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UNITEDSTATESSECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

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FORM 10-Q

(Mark One)

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

|        |                                                  |
|--------|--------------------------------------------------|
|   | For the quarterly period ended September 30,2004 |

or

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

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

Commission File No. 333-119231

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NALCO FINANCE HOLDINGSLLC

(Exact name of registrant asspecified in its charter)

|                                                              |  |                                       |  |  |  |  |
|--------------------------------------------------------------|--|---------------------------------------|--|--|--|--|
| Delaware                                                     |  | 61-1464558                            |
| (State or other jurisdictionofIncorporation or Organization) |  | (I.R.S.EmployerIdentification Number) |
|                                                              |

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

(Address, Including Zip Code, andTelephone Number, Including Area Code, of Registrant's PrincipalExecutive Offices)

Indicate by check mark whetherthe registrant: (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90days.        Yes           No   

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

    

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QUARTERLY REPORTON FORM 10-Q NALCO FINANCE HOLDINGS LLC Quarter EndedSeptember 30, 2004

TABLE OF CONTENTS

|                                                         |  |                                                                                                                                                          |  |        |        |        |  |  |  |  |
|---------------------------------------------------------|--|----------------------------------------------------------------------------------------------------------------------------------------------------------|--|--------|--------|--------|--|--|--|--|
| **PartI.    Financial Information** |
| Item1.                                                  |  | FinancialStatements (Unaudited)                                                                                                                          |  |   |   |   |
|                                                    |  | CondensedConsolidated Balance Sheets –     September 30, 2004 andDecember 31, 2003                                             |  |   | 2      |   |
|                                                    |  | CondensedConsolidated and Combined Statements of Operations –    Three months and nine months ended September 30, 2004 and2003 |  |   | 3      |   |
|                                                    |  | Condensed Consolidated andCombined Statements of Cash Flows –     Nine months endedSeptember 30, 2004 and 2003                 |  |   | 4      |   |
|                                                    |  | Notes to Condensed Consolidated and CombinedFinancial Statements –     September 30,2004                                       |  |   | 5      |   |
| Item2.                                                  |  | Management's Discussion and Analysis of FinancialCondition and     Results of Operations                                             |  |   | 17     |   |
| Item 3.                                                 |  | Quantitative and Qualitative Disclosures AboutMarket Risk                                                                                                |  |   | 28     |   |
| Item 4.                                                 |  | Controls andProcedures                                                                                                                                   |  |   | 28     |   |
| **PartII.    Other Information**    |
| Item 1.                                                 |  | LegalProceedings                                                                                                                                         |  |   | 29     |   |
| Item6.                                                  |  | Exhibits                                                                                                                                                 |  |   | 30     |   |
|                                                         |

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PART I.    FINANCIALINFORMATION

Item 1.    Financial Statements (Unaudited)

Nalco Finance Holdings LLC and Subsidiaries

Condensed Consolidated Balance Sheets(Dollars inMillions)

