UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION Washington, DC20549

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FORM10-Q

(Mark One)

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

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|--------|----------------------------------------------|
|   | For the quarterly period ended March 31,2005 |

or

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

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

Commission File No.001-32342

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NALCO HOLDINGCOMPANY

(Exact name of registrant as specifiedin its charter)

|                                                               |  |                                        |  |  |  |  |
|---------------------------------------------------------------|--|----------------------------------------|--|--|--|--|
| Delaware                                                      |  | 16-1701300                             |
| (State orother jurisdiction of Incorporation or Organization) |  | (I.R.S.Employer Identification Number) |
|                                                               |

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

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

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

Indicate by check mark whether the registrant is an acceleratedfiler (as defined in Rule 12b-2 of the ExchangeAct.)    Yes       No   

As of April30, 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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QUARTERLY REPORT ON FORM10-Q NALCO HOLDING COMPANY Quarter Ended March 31, 2005

TABLE OF CONTENTS

|                                                     |  |                                                                                                   |  |    |  |  |  |  |  |  |
|-----------------------------------------------------|--|---------------------------------------------------------------------------------------------------|--|----|--|--|--|--|--|--|
| PartI.    Financial Information |  |
| Item1.                                              |  | Financial Statements(Unaudited)                                                                   |  |
|                                                |  | Condensed Consolidated BalanceSheets – March 31, 2005 and December 31,2004                  |  | 2  |
|                                                |  | Condensed Consolidated Statements of Operations– Three months ended March 31, 2005 and 2004 |  | 3  |
|                                                |  | Condensed Consolidated Statements of Cash Flows– Three months ended March 31, 2005 and 2004 |  | 4  |
|                                                |  | Notes to Condensed Consolidated Financial Statements– March 31, 2005                        |  | 5  |
| Item2.                                              |  | Management's Discussion and Analysis of FinancialCondition and Results of Operations              |  | 15 |
| Item3.                                              |  | Quantitative and Qualitative Disclosures About MarketRisk                                         |  | 25 |
| Item 4.                                             |  | Controls andProcedures                                                                            |  | 25 |
| Part II.    OtherInformation    |  |
| Item6.                                              |  | Exhibits                                                                                          |  | 26 |
| Signature                                           |  | 27                                                                                                |
|                                                     |

1

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PART I. FINANCIALINFORMATION

Item 1. Financial Statements (Unaudited)

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

|                                                                       |  |                         |         |                 |  |        |         |        |  |  |
|-----------------------------------------------------------------------|--|-------------------------|---------|-----------------|--|--------|---------|--------|--|--|
|                                                                  |  | (Unaudited)March31,2005 |         | December31,2004 |
| **Assets**                                                            |  |                    |    |            |  |   |    |   |
| Currentassets:                                                        |  |                    |    |            |  |   |    |   |
| Cash and cashequivalents                                              |  | $                       | 34.5    |            |  | $      | 33.3    |   |
| Accountsreceivable, less allowances of $22.6 in 2005 and $21.1 in2004 |  |                    | 587.5   |            |  |   | 594.2   |   |
| Inventories:                                                          |  |                    |    |            |  |   |    |   |
| Finishedproducts                                                      |  |                    | 273.7   |            |  |   | 245.4   |   |
| Materialsand work inprocess                                           |  |                    | 78.8    |            |  |   | 68.1    |   |
|                                                                  |  |                    | 352.5   |            |  |   | 313.5   |   |
| Prepaidexpenses, taxes and other currentassets                        |  |                    | 75.5    |            |  |   | 90.1    |   |
| Totalcurrentassets                                                    |  |                    | 1,050.0 |            |  |   | 1,031.1 |   |
|                                                                  |  |                    |    |            |  |   |    |   |
| Property,plant, and equipment,net                                     |  |                    | 815.9   |            |  |   | 847.3   |   |
| Intangibleassets:                                                     |  |                    |    |            |  |   |    |   |
| Goodwill                                                              |  |                    | 2,336.1 |            |  |   | 2,368.3 |   |
| Otherintangibles,net                                                  |  |                    | 1,297.9 |            |  |   | 1,323.6 |   |
| Otherassets                                                           |  |                    | 357.2   |            |  |   | 363.6   |   |
| Totalassets                                                           |  | $                       | 5,857.1 |            |  | $      | 5,933.9 |   |
|                                                                  |  |                    |    |            |  |   |    |   |
| **Liabilitiesand shareholders'equity**                                |  |                    |    |            |  |   |    |   |
| Currentliabilities:                                                   |  |                    |    |            |  |   |    |   |
| Accountspayable                                                       |  | $                       | 260.4   |            |  | $      | 261.9   |   |
| Shortterm debt                                                        |  |                    | 25.4    |            |  |   | 17.7    |   |
| Othercurrentliabilities                                               |  |                    | 266.4   |            |  |   | 311.7   |   |
| Totalcurrentliabilities                                               |  |                    | 552.2   |            |  |   | 591.3   |   |
|                                                                  |  |                    |    |            |  |   |    |   |
| Otherliabilities:                                                     |  |                    |    |            |  |   |    |   |
| Long-termdebt                                                         |  |                    | 3,401.6 |            |  |   | 3,424.8 |   |
| Deferredincometaxes                                                   |  |                    | 475.3   |            |  |   | 484.8   |   |
| Accruedpensionbenefits                                                |  |                    | 418.9   |            |  |   | 411.7   |   |
| Otherliabilities                                                      |  |                    | 296.4   |            |  |   | 296.8   |   |
|                                                                  |  |                    |    |            |  |   |    |   |
| Minorityinterest                                                      |  |                    | 11.9    |            |  |   | 14.1    |   |
| Shareholders'equity                                                   |  |                    | 700.8   |            |  |   | 710.4   |   |
| Totalliabilities and shareholders'equity                              |  | $                       | 5,857.1 |            |  | $      | 5,933.9 |   |
|                                                                       |

Seeaccompanying notes to condensed consolidated financialstatements.

2

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

|                                               |  |                                 |         |                                |  |        |         |         |  |  |
|-----------------------------------------------|--|---------------------------------|---------|--------------------------------|--|--------|---------|---------|--|--|
|                                          |  | ThreeMonthsended March 31, 2005 |         | ThreeMonthsended March 31,2004 |
|                                          |  |                            |    |                           |  |   |    |    |
| Netsales                                      |  | $                               | 777.6   |                           |  | $      | 713.3   |    |
| Operating costsandexpenses:                   |  |                            |    |                           |  |   |    |    |
| Costof product sold                           |  |                            | 412.4   |                           |  |   | 374.4   |    |
| Selling,administrative, and researchexpenses  |  |                            | 258.5   |                           |  |   | 253.3   |    |
| Amortization ofintangibleassets               |  |                            | 20.6    |                           |  |   | 24.2    |    |
| In-process researchanddevelopment             |  |                            | — |                           |  |   | 122.3   |    |
| Businessoptimizationexpenses                  |  |                            | 0.8     |                           |  |   | — |    |
| Totaloperating costs andexpenses              |  |                            | 692.3   |                           |  |   | 774.2   |    |
|                                          |  |                            |    |                           |  |   |    |    |
| Operatingearnings(loss)                       |  |                            | 85.3    |                           |  |   | (60.9   | )  |
|                                          |  |                            |    |                           |  |   |    |    |
| Otherincome (expense),net                     |  |                            | (3.4    | )                         |  |   | (3.5    | )  |
| Interestincome                                |  |                            | 2.1     |                           |  |   | 2.7     |    |
| Interestexpense                               |  |                            | (62.1   | )                         |  |   | (61.0   | )  |
|                                          |  |                            |    |                           |  |   |    |    |
| Earnings(loss) before incometaxes             |  |                            | 21.9    |                           |  |   | (122.7  | )  |
|                                          |  |                            |    |                           |  |   |    |    |
| Incometaxprovision                            |  |                            | 9.7     |                           |  |   | 3.0     |    |
|                                          |  |                            |    |                           |  |   |    |    |
| Minorityinterests                             |  |                            | (1.2    | )                         |  |   | (1.0    | )  |
| Netearnings(loss)                             |  | $                               | 11.0    |                           |  | $      | (126.7  | )  |
|                                          |  |                            |    |                           |  |   |    |    |
| Netearnings (loss) pershare:                  |  |                            |    |                           |  |   |    |    |
| Basic                                         |  | $                               | 0.08    |                           |  | $      | (1.40   | )  |
| Diluted                                       |  | $                               | 0.08    |                           |  | $      | (1.40   | )  |
| Weighted-averageshares outstanding(millions): |  |                            |    |                           |  |   |    |    |
| Basic                                         |  |                            | 141.7   |                           |  |   | 90.6    |    |
| Diluted                                       |  |                            | 146.6   |                           |  |   | 90.6    |    |
|                                               |

Seeaccompanying notes to condensed consolidated financialstatements.

