UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION Washington, DC20549

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FORM10-Q

(Mark One)

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

For the quarterly period ended March 31, 2005

or

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

For the transition period from     to     .

Commission File No.333-119231

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NALCO FINANCEHOLDINGS LLC

(Exact name of registrant asspecified in its charter)

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

1601 West Diehl Road Naperville, IL60563-1198 (630) 305-1000

(Address,Including Zip Code, and Telephone Number, Including Area Code, ofRegistrant's Principal Executive Offices)

Indicateby check mark whether the registrant: (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities ExchangeAct of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days.    Yes    No 

Indicate by check mark whetherthe registrant is an accelerated filer (as defined in Rule 12b-2 of theExchange Act.)    Yes     No

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QUARTERLY REPORT ONFORM 10-Q NALCO FINANCE HOLDINGS LLC Quarter Ended March 31,2005

TABLE OF CONTENTS

PartI.    Financial Information

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|         |  |  |  |  |  |  |  |  |  |  |
| Item1.  |  | Financial Statements(Unaudited) |  |   |   |   |
|    |  | Condensed ConsolidatedBalance Sheets –     March 31, 2005 and December 31,2004 |  |   | 2 |   |
|    |  | Condensed Consolidated Statements of Operations–     Three months ended March 31, 2005 and2004 |  |   | 3 |   |
|    |  | Condensed ConsolidatedStatements of Cash Flows –     Three months ended March31, 2005 and 2004 |  |   | 4 |   |
|    |  | Notes toCondensed Consolidated Financial Statements –     March31, 2005 |  |   | 5 |   |
| Item2.  |  | Management's Discussion andAnalysis of Financial Condition and     Results ofOperations |  |   | 13 |   |
| Item3.  |  | Quantitative and Qualitative Disclosures About MarketRisk |  |   | 22 |   |
| Item 4. |  | Controls andProcedures |  |   | 22 |   |
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Part II.    OtherInformation

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| Item6. |  | Exhibits |  |   | 22 |   |
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|---------------|--|----|--|--|--|--|
| **Signature** |  | 23 |
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1

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PARTI.    FINANCIAL INFORMATION

Item 1.    FinancialStatements (Unaudited)

Nalco Finance Holdings LLC andSubsidiaries Condensed Consolidated Balance Sheets(dollarsinmillions)

|                                                                        |  |                         |         |                 |  |        |         |        |  |  |
|------------------------------------------------------------------------|--|-------------------------|---------|-----------------|--|--------|---------|--------|--|--|
|                                                                   |  | (Unaudited)March31,2005 |         | December31,2004 |
| **Assets**                                                             |  |
| Currentassets:                                                         |  |
| Cash and cashequivalents                                               |  | $                       | 34.4    |            |  | $      | 33.2    |   |
| 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                                                     |  |                    | 1,049.9 |            |  |   | 1,031.0 |   |
|                                                                   |  |                    |    |            |  |   |    |   |
| 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                                                            |  |                    | 359.1   |            |  |   | 364.3   |   |
| Totalassets                                                            |  | $                       | 5,858.9 |            |  | $      | 5,934.5 |   |
|                                                                   |  |                    |    |            |  |   |    |   |
| **Liabilitiesand unitholder'sequity**                                  |  |                    |    |            |  |   |    |   |
| 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                                                    |  |                    | 494.2   |            |  |   | 501.5   |   |
| Accruedpensionbenefits                                                 |  |                    | 418.9   |            |  |   | 411.7   |   |
| Otherliabilities                                                       |  |                    | 296.4   |            |  |   | 296.8   |   |
|                                                                   |  |                    |    |            |  |   |    |   |
| Minorityinterest                                                       |  |                    | 11.9    |            |  |   | 14.1    |   |
| Unitholder'sequity                                                     |  |                    | 683.7   |            |  |   | 694.3   |   |
| Totalliabilities and unitholder'sequity                                |  | $                       | 5,858.9 |            |  | $      | 5,934.5 |   |
|                                                                        |

Seeaccompanying notes to condensed consolidated financialstatements.

2

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Nalco Finance Holdings LLC andSubsidiariesCondensed Consolidated Statements ofOperations(Unaudited)(dollars inmillions)