|                                                                       |  |                             |         |                 |  |        |         |        |  |  |
|-----------------------------------------------------------------------|--|-----------------------------|---------|-----------------|--|--------|---------|--------|--|--|
|                                                                  |  | (Unaudited)September30,2004 |         | December31,2003 |
| **Assets**                                                            |  |                        |    |            |  |   |    |   |
| Currentassets:                                                        |  |                        |    |            |  |   |    |   |
| Cash and cashequivalents                                              |  | $                           | 63.1    |            |  | $      | 100.0   |   |
| Accountsreceivable, less allowances of $23.9 in 2004 and $21.0 in2003 |  |                        | 523.2   |            |  |   | 482.9   |   |
| Inventories:                                                          |  |                        |    |            |  |   |    |   |
| Finishedproducts                                                      |  |                        | 226.0   |            |  |   | 233.6   |   |
| Materialsand work inprocess                                           |  |                        | 59.9    |            |  |   | 61.5    |   |
|                                                                  |  |                        | 285.9   |            |  |   | 295.1   |   |
| Prepaidexpenses, taxes and other currentassets                        |  |                        | 60.6    |            |  |   | 97.6    |   |
| Totalcurrentassets                                                    |  |                        | 932.8   |            |  |   | 975.6   |   |
|                                                                  |  |                        |    |            |  |   |    |   |
| Property,plant, and equipment,net                                     |  |                        | 815.8   |            |  |   | 865.6   |   |
| Intangibleassets:                                                     |  |                        |    |            |  |   |    |   |
| Goodwill                                                              |  |                        | 2,359.1 |            |  |   | 2,500.1 |   |
| Otherintangibles,net                                                  |  |                        | 1,333.9 |            |  |   | 1,408.9 |   |
| Otherassets                                                           |  |                        | 386.5   |            |  |   | 413.6   |   |
| Totalassets                                                           |  | $                           | 5,828.1 |            |  | $      | 6,163.8 |   |
|                                                                  |  |                        |    |            |  |   |    |   |
| **Liabilitiesand unitholders'equity**                                 |  |                        |    |            |  |   |    |   |
| Currentliabilities:                                                   |  |                        |    |            |  |   |    |   |
| Accountspayable                                                       |  | $                           | 223.3   |            |  | $      | 155.9   |   |
| Short-termdebt                                                        |  |                        | 13.7    |            |  |   | 51.9    |   |
| Other currentliabilities                                              |  |                        | 321.7   |            |  |   | 321.0   |   |
| Totalcurrentliabilities                                               |  |                        | 558.7   |            |  |   | 528.8   |   |
|                                                                  |  |                        |    |            |  |   |    |   |
| Otherliabilities:                                                     |  |                        |    |            |  |   |    |   |
| Long-termdebt                                                         |  |                        | 3,503.5 |            |  |   | 3,262.8 |   |
| Deferredincometaxes                                                   |  |                        | 560.8   |            |  |   | 624.0   |   |
| Accruedpensionbenefits                                                |  |                        | 395.6   |            |  |   | 374.1   |   |
| Otherliabilities                                                      |  |                        | 305.8   |            |  |   | 293.5   |   |
|                                                                  |  |                        |    |            |  |   |    |   |
| Minorityinterest                                                      |  |                        | 12.9    |            |  |   | 11.6    |   |
| Unitholders'equity                                                    |  |                        | 490.8   |            |  |   | 1,069.0 |   |
| Totalliabilities and unitholders'equity                               |  | $                           | 5,828.1 |            |  | $      | 6,163.8 |   |
|                                                                       |

Seeaccompanying notes to condensed consolidated and combined financialstatements.

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Nalco Finance Holdings LLC andSubsidiaries

Condensed Consolidated and CombinedStatements of Operations (Unaudited)(Dollars inMillions)

|                                              |  |                                      |         |                                      |  |                                     |         |                                    |  |        |          |         |  |        |          |         |  |  |
|----------------------------------------------|--|--------------------------------------|---------|--------------------------------------|--|-------------------------------------|---------|------------------------------------|--|--------|----------|---------|--|--------|----------|---------|--|--|
|                                         |  | Successor                            |         | Predecessor                          |  | Successor                           |         | Predecessor                        |
|                                         |  | ThreeMonths ended September 30, 2004 |         | Three Monthsended September 30, 2003 |  | Nine Months endedSeptember 30, 2004 |         | Nine Months ended September30,2003 |
|                                         |  |                                 |    |                                 |  |                                |    |                               |  |   |     |    |  |   |     |    |
| Netsales                                     |  | $                                    | 774.2   |                                 |  | $                                   | 711.4   |                               |  | $      | 2,227.9  |    |  | $      | 2,064.1  |    |
| Operatingcosts andexpenses:                  |  |                                 |    |                                 |  |                                |    |                               |  |   |     |    |  |   |     |    |
| Costof productsold                           |  |                                 | (394.7  | )                               |  |                                | (337.9  | )                             |  |   | (1,128.4 | )  |  |   | (992.8   | )  |
| Selling,administrative, and researchexpenses |  |                                 | (261.8  | )                               |  |                                | (261.5  | )                             |  |   | (789.6   | )  |  |   | (792.6   | )  |
| Impairmentofgoodwill                         |  |                                 | — |                                 |  |                                | — |                               |  |   | —  |    |  |   | (244.4   | )  |
| Amortizationof intangibleassets              |  |                                 | (23.9   | )                               |  |                                | (20.5   | )                             |  |   | (73.0    | )  |  |   | (61.8    | )  |
| In-processresearch anddevelopment            |  |                                 | — |                                 |  |                                | — |                               |  |   | (122.3   | )  |  |   | —  |    |
| Businessoptimizationexpenses                 |  |                                 | — |                                 |  |                                | (5.5    | )                             |  |   | —  |    |  |   | (15.2    | )  |
|                                         |  |                                 | (680.4  | )                               |  |                                | (625.4  | )                             |  |   | (2,113.3 | )  |  |   | (2,106.8 | )  |
|                                         |  |                                 |    |                                 |  |                                |    |                               |  |   |     |    |  |   |     |    |
| Operatingearnings(loss)                      |  |                                 | 93.8    |                                 |  |                                | 86.0    |                               |  |   | 114.6    |    |  |   | (42.7    | )  |
|                                         |  |                                 |    |                                 |  |                                |    |                               |  |   |     |    |  |   |     |    |
| Otherincome (expense),net                    |  |                                 | (1.2    | )                               |  |                                | (12.8   | )                             |  |   | (6.5     | )  |  |   | (13.0    | )  |
| Interestincome                               |  |                                 | 2.3     |                                 |  |                                | 1.1     |                               |  |   | 7.7      |    |  |   | 5.4      |    |
| Interestexpense                              |  |                                 | (64.0   | )                               |  |                                | (9.7    | )                             |  |   | (187.7   | )  |  |   | (29.2    | )  |
|                                         |  |                                 |    |                                 |  |                                |    |                               |  |   |     |    |  |   |     |    |
| Earnings(loss) before incometaxes            |  |                                 | 30.9    |                                 |  |                                | 64.6    |                               |  |   | (71.9    | )  |  |   | (79.5    | )  |
|                                         |  |                                 |    |                                 |  |                                |    |                               |  |   |     |    |  |   |     |    |
| Incometaxprovision                           |  |                                 | (27.2   | )                               |  |                                | (29.5   | )                             |  |   | (46.8    | )  |  |   | (70.1    | )  |
|                                         |  |                                 |    |                                 |  |                                |    |                               |  |   |     |    |  |   |     |    |
| Minorityinterests                            |  |                                 | (1.7    | )                               |  |                                | (1.4    | )                             |  |   | (3.6     | )  |  |   | (4.4     | )  |
| Netincome(loss)                              |  | $                                    | 2.0     |                                 |  | $                                   | 33.7    |                               |  | $      | (122.3   | )  |  | $      | (154.0   | )  |
|                                              |

