capitaldistributions                                                                     |  |                        | — |                        |  |   | (446.9 | )  |
| Other                                                                                    |  |                        | (4.4    | )                      |  |   | (2.0   | )  |
| Netcash provided by (used for) financingactivities                                       |  |                        | 5.9     |                        |  |   | (113.7 | )  |
| Effect ofexchange rate changes on cash and cashequivalents                               |  |                        | (1.3    | )                      |  |   | (3.1   | )  |
| Increase(decrease) in cash and cashequivalents                                           |  |                        | 6.1     |                        |  |   | (1.1   | )  |
| Cash and cashequivalents at beginning ofperiod                                           |  |                        | 33.3    |                        |  |   | 100.0  |    |
| Cashand cash equivalents at end ofperiod                                                 |  | $                           | 39.4    |                        |  | $      | 98.9   |    |
|                                                                                          |

Seeaccompanying notes to condensed consolidated financialstatements.

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Nalco HoldingCompany and Subsidiaries Notes to Condensed Consolidated FinancialStatements (Unaudited)

June 30, 2005

1.    Descriptionof Business and Change in Ownership

Description ofBusiness

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

Change in Ownership

On November 4, 2003, ourindirect subsidiary, Nalco Holdings LLC (the Buyer), a newly-formedentity controlled 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.

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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. Because the ultimate ownership of the entities in theCompany's financial statements did not change, such financialstatements have been presented as if Nalco Holding Company was theparent company since the date of the Acquisition.

As part of theallocation of the purchase price for the Acquisition, the Companyrecorded a one-time charge for purchased in-process research anddevelopment (IPR&D) expenses of $122.3 million during the sixmonths ended June 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 six months ended June 30, 2004 includesan additional $14.5 million in cost of products sold related to thesale of inventory that had been revalued at selling price less costs tosell in the allocation of the purchase price for the Acquisition.

In conjunction with the Acquisition, the Company formulated a planto exit or restructure certain activities. The Company recordedliabilities of $35.5 million, primarily for employee severance andrelated costs, in connection with the Company's plan to exit orrestructure certain activities. The Company expects to complete theseactivities by the end of 2005. As of December 31, 2004, $3.8 millionremained of this accrual; $0.3 million was charged against it duringthe six months ended June  30, 2005.

2.    Basis ofPresentation

These consolidated financial statementsshould be read in conjunction with the consolidated and combinedfinancial statements and notes thereto included in the Annual Reportfor Nalco Holding Company 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 the sixmonths ended June 30, 2005 are not necessarily indicative of resultsthat 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.

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3.    Goodwilland Other Intangible Assets

The changes in goodwill for theperiod were asfollows:

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

Thefollowing table reflects intangible assets and related amortizationinformation:

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

4.    Debt

Debt consists of thefollowing:

|                                              |  |              |         |                  |  |        |         |        |  |  |
|----------------------------------------------|--|--------------|---------|------------------|--|--------|---------|--------|--|--|
| (dollarsin millions)                         |  | June 30,2005 |         | December 31,2004 |
| Short-term                                   |  |         |    |             |  |   |    |   |
| Checksoutstanding and bankoverdrafts         |  | $            | 19.9    |             |  | $      | 16.9    |   |
| Currentmaturities of long-termdebt           |  |         | 1.3     |             |  |   | 0.8     |   |
|                                         |  | $            | 21.2    |             |  | $      | 17.7    |   |
| Long-term                                    |  |         |    |             |  |   |    |   |
| Securitizedtrade accounts receivablefacility |  | $            | 79.4    |             |  | $      | 97.3    |   |
| Revolvingcredit facility                     |  |         | 24.0    |             |  |   | — |   |
| Termloan A, due November2009                 |  |         | 208.5   |             |  |   | 218.4   |   |
| Term loan B, dueNovember 2010                |  |         | 1,081.0 |             |  |   | 1,081.0 |   |
| Seniornotes, due November2011                |  |         | 906.6   |             |  |   | 937.4   |   |
| Senior subordinatednotes, due November2013   |  |         | 706.6   |             |  |   | 737.4   |   |
| Unsecured notes,due May 2008                 |  |         | 27.8    |             |  |   | 27.8    |   |
| Seniordiscount notes, due February2014       |  |         | 338.5   |             |  |   | 324.2   |   |
| Other                                        |  |         | 2.4     |             |  |   | 2.1     |   |
|                                         |  |         | 3,374.8 |             |  |   | 3,425.6 |   |
| Less:Currentportion                          |  |         | 1.3     |             |  |   | 0.8     |   |
|                                         |  | $            | 3,373.5 |             |  | $      | 3,424.8 |   |
|                                              |

OnJanuary 21, 2004, the Company, through its 100% ownedsubsidiaries, Nalco Finance Holdings LLC and Nalco Finance HoldingsInc. (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% perannum.

7

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4.    Debt (continued)

The accreted value of each note willincrease from the date of issuance until February 1, 2009 at a rate of9.0% per annum, reflecting the accrual of non-cash interest,such that the accreted value will equal the principal amount atmaturity on February 1, 2009.

In December 2004, the Issuersredeemed a portion of the senior discount notes with an accreted valueof $162.3 million using proceeds from the initial public offering ofcommon 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. At June 30, 2005, the seniordiscount notes had an accreted value of approximately $729.55 per$1,000 principal amount at maturity of notes, resulting in a totalaccreted value of $336.2 million. The $2.3 million difference betweenthe carrying value of the notes and the total accreted value representsa premium, which is being amortized over the term of the notes.