|                                              |  |                                  |         |                                 |  |        |         |         |  |  |
|----------------------------------------------|--|----------------------------------|---------|---------------------------------|--|--------|---------|---------|--|--|
|                                         |  | ThreeMonths ended March 31, 2005 |         | Three Monthsended March 31,2004 |
|                                         |  |                             |    |                            |  |   |    |    |
| Netsales                                     |  | $                                | 777.6   |                            |  | $      | 713.3   |    |
| Operatingcosts and expenses:                 |  |                             |    |                            |  |   |    |    |
| Cost ofproductsold                           |  |                             | 412.4   |                            |  |   | 374.4   |    |
| Selling,administrative, and researchexpenses |  |                             | 258.5   |                            |  |   | 253.3   |    |
| Amortizationof intangibleassets              |  |                             | 20.6    |                            |  |   | 24.2    |    |
| In-processresearch anddevelopment            |  |                             | — |                            |  |   | 122.3   |    |
| Businessoptimizationexpenses                 |  |                             | 0.8     |                            |  |   | — |    |
| Totaloperating costs andexpenses             |  |                             | 692.3   |                            |  |   | 774.2   |    |
|                                         |  |                             |    |                            |  |   |    |    |
| Operatingearnings(loss)                      |  |                             | 85.3    |                            |  |   | (60.9   | )  |
|                                         |  |                             |    |                            |  |   |    |    |
| Otherincome (expense),net                    |  |                             | (2.2    | )                          |  |   | (3.5    | )  |
| Interestincome                               |  |                             | 2.1     |                            |  |   | 2.7     |    |
| Interestexpense                              |  |                             | (62.1   | )                          |  |   | (61.0   | )  |
|                                         |  |                             |    |                            |  |   |    |    |
| Earnings(loss) before incometaxes            |  |                             | 23.1    |                            |  |   | (122.7  | )  |
|                                         |  |                             |    |                            |  |   |    |    |
| Incometaxprovision                           |  |                             | 11.9    |                            |  |   | 3.0     |    |
|                                         |  |                             |    |                            |  |   |    |    |
| Minorityinterests                            |  |                             | (1.2    | )                          |  |   | (1.0    | )  |
| Netearnings(loss)                            |  | $                                | 10.0    |                            |  | $      | (126.7  | )  |
|                                              |

Seeaccompanying notes to condensed consolidated financialstatements.

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

|                                                                                          |  |                                |         |                               |  |        |        |         |  |  |
|------------------------------------------------------------------------------------------|--|--------------------------------|---------|-------------------------------|--|--------|--------|---------|--|--|
|                                                                                     |  | ThreeMonthsendedMarch 31, 2005 |         | ThreeMonthsendedMarch 31,2004 |
| **Operatingactivities**                                                                  |  |                           |    |                          |  |   |   |    |
| Net earnings(loss)                                                                       |  | $                              | 10.0    |                          |  | $      | (126.7 | )  |
| Adjustmentsto reconcile 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                                                                                |  |                           | 13.0    |                          |  |   | 3.2    |    |
| Changes inoperating assets andliabilities                                                |  |                           | (69.8   | )                        |  |   | 22.3   |    |
| Netcash provided by operatingactivities                                                  |  |                           | 16.9    |                          |  |   | 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                                                                |  |                           | (1.6    | )                        |  |   | (2.2   | )  |
| Netcash provided by (used for) investingactivities                                       |  |                           | (17.1   | )                        |  |   | 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                                           |  |                           | 33.2    |                          |  |   | 100.0  |    |
| Cashand cash equivalents at end ofperiod                                                 |  | $                              | 34.4    |                          |  | $      | 130.6  |    |
|                                                                                          |

Seeaccompanying notes to condensed consolidated financialstatements.

4

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

March 31,2005

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| 1.  | Descriptionof Business and Change in Ownership |

Description ofBusiness

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

Change in Ownership

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

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

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

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

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

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|          |                                                                   |
|----------|-------------------------------------------------------------------|
| 1.  | Descriptionof Business and Change in Ownership   (continued) |

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

Aspart of the allocation of the purchase price for the Acquisition, theCompany recorded a one-time charge for purchased in-process researchand development (IPR&D) expenses of $122.3 million during the 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 Finance Holdings LLC and subsidiaries for the fiscalyear ended December 31, 2004.

The accompanying unauditedconsolidated financial statements have been prepared in accordance withgenerally accepted accounting principles for interim financialinformation. Accordingly, they do not include all of the informationand footnotes required by accounting principles generally accepted inthe United States for complete financial statements. Managementbelieves these financial statements include all normal recurringadjustments considered necessary for a fair presentation of thefinancial position and results of operations of the Company. Operatingresults for the three months ended March 31, 2005 are not necessarilyindicative of results that may be expected for the year ended December31, 2005.

Certain reclassifications have been made to the prioryear data to conform to the current year presentation which had noeffect on net earnings (loss) reported for any period.

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3.    Goodwilland Other Intangible Assets

The changes in goodwill for theperiod were asfollows:

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

Thefollowing table reflects intangible assets and related amortizationinformation:

|                                              |  |                     |         |                         |  |             |         |                         |  |        |         |        |  |        |         |         |  |  |
|----------------------------------------------|--|---------------------|---------|-------------------------|--|-------------|---------|-------------------------|--|--------|---------|--------|--|--------|---------|---------|--|--|
|                                         |  | Asof March 31, 2005 |         | As of December 31,2004  |
| (dollars inmillions)                         |  | GrossAmount         |         | AccumulatedAmortization |  | GrossAmount |         | AccumulatedAmortization |
| Intangibleassets subject toamortization:     |  |                |    |                    |  |        |    |                    |  |   |    |   |  |   |    |    |
| 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:

|                                              |  |              |         |                 |  |        |         |        |  |  |
|----------------------------------------------|--|--------------|---------|-----------------|--|--------|---------|--------|--|--|
| (dollarsin millions)                         |  | March31,2005 |         | December31,2004 |
| **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 |   |
|                                              |

OnJanuary 21, 2004, Nalco Finance Holdings LLC and its 100% ownedsubsidiary, Nalco Finance Holdings Inc. (together, the Issuers), issued$694.0 million aggregate principal amount at maturity of 9.0%senior discount notes due 2014. Prior to February 1, 2009, interestwill accrue on the senior discount notes in the form of an increase inthe accreted value of such notes. Thereafter, cash interest on thesenior discount notes will accrue and be payable semiannually inarrears on February 1 and August 1 of each year, commencing on August1, 2009, at a rate of 9.0% per annum. The accreted value of eachnote will increase from the date of issuance until February 1, 2009 ata rate of 9.0% per annum, reflecting the accrual of non-cashinterest, such that the accreted value will equal the principal amountat maturity on February 1, 2009.