Seeaccompanying notes to condensed consolidated and combined financialstatements.

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Nalco Finance Holdings LLC andSubsidiaries

Condensed Consolidated and CombinedStatements of Cash Flows(Unaudited)(Dollars inMillions)

|                                                                               |  |                                   |         |                                  |  |        |         |         |  |  |
|-------------------------------------------------------------------------------|--|-----------------------------------|---------|----------------------------------|--|--------|---------|---------|--|--|
|                                                                          |  | Successor                         |         | Predecessor                      |
|                                                                          |  | NineMonthsendedSeptember 30, 2004 |         | NineMonthsendedSeptember 30,2003 |
| **Operatingactivities**                                                       |  |                              |    |                             |  |   |    |    |
| Netloss                                                                       |  | $                                 | (122.3  | )                           |  | $      | (154.0  | )  |
| Adjustmentsto reconcile net loss to net cash provided by operatingactivities: |  |                              |    |                             |  |   |    |    |
| Depreciation                                                                  |  |                              | 80.7    |                             |  |   | 91.6    |    |
| Amortization                                                                  |  |                              | 73.0    |                             |  |   | 61.8    |    |
| Impairmentofgoodwill                                                          |  |                              | — |                             |  |   | 244.4   |    |
| In-processresearch anddevelopment                                             |  |                              | 122.3   |                             |  |   | — |    |
| Amortizationof deferred financing costs and accretion of senior discountnotes |  |                              | 36.4    |                             |  |   | — |    |
| Other,net                                                                     |  |                              | 21.1    |                             |  |   | 49.7    |    |
| Changes inoperating assets andliabilities                                     |  |                              | 44.9    |                             |  |   | (30.8   | )  |
| Netcash provided by operatingactivities                                       |  |                              | 256.1   |                             |  |   | 262.7   |    |
|                                                                          |  |                              |    |                             |  |   |    |    |
| **Investingactivities**                                                       |  |                              |    |                             |  |   |    |    |
| Purchase priceadjustment on acquisition of Ondeo NalcoGroup                   |  |                              | 25.3    |                             |  |   | — |    |
| Additions toproperty, plant, and equipment,net                                |  |                              | (57.7   | )                           |  |   | (66.9   | )  |
| Businesspurchases/sales,net                                                   |  |                              | — |                             |  |   | (25.6   | )  |
| Other investingactivities                                                     |  |                              | (5.1    | )                           |  |   | (35.4   | )  |
| Netcash used for investingactivities                                          |  |                              | (37.5   | )                           |  |   | (127.9  | )  |
|                                                                          |  |                              |    |                             |  |   |    |    |
| **Financingactivities**                                                       |  |                              |    |                             |  |   |    |    |
| Cashdividends                                                                 |  |                              | — |                             |  |   | (29.0   | )  |
| Changes inshort-term debt,net                                                 |  |                              | (38.1   | )                           |  |   | (100.6  | )  |
| Proceeds fromlong-term debt                                                   |  |                              | 542.9   |                             |  |   | 0.6     |    |
| Repaymentsof long-termdebt                                                    |  |                              | (318.6  | )                           |  |   | (6.8    | )  |
| Deferredfinancingcosts                                                        |  |                              | (1.2    | )                           |  |   | — |    |
| Capitalcontributions (distributions),net                                      |  |                              | (437.6  | )                           |  |   | 31.6    |    |
| Other                                                                         |  |                              | (0.7    | )                           |  |   | (2.6    | )  |
| Netcash used for financingactivities                                          |  |                              | (253.3  | )                           |  |   | (106.8  | )  |
| Effect ofexchange rate changes on cash and cashequivalents                    |  |                              | (2.2    | )                           |  |   | 10.7    |    |
| Increase(decrease) in cash and cashequivalents                                |  |                              | (36.9   | )                           |  |   | 38.7    |    |
| Cash andcash equivalents at beginning ofperiod                                |  |                              | 100.0   |                             |  |   | 120.5   |    |
| Cashand cash equivalents at end ofperiod                                      |  | $                                 | 63.1    |                             |  | $      | 159.2   |    |
|                                                                               |