The Company and the Issuers do not generate any revenue, and NalcoFinance Holdings Inc. was incorporated solely to accommodate theissuance of the notes by Nalco Finance Holdings LLC. All of theCompany's consolidated assets are owned, and all of theCompany's consolidated net sales are earned, by its direct andindirect subsidiaries. As of June 30, 2005, the Company'ssubsidiaries had $986.6 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 or the Company.Further, the terms of the indentures governing the senior notes andsenior subordinated notes of Nalco Company significantly restrict NalcoCompany and the Issuers' other subsidiaries from paying dividendsor otherwise transferring assets to the Issuers or the Company. Theability of Nalco Company to make such payments is governed by a formulabased on its consolidated net income, as well as meeting certain otherconditions. Notwithstanding such restrictions, such indentures permitan aggregate of $50.0 million of such payments to be made whether ornot there is availability under the formula or the conditions to itsuse are met. The Issuers' subsidiaries will be permitted underthe terms of the senior credit facilities and other indebtedness toincur additional indebtedness that may severely restrict or prohibitthe making of distributions, the payment of dividends or the making ofloans by such subsidiaries to the Issuers or the Company.

5.    Shareholders'Equity

Shareholders' equity consists of thefollowing:

|                                                                                                                |  |              |         |                   |  |        |         |         |  |  |
|----------------------------------------------------------------------------------------------------------------|--|--------------|---------|-------------------|--|--------|---------|---------|--|--|
| (dollarsin millions, except per shareamounts)                                                                  |  | June 30,2005 |         | December 31, 2004 |
| Preferred stock,par value $0.01 per share; authorized 100,000,000 shares; noneissued                           |  | $            | — |              |  | $      | — |    |
| Commonstock, par value $0.0l per share; authorized 500,000,000 shares;141,663,369 shares issued andoutstanding |  |         | 1.4     |              |  |   | 1.4     |    |
| Additionalpaid-incapital                                                                                       |  |         | 739.0   |              |  |   | 738.8   |    |
| Accumulateddeficit                                                                                             |  |         | (157.7  | )            |  |   | (162.9  | )  |
| Accumulatedother comprehensiveincome:                                                                          |  |         |    |              |  |   |    |    |
| Derivatives                                                                                                    |  |         | 0.5     |              |  |   | (0.2    | )  |
| Foreigncurrency translationadjustment                                                                          |  |         | 87.3    |              |  |   | 133.3   |    |
| Totalshareholders'equity                                                                                       |  | $            | 670.5   |              |  | $      | 710.4   |    |
|                                                                                                                |

8

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6.    Pensionand Other Postretirement Benefit Plans

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

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

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

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

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

As a result of qualifying for thesubsidy, the accumulated benefit obligation for the Company'sdefined postretirement benefit plans other than pensions has beenreduced by approximately $25.4  million as of January 2005. Theservice and interest cost components of other postretirement benefitsexpense was reduced by $0.3 million and $0.3 million, respectively, forthe six months ended June 30, 2005.

7.    BusinessOptimization Expenses

In addition to theCompany's plan to exit or restructure certain activities that wasformulated in conjunction with the Acquisition, the Company iscontinuing to redesign and optimize its business and work processes. InJune 2005, the Company also announced a plan to de-layer its managementstructure and to reduce costs in lower-performing business units. Theplan calls for the elimination of approximately 220 positions,primarily in Europe and North America.

Business processoptimization expenses, consisting mostly of employee severance andrelated costs, were $17.0 million and $17.8 million for the threemonths and six months ended June 30, 2005, respectively, and included a$14.0 million accrual for the restructuring plan announced in June2005. No payments have been charged against the accrual as of June 30,2005.

9

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8.    Summaryof Other Income (Expense)

The components of other income(expense), net for the three months and six months ended June30, 2005 and 2004, include thefollowing:

|                                                 |  |                                 |         |                                 |  |                                |         |                               |  |        |         |         |  |        |         |         |  |  |
|-------------------------------------------------|--|---------------------------------|---------|---------------------------------|--|--------------------------------|---------|-------------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--|
| (dollarsin millions)                            |  | Three Months endedJune 30, 2005 |         | Three Months ended June 30,2004 |  | Six Months ended June 30, 2005 |         | SixMonths ended June 30, 2004 |
| Impairment losson business held for sale        |  | $                               | — |                            |  | $                              | — |                          |  | $      | (2.4    | )  |  | $      | — |    |
| Sponsormonitoringfees                           |  |                            | — |                            |  |                           | (3.2    | )                        |  |   | — |    |  |   | (5.7    | )  |
| Franchisetaxes                                  |  |                            | (0.6    | )                          |  |                           | (0.7    | )                        |  |   | (1.3    | )  |  |   | (1.5    | )  |
| Equityin earnings of unconsolidatedsubsidiaries |  |                            | — |                            |  |                           | 0.6     |                          |  |   | 0.8     |    |  |   | 1.3     |    |
| Foreigncurrency exchangeadjustments             |  |                            | 2.1     |                            |  |                           | (0.3    | )                        |  |   | 1.4     |    |  |   | (1.2    | )  |
| Other                                           |  |                            | (1.6    | )                          |  |                           | 1.8     |                          |  |   | (2.0    | )  |  |   | 1.8     |    |
|                                            |  | $                               | (0.1    | )                          |  | $                              | (1.8    | )                        |  | $      | (3.5    | )  |  | $      | (5.3    | )  |
|                                                 |

9.    IncomeTaxes

The Company's effective income tax ratewas 45.2% for the six months ended June 30, 2005. The ratevaries from the U.S. statutory income tax rate of 35% primarilydue to the incremental tax on dividends received from non-U.S.subsidiaries, foreign taxes provided at less than the 35% U.S.statutory rate, U.S. state income taxes, nondeductible expenses, andother permanent differences.

The aforementioned itemscontributed to the variation between the U.S. statutory income tax rateand the Company's effective income tax rate for the six monthsended June 30, 2004. In addition, the effective rate was impacted bythe charge for purchased IPR&D, which is not tax deductible, and avaluation allowance for the income tax benefit on the interest expensefrom the senior discount notes issued by Nalco Finance Holdings LLC andNalco Finance Holdings, Inc. in January 2004.