3

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

|                                                                                          |  |                                |         |                               |  |        |        |         |  |  |
|------------------------------------------------------------------------------------------|--|--------------------------------|---------|-------------------------------|--|--------|--------|---------|--|--|
|                                                                                     |  | ThreeMonthsendedMarch 31, 2005 |         | ThreeMonthsendedMarch 31,2004 |
|                                                                                     |  |                           |    |                          |  |   |   |    |
| **Operatingactivities**                                                                  |  |                           |    |                          |  |   |   |    |
| Net earnings(loss)                                                                       |  | $                              | 11.0    |                          |  | $      | (126.7 | )  |
| Adjustments toreconcile net earnings (loss) to net cash provided by operatingactivities: |  |                           |    |                          |  |   |   |    |
| Depreciation                                                                             |  |                           | 33.2    |                          |  |   | 28.7   |    |
| Amortization                                                                             |  |                           | 20.6    |                          |  |   | 24.2   |    |
| In-processresearch anddevelopment                                                        |  |                           | — |                          |  |   | 122.3  |    |
| Amortizationof deferred financing costs and accretion of senior discountnotes            |  |                           | 9.9     |                          |  |   | 10.5   |    |
| Other,net                                                                                |  |                           | 10.8    |                          |  |   | 3.2    |    |
| Changes inoperating assets andliabilities                                                |  |                           | (69.8   | )                        |  |   | 22.3   |    |
| Netcash provided by operatingactivities                                                  |  |                           | 15.7    |                          |  |   | 84.5   |    |
|                                                                                     |  |                           |    |                          |  |   |   |    |
| **Investingactivities**                                                                  |  |                           |    |                          |  |   |   |    |
| Purchase priceadjustment on acquisition of Ondeo NalcoGroup                              |  |                           | (3.2    | )                        |  |   | 25.6   |    |
| Additions toproperty, plant, and equipment,net                                           |  |                           | (12.3   | )                        |  |   | (16.4  | )  |
| Other investingactivities                                                                |  |                           | (0.4    | )                        |  |   | (2.2   | )  |
| Netcash provided by (used for) investingactivities                                       |  |                           | (15.9   | )                        |  |   | 7.0    |    |
|                                                                                     |  |                           |    |                          |  |   |   |    |
| **Financingactivities**                                                                  |  |                           |    |                          |  |   |   |    |
| Changes inshort-term debt,net                                                            |  |                           | 7.9     |                          |  |   | (2.7   | )  |
| Proceeds fromlong-term debt                                                              |  |                           | 0.1     |                          |  |   | 450.3  |    |
| Repaymentsof long-termdebt                                                               |  |                           | (2.1    | )                        |  |   | (60.0  | )  |
| Capitaldistributions                                                                     |  |                           | — |                          |  |   | (446.9 | )  |
| Other                                                                                    |  |                           | (4.0    | )                        |  |   | (1.2   | )  |
| Netcash provided by (used for) financingactivities                                       |  |                           | 1.9     |                          |  |   | (60.5  | )  |
| Effect ofexchange rate changes on cash and cashequivalents                               |  |                           | (0.5    | )                        |  |   | (0.4   | )  |
| Increasein cash and cashequivalents                                                      |  |                           | 1.2     |                          |  |   | 30.6   |    |
| Cash and cashequivalents at beginning ofperiod                                           |  |                           | 33.3    |                          |  |   | 100.0  |    |
| Cashand cash equivalents at end ofperiod                                                 |  | $                              | 34.5    |                          |  | $      | 130.6  |    |
|                                                                                          |

Seeaccompanying notes to condensed consolidated financialstatements.

4

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NalcoHolding Company and Subsidiaries Notes to Condensed ConsolidatedFinancial Statements (Unaudited)

March 31,2005

1.    Description of Business andChange in Ownership

Description of Business

NalcoHolding Company and subsidiaries (the Company) is engaged in theworldwide manufacture and sale of highly specialized service chemicalprograms. This includes production and service related to the sale andapplication of chemicals and technology used in water treatment,pollution control, energy conservation, oil production and refining,steelmaking, papermaking, mining, and other industrial processes.

Change in Ownership

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

The Buyer was capitalized byequity investments totaling $991.9 million from the Sponsors and $10.0million from Dr. William H. Joyce, the Chairman and Chief ExecutiveOfficer of the Buyer. The equity investments were made to NalcoInvestment Holdings LLC which, in turn, contributed $1,001.9 million tothe Buyer and was its parent company until January 14, 2004. Fundingfor the Acquisition included the equity investments and the issuance ofsenior notes and senior subordinated notes in a private offering, andnew revolving credit and term loan facilities by the Buyer, through its100% owned subsidiary, Nalco Company.

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

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

OnJanuary 14, 2004, Nalco Investment Holdings LLC contributed its100% interest in the Buyer to a newly formed entity, NalcoFinance Holdings LLC, in exchange for a 99% interest in NalcoFinance Holdings LLC. The remaining 1% interest in Nalco FinanceHoldings LLC was held indirectly by Nalco Investment Holdings LLCthrough its wholly owned subsidiary, Nalco Finance Holdings II Inc. Asof January 14, 2004, Nalco Finance Holdings LLC became the directparent company of the Buyer. Subsequent to that date, the Sponsors andDr. Joyce engaged in a series of transactions that ultimately resultedin a newly formed entity, Nalco LLC, becoming the indirect and ultimateparent company of Nalco Investment Holdings LLC, Nalco Finance HoldingsLLC, and the Buyer. Nalco LLC's interests in Nalco InvestmentHoldings LLC were held through its holdings of 100% of theinterests of each of BCP Nalco I LLC, BCP Nalco II LLC, APV Nalco LLC,GS Nalco LLC and JAG Nalco LLC (collectively, the Sponsor entities),which collectively held 100% of the interests of NalcoInvestment Holdings LLC.

5

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NalcoHolding Company and Subsidiaries Notes to Condensed ConsolidatedFinancial Statements (Unaudited)

March 31,2005

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 threemonths ended March 31, 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 three months ended March 31, 2004includes an additional $14.1 million in cost of products sold relatedto the sale of inventory that had been revalued at selling price lesscosts to sell in the allocation of the purchase price for theAcquisition.

In conjunction with the Acquisition, the Companyformulated a plan to exit or restructure certain activities. TheCompany recorded liabilities of $35.5 million, primarily for employeeseverance and related costs, in connection with the Company'splan to exit or restructure certain activities. The Company expects tocomplete these activities by the end of 2005. As of December 31, 2004,$3.8 million remained of this accrual, and there were no chargesagainst it during the three months ended March 31, 2005.

2.    Basis of Presentation

These consolidated financialstatements should be read in conjunction with the consolidated andcombined financial statements and notes thereto included in the AnnualReport for Nalco Holding Company and subsidiaries for the fiscal yearended December 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 thethree months ended March 31, 2005 are not necessarily indicative ofresults that may be expected for the year ended December 31, 2005.