Seeaccompanying notes to condensed consolidated and combined financialstatements

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NalcoFinance Holdings LLC and Subsidiaries

Notes toCondensed Consolidated and Combined Financial Statements(Unaudited)(Dollars in Millions)

September 30, 2004

1.    Description ofBusiness and Change in Ownership

Description of Business

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

Change in Ownership

On November 4, 2003,Nalco Holdings LLC, a newly-formed entity controlled by affiliates ofThe Blackstone Group, L.P., Apollo Management, L.P., and The GoldmanSachs Group, Inc. (collectively, the Sponsors), pursuant to a StockPurchase Agreement (as amended, the Stock Purchase Agreement) with SuezS.A. (Suez or Seller) and certain of its affiliates, acquired the netassets of Ondeo Nalco Group (the Predecessor and as defined in Note 2below) for $4,127.1 million, including direct costs of the acquisitionof $125.6 million, excluding assumed debt of $30.2 million, and subjectto certain closing and post-closing adjustments (the Acquisition).

Nalco Holdings LLC was capitalized by equity investments totaling$991.9 million from the Sponsors and $10.0 million from Dr. William H.Joyce, the Chairman and Chief Executive Officer of Nalco Holdings LLC.The equity investments were made to Nalco Investment Holdings LLCwhich, in turn, contributed $1,001.9 million to Nalco Holdings LLC andwas its parent company until January 14, 2004.

On January 14,2004, Nalco Investment Holdings LLC contributed its 100%interest in Nalco Holdings LLC in exchange for a 100% interestin a newly formed entity, Nalco Finance Holdings LLC. As of that date,Nalco Finance Holdings LLC became the parent company and NalcoInvestment Holdings LLC became the indirect parent company of NalcoHoldings LLC. Subsequent to that date, the Sponsors and Dr. Joyceengaged in a series of transactions that ultimately resulted in a newlyformed entity, Nalco LLC, becoming the direct parent company of anothernewly formed entity, Nalco Investment Holdings II Corp., which, inturn, became the direct parent company of Nalco Investment HoldingsLLC.

Funding for the Acquisition included the equity investmentsand the issuance of senior notes and senior subordinated notes (theNotes) in a private offering, and new revolving credit and term loanfacilities by the Company, through its 100% owned subsidiary,Nalco Company.

The Stock Purchase Agreement provides for certainadjustments of the purchase price, including adjustments based on theclosing working capital and indebtedness (as both are defined in theStock Purchase Agreement) of the Predecessor at the date of theAcquisition. On March 25, 2004, the Company and Suez agreed to a $25.6million working capital adjustment payable to the Company plusinterest. This adjustment was not reflected in the consolidatedfinancial statements as of December 31, 2003. The Company recorded thepurchase price adjustment in 2004 by decreasing goodwill.

2.    Basis ofPresentation

These consolidated and combined financialstatements should be read in conjunction with the consolidatedfinancial statements of the Successor as of December 31, 2003 and forthe period from November 4, 2003 to December 31, 2003, the combinedfinancial statements of the Predecessor as of 

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2.    Basis ofPresentation  (continued)

December 31, 2002 and 2001 and for each of thetwo years in the period ended December 31, 2002 and the combinedfinancial statements of the Predecessor for the period from January 1,2003 to November 3, 2003.