A valuationallowance for the income tax benefit on the senior discount noteinterest was recorded during the first nine months of 2004, pending adetermination as to whether the deduction was realizable. During thefourth quarter of 2004, the valuation allowance for this tax benefitwas reversed when it was determined that the deduction could berealized.

The effective rate of the provision for income taxesdiffers from the U.S. statutory tax rate due to the followingitems:

|                                                 |  |                                 |         |                                 |  |                                |         |                               |  |        |         |        |  |        |       |         |  |  |
|-------------------------------------------------|--|---------------------------------|---------|---------------------------------|--|--------------------------------|---------|-------------------------------|--|--------|---------|--------|--|--------|-------|---------|--|--|
| (dollarsin millions)                            |  | Three Months endedJune 30, 2005 |         | Three Months ended June 30,2004 |  | Six Months ended June 30, 2005 |         | SixMonths ended June 30, 2004 |
| U.S. statutorytaxrate                           |  | $                               | (2.6    | )                          |  | $                              | 6.9     |                          |  | $      | 5.1     |   |  | $      | (36.0 | )  |
| IPR&D                                       |  |                            | — |                            |  |                           | — |                          |  |   | — |   |  |   | 42.8  |    |
| Valuationallowance – senior discountnotes |  |                            | — |                            |  |                           | 3.5     |                          |  |   | — |   |  |   | 6.2   |    |
| Other                                           |  |                            | (0.5    | )                          |  |                           | 6.2     |                          |  |   | 1.5     |   |  |   | 6.6   |    |
| Incometax provision(benefit)                    |  | $                               | (3.1    | )                          |  | $                              | 16.6    |                          |  | $      | 6.6     |   |  | $      | 19.6  |    |
|                                                 |

10

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10.    ComprehensiveIncome (Loss)

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

|                                                       |  |                                 |        |                                 |  |                                |         |                               |  |        |        |         |  |        |         |         |  |  |
|-------------------------------------------------------|--|---------------------------------|--------|---------------------------------|--|--------------------------------|---------|-------------------------------|--|--------|--------|---------|--|--------|---------|---------|--|--|
| (dollarsin millions)                                  |  | Three Months endedJune 30, 2005 |        | Three Months ended June 30,2004 |  | Six Months ended June 30, 2005 |         | SixMonths ended June 30, 2004 |
| Net earnings(loss)                                    |  | $                               | (5.8   | )                          |  | $                              | 2.4     |                          |  | $      | 5.2    |    |  | $      | (124.3  | )  |
| Othercomprehensive income (loss), net of incometaxes: |  |                            |   |                            |  |                           |    |                          |  |   |   |    |  |   |    |    |
| Derivatives                                           |  |                            | 0.2    |                            |  |                           | — |                          |  |   | 0.7    |    |  |   | — |    |
| Foreigncurrency translationadjustments                |  |                            | (24.9  | )                          |  |                           | (72.1   | )                        |  |   | (46.0  | )  |  |   | (62.6   | )  |
| Comprehensiveloss                                     |  | $                               | (30.5  | )                          |  | $                              | (69.7   | )                        |  | $      | (40.1  | )  |  | $      | (186.9  | )  |
|                                                       |

11.    SegmentInformation

The Company provides integrated water treatment andprocess improvement services for industrial and institutionalapplications, using technologically advanced solutions, combiningchemical products and equipment, and consistent, reliable on-siteservice and expertise. These solutions and services enable theCompany's customers to improve production yields, lowermanufacturing costs, extend asset lives and maintain environmentalstandards at costs that represent a small share of their overallproduction expense.

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

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

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

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

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

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

Net sales by reportable segment were asfollows:

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

11

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11.    SegmentInformation (continued)

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

|                                     |  |                                 |         |                                 |  |                                |         |                             |  |        |         |         |  |        |         |         |  |  |
|-------------------------------------|--|---------------------------------|---------|---------------------------------|--|--------------------------------|---------|-----------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--|
| (dollarsin millions)                |  | Three Months endedJune 30, 2005 |         | Three Months ended June 30,2004 |  | Six Months ended June 30, 2005 |         | SixMonths endedJune 30,2004 |
| Segment directcontribution:         |  |                            |    |                            |  |                           |    |                        |  |   |    |    |  |   |    |    |
| Industrialand InstitutionalServices |  | $                               | 93.3    |                            |  | $                              | 90.6    |                        |  | $      | 169.2   |    |  | $      | 170.5   |    |
| EnergyServices                      |  |                            | 43.9    |                            |  |                           | 44.0    |                        |  |   | 91.4    |    |  |   | 88.3    |    |
| PaperServices                       |  |                            | 31.8    |                            |  |                           | 36.4    |                        |  |   | 66.5    |    |  |   | 78.5    |    |
| Other                               |  |                            | (28.8   | )                          |  |                           | (13.5   | )                      |  |   | (34.2   | )  |  |   | (48.4   | )  |
| Totalsegment directcontribution     |  |                            | 140.2   |                            |  |                           | 157.5   |                        |  |   | 292.9   |    |  |   | 288.9   |    |
|                                |  |                            |    |                            |  |                           |    |                        |  |   |    |    |  |   |    |    |
| Expensesnot allocated tosegments:   |  |                            |    |                            |  |                           |    |                        |  |   |    |    |  |   |    |    |
| Administrativeexpenses              |  |                            | 47.1    |                            |  |                           | 50.9    |                        |  |   | 93.1    |    |  |   | 96.7    |    |
| Amortizationof intangibleassets     |  |                            | 20.5    |                            |  |                           | 24.9    |                        |  |   | 41.1    |    |  |   | 49.1    |    |
| In-processresearch anddevelopment   |  |                            | — |                            |  |                           | — |                        |  |   | — |    |  |   | 122.3   |    |
| Businessoptimizationexpenses        |  |                            | 17.0    |                            |  |                           | — |                        |  |   | 17.8    |    |  |   | — |    |
| Operatingearnings(loss)             |  |                            | 55.6    |                            |  |                           | 81.7    |                        |  |   | 140.9   |    |  |   | 20.8    |    |
| Otherincome (expense),net           |  |                            | (0.1    | )                          |  |                           | (1.8    | )                      |  |   | (3.5    | )  |  |   | (5.3    | )  |
| Interestincome                      |  |                            | 2.0     |                            |  |                           | 2.7     |                        |  |   | 4.1     |    |  |   | 5.4     |    |
| Interestexpense                     |  |                            | (64.8   | )                          |  |                           | (62.7   | )                      |  |   | (126.9  | )  |  |   | (123.7  | )  |
| Earnings(loss) before incometaxes   |  | $                               | (7.3    | )                          |  | $                              | 19.9    |                        |  | $      | 14.6    |    |  | $      | (102.8  | )  |
|                                     |