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

6

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NalcoHolding Company and Subsidiaries Notes to Condensed ConsolidatedFinancial Statements (Unaudited)

March 31,2005

3.    Goodwill and Other IntangibleAssets

The changes in goodwill for the period were asfollows:

|                                        |  |        |         |         |  |  |
|----------------------------------------|--|--------|---------|---------|--|--|
| (dollarsin millions)                   |  |   |
| Balance as of December 31,2004         |  | $      | 2,368.3 |    |
| Preacquisition income taxuncertainties |  |   | 0.4     |    |
| Effect of foreign currencytranslation  |  |   | (32.6   | )  |
| Balanceas of March 31,2005             |  | $      | 2,336.1 |    |
|                                        |

Thefollowing table reflects intangible assets and related amortizationinformation:

|                                              |  |                     |         |                         |  |             |         |                         |  |        |         |        |  |        |         |         |  |  |
|----------------------------------------------|--|---------------------|---------|-------------------------|--|-------------|---------|-------------------------|--|--------|---------|--------|--|--------|---------|---------|--|--|
|                                         |  | Asof March 31, 2005 |         | As of December31, 2004  |
| (dollars inmillions)                         |  | GrossAmount         |         | AccumulatedAmortization |  | GrossAmount |         | AccumulatedAmortization |
| Intangibleassets subject to amortization:    |  |
| Customerrelationships                        |  | $                   | 500.1   |                    |  | $           | (120.2  | )                  |  | $      | 506.6   |   |  | $      | (103.5  | )  |
| Patentsand developedtechnology               |  |                | 100.5   |                    |  |        | (14.7   | )                  |  |   | 100.5   |   |  |   | (12.2   | )  |
| Other                                        |  |                | 2.2     |                    |  |        | — |                    |  |   | 2.2     |   |  |   | — |    |
| Intangibleassets not subject toamortization: |  |                |    |                    |  |        |    |                    |  |   |    |   |  |   |    |    |
| Trademarksand tradenames                     |  |                | 830.0   |                    |  |        | — |                    |  |   | 830.0   |   |  |   | — |    |
|                                         |  | $                   | 1,432.8 |                    |  | $           | (134.9  | )                  |  | $      | 1,439.3 |   |  | $      | (115.7  | )  |
|                                              |

4.    Debt

Debt consists of thefollowing:

|                                              |  |               |         |                   |  |        |         |        |  |  |
|----------------------------------------------|--|---------------|---------|-------------------|--|--------|---------|--------|--|--|
|                                         |  | March31, 2005 |         | December 31, 2004 |
| (dollars inmillions)                         |  |
| Short-term                                   |  |          |    |              |  |   |    |   |
| Checksoutstanding and bankoverdrafts         |  | $             | 24.6    |              |  | $      | 16.9    |   |
| Currentmaturities of long-termdebt           |  |          | 0.8     |              |  |   | 0.8     |   |
|                                         |  | $             | 25.4    |              |  | $      | 17.7    |   |
| Long-term                                    |  |          |    |              |  |   |    |   |
| Securitizedtrade accounts receivablefacility |  | $             | 95.2    |              |  | $      | 97.3    |   |
| Term loan A,due November 2009                |  |          | 214.4   |              |  |   | 218.4   |   |
| Termloan B, due November2010                 |  |          | 1,081.0 |              |  |   | 1,081.0 |   |
| Senior notes,due November 2011               |  |          | 925.2   |              |  |   | 937.4   |   |
| Seniorsubordinated notes, due November2013   |  |          | 725.2   |              |  |   | 737.4   |   |
| Unsecured notes,due May 2008                 |  |          | 27.8    |              |  |   | 27.8    |   |
| Seniordiscount notes, due February2014       |  |          | 331.4   |              |  |   | 324.2   |   |
| Other                                        |  |          | 2.2     |              |  |   | 2.1     |   |
|                                         |  |          | 3,402.4 |              |  |   | 3,425.6 |   |
| Less:Currentportion                          |  |          | 0.8     |              |  |   | 0.8     |   |
|                                         |  | $             | 3,401.6 |              |  | $      | 3,424.8 |   |
|                                              |

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NalcoHolding Company and Subsidiaries Notes to Condensed ConsolidatedFinancial Statements (Unaudited)

March 31,2005

On January 21, 2004, the Company, throughits 100% owned subsidiaries, Nalco Finance Holdings LLC andNalco Finance Holdings Inc. (together, the Issuers), issued $694.0million aggregate principal amount at maturity of 9.0% seniordiscount notes due 2014. Prior to February 1, 2009, interest willaccrue on the senior discount notes in the form of an increase in theaccreted value of such notes. Thereafter, cash interest on the seniordiscount notes will accrue and be payable semiannually in arrears onFebruary 1 and August 1 of each year, commencing on August 1, 2009, ata rate of 9.0% per annum. 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 March 31, 2005, the seniordiscount notes had an accreted value of approximately $713.73 per$1,000 principal amount at maturity of notes, resulting in a totalaccreted value of $328.9 million. The $2.5 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 March 31, 2005, the Company'ssubsidiaries had $1,013.2 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.

8

----

NalcoHolding Company and Subsidiaries Notes to Condensed ConsolidatedFinancial Statements (Unaudited)

March 31,2005

5.    Shareholders' Equity

Shareholders' equity consists of thefollowing:

|                                                                                                                |  |               |         |                   |  |        |         |         |  |  |
|----------------------------------------------------------------------------------------------------------------|--|---------------|---------|-------------------|--|--------|---------|---------|--|--|
| (dollars in millions,except per share amounts)                                                                 |  | March 31,2005 |         | 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                                                                                       |  |          | 738.8   |              |  |   | 738.8   |    |
| Accumulateddeficit                                                                                             |  |          | (151.9  | )            |  |   | (162.9  | )  |
| Accumulatedother comprehensiveincome:                                                                          |  |          |    |              |  |   |    |    |
| Derivatives                                                                                                    |  |          | 0.3     |              |  |   | (0.2    | )  |
| Foreigncurrency translationadjustment                                                                          |  |          | 112.2   |              |  |   | 133.3   |    |
| Totalshareholders'equity                                                                                       |  | $             | 700.8   |              |  | $      | 710.4   |    |
|                                                                                                                |

6.    Pensionand Other Postretirement Benefit Plans

Thecomponents of net periodic pension cost and the cost of otherpostretirement benefits for the three months ended March 31, 2005 and2004 were asfollows:

|                                  |  |                                  |         |                                  |  |                                  |         |                                  |  |        |         |         |  |        |         |        |  |  |
|----------------------------------|--|----------------------------------|---------|----------------------------------|--|----------------------------------|---------|----------------------------------|--|--------|---------|---------|--|--------|---------|--------|--|--|
|                             |  | PensionBenefits                  |         | Other PostretirementBenefits     |
| (dollarsin millions)             |  | Three Monthsended March 31, 2005 |         | Three Monthsended March 31, 2004 |  | Three Monthsended March 31, 2005 |         | Three Monthsended March 31, 2004 |
| Servicecost                      |  | $                                | 7.1     |                             |  | $                                | 6.5     |                             |  | $      | 1.4     |    |  | $      | 1.7     |   |
| Interestcost                     |  |                             | 10.2    |                             |  |                             | 9.0     |                             |  |   | 2.1     |    |  |   | 2.6     |   |
| Expectedreturn on planassets     |  |                             | (6.5    | )                           |  |                             | (5.9    | )                           |  |   | — |    |  |   | — |   |
| Amortizationof prior servicecost |  |                             | — |                             |  |                             | — |                             |  |   | (0.9    | )  |  |   | — |   |
| Netperiodiccost                  |  | $                                | 10.8    |                             |  | $                                | 9.6     |                             |  | $      | 2.6     |    |  | $      | 4.3     |   |
|                                  |

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. The service and interest costcomponents of other postretirement benefits expense was reduced by $0.1million and $0.2 million, respectively, for the three months endedMarch 31, 2005.

9

----

NalcoHolding Company and Subsidiaries Notes to Condensed ConsolidatedFinancial Statements (Unaudited)

March 31,2005

7.    Business OptimizationExpenses

In addition to the Company's plan to exit orrestructure certain activities that was formulated in conjunction withthe Acquisition, the Company is continuing to redesign and optimize itsbusiness and work processes. Business process optimization expenses,consisting mostly of employee severance and related costs, were $0.8million for the three months ended March 31, 2005.

8.    Summary of Other Income (Expense)

The components ofother income (expense), net for the three months ended March 31, 2005and 2004, include thefollowing:

|                                                 |  |                                  |         |                                  |  |        |         |         |  |  |
|-------------------------------------------------|--|----------------------------------|---------|----------------------------------|--|--------|---------|---------|--|--|
| (dollars inmillions)                            |  | Three Months ended March31, 2005 |         | Three Months ended March 31,2004 |
| Impairment loss on business held forsale        |  | $                                | (2.4    | )                           |  | $      | — |    |
| Sponsormonitoringfees                           |  |                             | — |                             |  |   | (2.5    | )  |
| Franchisetaxes                                  |  |                             | (0.7    | )                           |  |   | (0.8    | )  |
| Equity in earningsof unconsolidatedsubsidiaries |  |                             | 0.8     |                             |  |   | 0.7     |    |
| Foreigncurrency exchangeadjustments             |  |                             | (0.7    | )                           |  |   | (0.9    | )  |
| Other                                           |  |                             | (0.4    | )                           |  |   | — |    |
|                                            |  | $                                | (3.4    | )                           |  | $      | (3.5    | )  |
|                                                 |

9.    IncomeTaxes

The Company's effective income tax rate was44.3% for the three months ended March 31, 2005. The rate variesfrom the U.S. statutory income tax rate of 35% primarily due tothe incremental tax on dividends received from non-U.S. subsidiaries,foreign taxes provided at less than the 35% U.S. statutory rate,U.S. state income taxes, nondeductible expenses, and other permanentdifferences.