Predecessor – Theaccompanying combined financial statements of the Predecessor prior tothe Acquisition include the consolidated financial statements of OndeoNalco Company and subsidiaries (ONC) and the combined financialstatements of certain subsidiaries of Nalco International SAS (NIS)plus Calgon Europe Limited (UK), owned by Degremont (a former relatedparty). The combined financial statements of NIS subsidiaries are acombination of the consolidated financial statements of Ondeo NalcoFrance, the consolidated financial statements of Aquazur Ltd., and theconsolidated financial statements of Nalco Dutch Holdings B.V., OndeoNalco Belgium NV/SA, Wyss Wassertechnik AG, Ondeo Nalco (Shanghai)Trading Co., Ltd., and Nalco Portuguesa (Quimica Industrial) Ltd. OndeoIndustrial Solutions North America, a subsidiary of ONC, has beenexcluded from the Predecessor, as it was not acquired by theCompany.

Successor – The accompanying consolidatedfinancial statements include the accounts of Nalco Finance Holdings LLCand subsidiaries (collectively, the Company) subsequent to theAcquisition.

The accompanying unaudited consolidated financialstatements of the Successor and unaudited combined financial statementsof the Predecessor have been prepared in accordance with generallyaccepted accounting principles for interim financial information.Accordingly, they do not include all of the information and footnotesrequired by accounting principles generally accepted in the UnitedStates for complete financial statements. Management believes thesefinancial statements include all normal recurring adjustmentsconsidered necessary for a fair presentation of the financial positionand results of operations of the Company. Operating results for thethree months and nine months ended September 30, 2004 are notnecessarily indicative of results that may be expected for the yearended December 31, 2004.

Certain reclassifications have beenmade to the prior year data to conform to the current year presentationwhich had no effect on net income reported for any period.

Theconsolidated financial statements of the Successor as of and for thethree months and nine months ended September 30, 2004 reflect theAcquisition under the purchase method of accounting, in accordance withthe Financial Accounting Standards Board("FASB") Statement of Financial AccountingStandards ("SFAS") No.  141,Business Combinations.

The following unaudited pro formafinancial data summarizes the results of operations for the threemonths and nine months ended September 30, 2003 as if the Acquisitionhad occurred as of the beginning of that period.

Pro formaadjustments include adjustments for (1) purchase accounting, including,(i) the elimination of inventory write-up recorded as a result of theAcquisition, (ii) adjustments to depreciation and amortization toreflect the fair value of property, plant and equipment and identifiedintangible assets (with finite lives), (iii) elimination of the pensionand other postretirement benefit amortization of unrecognized actuariallosses, prior service costs and transition obligations and assetslosses, and (2) adjustments for items directly related to thetransaction, including (i) rent expense that we would have incurred hadthe sublease of our Naperville, Illinois headquarters and researchfacility been in place, (ii) elimination of management fees that Suezand its affiliates charged to the Company for general corporateoverhead and of charges to Suez and its affiliates for tax planning andcompliance and treasury administration provided by the Company in NorthAmerica, (iii) adjustments to interest expense to reflect theCompany's new capital structure, and (iv) correspondingadjustments to income tax expense.

These pro forma amounts arenot necessarily indicative of the results that would have been attainedif the Acquisition had occurred at the beginning of each periodpresented or that may be attained in the future.

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2.    Basis ofPresentation  (continued)

|                          |  |                                     |       |                                    |  |        |         |         |  |  |
|--------------------------|--|-------------------------------------|-------|------------------------------------|--|--------|---------|---------|--|--|
|                     |  | Predecessor(unaudited)              |
|                     |  | ThreeMonths endedSeptember 30, 2003 |       | Nine MonthsendedSeptember 30, 2003 |
| Netsales                 |  | $                                   | 711.4 |                               |  | $      | 2,064.1 |    |
| Operatingearnings (loss) |  |                                | 85.4  |                               |  |   | (46.1   | )  |
| Netincome (loss)         |  | $                                   | (1.1  | )                             |  | $      | (257.8  | )  |
|                          |