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4.    Debt   (continued)

In December 2004, the Issuers redeemed aportion of the senior discount notes with an accreted value of $162.3million using proceeds from the 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. At March 31, 2005, the senior discount notes hadan accreted value of approximately $713.73 per $1,000 principal amountat maturity of notes, resulting in a total accreted value of $328.9million. The $2.5 million difference between the carrying value of thenotes and the total accreted value represents a premium, which is beingamortized over the term of the notes.

The Issuers do notgenerate any revenue, and Nalco Finance Holdings Inc. was incorporatedsolely to accommodate the issuance of the notes by Nalco FinanceHoldings LLC. All of the Issuers' consolidated assets are owned,and all of the Issuers' consolidated net sales are earned, by itsdirect and indirect subsidiaries. As of March 31, 2005, theIssuers' subsidiaries had $1,013.2 million of restricted netassets.

The terms of Nalco Company's senior creditagreement fully prohibit Nalco Holdings LLC and its subsidiaries frompaying dividends or otherwise transferring their assets to the Issuers.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. The ability of NalcoCompany to make such payments is governed by a formula based on itsconsolidated net income, as well as meeting certain other conditions.Notwithstanding such restrictions, such indentures permit an aggregateof $50.0 million of such payments to be made whether or not there isavailability under the formula or the conditions to its use are met.The Issuers' subsidiaries will be permitted under the terms ofthe senior credit facilities and other indebtedness to incur additionalindebtedness that may severely restrict or prohibit the making ofdistributions, the payment of dividends or the making of loans by suchsubsidiaries to the Issuers.

5.    Unitholder's Equity

Unitholder's equity consists of thefollowing:

|                                       |  |               |        |                   |  |        |        |         |  |  |
|---------------------------------------|--|---------------|--------|-------------------|--|--------|--------|---------|--|--|
| (dollars in millions)                 |  | March 31,2005 |        | December 31, 2004 |
| Capitalaccount                        |  | $             | 741.2  |              |  | $      | 741.2  |    |
| Accumulateddeficit                    |  |          | (170.0 | )            |  |   | (180.0 | )  |
| Accumulatedother comprehensiveincome: |  |          |   |              |  |   |   |    |
| Derivatives                           |  |          | 0.3    |              |  |   | (0.2   | )  |
| Foreigncurrency translationadjustment |  |          | 112.2  |              |  |   | 133.3  |    |
| Totalunitholder'sequity               |  | $             | 683.7  |              |  | $      | 694.3  |    |
|                                       |

Thecapital structure of the Company consists of one class of limitedliability company interests represented by Units, which are identicalwith each other in every respect. At December 31, 2004, there were 100Units issued and outstanding, of which 99 were owned by NalcoInvestment Holdings LLC and 1 was owned by Nalco Finance Holdings II,Inc. In January 2005, these two companies were merged with their parentcompany, Nalco Holding Company, which became the direct parent companyand unitholder of Nalco Finance Holdings LLC at that date.

8

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6.    Pensionand Other Postretirement Benefit Plans

The components of netperiodic pension cost and the cost of other postretirement benefits forthe three months ended March 31, 2005 and 2004 were asfollows:

|                                  |  |                                |         |                                |  |                                 |         |                                |  |        |         |         |  |        |         |        |  |  |
|----------------------------------|--|--------------------------------|---------|--------------------------------|--|---------------------------------|---------|--------------------------------|--|--------|---------|---------|--|--------|---------|--------|--|--|
|                             |  | PensionBenefits                |         | OtherPostretirementBenefits    |
| (dollars inmillions)             |  | Three MonthsendedMarch31, 2005 |         | Three MonthsendedMarch 31,2004 |  | Three MonthsendedMarch 31, 2005 |         | ThreeMonthsendedMarch 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.

7.    Business Optimization Expenses

In addition to the Company's plan to exit or restructurecertain activities that was formulated in conjunction with theAcquisition, 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:

|                                                 |  |                                 |         |                                |  |        |         |         |  |  |
|-------------------------------------------------|--|---------------------------------|---------|--------------------------------|--|--------|---------|---------|--|--|
| (dollarsin millions)                            |  | Three MonthsendedMarch 31, 2005 |         | Three MonthsendedMarch 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                                           |  |                            | 0.8     |                           |  |   | — |    |
|                                            |  | $                               | (2.2    | )                         |  | $      | (3.5    | )  |
|                                                 |

9.    IncomeTaxes

The Company's effective income tax rate was51.5% for the three months ended March 31, 2005. The rate variesfrom the U.S. statutory income tax rate of 35% due to the taxtreatment of the senior 

9

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9.    IncomeTaxes   (continued)

discount note interest expense, theincremental tax on dividends received from non-U.S. subsidiaries,foreign taxes provided at less than the 35% U.S. statutory rate,U.S. state income taxes, nondeductible expenses, and other permanentdifferences.