These items contributed to the variation betweenthe U.S. statutory income tax rate and the Company's effectiveincome tax rate for the three months ended March 31, 2004. In addition,the effective rate was impacted by the charge for purchased IPR&D,which is not tax deductible, and a valuation allowance for the incometax benefit on the interest expense from the senior discount notesissued by Nalco Finance Holdings LLC and Nalco Finance Holdings, Inc.in January 2004.

A valuation allowance for the income taxbenefit on the senior discount note interest was recorded during thefirst quarter of 2004, pending a determination as to whether thededuction was realizable. During the fourth quarter of 2004, thevaluation allowance for this tax benefit was reversed when it wasdetermined that the deduction could be realized.

10

----

NalcoHolding Company and Subsidiaries Notes to Condensed ConsolidatedFinancial Statements (Unaudited)

March 31,2005

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

|                                                 |  |                                  |         |                                  |  |        |       |         |  |  |
|-------------------------------------------------|--|----------------------------------|---------|----------------------------------|--|--------|-------|---------|--|--|
| (dollars inmillions)                            |  | Three Months endedMarch 31, 2005 |         | Three Months ended March 31,2004 |
| U.S. statutory taxrate                          |  | $                                | 7.7     |                             |  | $      | (42.9 | )  |
| IPR&D                                       |  |                             | — |                             |  |   | 42.8  |    |
| Valuationallowance – senior discountnotes |  |                             | — |                             |  |   | 2.7   |    |
| Other                                           |  |                             | 2.0     |                             |  |   | 0.4   |    |
| Incometaxprovision                              |  | $                                | 9.7     |                             |  | $      | 3.0   |    |
|                                                 |

10.    ComprehensiveIncome (Loss)

Total comprehensive income (loss) and itscomponents, net of related tax, for the three months ended March 31,2005 and 2004, are as follows:

|                                                       |  |                                  |        |                                  |  |        |         |         |  |  |
|-------------------------------------------------------|--|----------------------------------|--------|----------------------------------|--|--------|---------|---------|--|--|
| (dollars inmillions)                                  |  | Three Months ended March31, 2005 |        | Three Months ended March 31,2004 |
| Net earnings(loss)                                    |  | $                                | 11.0   |                             |  | $      | (126.7  | )  |
| Othercomprehensive income (loss), net of incometaxes: |  |                             |   |                             |  |   |    |    |
| Derivatives                                           |  |                             | 0.5    |                             |  |   | — |    |
| Foreigncurrency translationadjustments                |  |                             | (21.1  | )                           |  |   | 9.5     |    |
| Comprehensiveloss                                     |  | $                                | (9.6   | )                           |  | $      | (117.2  | )  |
|                                                       |

11.    SegmentInformation

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

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

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

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

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

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

The Company evaluates the performance of itssegments based on "direct contribution",which is defined as net sales, less cost of products sold (excludingvariances to standard costs), selling and 

11

----

NalcoHolding Company and Subsidiaries Notes to Condensed ConsolidatedFinancial Statements (Unaudited)

March 31,2005

service expenses, marketing expenses andresearch expenses directly attributable to each segment. There are nointersegment revenues. Prior year data have been reclassified betweensegments to conform to the current year presentation.

Net salesby reportable segment were asfollows:

|                                      |  |                                |       |                                |  |        |       |        |  |  |
|--------------------------------------|--|--------------------------------|-------|--------------------------------|--|--------|-------|--------|--|--|
| (dollars inmillions)                 |  | Three MonthsendedMarch 31,2005 |       | Three Months endedMarch31,2004 |
| Industrial and InstitutionalServices |  | $                              | 343.7 |                           |  | $      | 329.3 |   |
| EnergyServices                       |  |                           | 209.9 |                           |  |   | 194.2 |   |
| PaperServices                        |  |                           | 170.3 |                           |  |   | 164.1 |   |
| Other                                |  |                           | 53.7  |                           |  |   | 25.7  |   |
| Netsales                             |  | $                              | 777.6 |                           |  | $      | 713.3 |   |
|                                      |

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

|                                     |  |                                |         |                                |  |        |         |         |  |  |
|-------------------------------------|--|--------------------------------|---------|--------------------------------|--|--------|---------|---------|--|--|
| (dollars inmillions)                |  | Three MonthsendedMarch 31,2005 |         | Three Months endedMarch31,2004 |
| Segment directcontribution:         |  |                           |    |                           |  |   |    |    |
| Industrialand InstitutionalServices |  | $                              | 75.9    |                           |  | $      | 79.9    |    |
| EnergyServices                      |  |                           | 47.5    |                           |  |   | 44.3    |    |
| PaperServices                       |  |                           | 34.7    |                           |  |   | 42.1    |    |
| Other                               |  |                           | (5.4    | )                         |  |   | (34.9   | )  |
| Totalsegment directcontribution     |  |                           | 152.7   |                           |  |   | 131.4   |    |
|                                |  |                           |    |                           |  |   |    |    |
| Expensesnot allocated tosegments:   |  |                           |    |                           |  |   |    |    |
| Administrativeexpenses              |  |                           | 46.0    |                           |  |   | 45.8    |    |
| Amortizationof intangibleassets     |  |                           | 20.6    |                           |  |   | 24.2    |    |
| In-processresearch anddevelopment   |  |                           | — |                           |  |   | 122.3   |    |
| Businessoptimizationexpenses        |  |                           | 0.8     |                           |  |   | — |    |
| Operatingearnings (loss)            |  |                           | 85.3    |                           |  |   | (60.9   | )  |
| Otherincome (expense),net           |  |                           | (3.4    | )                         |  |   | (3.5    | )  |
| Interestincome                      |  |                           | 2.1     |                           |  |   | 2.7     |    |
| Interestexpense                     |  |                           | (62.1   | )                         |  |   | (61.0   | )  |
| Earnings(loss) before incometaxes   |  | $                              | 21.9    |                           |  | $      | (122.7  | )  |
|                                     |

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 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.

12

----

NalcoHolding Company and Subsidiaries Notes to Condensed ConsolidatedFinancial Statements (Unaudited)

March 31,2005

Basic and diluted earnings (loss) pershare were calculated asfollows:

|                                                                                                 |  |                                  |        |                                  |  |        |         |         |  |  |
|-------------------------------------------------------------------------------------------------|--|----------------------------------|--------|----------------------------------|--|--------|---------|---------|--|--|
| (inmillions)                                                                                    |  | Three Months ended March31, 2005 |        | Three Months ended March 31,2004 |
| Numerator for basic and diluted earnings (loss)per share:Net earnings(loss)                     |  | $                                | 11.0   |                             |  | $      | (126.7  | )  |
| Denominatorfor basic earnings (loss) per share – weighted average commonsharesoutstanding |  |                             | 141.7  |                             |  |   | 90.6    |    |
| Effectof dilutivesecurities:                                                                    |  |                             |   |                             |  |   |    |    |
| Stock purchasewarrant                                                                           |  |                             | 4.9    |                             |  |   | — |    |
| Denominatorfor diluted earnings (loss) pershare                                                 |  |                             | 146.6  |                             |  |   | 90.6    |    |
|                                                                                                 |

Asa result of a dividend consisting of 90.6 million shares of NalcoHolding Company common stock that was issued to Nalco LLC immediatelyprior to the consummation of the initial public offering of NalcoHolding Company common stock in November 2004, net earnings (loss) pershare has been adjusted retroactively for periods subsequent to theAcquisition and prior to the fourth quarter 2004 to reflect this stockdividend.