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

12.    Earnings(Loss) Per Share

Basic earnings (loss) per share is computed bydividing net earnings (loss) by the weighted average number of commonshares outstanding during the period. Diluted earnings (loss) per sharereflects the potential dilution that could occur if securities or othercontracts to issue common stock were exercised or converted into commonstock or resulted in the issuance of common stock.

Basic anddiluted earnings (loss) per share were calculated asfollows:

|                                                                                                 |  |                                 |         |                                 |  |                                |         |                              |  |        |        |        |  |        |         |         |  |  |
|-------------------------------------------------------------------------------------------------|--|---------------------------------|---------|---------------------------------|--|--------------------------------|---------|------------------------------|--|--------|--------|--------|--|--------|---------|---------|--|--|
| ((inmillions)                                                                                   |  | Three Months endedJune 30, 2005 |         | Three Months ended June 30,2004 |  | Six Months ended June 30, 2005 |         | SixMonths endedJune 30, 2004 |
| Numerator forbasic and diluted earnings (loss) per share:Net earnings(loss)                     |  | $                               | (5.8    | )                          |  | $                              | 2.4     |                         |  | $      | 5.2    |   |  | $      | (124.3  | )  |
| Denominatorfor basic earnings (loss) per share – weighted average commonsharesoutstanding |  |                            | 141.7   |                            |  |                           | 90.6    |                         |  |   | 141.7  |   |  |   | 90.6    |    |
| Effectof dilutivesecurities:                                                                    |  |                            |    |                            |  |                           |    |                         |  |   |   |   |  |   |    |    |
| Stockpurchasewarrant                                                                            |  |                            | — |                            |  |                           | — |                         |  |   | 4.9    |   |  |   | — |    |
| Denominatorfor diluted earnings (loss) pershare                                                 |  |                            | 141.7   |                            |  |                           | 90.6    |                         |  |   | 146.6  |   |  |   | 90.6    |    |
|                                                                                                 |

12

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12.    Earnings(Loss) Per Share (continued)

The potential dilutive effect of the stockpurchase warrant for 6.2 million shares of common stock held by theCompany's direct parent company, Nalco LLC, was not included inthe computation of diluted loss per share for the three months endedJune 30, 2005 as it would have been anti-dilutive.

As a resultof a dividend consisting of 90.6 million shares of Nalco HoldingCompany common stock that was issued to Nalco LLC immediately prior tothe consummation of the initial public offering of Nalco HoldingCompany common stock in November 2004, net earnings (loss) per sharehas been adjusted retroactively for periods subsequent to theAcquisition and prior to the fourth quarter 2004 to reflect this stockdividend.

13.    Contingenciesand Litigation

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

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

TheCompany's undiscounted reserves for known environmental clean upcosts were $2.0 million at June 30, 2005.

These environmentalreserves represent management's current estimate of itsproportional clean-up costs and are based upon negotiation andagreement with enforcement agencies, its previous 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 six months ended June 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 Company has received subpoenas from the U.S. Department ofJustice for documents and testimony relating to its storage of claimedhazardous materials, the claimed leakage of wastewater and othermatters at its plant in Garyville, Louisiana. No charges or indictmentshave been filed, but the outcome of this investigation is unknown tothe Company.

In the ordinary course of its business, the Companyis also a party to a number of lawsuits and is subject to variousclaims relating to trademarks, employee matters, contracts,transactions, chemicals 

13

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13.    Contingenciesand Litigation (continued)

and other matters, the outcome of which, inthe opinion of management, should not have a material effect on theconsolidated financial position of the Company. However, we cannotpredict the outcome of any litigation or the potential for futurelitigation. Were an unfavorable ruling to occur, there exists thepossibility of a material adverse impact on the results of operationsfor the period in which the ruling occurs. The Company maintainsaccruals where the outcome of the matter is probable and can bereasonably estimated.

14.    Guarantees

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

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

14

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Item2.   Management's Discussion and Analysis of FinancialCondition and Results               ofOperations

On November 4, 2003, Nalco Holdings LLC, oursubsidiary and a company formed by The Blackstone Group, ApolloManagement, 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 regarding industryoutlook, our expectations regarding the performance of our business andthe other non-historical statements in the discussion and analysis areforward-looking statements. These forward-looking statements aresubject to numerous risks and uncertainties. Our actual results maydiffer materially from those contained in or implied by anyforward-looking statements. You should read the following discussiontogether with the consolidated financial statements of Nalco HoldingCompany included elsewhere in this report.

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

This Quarterly Reportfor the fiscal quarter ended June 30, 2005 (the "QuarterlyReport") includes "forward-lookingstatements" within the meaning of Section 27A of theSecurities Act of 1933 and Section 21E of the Securities Exchange Actof 1934. These forward-looking statements include statements concerningour plans, objectives, goals, strategies, future events, future revenueor performance, capital expenditures, financing needs, plans orintentions relating to acquisitions, business trends and otherinformation that is not historical information. When used in thisQuarterly Report, the words "estimates,""expects,""anticipates,""projects,""plans," "intends,"" believes,""forecasts," or future or conditional verbs,such as "will,""should," "could"or "may," and variations of such words orsimilar expressions are intended to identify forward-lookingstatements. All forward-looking statements, including, withoutlimitation, management's examination of historical operatingtrends and data are based upon our current expectations and variousassumptions. Our expectations, beliefs and projections are expressed ingood faith and we believe there is a reasonable basis for them.However, there can be no assurance that management'sexpectations, beliefs and projections will be achieved.