The aforementioned items contributed to thevariation between the U.S. statutory income tax rate and theCompany's effective income tax rate for the three months endedMarch 31, 2004. In addition, the effective rate was impacted by thecharge for purchased IPR&D, which is not tax deductible.

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

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

|                                              |  |                                 |         |                                |  |        |       |         |  |  |
|----------------------------------------------|--|---------------------------------|---------|--------------------------------|--|--------|-------|---------|--|--|
| (dollarsin millions)                         |  | Three MonthsendedMarch 31, 2005 |         | Three MonthsendedMarch 31,2004 |
| U.S. statutory taxrate                       |  | $                               | 8.1     |                           |  | $      | (42.9 | )  |
| IPR&D                                    |  |                            | — |                           |  |   | 42.8  |    |
| Interestexpense – senior discountnotes |  |                            | 2.5     |                           |  |   | 2.7   |    |
| Other                                        |  |                            | 1.3     |                           |  |   | 0.4   |    |
| Incometaxprovision                           |  | $                               | 11.9    |                           |  | $      | 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 asfollows:

|                                                       |  |                                |        |                                |  |        |         |         |  |  |
|-------------------------------------------------------|--|--------------------------------|--------|--------------------------------|--|--------|---------|---------|--|--|
| (dollarsin millions)                                  |  | ThreeMonthsendedMarch 31, 2005 |        | ThreeMonthsendedMarch 31, 2004 |
| Net earnings(loss)                                    |  | $                              | 10.0   |                           |  | $      | (126.7  | )  |
| Othercomprehensive income (loss), net of incometaxes: |  |                           |   |                           |  |   |    |    |
| Derivatives                                           |  |                           | 0.5    |                           |  |   | — |    |
| Foreigncurrency translationadjustments                |  |                           | (21.1  | )                         |  |   | 9.5     |    |
| Comprehensiveloss                                     |  | $                              | (10.6  | )                         |  | $      | (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.

10

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11.    SegmentInformation   (continued)

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

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

Net sales by reportable segment were asfollows:

|                                     |  |                                |       |                                |  |        |       |        |  |  |
|-------------------------------------|--|--------------------------------|-------|--------------------------------|--|--------|-------|--------|--|--|
| (dollarsin millions)                |  | ThreeMonthsendedMarch 31, 2005 |       | ThreeMonthsendedMarch 31, 2004 |
| Industrial andInstitutionalServices |  | $                              | 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 incometaxes:

|                                     |  |                                |         |                               |  |        |         |         |  |  |
|-------------------------------------|--|--------------------------------|---------|-------------------------------|--|--------|---------|---------|--|--|
| (dollarsin millions)                |  | ThreeMonthsendedMarch 31, 2005 |         | ThreeMonthsendedMarch 31,2004 |
| 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           |  |                           | (2.2    | )                        |  |   | (3.5    | )  |
| Interestincome                      |  |                           | 2.1     |                          |  |   | 2.7     |    |
| Interestexpense                     |  |                           | (62.1   | )                        |  |   | (61.0   | )  |
| Earnings(loss) before incometaxes   |  | $                              | 23.1    |                          |  | $      | (122.7  | )  |
|                                     |

12.    Contingenciesand Litigation

Various claims, lawsuits and administrativeproceedings are pending or threatened against the Company and itssubsidiaries, arising from the ordinary course of business with respectto commercial, intellectual property, product liability, employee andenvironmental matters. Historically, these matters have not had amaterial impact on the consolidated financial position of the Company.However, the Company cannot predict the outcome of any litigation orthe potential for future litigation. The Company has been named as apotentially responsible party (PRP) by the Environmental Protection

11

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12.    Contingenciesand Litigation   (continued)

Agency or state enforcement agencies at threewaste sites where some financial contribution is or may be required.These agencies have also identified many other parties who may beresponsible for clean up costs at these waste disposal sites. TheCompany's financial contribution to remediate these sites isexpected to be minor. There has been no significant financial impact onthe Company up to the present, nor is it anticipated that there will bein the future, as a result of these matters. The Company has made andwill continue to make provisions for these costs if the Company'sliability becomes probable and when costs can be reasonably estimated.The Company's undiscounted reserves for known environmental cleanup costs were $2.0 million at March 31, 2005.

Theseenvironmental reserves represent management's current estimate ofits proportional clean-up costs and are based upon negotiation andagreement with enforcement agencies, its previous experience withrespect to clean-up activities, a detailed review by the Company ofknown conditions, and information about other PRPs. They are notreduced by any possible recoveries from insurance companies or otherPRPs not specifically identified. Although management cannot determinewhether or not a material effect on future operations is reasonablylikely to occur, given the evolving nature of environmentalregulations, it believes that the recorded reserve levels areappropriate estimates of the potential liability. Although settlementwill require future cash outlays, it is not expected that such outlayswill materially impact the Company's liquidity position.Expenditures for the three months ended March 31, 2005, relating toenvironmental compliance and clean up activities, were notsignificant.