13.    Contingencies and Litigation

Variousclaims, lawsuits and administrative proceedings are pending orthreatened against the Company and its subsidiaries, arising from theordinary course of business with respect to commercial, intellectualproperty, product liability, employee and environmental matters.Historically, these matters have not had a material impact on theconsolidated financial position of the Company. However, the Companycannot predict the outcome of any litigation or the potential forfuture litigation.

The Company has been named as a potentiallyresponsible party (PRP) by the Environmental Protection Agency or stateenforcement agencies at three waste sites where some financialcontribution is or may be required. These agencies have also identifiedmany other parties who may be responsible for clean up costs at thesewaste disposal sites. The Company's financial contribution toremediate these sites is expected to be minor. There has been nosignificant financial impact on the Company up to the present, nor isit anticipated that there will be in the future, as a result of thesematters. The Company has made and will continue to make provisions forthese costs if the Company's liability becomes probable and whencosts can be reasonably estimated.

The Company'sundiscounted reserves for known environmental clean up costs were $2.0million at March 31, 2005.

These environmental reservesrepresent management's current estimate of its proportionalclean-up costs and are based upon negotiation and agreement withenforcement agencies, its previous experience with respect to clean-upactivities, a detailed review by the Company of known conditions, andinformation about other PRPs. They are not reduced by any possiblerecoveries from insurance companies or other PRPs not specificallyidentified. Although management cannot determine whether or not amaterial effect on future operations is reasonably likely to occur,given the evolving nature of environmental regulations, it believesthat the recorded reserve levels are appropriate estimates of thepotential liability. Although settlement will require future cashoutlays, it is not expected that such outlays will materially impactthe Company's liquidity position. Expenditures for the threemonths ended March 31, 2005, relating to environmental compliance andclean up activities, were not significant.

The Company has beennamed as a defendant in lawsuits based on claimed involvement in thesupply of allegedly defective or hazardous materials. The plaintiffs inthese cases seek damages for alleged 

13

----

NalcoHolding Company and Subsidiaries Notes to Condensed ConsolidatedFinancial Statements (Unaudited)

March 31,2005

personal injury or potential injuryresulting from exposure to our products or other chemicals. Thesematters have had a de minimis impact on the Company's businesshistorically and the Company does not anticipate these matters topresent any material risk to the Company's business in thefuture. Notwithstanding, the Company cannot predict the outcome of anysuch lawsuits or the involvement the Company might have in thesematters in the future.

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

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

14.    Guarantees

Nosignificant guarantees were outstanding at March 31, 2005, other thansubsidiary-related performance guarantees.

The Company had $36.8million of letters of credit outstanding at March 31,2005.

14

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

OnNovember 4, 2003, Nalco Holdings LLC, our subsidiary and a companyformed by The Blackstone Group, Apollo Management, L.P. and GS CapitalPartners (the "Sponsors"), purchased all ofthe outstanding shares of capital stock of Ondeo Nalco Company (whichis now known as Nalco Company) and the Nalco International SASSubsidiaries, which had been operated as a single business unit, fromsubsidiaries of Suez S.A. (Suez). In the following discussion andanalysis, we refer to this acquisition as the"Acquisition," and the term"Transactions" means, collectively, theAcquisition and the related financings to fund the Acquisition.

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

"SafeHarbor" Statement Under Private Securities LitigationReform Act of 1995

This Quarterly Report for the fiscal quarterended March 31, 2005 (the "Quarterly Report")includes "forward-looking statements" withinthe meaning of Section 27A of the Securities Act of 1933 and Section21E of the Securities Exchange Act of 1934. These forward-lookingstatements include statements concerning our plans, objectives, goals,strategies, future events, future revenue or performance, capitalexpenditures, financing needs, plans or intentions relating toacquisitions, business trends and other information that is nothistorical information. When used in this Quarterly Report, the words"estimates,""expects,""anticipates,""projects,""plans," "intends,"" believes,""forecasts," or future or conditional verbs,such as "will,""should," "could"or "may," and variations of such words orsimilar expressions are intended to identify forward-lookingstatements. All forward-looking statements, including, withoutlimitation, management's examination of historical operatingtrends and data are based upon our current expectations and variousassumptions. Our expectations, beliefs and projections are expressed ingood faith and we believe there is a reasonable basis for them.However, there can be no assurance that management'sexpectations, beliefs and projections will be achieved.

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

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

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

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

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

|              |                                     |
|--------------|-------------------------------------|
| •  | technological changeand innovation; |

|              |                                               |
|--------------|-----------------------------------------------|
| •  | risks associated withour non-U.S. operations; |

|              |                                         |
|--------------|-----------------------------------------|
| •  | fluctuationsin currency exchange rates; |

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

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

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

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

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

15

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

|              |                                                                                              |
|--------------|----------------------------------------------------------------------------------------------|
| •  | 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 andengineers; |

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

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

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

All forward-looking statements attributable to us or persons actingon our behalf apply only as of the date of this Quarterly Report andare expressly qualified in their entirety by the cautionary statementsincluded in this Quarterly Report. We undertake no obligation to updateor revise forward-looking statements which may be made to reflectevents or circumstances that arise after the date made or to reflectthe occurrence of unanticipated events.

Executive LevelOverview

In the first quarter of 2005, Nalco Holding Companysales increased 9.0% to $777.6 million from $713.3 millionreported for the year-ago period. Net earnings turned to a positive$11.0 million from the year-ago loss of $126.7 million. AdjustedEBITDA, a non-GAAP measure used to determine compliance with theCompany's debt covenants, increased by 6.7% to $144.3million from $135.3 million.

Our first quarter sales andearnings results represent progress toward our 2005 goal of 5%sales growth on an organic basis (after adjusting for the impacts ofchanges in foreign currency translation rates and acquisitions anddivestitures) and double-digit Adjusted EBITDA growth.

Our salesgrowth consisted of 4.7% organic growth, including 2.5%from pricing; a 2.3% favorable impact from foreign currencytranslation rate changes; and a 2.0% benefit from formation ofthe Katayama Nalco joint venture in Japan. This growth was withoutabout $10 million in sales that was recognized in the fourth quarter2004, resulting from customers in Europe purchasing early to avoid anypotential complications from our conversion to a SAP system in thatregion on January 1, 2005. We also believe customers pre-purchased inlight of shortages and price increases. Without this, we would not havebeen at 8.5% organic growth in the fourth quarter of 2004. Realgrowth – organic growth less price increases that pass on rawmaterial cost increases – was 2.2% in the first quarter of2005. Looking across the last three quarters, we remain confident ofhitting our target of 5% growth above simply passing on highercosts.

Energy Services led the Company's sales growth,increasing 8.1% versus the first quarter of 2004, or 7.6%on an organic basis. Industrial and Institutional Services sales grew4.4%, or 2.7% organically and Paper Services increased3.8%, or 2.4% organically. Other segment sales more thandoubled, growing 22.9% organically on continuing strength inIndia and from a small alternate channels business group.

Geographically, we are improving sales most rapidly in the Pacific,Latin America, Eastern Europe, Africa and the Middle East.

Earnings per share increased to $0.08, versus the year-earlier lossof $1.40 per share. For the first quarter of 2005, reductions to netearnings from business process optimization, reimbursed profit sharingexpense and other unusual charges were $4.1 million pre-tax, or $0.02per share on an after-tax basis. The loss for the first quarter of 2004was driven by a non-cash, one-time charge of $122.3 million forpurchased in-process research and development expense.

Lookingahead, two issues are particularly important for the Company tocontinue to address – pricing and operating working capital.

16

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

Pricing lagged behind rapid growth in rawmaterial costs, pressuring the gross margin down to 47.0% fromthe year-earlier 47.5%. However, the first quarter of 2004included a $14.1 million charge to cost of product sold, resulting fromthe sale of inventory that had been revalued in purchase accounting.Without this expense, the gross margin would have been approximately200 basis points higher in the first quarter of 2004. In the firstquarter of this year, we realized $18 million in added price increasesbut saw raw material costs increase $34 million.

While mixissues played a small role in our gross margin decline, the primarycause of this year-on-year drop is this gap between cost and priceincreases. On the positive side, we are seeing customer acceptance ofprice increases in most businesses. Looking forward, we expect totalraw material cost increases for the year to total about $125 million.To date, we have in place customer-accepted price increases that willrecoup more than $85 million. We are moving ahead with furtherincreases in the second and third quarters to close the remaining gap,including the May 4, 2005 announcement of further increases for PaperServices customers. As we move pricing, it is our intent to recapturethe first quarter gap, as well.