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

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

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

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

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

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

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

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

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

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

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

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

15

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Item2.   Management's Discussion and Analysis of FinancialCondition and Results               ofOperations (continued)

|              |                                                   |
|--------------|---------------------------------------------------|
| •  | difficulties insecuring the raw materials we use; |

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

|              |                                                               |
|--------------|---------------------------------------------------------------|
| •  | our ability torealize the full value of our intangibleassets; |

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

|              |                                                            |
|--------------|------------------------------------------------------------|
| •  | ourability to protect our intellectual property rights;and |

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

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

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

Executive LevelOverview

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

Business process optimization chargesof $17.0 million, including a previously announced $14.0 millionrestructuring charge, drove otherwise positive earnings to a net lossof $5.8 million versus a $2.4 million profit in the three months endedJune 30, 2004.

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

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

While the inventory reduction had a temporarily negativeearnings impact, inventory levels at June 30, 2005 totaled $300.9million, down $51.6 million from our March 31, 2005 level and down

16

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Item2.   Management's Discussion and Analysis of FinancialCondition and Results               ofOperations (continued)

$12.6 million from the December 31, 2004total, which was lower than we had initially targeted. Cash benefitsfrom the non-write-off inventory reductions were not immediatelyrealized, however, as these reductions initially resulted in highercash requirements for working capital, most notably for accountspayable.

During June 2005, we sold our 1,000th 3DTRASAR® cooling water stress management unit to a largemicroelectronics manufacturer. The sale comes approximately one yearafter the conclusion of sales training in North America and as initialrollout activities are being completed in other regions. We haveexperienced substantial demand for 3D TRASAR and intend to increaseproduction levels.

During the six months ended June 30, 2005,sales grew 11.0% to $1,613.9 million compared to revenues of$1,453.7 million for the six months ended June 30, 2004. Net earningsfor the six months ended June 30, 2005 increased to $5.2 millioncompared to a loss of $124.3 million for the six months ended June 30,2004. The loss in 2004 was driven largely by a one-time, non-cashexpense related to purchase accounting of $122.3 million for in-processresearch and development.

Outlook

We expectthat price increases agreed upon with customers will be approximately$150 million, or about 5% of revenues, for 2005, with $96million expected to be realized in the second half of 2005. We expectraw materials and other purchased material costs to be up $145 millionfor 2005. In the markets and product lines where pricing does notreflect increased raw material costs, we will also press for selectiveprice increases through the remainder of 2005.

We believe thatthese price increases, coupled with cost reduction activities andstable raw material and other purchased materials costs, should drivebetter results in the second half of 2005. We expect that costreduction activities will generate $83 million in 2005 savings withrun-rate benefits of $97 million. These savings actions are targeted tomore than offset higher compensation, inflationary and research andsales engineer investment costs. We expect to begin realizing the cashbenefits of our inventory reduction efforts in the three months endedSeptember 30, 2005, as the initial impact of reducing inventory was toreduce payables.

Results of Operations

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

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

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

Net salesfor the three months ended June 30, 2005 were $836.3 million, a13.0% increase from the $740.4 million reported for the threemonths ended June 30, 2004. On an organic basis, which excludes theimpacts of changes in foreign currency translation rates andacquisitions and divestitures, net sales were up 8.6%. Of thisimprovement, 4.8% was attributed to price increases, while theremaining 3.8% was driven by favorable sales growth broadlyspread across our customer base. The 

17

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Item2.   Management's Discussion and Analysis of FinancialCondition and Results               ofOperations (continued)

Energy Services division posted significantorganic growth in sales of 9.9% over the same period last year.Organically, Paper Services division sales were up 7.1% comparedto a year ago, reflecting continued strong growth in the Latin Americaand Pacific regions and a more modest gain in North America. PaperServices sales in Europe continue to suffer, resulting in part frommanagement vs. labor challenges faced by our Finnish customers. TheIndustrial and Institutional Services division reported organic growthof 6.2%. While most of the improvement was due to priceincreases, solid gains continue to be posted by our global miningbusiness and our water treatment business in the Latin American andPacific regions. Most of the organic improvement in"other" sales was attributable to oursubsidiary company in India and our Japanese joint venture, KatayamaNalco, which reported improved sales in the month of June over lastyear. The increase in "other" salesattributable to acquisitions/divestitures represents the incrementalimpact of April and May 2005 sales of Katayama Nalco, which was formedwith Katayama Chemical Inc. on June 1, 2004.

Grossprofit**,**defined as the difference between net sales andcost of product sold, of $356.4 million for the three months ended June30, 2005 decreased by $11.8 million, or 3.2%, from the $368.2million reported for the quarter ended June 30, 2004. On an organicbasis, gross profit decreased by $26.3 million. Unfavorablemanufacturing volume variances attributable to our plan to reduceinventory levels during the quarter and an inventory write-offaccounted for most of this change. These two factors were primarilyresponsible for the change in the gross profit margin, which was42.6% for the three months ended June 30, 2005 compared to49.7% for the year-ago period. Higher costs of raw and otherpurchased materials were largely offset by increases in the sellingprices of our products.

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

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

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

Other income (expense), netwas a net expense of $0.1 million and $1.8 million for the three monthsended June 30, 2005 and 2004, respectively. In November 2004, theCompany terminated the monitoring services provided to the Company byaffiliates of the Sponsors. Monitoring fees for such services were $3.2million for the three months ended June 30, 2004.