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

The Company has received subpoenas from the U.S. Department ofJustice for documents and testimony relating to its storage of claimedhazardous materials, the claimed leakage of wastewater and othermatters at its plant in Garyville, Louisiana. No charges or indictmentshave been filed, but the outcome of this investigation is unknown tothe Company.

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

13.    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.

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

On November 4, 2003, Nalco Holdings LLC, our subsidiary and acompany formed by The Blackstone Group, Apollo Management, L.P. and GSCapital Partners (the "Sponsors"), purchasedall of the outstanding shares of capital stock of Ondeo Nalco Company(which is 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 FinanceHoldings LLC included elsewhere in this report.

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

This Quarterly Reportfor the fiscal quarter ended March 31, 2005 (the"Quarterly Report") includes"forward-looking statements" within themeaning of Section 27A of the Securities Act of 1933 and Section 21E ofthe Securities Exchange Act of 1934. These forward-looking statementsinclude statements concerning our plans, objectives, goals, strategies,future events, future revenue or performance, capital expenditures,financing needs, plans or intentions relating to acquisitions, businesstrends and other information that is not historical information. Whenused in this Quarterly Report, the words"estimates,""expects,""anticipates,""projects,""plans," "intends,"" believes,""forecasts," or future or conditional verbs,such as "will,""should," "could"or "may," and variations of such words orsimilar expressions are intended to identify forward-lookingstatements. All forward-looking statements, including, withoutlimitation, management's examination of historical operatingtrends and data are based upon our current expectations and variousassumptions. Our expectations, beliefs and projections are expressed ingood faith and we believe there is a reasonable basis for them.However, there can be no assurance that management'sexpectations, beliefs and projections will be achieved.

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

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

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

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

|              |                                    |
|--------------|------------------------------------|
| •  | pricingpressure from ourcustomers; |

|              |                                    |
|--------------|------------------------------------|
| •  | technologicalchange andinnovation; |

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

|              |                                        |
|--------------|----------------------------------------|
| •  | fluctuations incurrency exchangerates; |

|              |                                                    |
|--------------|----------------------------------------------------|
| •  | high competition inthe markets in which weoperate; |

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

|              |                                               |
|--------------|-----------------------------------------------|
| •  | operatinghazards in our productionfacilities; |

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

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

13

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

|              |                                                               |
|--------------|---------------------------------------------------------------|
| •  | ourability to realize the full value of our intangibleassets; |

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

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

|              |                                                                             |
|--------------|-----------------------------------------------------------------------------|
| •  | the possibility thatour owners' interests will conflict with ours or yours. |

There may be other factors that may cause our actual results todiffer materially from the forward-looking statements.

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

Executive LevelOverview

In the first quarter of 2005, sales increased9.0% to $777.6 million from $713.3 million reported for theyear-ago period. Net earnings turned to a positive $10.0 million fromthe year-ago loss of $126.7 million. Adjusted EBITDA, a non-GAAPmeasure used to determine compliance with the Company's debtcovenants, increased by 7.5% to $145.5 million from $135.3million.

Our first quarter sales and earnings results representprogress toward our 2005 goal of 5% sales growth on an organicbasis (after adjusting for the impacts of changes in foreign currencytranslation rates and acquisitions and divestitures) and double-digitAdjusted EBITDA growth.

Our sales growth consisted of4.7% organic growth, including 2.5% from pricing; a2.3% favorable impact from foreign currency translation ratechanges; and a 2.0% benefit from formation of the Katayama Nalcojoint venture in Japan. This growth was without about $10 million insales that was recognized in the fourth quarter 2004, resulting fromcustomers in Europe purchasing early to avoid any potentialcomplications from our conversion to a SAP system in that region onJanuary 1, 2005. We also believe customers pre-purchased in light ofshortages and price increases. Without this, we would not have been at8.5% organic growth in the fourth quarter of 2004. Real growth– organic growth less price increases that pass on raw materialcost increases – was 2.2% in the first quarter of 2005.Looking across the last three quarters, we remain confident of hittingour 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.

Forthe first quarter of 2005, reductions to net earnings from businessprocess optimization, reimbursed profit sharing expense and otherunusual charges were $4.1 million pre-tax and $2.6 million on anafter-tax basis. The loss for the first quarter of 2004 was driven by anon-cash, one-time charge of $122.3 million for purchased in-processresearch and development expense.

Looking ahead, two issues areparticularly important for the Company to continue to address –pricing and operating working capital.

Pricing lagged behindrapid growth in raw material costs, pressuring the gross margin down to47.0% from the year-earlier 47.5%. However, the firstquarter of 2004 included a $14.1 million charge to cost of productsold, resulting from the sale of inventory that had been revalued inpurchase accounting. Without this expense, the gross margin would havebeen approximately 200 basis points higher in the 

14

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first quarter of 2004. In the first quarterof this year, we realized $18 million in added price increases but sawraw material costs increase $34 million.

While mix issues playeda small role in our gross margin decline, the primary cause of thisyear-on-year drop is this gap between cost and price increases. On thepositive side, we are seeing customer acceptance of price increases inmost businesses. Looking forward, we expect total raw material costincreases for the year to total about $125 million. To date, we have inplace customer-accepted price increases that will recoup more than $85million. We are moving ahead with further increases in the second andthird quarters to close the remaining gap, including the May 4, 2005announcement of further increases for Paper Services customers. As wemove pricing, it is our intent to recapture the first quarter gap, aswell.