In all cases, we have tried toanticipate what we will need, given what we currently know about costincreases. However, the rate of raw material increases continues to gofaster than our plans. Because of this, we would not be surprised torequire additional price hikes beyond what we are targeting in thesecond quarter of 2005.

We generated a sizable gain in cashearnings as compared to last year, but saw it consumed by a build inworking capital, which presents an opportunity for the balance of theyear. Year-over-year, our inventories have risen by more than $70million, most of it since September, as normal increases to supportgrowth were exacerbated by cost increases, steps taken to navigatethrough select raw material shortages, and issues associated with theaforementioned SAP implementation. While we had made significant gainsin our inventory-days levels when management attention was focused onthe issue in 2004, the shortage environment we entered in the fourthquarter 2004 was not the time to continue to pressure inventories down.Receivables have also increased nearly $65 million since September,driven by growth, but also affected by the SAP implementation.

These issues consumed the management resources that we mightotherwise have focused on improving inventory and receivables levels.We believe raw material shortages are now largely behind us, asadditional supply contracts were finalized in April. With this and SAPtransition issues behind us, we can refocus on not only recovering ourinventory-days and days-sales-outstanding back to September 2004levels, but on stepping beyond those levels with the benefit of acommon information technologies platform across 80% of ourbusiness. Payables have not been affected, and we have continued tobenefit from the work process redesign efforts we have put into thisarea. The absolute reduction to working capital we are set to achieve,even as revenues grow, is a major contributor to our expected Free CashFlow – which we define as cash from operations less minorityinterests and net capital expenditures – for this year. Asbefore, our Free Cash Flow is targeted for debt reduction.

Weremain confident that we will deliver on our $75 million cost savingscommitment for 2005. The $75 million in savings is designed to offsethigher compensation and benefit costs, normal inflationary costs,Sarbanes-Oxley compliance costs and the investments we are making inresearch and development and selling and service – while stilldelivering a bottom-line benefit. This also allows the full benefits ofour growth to flow through to our EBIT.

The variable rateportion of our debt amounted to $1.4 billion at March 31, 2005. Overthe first quarter, the average rate on term loan borrowings was4.6% and the average rate on all our debt was 6.8%. Weexpect cash interest payments for the year to be slightly above $210million. Near the end of the quarter, the Company executed a waiver andamendment of its trade-receivables securitization facility. The needfor a waiver stemmed from an increase in the level of past duereceivables, in particular those that have aged more than 60 days. Webelieve the rise in past due receivables is 

17

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

attributable to SAP implementation issues andis not due to a deterioration in the credit quality of our receivablesportfolio. As we continue to identify and resolve the underlyingsystems implementation issues, we expect to see improvement in past duereceivables.

Beginning with the first quarter 2005, technicalservice work that had been previously reported in selling,administrative and research expenses was reported in cost of productsold. This change more accurately portrays the service nature ofcomponents of our offering. This change is expected to initiallyincrease cost of product sold and reduce selling, administrative andresearch expenses in an amount affecting gross margin by about 75 basispoints. The change is neutral at the operating earnings level, andreclassifications have been made to prior year data to conform to thispresentation. You will see a further gradual transition in thisdirection as we continue to grow, as our strategy includes dedicatingour sales engineers to high-value-added activities and letting aservices team perform the ongoing technical service.

Lookingahead, the Company estimates its effective tax rate in 2005 to be44.2% and expects to make cash tax payments in an amountapproximating $100 million. These estimates do not give effect toliabilities on any dividend repatriations we might implement under theterms of the American Jobs Creation Act. We have made no decision onthis as yet, as we compare the benefits available to us under thislegislation to those under other strategies for global cash and debtmanagement.

Depreciation is expected to be between $135 and $140million this year, with the increase over last year's $114.3million largely due to the quick depreciation cycle for our SAPplatform. Depreciation on SAP is included in administrative expense andmasks some of the success we are having in lowering administrativecosts through work process redesign. Depreciation in future yearsshould decline rapidly as we continue to project that capitalexpenditures will remain at or below $100 million a year.

Webelieve we can hit our sales target of 5% growth over and abovethe impact of passing on raw material costs, while also beginning togain some benefits from alternate channels development. A small amountof our first quarter sales growth – less than 0.25%– can be attributed to alternate channels development. We aretargeting growth from alternate channels to be at a 2% annualrun rate by the end of 2006, which would bring our organic sales growthtarget to 7% as we enter 2007.

Results ofOperations

Net sales for the three months ended March 31, 2005and March 31, 2004 may be compared asfollows:

|                                       |  |                   |       |               |  |                                               |       |                     |  |                           |       |         |  |        |     |         |  |        |      |          |  |        |      |         |  |  |
|---------------------------------------|--|-------------------|-------|---------------|--|-----------------------------------------------|-------|---------------------|--|---------------------------|-------|---------|--|--------|-----|---------|--|--------|------|----------|--|--------|------|---------|--|--|
|                                  |  | ThreeMonths Ended |       |          |  | Attributable toChangesin the FollowingFactors |
| (dollars inmillions)                  |  | March 31, 2005    |       | March 31,2004 |  | % Change                                      |       | CurrencyTranslation |  | Acquisitions/Divestitures |       | Organic |
| Industrial& InstitutionalServices |  | $                 | 343.7 |          |  | $                                             | 329.3 |                |  |                      | 4.4   | %  |  |   | 2.0 | %  |  |   | (0.3 | )%  |  |   | 2.7  | %  |
| EnergyServices                        |  |              | 209.9 |          |  |                                          | 194.2 |                |  |                      | 8.1   | %  |  |   | 2.2 | %  |  |   | (1.7 | )%  |  |   | 7.6  | %  |
| PaperServices                         |  |              | 170.3 |          |  |                                          | 164.1 |                |  |                      | 3.8   | %  |  |   | 2.7 | %  |  |   | (1.3 | )%  |  |   | 2.4  | %  |
| Other                                 |  |              | 53.7  |          |  |                                          | 25.7  |                |  |                      | 108.9 | %  |  |   | 4.3 | %  |  |   | 81.7 | %   |  |   | 22.9 | %  |
| Netsales                              |  | $                 | 777.6 |          |  | $                                             | 713.3 |                |  |                      | 9.0   | %  |  |   | 2.3 | %  |  |   | 2.0  | %   |  |   | 4.7  | %  |
|                                       |

Netsales for the three months ended March 31, 2005 were $777.6million, a 9.0% increase over the $713.3 million reported forthe three months ended March 31, 2004. On an organic basis, whichexcludes the impacts of changes in foreign currency translation ratesand acquisitions and divestitures, net sales were up 4.7%. Thisimprovement was driven by favorable sales growth broadly spread acrossour customer base. The Energy Services division posted significantorganic growth in sales of 7.6% over the same period last year.The Industrial and Institutional Services division reported organic

18

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

growth of 2.7%, as solid gains wereposted by our global mining business and our water treatment businessin the Latin American and Pacific regions. These gains were partlyoffset by lower sales reported in Europe, which was the result ofhigher sales during the three months ended December 31, 2004, ascustomers purchased in advance to avoid risking any potentialcomplications from our information systems conversion in that region onJanuary 1, 2005. Organically, Paper Services division sales were up2.4% compared to a year ago, reflecting continued strong growthin the Latin America and Pacific regions and a more modest gain inNorth America. Lower Paper Services sales in Europe, due to advancepurchases made by customers during the three months ended December 31,2004, partly offset these improvements. Most of the organic improvementin "other" sales was attributable to oursubsidiary company in India and alternate channel sales. The increasein "other" sales attributable toacquisitions/divestitures includes the incremental impact of ourJapanese joint venture, Katayama Nalco, which was formed with KatayamaChemical Inc. in June 2004 to accelerate our development in thisimportant industrialized market.