TheCompany has not finalized the allocation of the purchase price as ofSeptember 30, 2004. The Company has preliminarily allocated thepurchase price on the basis of its current estimate of the fair valueof the underlying assets acquired and liabilities assumed asfollows:

|                                                  |  |                       |         |        |  |  |
|--------------------------------------------------|--|-----------------------|---------|--------|--|--|
|                                             |  | Asof November 4, 2003 |
| Currentassets:                                   |  |                  |    |   |
| Cash and cashequivalents                         |  | $                     | 24.3    |   |
| Trade accountsreceivable                         |  |                  | 477.5   |   |
| Inventories                                      |  |                  | 316.5   |   |
| Othercurrentassets                               |  |                  | 103.6   |   |
| Goodwill                                         |  |                  | 2,288.6 |   |
| Intangibleassets                                 |  |                  | 1,410.0 |   |
| Purchased in-process researchand development     |  |                  | 122.3   |   |
| Other noncurrentassets                           |  |                  | 366.3   |   |
| Property, plant andequipment                     |  |                  | 831.4   |   |
| Totalassetsacquired                              |  |                  | 5,940.5 |   |
| Currentliabilities:                              |  |                  |    |   |
| Accountspayable                                  |  |                  | 138.7   |   |
| Accruedexpenses                                  |  |                  | 266.2   |   |
| Other currentliabilities                         |  |                  | 74.3    |   |
| Long-termdebt                                    |  |                  | 30.2    |   |
| Deferred incometaxes                             |  |                  | 645.2   |   |
| Accrued pension and otherpostretirement benefits |  |                  | 539.9   |   |
| Othernoncurrentliabilities                       |  |                  | 144.2   |   |
| Totalliabilitiesassumed                          |  |                  | 1,838.7 |   |
| Netassetsacquired                                |  | $                     | 4,101.8 |   |
|                                                  |

Cashand cash equivalents, trade accounts receivable, other current assets,accounts payable, accrued expenses and other current liabilities werestated at historical carrying values, given the short-term nature ofthese assets and liabilities. Inventory and long-term debt outstandingas of the effective date of the Acquisition have been recorded based onmanagement's judgments and estimates. The Company'sprojected pension and other postretirement benefit obligations andassets have been reflected in the allocation of purchase price at theprojected benefit obligation less plan assets at fair market value,based on management's computations which included valuationsperformed by independent actuaries engaged by the Company. Deferredincome taxes have been provided in the consolidated balance sheet basedon the Company's preliminary estimates of the tax versus bookbasis of the assets acquired and liabilities assumed, as adjusted toestimated fair values. Valuation allowances were established fordeferred tax assets related to all of the net operating losscarryforwards for which utilization is uncertain.

The Companyengaged independent appraisers to assist in determining the fair valuesof property, plant and equipment and intangible assets acquired,including purchased in-process research and development (IPR&D),trade names, trademarks, developed technology and customerrelationships. The Company has received preliminary values from theappraisers, which have been included in the 

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2.    Basis ofPresentation  (continued)

above table, however, the final appraisals arenot yet complete. Thus, the Company has not yet completed itsallocation of purchase price and may make further adjustments to thepreliminary allocations. The Company expects to receive finalvaluations from the independent appraisers in the final quarter of 2004and complete its purchase accounting by the fourth quarter of 2004.

The Company recorded a one-time charge for purchased IPR&Dexpenses of $122.3 million during the nine months ended September 30,2004. The value of purchased IPR&D was comprised of five ongoingdevelopment projects at the date of the Acquisition. PurchasedIPR&D was derived by assigning values to those projects identifiedby management as having economic value, but that had not yet reachedtechnological feasibility and had no alternative future use. Theseproducts had not been released to the market as of the date of theAcquisition, but the features and functionality of the products hadbeen defined.

During the nine months ended September 30, 2004,the Company reduced by $21.5 million the estimated fair value ofproperty, plant and equipment to reflect the most recent updatedvaluation provided by its independent appraisers.

Trademarks andtrade names have been preliminarily valued based on the relief ofroyalty approach. This method allocates value based on what the Companywould be willing to pay as a royalty to a third-party owner of thetrademark or trade name in order to exploit the economic benefits.Trademarks and trade names that have been valued under this approachhave a preliminary value of $830.0 million with an estimated indefinitelife.

Patents and developed technology have been preliminarilyvalued based on the relief of royalty approach. This method allocatesvalue based on what the Company would be willing to pay as a royalty toa third-party owner of the patent or technology in order to exploit theeconomic benefits. The technologies that have been valued under thisapproach have a preliminary value of $100.0  million with anestimated weighted average useful life of 10 years.

Customerrelationships have been preliminarily valued using an income approachafter considering a fair return on fixed assets, working capital,patents, trade names, trademarks, technology, and assembled workforce.A preliminary value of $480.0  million has been assigned tocustomer relationships. As of December 31, 2003, an estimated usefullife of 10 years had been used based on preliminary informationobtained from our independent appraisers. In the nine months endedSeptember 30, 2004, we obtained updated information from ourindependent appraisers and revised the estimated useful life ofcustomer relationships to 16 years.