In all cases, we have tried to anticipate what we willneed, given what we currently know about cost increases. However, therate of raw material increases continues to go faster than our plans.Because of this, we would not be surprised to require additional pricehikes beyond what we are targeting in the second quarter of 2005.

We generated a sizable gain in cash earnings as compared to lastyear, but saw it consumed by a build in working capital, which presentsan opportunity for the balance of the year. Year-over-year, ourinventories have risen by more than $70 million, most of it sinceSeptember, as normal increases to support growth were exacerbated bycost increases, steps taken to navigate through select raw materialshortages, and issues associated with the aforementioned SAPimplementation. While we had made significant gains in ourinventory-days levels when management attention was focused on theissue 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 attributable to SAPimplementation issues and is not due to a deterioration in the creditquality of our receivables portfolio. As we continue to identify andresolve the underlying systems implementation issues, we expect to seeimprovement in past due receivables.

Beginning with the firstquarter 2005, technical service work that had been previously reportedin selling, administrative and research expenses was reported in costof product sold. This change more accurately portrays the servicenature of components of our offering. This change is expected toinitially increase cost of product sold and reduce selling,administrative and research expenses in an 

15

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amount affecting gross margin by about 75basis points. The change is neutral at the operating earnings level,and reclassifications have been made to prior year data to conform tothis presentation. 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 be51.5% 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 |       |         |  | Attributableto Changesin the FollowingFactors |
| (dollars inmillions)                  |  | March 31,2005     |       | March31,2004 |  | %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 organicgrowth of 2.7%, as solid gains were posted by our global miningbusiness and our water treatment business in the Latin American andPacific regions. These gains were partly offset by lower sales reportedin Europe, which was the result of higher sales during the three monthsended December 31, 2004, as customers purchased in advance to avoidrisking any potential complications from our information systemsconversion in that region on January 1, 2005. Organically, PaperServices division sales were up 2.4% compared to a year ago,reflecting continued strong growth in the Latin America and Pacificregions and a more modest gain in North America. Lower Paper Servicessales in Europe, due to advance purchases made by customers during thethree months ended December 31, 2004, partly offset these improvements.Most of the organic improvement in "other"sales was attributable to our subsidiary company in India and alternatechannel sales. The increase in "other" salesattributable to acquisitions/divestitures includes the incrementalimpact of our Japanese joint venture, Katayama Nalco, which was formedwith Katayama Chemical Inc. in June 2004 to accelerate our developmentin this important industrialized market.

16

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Gross profit**,**defined asthe difference between net sales and cost of product sold, of $365.2million for the three months ended March 31, 2005 increased by $26.3million, or 7.8%, over the $338.9 million reported for thequarter ended March 31, 2004. On an organic basis and excluding theimpact of a $14.1 million charge to cost of product sold during thethree months ended March 31, 2004 resulting from the sale of inventorythat had been revalued at selling price less costs to sell in purchaseaccounting at the date of the Acquisition, gross profit decreased by$2.2 million. Increased sales volumes favorably impacted gross profitby approximately $15.5 million, but this was more than offset primarilyby the impact of higher raw material costs. Gross profit margin for thethree months ended March 31, 2005 was 47.0% compared to47.5% for the year-ago period. Gross profit margin for the threemonths ended March 31, 2004 was reduced approximately 200 basis pointsas a result of the aforementioned $14.1 million charge resulting frompurchase accounting. The decrease in gross profit margin from a yearago was mostly the result of higher raw material costs.

Selling, administrative, and research expenses for thethree months ended March 31, 2005 of $258.5 million increased by $5.2million, or 2.1%, from $253.3 million for the three months endedMarch 31, 2004. On an organic basis, selling, administrative, andresearch expenses decreased by $5.4 million, or 2.1%, reflectingfurther initiatives to reduce and control spending.

Businessoptimization expenses, representing mostly employee severance andrelated costs associated with the continuing redesign and optimizationof business and work processes, were $0.8 million for the three monthsended March 31, 2005.

Amortization of intangible assetswas $20.6 million and $24.2 million for the three months ended March31, 2005 and 2004, respectively. The decrease was attributable to loweramortization of customer relationships, which are amortized using anaccelerated method.

In-process research and developmentwas a one-time charge of $122.3 million recorded during the threemonths ended 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 $2.2 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 reported for the three months endedMarch 31, 2004. The impact of higher interest rates on variable rateborrowings more than offset the impact of a lower average debt levelcompared to the year-ago period.

The effective tax ratefor the three months ended March 31, 2005 was 51.5% for thethree months ended March 31, 2005. The rate varies from the U.S.statutory income tax rate of 35% due to the tax treatment of thesenior discount note interest expense, the incremental tax on dividendsreceived from non-U.S. subsidiaries, foreign taxes provided at lessthan the 35% U.S. statutory rate, U.S. state income taxes,nondeductible expenses, and other permanent differences.

Theaforementioned items contributed to the variation between the U.S.statutory income tax rate and the Company's effective income taxrate for the three months ended March 31, 2004. In addition, theeffective rate was impacted by the charge for purchased IPR&D,which is not tax deductible.