Netinterest expense, defined as the combination of interest incomeand interest expense, of $62.8 million for the three months ended June30, 2005 increased by $2.8 million from the $60.0 million reported forthe three months ended June 30, 2004. The impact of higher interestrates on variable rate borrowings more than offset the impact of alower average debt level compared to the year-ago period.

The effective tax rate for the three months ended June 30,2005 was 42.5%. The rate varies from the U.S. statutory incometax rate of 35% primarily due to the incremental tax ondividends received from non-U.S. subsidiaries, foreign taxes providedat less than the 35% U.S. statutory rate, U.S. state incometaxes, nondeductible expenses, and other permanent differences.

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

18

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Item2.   Management's Discussion and Analysis of FinancialCondition and Results               ofOperations (continued)

effective rate was impacted by a valuationallowance for the income tax benefit on the interest expense from thesenior discount notes issued by Nalco Finance Holdings LLC and NalcoFinance Holdings, Inc. in January 2004. A valuation allowance for theincome tax benefit on the senior discount note interest was recordedduring the first nine months of 2004, pending a determination as towhether the deduction was realizable. During the fourth quarter of2004, the valuation allowance for this tax benefit was reversed when itwas determined that the deduction could be realized.

Theyear-to-date effective tax rate changed from 44.3% for the threemonths ended March 31, 2005 to 45.2% for the six months endedJune 30, 2005. Because the three months ended June 30, 2005 is apre-tax loss, this change results in a reduced tax benefit for thequarter.

Minority interest expense was $0.7 millionhigher than the $0.9 million for the three months ended June 30, 2004,reflecting improved results for most of the Company's non-whollyowned subsidiaries.

Six Months Ended June 30, 2005 Comparedto the Six Months Ended June 30, 2004

Net sales for thesix months ended June 30, 2005 and June 30, 2004 may be compared asfollows:

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

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

Gross profit**,**defined as the differencebetween net sales and cost of product sold, of $721.6 million for thesix months ended June 30, 2005 increased by $14.5 million, or2.0%, over the $707.1 

19

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Item2.   Management's Discussion and Analysis of FinancialCondition and Results               ofOperations (continued)

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

Selling, administrative, and researchexpenses for the six months ended June 30, 2005 of $521.8 millionincreased by $6.9 million, or 1.3%, from $514.9 million for thesix months ended June 30, 2004. This increase was attributable tochanges in foreign currency translation rates and the incrementalexpenses of Katayama Nalco for the first five months of 2005. On anorganic basis, selling, administrative, and research expenses decreasedby $13.9 million, or 2.7%, reflecting continuing efforts toreduce and control spending.

Amortization of intangibleassets was $41.1 million and $49.1 million for the six monthsended June 30, 2005 and 2004, respectively. The decrease wasattributable to lower amortization of customer relationships, which areamortized using an accelerated method.

In-process researchand development was a one-time charge of $122.3 million recordedduring the six months ended June 30, 2004, as a result of purchaseaccounting related to the Acquisition. The value of purchased IPR&Dwas comprised 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.

Business optimization expenses,representing mostly employee severance and related costs, were$17.8 million for the six months ended June 30, 2005, and included a$14.0 million charge recorded at the end of the period to support aplan to de-layer our management structure and reduce costs inlower-performing business units. The plan calls for the elimination ofapproximately 220 positions, primarily in Europe and North America.

Other income (expense), net was a net expense of $3.5million and $5.3 million for the six months ended June 30, 2005 and2004, respectively. In November 2004, the Company terminated themonitoring services provided to the Company by affiliates of theSponsors. Monitoring fees for such services were $5.7 million for thesix months ended June 30, 2004. The resulting favorable variance wasoffset by a $2.4 million impairment charge recorded during the sixmonths ended June 30, 2005 related to a business held for sale.

Net interest expense, defined as the combination ofinterest income and interest expense, of $122.8 million for the sixmonths ended June 30, 2005 increased by $4.5 million from the $118.3million reported for the six months ended June 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 six months endedJune 30, 2005 was 45.2%. The rate varies from the U.S. statutoryincome tax rate of 35% primarily due to the incremental tax ondividends received from non-U.S. subsidiaries, foreign taxes providedat less than the 35% U.S. statutory rate, U.S. state incometaxes, nondeductible expenses, and other permanent differences.

These items contributed to the variation between the U.S. statutoryincome tax rate and the Company's effective income tax rate forthe six months ended June 30, 2004. In addition, the effective rate wasimpacted by the charge for purchased IPR&D, which is not taxdeductible, and a valuation 

20

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Item2.   Management's Discussion and Analysis of FinancialCondition and Results               ofOperations (continued)

allowance for the income tax benefit on theinterest expense from the senior discount notes issued by Nalco FinanceHoldings LLC and Nalco Finance Holdings, Inc. in January 2004.

Avaluation allowance for the income tax benefit on the senior discountnote interest was recorded during the first nine months of 2004,pending a determination as to whether the deduction was realizable.During the fourth quarter of 2004, the valuation allowance for this taxbenefit was reversed when it was determined that the deduction could berealized.

Minority interest expense was $0.9 millionhigher than the $1.9 million for the six months ended June 30, 2004,reflecting improved results for most of the Company's non-whollyowned subsidiaries.

Liquidity and Capital Resources

Operating activities.    Historically, theCompany's main source of liquidity has been its solid cash flowgenerated by operating activities. For the six months ended June 30,2005, cash provided by operating activities was $29.7 million, a $95.7million decrease from the same period last year. This decrease wasmostly attributable to higher working capital requirements, mostnotably for accounts payable, which directly resulted from our effortsto significantly reduce inventory levels during the second quarter of2005. Also contributing was the payment of year-end incentive plan andcommission accruals.

Investing activities.    Cashused for investing activities was $28.2 million for the six monthsended June 30, 2005, which was mostly attributable to net propertyadditions of $25.0 million.