Based on the preliminaryestimates, approximately $3.4 billion of goodwill and other intangibleassets will not be deductible for income tax purposes. The primaryreasons for the Acquisition and the primary factors that contributed toa purchase price that resulted in recognition of goodwillinclude:

|              |                                                                                                                                                                                                                                                                     |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | The Company'sleading market position as a global provider of integrated watertreatment and process improvement services, chemicals and equipmentprograms for industrial and institutional applications offers acompetitive advantage in competing for newcustomers; |

|              |                                                                                                                                                                                                                                                                                                                                             |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | The Company beingone of only a small number of companies that can provide turnkey watermanagement solutions on a global basis (130 countries across sixcontinents) offers a competitive advantage in meeting the global needsof multinational customers and mitigates the potential impact ofvolatility in any individual country orregion; |

|              |                                                                                                                               |
|--------------|-------------------------------------------------------------------------------------------------------------------------------|
| •  | The diverse customerbase and industries served minimizes the potential impact of volatilityfrom any one customer or industry. |

Other considerationsaffecting the value of goodwill include:

|              |                                                                                                                                                                                                                                                                                                              |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | The potential for improvedearnings and cash flow gained from operating as a stand-alone companywith focused management effort and more efficient resource managementand from the ability of the assembled work force to drive significantannual cost reductions in the administrative and overheadfunctions; |

8

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2.    Basis ofPresentation  (continued)

|              |                                                                                                                          |
|--------------|--------------------------------------------------------------------------------------------------------------------------|
| •  | Thehistorical heavy investment in recruiting and continuously trainingmore than 5,000 sales professionals and engineers; |

|              |                                                                                                                                                                                                |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | The ability of the assembledworkforce to develop future innovative technologies and products, ashas been done in the past through a focused commitment to technology,research and development; |

|              |                                                                                                                                                                                                                                |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Theapplication of purchase accounting, particularly for such items aspension and other post-retirement benefits for which significantreserve balances were recorded with no corresponding significantshort-term cash outflows. |

In conjunction with the Acquisition,the Company has formulated a plan to exit or restructure certainactivities. The Company has recorded liabilities of $34.4 million,primarily for employee severance and related costs, in connection withthe Company's plan to exit or restructure certain activities. Asof September 30, 2004, $29.4 million has been charged against thisaccrual. The Company expects that these activities will be completed bythe end of the third quarter 2005.

The consolidated statement ofoperations for the nine months ended September 30, 2004 includes anadditional $14.5 million in cost of products sold related to the saleof inventory that had been revalued at selling price less costs to sellin purchase accounting.

3.    Trade AccountsReceivable Securitization

In June 2004, the Company enteredinto a three-year accounts receivable securitization facility with acommercial paper conduit sponsored by one of the lenders under theCompany's senior credit facilities. The facility provides up to$100 million in funding, based on availability of eligible tradeaccounts receivable and other customary factors.

In connectionwith the facility, the Company established a bankruptcy-remote, whollyowned, special purpose limited liability company (the"Transferor"), into which Nalco Company andone of its domestic subsidiaries (the"Sellers") transfer all eligible tradeaccounts receivable (the "Receivables").Pursuant to a Receivables Transfer Agreement, the Transferor thentransfers an undivided interest in the Receivables to the commercialpaper conduit or the related bank sponsor (the"Transferees") in exchange for cash.

The financing fee charged by the Transferees under the facility isbased on the amount funded and the conduit's cost of funds forissuing commercial paper plus a margin that varies based on theleverage ratio as calculated under the Company's senior creditfacilities. A commitment fee that varies based on the same ratio andthe unused portion of the facility is also charged by the conduit.Under the facility, Nalco Company services, administers and collectsthe Receivables, for which it receives a monthly servicing fee of1% per annum of the average daily outstanding balance ofReceivables.

Availability of funding under the facility dependsprimarily upon the outstanding Receivables balance from time to time.The facility may be terminated for, among other reasons, materialbreaches of representations and warranties, bankruptcies of the Sellersor the Transferor, a judgment or order for the payment of moneyrendered against the Transferor, cross-defaults to the Company'sother debt, or breach of specified financial covenants. The Company iscurrently in compliance with these covenants.

The facility isaccounted for as a secured borrowing, resulting in the funding andrelated Receivables being shown as liabilities and assets,respectively, on the Company's consolidated balance sheet and thecosts associated with the facility being recorded as interest expense.At September 30, 2004, the Company had outstanding borrowings of $47.6million under the facility, which the Company had used to repay termloans under the senior credit facilities.