The taxable income and expenses ofNalco Finance Holdings LLC flow directly to the owners for U.S. taxpurposes. As a result, the Company's owners recognize the taxbenefit on the senior discount note interest expense.

17

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Minority interest expense was$0.2 million higher than the $1.0 million for the three months endedMarch 31, 2004, reflecting improved results for most of theCompany's non-wholly owned subsidiaries.

Liquidity andCapital Resources

Operating activities. Historically,the Company's main source of liquidity has been its solid cashflow generated by operating activities. For the three months endedMarch 31, 2005, cash provided by operating activities was $16.9million, a $67.6 million decrease from the same period last year. Thisdecrease primarily resulted from higher working capital requirementsattributable to increased inventory levels and the payment of year-endincentive plan and commission accruals.

Investingactivities. Cash used for investing activities was $17.1million for the three months ended March 31, 2005, which was mostlyattributable to net property additions of $12.3 million.

Cashprovided by investing activities was $7.0 million for the three monthsended March 31, 2004. This was mostly the result of a $25.6 millionpurchase price adjustment received from Suez related to theAcquisition, 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 a revolvingcredit facility, a $300 million six-year term loan A facility (whichincludes an €88.0 million tranche) which matures inNovember 2009 and a $1,300 million seven-year term loan B facilitywhich matures in November 2010. Borrowings under the senior creditfacilities bear interest at a floating base rate plus an applicablemargin. The applicable margin for borrowings under the revolving creditfacility and the term loan A facility is 1.50% with respect tobase rate borrowings and 2.50% with respect to LIBOR orEurocurrency borrowings and may be reduced subject to our attainingcertain leverage ratios. The applicable margin for borrowings under theterm loan B facility is 1.50% with respect to base rateborrowings and 2.00% with respect to LIBOR or Eurocurrencyborrowings. The applicable margin for borrowings under the term loan Bfacility is not subject to adjustment.

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

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

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

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

Principalamounts outstanding under the revolving credit facility will be due andpayable in full at maturity on November 4, 2009. There were nooutstanding borrowings under the revolving credit facility as of March31, 2005.

18

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The senior credit facilities contain anumber of covenants that, among other things, restrict, subject tocertain exceptions, our ability and the ability of our subsidiaries(including Nalco Company) to sell assets, incur additional indebtednessor issue preferred stock, repay other indebtedness, pay dividends anddistributions or repurchase certain capital stock, create liens onassets, make investments, loans or advances, make certain acquisitions,engage in mergers or consolidations, enter into sale and leasebacktransactions, engage in certain transactions with affiliates, amendcertain material agreements governing our indebtedness, change thebusiness conducted by us and our subsidiaries (including Nalco Company)and enter into hedging agreements. In addition, the senior creditfacilities require Nalco Company to maintain the following significantfinancial covenants: a maximum total leverage ratio, a minimum interestcoverage ratio and a maximum capital expenditures limitation. We werein compliance with all covenants at March 31, 2005.

Seniornotes, senior subordinated notes and senior discount notes. As partof the Transactions 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, Nalco Finance Holdings LLCand Nalco Finance Holdings Inc., issued $694.0 million aggregateprincipal amount at maturity of 9.0% senior discount notes due2014. Prior to February 1, 2009, interest will accrue on the notes inthe form of an increase in the accreted value of such notes. Theaccreted value of each note will increase from the date of issuanceuntil February 1, 2009 at a rate of 9.0% per annum, reflectingthe accrual of non-cash interest, such that the accreted value willequal the principal amount at maturity on February 1, 2009. Cashinterest payments on the notes will be due and payable beginning in2009. 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 fully prohibit Nalco HoldingsLLC and our other subsidiaries from paying dividends or otherwisetransferring assets to the issuers. In addition, the terms of certainof the indentures governing the existing senior notes and seniorsubordinated notes of Nalco Company significantly restrict NalcoCompany and our other subsidiaries from paying dividends, makingdistributions and otherwise transferring assets to the issuers of thesenior discount notes. In addition, as a condition to making suchpayments to the issuers based on such formula, Nalco Holdings LLC musthave an Adjusted EBITDA to interest expense ratio of at least 2.0 to 1after giving effect to any such payments. Notwithstanding suchrestrictions, such indentures permit an aggregate of $50.0 million ofsuch payments to be made whether or not there is availability under theformula or the conditions to its use are met.

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

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

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

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

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

|              |                                                          |
|--------------|----------------------------------------------------------|
| •  | enter intocertain types of transactions with affiliates; |

|              |                                                                  |
|--------------|------------------------------------------------------------------|
| •  | limit dividends or otherpayments by our restricted subsidiaries; |

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

|              |                                                           |
|--------------|-----------------------------------------------------------|
| •  | sell certain assets or mergewith or into other companies. |

19

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Subject to certain exceptions, theindentures governing the senior notes, the senior subordinated notes,and the senior discount notes permit the Company and our restrictedsubsidiaries to incur additional indebtedness, including securedindebtedness.