Cash used for investing activitieswas $9.7 million for the six months ended June 30, 2004. This wasmostly the result of net property additions of $34.9 million, partlyoffset by a $25.6 million purchase price adjustment received from Suezrelated to the Acquisition. Approximately half of the capital spendingwas attributable to our information systems project in Europe.

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

Net cash used for financing activities totaled$113.7 million during the six months ended June 30, 2004. This wasprimarily comprised of repayment of borrowings since the proceeds ofthe 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.

21

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Item2.   Management's Discussion and Analysis of FinancialCondition 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 June 30, 2005, the outstanding balanceof the term loan A and term loan B facilities was $208.5 million and$1,081.0 million, respectively.

Principal amounts outstandingunder the revolving credit facility will be due and payable in full atmaturity on November 4, 2009. At June 30, 2005, our outstandingborrowing under the revolving credit facility was $24.0 million.

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 June 30, 2005.

Senior notes, senior subordinatednotes and senior discount notes. As part of the Transactions inNovember 2003, Nalco Company issued $665 million aggregate principalamount of 73⁄4% U.S. dollar-denominated senior notes due2011, €200 million aggregate principal amount of73⁄4% euro-denominated senior notes due 2011, $465 millionaggregate principal amount of 8 7/8% U.S.dollar-denominated senior subordinated notes due 2013 and€200 million aggregate principal amount of 9%euro-denominated senior subordinated notes due 2013.

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

22

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Item2.   Management's Discussion and Analysis of FinancialCondition 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 otherdistributions or repurchase certain capital stock; |

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

|              |                                                          |
|--------------|----------------------------------------------------------|
| •  | enter into certain types of transactionswith affiliates; |

|              |                                                                  |
|--------------|------------------------------------------------------------------|
| •  | limit dividends orother payments by our restricted subsidiaries; |

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

|              |                                                           |
|--------------|-----------------------------------------------------------|
| •  | sell certain assetsor merge with or into other companies. |

Subject to certainexceptions, the indentures governing the senior notes, the seniorsubordinated notes, and the senior discount notes permit the Companyand our restricted subsidiaries to incur additional indebtedness,including secured indebtedness.

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

Adjusted EBITDA is used todetermine our compliance with many of the covenants contained in theindentures governing the notes and in our senior credit agreement.Adjusted EBITDA is defined as EBITDA further adjusted to excludeunusual items and other adjustments permitted in calculating covenantcompliance under the indentures and our senior credit facility. Webelieve that the inclusion of supplementary adjustments to EBITDAapplied in presenting Adjusted EBITDA are appropriate to provideadditional information to investors to demonstrate compliance with ourfinancing covenants.

23

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Item2.   Management's Discussion and Analysis of FinancialCondition and Results               ofOperations (continued)

Adjusted EBITDA is calculated asfollows:

|                                  |  |                                 |       |                                 |  |                                |         |                               |  |        |       |         |  |        |         |         |  |  |
|----------------------------------|--|---------------------------------|-------|---------------------------------|--|--------------------------------|---------|-------------------------------|--|--------|-------|---------|--|--------|---------|---------|--|--|
| (dollarsin millions)             |  | Three Months endedJune 30, 2005 |       | Three Months ended June 30,2004 |  | Six Months ended June 30, 2005 |         | SixMonths ended June 30, 2004 |
| Net earnings(loss)               |  | $                               | (5.8  | )                          |  | $                              | 2.4     |                          |  | $      | 5.2   |    |  | $      | (124.3  | )  |
| Interest,net                     |  |                            | 62.8  |                            |  |                           | 60.0    |                          |  |   | 122.8 |    |  |   | 118.3   |    |
| Incometax provision(benefit)     |  |                            | (3.1  | )                          |  |                           | 16.6    |                          |  |   | 6.6   |    |  |   | 19.6    |    |
| Depreciation                     |  |                            | 33.5  |                            |  |                           | 28.2    |                          |  |   | 66.7  |    |  |   | 56.9    |    |
| Amortization                     |  |                            | 20.5  |                            |  |                           | 24.9    |                          |  |   | 41.1  |    |  |   | 49.1    |    |
| EBITDA                           |  | $                               | 107.9 |                            |  | $                              | 132.1   |                          |  | $      | 242.4 |    |  | $      | 119.6   |    |
| Non-cashcharges(1)               |  |                            | 5.7   |                            |  |                           | 7.6     |                          |  |   | 15.8  |    |  |   | 153.0   |    |
| Businessoptimization expenses(2) |  |                            | 17.0  |                            |  |                           | — |                          |  |   | 17.8  |    |  |   | — |    |
| Unusualitems(3)                  |  |                            | 1.8   |                            |  |                           | 3.4     |                          |  |   | 2.5   |    |  |   | 4.5     |    |
| Otheradjustments(4)              |  |                            | (1.2  | )                          |  |                           | 2.4     |                          |  |   | (3.0  | )  |  |   | 3.7     |    |
| AdjustedEBITDA                   |  | $                               | 131.2 |                            |  | $                              | 145.5   |                          |  | $      | 275.5 |    |  | $      | 280.8   |    |
|                                  |

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

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

In-processResearch and Development

In-process research anddevelopment was a one time charge of $122.3 million recorded during thesix months ended June 30, 2004, as a result of purchase accountingentries related to the Acquisition.

InventoryStep-Up

As a result of purchase accounting for theAcquisition, we wrote up our inventory to fair value and subsequentlycharged the write up to cost of sales as the inventory was sold.

Profit Sharing and 401(k) Expense Funded by Suez

In conjunction with the Acquisition, we entered into anagreement with Suez whereby Suez will reimburse us for certainprofit-sharing and 401(k) matching contributions made by us to theProfit-Sharing Trust.