Gross profit**,**defined as the difference between net sales and cost of productsold, of $365.2 million for the three months ended March 31, 2005increased by $26.3 million, or 7.8%, over the $338.9 millionreported for the quarter ended March 31, 2004. On an organic basis andexcluding the impact of a $14.1 million charge to cost of product soldduring the three months ended March 31, 2004 resulting from the sale ofinventory that had been revalued at selling price less costs to sell inpurchase accounting at the date of the Acquisition, gross profitdecreased by $2.2 million. Increased sales volumes favorably impactedgross profit by approximately $15.5 million, but this was more thanoffset primarily by the impact of higher raw material costs. Grossprofit margin for the three months ended March 31, 2005 was47.0% compared to 47.5% for the year-ago period. Grossprofit margin for the three months ended March 31, 2004 was reducedapproximately 200 basis points as a result of the aforementioned $14.1million charge resulting from purchase accounting. The decrease ingross profit margin from a year ago was mostly the result of higher rawmaterial costs.

Selling, administrative, and researchexpenses for the three months ended March 31, 2005 of $258.5million increased by $5.2 million, or 2.1%, from $253.3 millionfor the three months ended March 31, 2004. On an organic basis,selling, administrative, and research expenses decreased by $5.4million, or 2.1%, reflecting further initiatives to reduce andcontrol spending.

Business optimization expenses,representing mostly employee severance and related costs associatedwith the continuing redesign and optimization of business and workprocesses, were $0.8 million for the three months ended March 31,2005.

Amortization of intangible assets was $20.6million and $24.2 million for the three months ended March 31, 2005 and2004, respectively. The decrease was attributable to lower amortizationof customer relationships, which are amortized using an acceleratedmethod.

In-process research and development was aone-time charge of $122.3 million recorded during the three monthsended March 31, 2004, as a result of purchase accounting entriesrelated to the Acquisition. 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.

Other income (expense), net wasa net expense of $3.4 million and $3.5 million for the three monthsended March 31, 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 $2.5million for the three months ended March 31, 2004. The resultingfavorable variance was offset by a $2.4 million impairment chargerecorded during the three months ended March 31, 2005 related to abusiness held for sale.

Net interest expense, definedas the combination of interest income and interest expense, of $60.0million for the three months ended March 31, 2005 increased by $1.7million from the $58.3 million 

19

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

reported for the three months ended March 31,2004. The impact of higher interest rates on variable rate borrowingsmore than offset the impact of a lower average debt level compared tothe year-ago period.

The effective tax rate for thethree months ended March 31, 2005 was 44.3%. The rate variesfrom the U.S. statutory income tax rate of 35% primarily due tothe incremental tax on dividends received from non-U.S. subsidiaries,foreign taxes provided at less than the 35% U.S. statutory rate,U.S. state income taxes, nondeductible expenses, and other permanentdifferences.

These items contributed to the variation betweenthe U.S. statutory income tax rate and the Company's effectiveincome tax rate for the three months ended March 31, 2004. In addition,the effective rate was impacted by the charge for purchased IPR&D,which is not tax deductible, and a valuation allowance for the incometax benefit on the interest expense from the senior discount notesissued by Nalco Finance Holdings LLC and Nalco Finance Holdings, Inc.in January 2004.

A valuation allowance for the income taxbenefit on the senior discount note interest was recorded during thefirst quarter of 2004, pending a determination as to whether thededuction was realizable. During the fourth quarter of 2004, thevaluation allowance for this tax benefit was reversed when it wasdetermined that the deduction could be realized.

Minorityinterest expense was $0.2 million higher than the $1.0 million forthe three months ended March 31, 2004, reflecting improved results formost of the Company's non-wholly owned subsidiaries.

Liquidity and Capital Resources

Operatingactivities.    Historically, the Company's main source ofliquidity has been its solid cash flow generated by operatingactivities. For the three months ended March 31, 2005, cash provided byoperating activities was $15.7 million, a $68.8 million decrease fromthe same period last year. This decrease primarily resulted from higherworking capital requirements attributable to increased inventory levelsand the payment of year-end incentive plan and commission accruals.

Investing activities.    Cash used for investingactivities was $15.9 million for the three months ended March 31, 2005,which was mostly attributable to net property additions of $12.3million.

Cash provided by investing activities was $7.0 millionfor the three months ended March 31, 2004. This was mostly the resultof a $25.6 million purchase price adjustment received from Suez relatedto the Acquisition, partly offset by net property additions of $16.4million.

Financing activities.    Net cash providedby financing activities totaled $1.9 million during the three monthsended March 31, 2005, which was mostly attributable to a net increasein borrowings.

Net cash used for financing activities totaled$60.5 million during the three months ended March 31, 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 shareholderand to pay fees and expenses related to that offering.

Since theTransactions, we have been highly leveraged. Our liquidity requirementsare significant, primarily due to debt service requirements as well asresearch and development and capital investment. Our primary source ofliquidity will continue to be cash flow generated from operations, butwe also have availability under a $250 million revolving creditfacility and a $100 million receivables facility, in each case subjectto certain conditions. We believe that our financial position andfinancing structure will provide flexibility in worldwide financingactivities and permit us to respond to changing conditions in creditmarkets.

Senior credit facilities.     On November 4,2003, we entered into senior credit facilities which provided for arevolving credit facility, a $300 million six-year term loan A facility(which includes an €88.0 million tranche) which matures inNovember 2009 and a $1,300 million seven-year term loan B facility

20

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

which matures in November 2010. Borrowingsunder the senior credit facilities bear interest at a floating baserate plus an applicable margin. The applicable margin for borrowingsunder the revolving credit facility and the term loan A facility is1.50% with respect to base rate borrowings and 2.50% withrespect to LIBOR or Eurocurrency borrowings and may be reduced subjectto our attaining certain leverage ratios. The applicable margin forborrowings under the term loan B facility is 1.50% with respectto base rate borrowings and 2.00% with respect to LIBOR orEurocurrency borrowings. The applicable margin for borrowings under theterm loan B facility is not subject to adjustment.

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

The term loan A facility will amortizeeach year in quarterly amounts at a rate of 5% per annum in yearone, 10% per annum in year two, 15% per annum in yearthree, 20% per annum in year four and 25% per annum ineach of years five and six.

The term loan B facility willamortize each year in an amount equal to 1% per annum in equalquarterly installments for the first six years and nine months, withthe remaining amount payable on November 4, 2010.

At March 31,2005, the outstanding balance of the term loan A and term loan Bfacilities was $214.4 million and $1,081.0 million,respectively.

Principal amounts outstanding under the revolvingcredit facility will be due and payable in full at maturity on November4, 2009. There were no outstanding borrowings under the revolvingcredit facility as of March 31, 2005.

The senior creditfacilities contain a number of covenants that, among other things,restrict, subject to certain exceptions, our ability and the ability ofour subsidiaries (including Nalco Company) to sell assets, incuradditional indebtedness or issue preferred stock, repay otherindebtedness, pay dividends and distributions or repurchase certaincapital stock, create liens on assets, make investments, loans oradvances, 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 March 31, 2005.

Senior notes, seniorsubordinated notes and senior discount notes.    As part of theTransactions in November 2003, Nalco Company issued $665 millionaggregate principal amount of 73⁄4% U.S. dollar-denominatedsenior notes due 2011, €200 million aggregate principalamount of 73⁄4% euro-denominated senior notes due 2011,$465 million aggregate principal amount of8% U.S. dollar-denominated seniorsubordinated notes due 2013 and €200 million aggregateprincipal amount of 9% euro-denominated senior subordinatednotes due 2013.

On January 21, 2004, our subsidiaries, NalcoFinance Holdings LLC and Nalco Finance Holdings Inc., issued $694.0million aggregate principal amount at maturity of 9.0% seniordiscount notes due 2014. Prior to February 1, 2009, interest willaccrue on the notes in the form of an increase in the accreted value ofsuch notes. The accreted value of each note will increase from the dateof issuance until February 1, 2009 at a rate of 9.0% per annum,reflecting the accrual of non-cash interest, such that the accretedvalue will equal the principal amount at maturity on February 1, 2009.Cash interest payments on the notes will be due and payable beginningin 2009. Our primary source of liquidity for such payments will be cashflow generated from the operations of subsidiaries, including NalcoHoldings LLC and Nalco Company. However, the terms of NalcoCompany's senior credit agreement 

21

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

fully prohibit Nalco Holdings LLC and ourother subsidiaries from paying dividends or otherwise transferringassets to the issuers. In addition, the terms of certain of theindentures governing the existing senior notes and senior subordinatednotes of Nalco Company significantly restrict Nalco Company and ourother subsidiaries from paying dividends, making distributions andotherwise transferring assets to the issuers of the senior discountnotes. In addition, as a condition to making such payments to theissuers based on such formula, Nalco Holdings LLC must have an AdjustedEBITDA to interest expense ratio of at least 2.0 to 1 after givingeffect to any such payments. Notwithstanding such restrictions, suchindentures permit an aggregate of $50.0 million of such payments to bemade whether or not there is availability under the formula or theconditions to its use are met.