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

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

Adjusted EBITDA is calculated asfollows:

|                                  |  |                                 |       |                                 |  |        |         |         |  |  |
|----------------------------------|--|---------------------------------|-------|---------------------------------|--|--------|---------|---------|--|--|
| (dollarsin millions)             |  | Three MonthsendedMarch 31, 2005 |       | Three Monthsended March 31,2004 |
| Net earnings(loss)               |  | $                               | 10.0  |                            |  | $      | (126.7  | )  |
| Interest,net                     |  |                            | 60.0  |                            |  |   | 58.3    |    |
| Income taxprovision              |  |                            | 11.9  |                            |  |   | 3.0     |    |
| Depreciation                     |  |                            | 33.2  |                            |  |   | 28.7    |    |
| Amortization                     |  |                            | 20.6  |                            |  |   | 24.2    |    |
| EBITDA                           |  | $                               | 135.7 |                            |  | $      | (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                   |  | $                               | 145.5 |                            |  | $      | 135.3   |    |
|                                  |

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

|                                               |  |                                  |         |                                  |  |        |         |        |  |  |
|-----------------------------------------------|--|----------------------------------|---------|----------------------------------|--|--------|---------|--------|--|--|
| (dollarsin millions)                          |  | Three Months endedMarch 31, 2005 |         | Three Months ended March 31,2004 |
| In-process research and development           |  | $                                | — |                             |  | $      | 122.3   |   |
| Inventorystep-up                              |  |                             | — |                             |  |   | 14.1    |   |
| Assetwrite-offs                               |  |                             | 2.4     |                             |  |   | — |   |
| Profitsharing expense and 401(k) fundedbySuez |  |                             | 5.6     |                             |  |   | 6.1     |   |
| Other                                         |  |                             | 2.1     |                             |  |   | 2.9     |   |
| Non-cashcharges                               |  | $                                | 10.1    |                             |  | $      | 145.4   |   |
|                                               |

    In-processResearch and Development

In-processresearch and development was a one time charge of $122.3 millionrecorded during the three months ended March 31, 2004, as a result ofpurchase accounting entries related to the Acquisition.

    Inventory Step-Up

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

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    Profit Sharing and 401(k) ExpenseFunded by Suez

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

    Other

Other non-cash chargesinclude the non-cash impact on earnings of our equity investments andminority interests. Non-cash charges also includes the non-cash portionof rent expense under the sublease that we entered into with Suez inconjunction with the Acquisition.

|           |                                                                                                                                                                |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  | Business optimization expenses for2005 include costs associated with the redesign and optimization ofwork processes. See note 7 to Item 1 for moreinformation. |

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

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

|  |     |                                                                           |
|--|-----|---------------------------------------------------------------------------|
|  | (a) | Otherunusual items include certain costs associated with theTransactions. |

|           |                                                                                                                                           |
|-----------|-------------------------------------------------------------------------------------------------------------------------------------------|
| (4)  | We are requiredto make 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:

|                                                                                                           |  |                              |        |        |  |        |        |        |  |  |
|-----------------------------------------------------------------------------------------------------------|--|------------------------------|--------|--------|--|--------|--------|--------|--|--|
|                                                                                                      |  | CovenantLevelatMarch 31,2005 |        | Ratios |
| **Senior creditfacility** (1)                                                                             |  |                         |   |   |  |   |   |   |
|     MinimumAdjusted EBITDA to cash interestratio                                      |  |                         | 1.70x  |   |  |   | 3.02x  |   |
|     Maximum netdebt to Adjusted EBITDAratio                                           |  |                         | 6.50x  |   |  |   | 5.14x  |   |
| **Indentures**(2)                                                                                         |  |                         |   |   |  |   |   |   |
| Minimum Adjusted EBITDAto fixed charge ratio required to incur additional debt pursuant toratioprovisions |  |                         | 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 toincur additional debt and make certain restricted payments under ourindentures, subject to specified exceptions, is tied to an AdjustedEBITDA to fixed charge ratio of at least 2.0 to 1, except that we mayincur certain debt and make certain restricted payments and certainpermitted investments without regard to the ratio, such as up to anaggregate principal amount of $1,950 million (including $1,295.4million that was outstanding under our term loan facilities as of March31, 2005) and investments in similar business and other investmentsequal to 6% of Nalco Finance Holdings LLC 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.

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

Availability of funding under the receivablesfacility depends primarily upon the outstanding trade accountsreceivable balance from time to time. Aggregate availability isdetermined by using a formula that reduces the gross receivablesbalance by factors that take into account historical default anddilution rates, excessive concentrations and average days outstandingand the costs of the facility. Based on the terms of this facility andon the criteria described above, as of 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.

Item 3.    Quantitative and Qualitative DisclosuresAbout Market Risk

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

Item 4.    Controls andProcedures

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

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

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

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

PART II.    OTHER INFORMATION

Item 6.    Exhibits

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

Exhibit 31.1 Certification of ChiefExecutive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of2002

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

Exhibit 32.1 Certifications Pursuant to18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of theSarbanes-Oxley Act of 2002

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SIGNATURE

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

|        |  |                           |  |                                                    |  |  |  |  |  |  |
|--------|--|---------------------------|--|----------------------------------------------------|--|--|--|--|--|--|
|   |  | NALCOFINANCE HOLDINGS LLC |
|   |  | /s/BRADLEY J. BELL        |
|   |  | Name:                     |  | Bradley J.Bell                                     |
|   |  | Title:                    |  | Executive VicePresident and Chief FinancialOfficer |
|        |

Dated: May 12,2005

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