Other

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

24

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Item2.   Management's Discussion and Analysis of FinancialCondition and Results               ofOperations (continued)

|           |                                                                                                                                                                                                                                                                    |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  | Businessoptimization expenses for 2005 include costs associated with thede-layering of our management structure, cost reductions inlower-performing business units, and the redesign and optimization ofwork processes. See note 7 to Item 1 for more information. |

|           |                                                          |
|-----------|----------------------------------------------------------|
| (3)  | Unusual items are further detailed onthe followingtable: |

|                                     |  |                                 |     |                                 |  |                                |         |                               |  |        |     |        |  |        |         |        |  |  |  |  |  |  |  |  |  |  |
|-------------------------------------|--|---------------------------------|-----|---------------------------------|--|--------------------------------|---------|-------------------------------|--|--------|-----|--------|--|--------|---------|--------|--|--|--|--|--|--|--|--|--|--|
| (dollarsin millions)                |  | Three Months endedJune 30, 2005 |     | Three Months ended June 30,2004 |  | Six Months ended June 30, 2005 |         | SixMonths ended June 30, 2004 |  |
| Loss (gain) onsales, net ofexpenses |  | $                               | 0.6 |                            |  | $                              | — |                          |  | $      | 1.1 |   |  | $      | — |   |  |
| Otherunusual items(a)               |  |                            | 1.2 |                            |  |                           | 3.4     |                          |  |   | 1.4 |   |  |   | 4.5     |   |  |
|                                |  | $                               | 1.8 |                            |  | $                              | 3.4     |                          |  | $      | 2.5 |   |  | $      | 4.5     |   |  |
|                                     |

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

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

|           |                                                                                                                                           |
|-----------|-------------------------------------------------------------------------------------------------------------------------------------------|
| (4)  | We are required tomake adjustments 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 June 30, 2005 are asfollows:

|                                                                                                           |  |                               |        |        |  |        |        |        |  |  |
|-----------------------------------------------------------------------------------------------------------|--|-------------------------------|--------|--------|--|--------|--------|--------|--|--|
|                                                                                                      |  | CovenantLevel at June 30,2005 |        | Ratios |
| **Senior creditfacility (1)**                                                                             |  |
|     Minimum Adjusted EBITDA tocash interestratio                                      |  |                          | 1.70x  |   |  |   | 2.87x  |   |
|     Maximum netdebt to Adjusted EBITDAratio                                           |  |                          | 6.50x  |   |  |   | 5.20x  |   |
| **Indentures(2)**                                                                                         |  |                          |   |   |  |   |   |   |
| Minimum AdjustedEBITDA to fixed charge ratio required to incur additional debt pursuantto ratioprovisions |  |                          | 2.00x  |   |  |   | 2.45x  |   |
|                                                                                                           |

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

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

|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  | Our ability to incuradditional debt and make certain restricted payments under ourindentures, subject to specified exceptions, is tied to an AdjustedEBITDA to fixed charge ratio of at least 2.0 to 1, except that we mayincur certain debt and make certain restricted payments and certainpermitted investments without regard to the ratio, such as up to anaggregate principal amount of $1,950 million (including $1,289.5million that was outstanding under our term loan facilities as of June30, 2005) and investments in similar business and other investmentsequal to 6% of Nalco Holding Company consolidated assets. |

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

Receivablesfacility.    Nalco Company entered into a receivables facility onJune 25, 2004 that provides up to $100 million in funding from acommercial paper conduit sponsored by JPMorgan 

25

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Item2.   Management's Discussion and Analysis of FinancialCondition and Results               ofOperations (continued)

Chase Bank, one of the lenders under NalcoCompany's senior credit facilities, based on availability ofeligible receivables and satisfaction of other customaryconditions.

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

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

26

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Item3.    Quantitative and Qualitative Disclosures About Market Risk

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

Item4.    Controls andProcedures

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

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

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

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

27

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Part II.    Other Information

Item 4.    Submission of Matters to a Vote of SecurityHolders

The Annual Meeting of Shareholders washeld on May 5, 2005. At the meeting, Dr. William H. Joyce and Messrs.Douglas A. Pertz and Daniel S. Sanders were each elected by theshareholders to a term to expire in2008.

|                 |  |        |             |         |  |          |     |        |  |        |            |        |  |  |
|-----------------|--|--------|-------------|---------|--|----------|-----|--------|--|--------|------------|--------|--|--|
| Nominee         |  | For    |             | Against |  | Withheld |
| WilliamH.Joyce  |  |   | 113,991,565 |    |  |     | -0- |   |  |   | 22,473,161 |   |
| DouglasA.Pertz  |  |   | 135,605,485 |    |  |     | -0- |   |  |   | 855,241    |   |
| DanielS.Sanders |  |   | 135,605,485 |    |  |     | -0- |   |  |   | 855,241    |   |
|                 |

Messrs.Black, Cho, Friedman, Harris, Mehra and O'Neill each have termsof office as directors that continued after the 2005 AnnualMeeting.

The shareholders also ratified the appointmentof Ernst & Young LLP as the Independent Registered PublicAccounting Firm for2005:

|             |  |         |  |         |  |  |  |  |  |  |
|-------------|--|---------|--|---------|--|--|--|--|--|--|
| For         |  | Against |  | Abstain |
| 136,453,410 |  | 10,366  |  | 950     |
|             |

Item6.    Exhibits

|           |                                   |
|-----------|-----------------------------------|
| (a)  | The followingare included herein: |

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

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

|  |                    |                                                                                                   |
|--|--------------------|---------------------------------------------------------------------------------------------------|
|  | Exhibit 31.2  | Certification of ChiefFinancial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of2002 |

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

28

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SIGNATURE

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

|        |  |                      |  |                                                    |  |  |  |  |  |  |
|--------|--|----------------------|--|----------------------------------------------------|--|--|--|--|--|--|
|   |  | NALCOHOLDING COMPANY |
|   |  | /s/ BRADLEYJ. BELL   |
|   |  | Name:                |  | Bradley J.Bell                                     |
|   |  | Title:               |  | Executive VicePresident and Chief FinancialOfficer |
|        |

Dated: August 12,2005

29

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