In December 2004, Nalco FinanceHoldings LLC and Nalco Finance Holdings Inc. redeemed a portion of thesenior discount notes with an accreted value of $162.3 million usingproceeds from the November 2004 initial public offering of common stockof Nalco Holding Company. After the partial redemption, the aggregateprincipal amount at maturity of the notes declined to $460.8 millionfrom $694.0 million.

The indentures governing the senior notes,the senior subordinated notes and senior discount notes limit ourability and the ability of our restricted subsidiaries to:

|              |                                |
|--------------|--------------------------------|
| •  | 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 certainassets or 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.

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

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

22

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

Adjusted EBITDA is calculated asfollows:

|                                  |  |                                 |       |                                 |  |        |         |         |  |  |
|----------------------------------|--|---------------------------------|-------|---------------------------------|--|--------|---------|---------|--|--|
| (dollarsin millions)             |  | Three MonthsendedMarch 31, 2005 |       | Three Monthsended March 31,2004 |
| Net earnings(loss)               |  | $                               | 11.0  |                            |  | $      | (126.7  | )  |
| Interest,net                     |  |                            | 60.0  |                            |  |   | 58.3    |    |
| Income taxprovision              |  |                            | 9.7   |                            |  |   | 3.0     |    |
| Depreciation                     |  |                            | 33.2  |                            |  |   | 28.7    |    |
| Amortization                     |  |                            | 20.6  |                            |  |   | 24.2    |    |
| EBITDA                           |  | $                               | 134.5 |                            |  | $      | (12.5   | )  |
| Non-cashcharges (1)              |  |                            | 10.1  |                            |  |   | 145.4   |    |
| Businessoptimization expenses(2) |  |                            | 0.8   |                            |  |   | — |    |
| Unusual items(3)                 |  |                            | 0.7   |                            |  |   | 1.1     |    |
| Other adjustments(4)             |  |                            | (1.8  | )                          |  |   | 1.3     |    |
| AdjustedEBITDA                   |  | $                               | 144.3 |                            |  | $      | 135.3   |    |
|                                  |

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

|                                                |  |                                 |          |                                 |  |        |         |        |  |  |
|------------------------------------------------|--|---------------------------------|----------|---------------------------------|--|--------|---------|--------|--|--|
| (dollarsin millions)                           |  | Three MonthsendedMarch 31, 2005 |          | Three Monthsended March 31,2004 |
| In-process research anddevelopment             |  | $                               | —- |                            |  | $      | 122.3   |   |
| Inventorystep-up                               |  |                            | —  |                            |  |   | 14.1    |   |
| Assetwrite-offs                                |  |                            | 2.4      |                            |  |   | — |   |
| Profitsharing expense and 401(k) funded bySuez |  |                            | 5.6      |                            |  |   | 6.1     |   |
| Other                                          |  |                            | 2.1      |                            |  |   | 2.9     |   |
| Non-cashcharges                                |  | $                               | 10.1     |                            |  | $      | 145.4   |   |
|                                                |

In-processResearch and Development

In-process researchand development was a one time charge of $122.3 million recorded duringthe three months ended March 31, 2004, as a result of purchaseaccounting entries related to the Acquisition.

InventoryStep-Up

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

Profit Sharing and 401(k) Expense Funded by Suez

In conjunction with the Acquisition, we entered intoan agreement 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.

23

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

|           |                                                                                                                                                                |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  | Businessoptimization expenses for 2005 include costs associated with theredesign and optimization of work processes. See note 7 to Item 1 formore information. |

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

|                                      |  |                                 |     |                                 |  |        |         |        |  |  |
|--------------------------------------|--|---------------------------------|-----|---------------------------------|--|--------|---------|--------|--|--|
| (dollarsin millions)                 |  | Three MonthsendedMarch 31, 2005 |     | Three Monthsended March 31,2004 |
| Loss (gain) on sales, net ofexpenses |  | $                               | 0.5 |                            |  | $      | — |   |
| Otherunusual items(a)                |  |                            | 0.2 |                            |  |   | 1.1     |   |
|                                 |  | $                               | 0.7 |                            |  | $      | 1.1     |   |
|                                      |

|  |     |                                                                           |
|--|-----|---------------------------------------------------------------------------|
|  | (a) | Otherunusual items include certain 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 March 31, 2005 are asfollows:

|                                                                                                            |  |                                |        |        |  |        |        |        |  |  |
|------------------------------------------------------------------------------------------------------------|--|--------------------------------|--------|--------|--|--------|--------|--------|--|--|
|                                                                                                       |  | CovenantLevel at March 31,2005 |        | Ratios |
| **Senior creditfacility**(1)                                                                               |  |                           |   |   |  |   |   |   |
| MinimumAdjusted EBITDA to cash interestratio                                                               |  |                           | 1.70x  |   |  |   | 3.02x  |   |
| Maximum net debtto Adjusted EBITDAratio                                                                    |  |                           | 6.50x  |   |  |   | 5.14x  |   |
| **Indentures**(2)                                                                                          |  |                           |   |   |  |   |   |   |
| Minimum Adjusted EBITDA tofixed charge ratio required to incur additional debt pursuant to ratioprovisions |  |                           | 2.00x  |   |  |   | 2.54x  |   |
|                                                                                                            |

|  |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (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 $1,295.4million that was outstanding under our term loan facilities as of March31, 2005) and investments in similar business and other investmentsequal to 6% of Nalco Holding Company consolidatedassets. |

Local lines of credit.    Certain of ournon-U.S. subsidiaries have lines of credit to support localrequirements. As of March 31, 2005, the aggregate outstanding balanceunder these local lines of credit was approximately $25.0 million.Certain of these lines of credit are equally and ratably secured withobligations under our senior 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 Chase Bank,

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

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 March 31, 2005, approximately$167.2 million of our accounts receivable balance was consideredeligible for financing under the program, of which approximately $96.0million would have been available for funding. As of March 31, 2005, wehad $95.2 million of outstanding borrowings under this facility.

This facility is treated as a general financing agreement resultingin the funding and related receivables being shown as liabilities andassets, respectively, on our consolidated balance sheet and the costsassociated with the receivables facility being recorded as interestexpense.

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

There have been no material changes to theCompany's exposures to market risk since December 31, 2004.

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

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

The Company's chief executive officer andchief financial officer, after evaluating the effectiveness of theCompany's "disclosure controls andprocedures" (as defined in the Securities Exchange Act of1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period, haveconcluded that the Company's disclosure controls and procedureswere adequate and designed to ensure that material information relatingto the Company and its consolidated subsidiaries would be made known tothem by others within those entities as appropriate to allow timelydecisions regarding requireddisclosures.

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

There were no changes in theCompany's internal controls over financial reporting thatoccurred during the first quarter of 2005 that have materiallyaffected, or are reasonably likely to materially affect, theCompany's internal controls over financialreporting.

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PART II. OTHER INFORMATION

|              |          |
|--------------|----------|
| Item6.  | Exhibits |

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

|                    |                                                                                                    |
|--------------------|----------------------------------------------------------------------------------------------------|
| Exhibit 31.1  | Certification of Chief Executive Officer, Pursuantto Section 302 of the Sarbanes-Oxley Act of 2002 |

|                    |                                                                                                    |
|--------------------|----------------------------------------------------------------------------------------------------|
| Exhibit 31.2  | Certification of Chief Financial Officer, Pursuantto Section 302 of the Sarbanes-Oxley Act of 2002 |

|                    |                                                                                                                       |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|
| Exhibit 32.1  | Certifications Pursuant to 18 U.S.C. Section 1350,as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of2002 |

|                     |                                                                                       |
|---------------------|---------------------------------------------------------------------------------------|
| Exhibit 99.1   | Segment Information —2004 Results Reclassified to Conform with 2005Presentation |

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SIGNATURE

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

|  | NALCO HOLDING COMPANY |
|--|-----------------------|

|  | /s/ BRADLEY J. BELL Name:    Bradley J. BellTitle:       Executive Vice President and                Chief Financial Officer |
|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Dated:    May 12, 2005

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