9

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4.    Goodwill and Other IntangibleAssets

The changes in goodwill for the period were asfollows:

|                                                   |  |        |         |         |  |  |
|---------------------------------------------------|--|--------|---------|---------|--|--|
| Balanceas of December 31, 2003                    |  | $      | 2,500.1 |    |
| Adjustmentto record purchased IPR&Dexpense    |  |   | (122.3  | )  |
| Adjustment of Ondeo NalcoGroup purchase price     |  |   | (25.3   | )  |
| Revised fairvalue of property, plant andequipment |  |   | 21.5    |    |
| Adjustment to fair value ofother long term assets |  |   | 1.5     |    |
| Adjustment toaccrued liabilities                  |  |   | 21.9    |    |
| Adjustment todeferred income taxes                |  |   | (22.6   | )  |
| Effect offoreign currencytranslation              |  |   | (15.7   | )  |
| Balanceas of September 30,2004                    |  | $      | 2,359.1 |    |
|                                                   |

Thefollowing table reflects intangible assets and related amortizationinformation:

|                                               |  |                         |         |                         |  |             |         |                         |  |        |         |        |  |        |         |         |  |  |
|-----------------------------------------------|--|-------------------------|---------|-------------------------|--|-------------|---------|-------------------------|--|--------|---------|--------|--|--------|---------|---------|--|--|
|                                          |  | Asof September 30, 2004 |         | As of December 31,2003  |
|                                          |  | GrossAmount             |         | AccumulatedAmortization |  | GrossAmount |         | AccumulatedAmortization |
| Intangibleassets subject to amortization:     |  |
| Customerrelationships                         |  | $                       | 492.3   |                    |  | $           | (79.3   | )                  |  | $      | 494.4   |   |  | $      | (13.9   | )  |
| Patentsand developedtechnology                |  |                    | 100.5   |                    |  |        | (9.6    | )                  |  |   | 100.1   |   |  |   | (1.7    | )  |
| Intangibleassets not subject to amortization: |  |
| Trademarksand tradenames                      |  |                    | 830.0   |                    |  |        | — |                    |  |   | 830.0   |   |  |   | — |    |
|                                          |  | $                       | 1,422.8 |                    |  | $           | (88.9   | )                  |  | $      | 1,424.5 |   |  | $      | (15.6   | )  |
|                                               |

5.    Debt

Debt consists of thefollowing:

|                                              |  |                  |         |                 |  |        |         |        |  |  |
|----------------------------------------------|--|------------------|---------|-----------------|--|--------|---------|--------|--|--|
|                                         |  | September30,2004 |         | December31,2003 |
| **Short-term**                               |  |
| Checksoutstanding and bankoverdrafts         |  | $                | 12.3    |            |  | $      | 19.5    |   |
| Notes payableto banks                        |  |             | 0.1     |            |  |   | 1.5     |   |
| Current maturitiesof long-term debt          |  |             | 1.3     |            |  |   | 29.2    |   |
| Notespayable to affiliatedcompanies          |  |             | — |            |  |   | 1.7     |   |
|                                         |  | $                | 13.7    |            |  | $      | 51.9    |   |
| **Long-term**                                |  |
| Revolvingcreditfacility                      |  | $                | — |            |  | $      | 15.0    |   |
| Securitizedtrade accounts receivablefacility |  |             | 47.6    |            |  |   | — |   |
| Term loan A,due November 2009                |  |             | 225.6   |            |  |   | 311.2   |   |
| Termloan B, due November2010                 |  |             | 1,095.9 |            |  |   | 1,300.0 |   |
| Senior notes,due November 2011               |  |             | 913.1   |            |  |   | 917.7   |   |
| Seniorsubordinated notes, due November2013   |  |             | 713.1   |            |  |   | 717.7   |   |
| Unsecured notes,due May 2008                 |  |             | 27.8    |            |  |   | 27.8    |   |
| Seniordiscount notes due February2014        |  |             | 477.8   |            |  |   | — |   |
| Other                                        |  |             | 3.9     |            |  |   | 2.6     |   |
|                                         |  |             | 3,504.8 |            |  |   | 3,292.0 |   |
| Less:Currentportion                          |  |             | 1.3     |            |  |   | 29.2    |   |
|                                         |  | $                | 3,503.5 |            |  | $      | 3,262.8 |   |
|                                              |

10

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5.    Debt  (continued)

On January 21, 2004, Nalco FinanceHoldings LLC and Nalco Finance Holdings Inc. (together, the Issuers),issued $694.0 million aggregate principal amount at maturity of9.0% senior discount notes due 2014. Prior to February 1, 2009,interest will accrue on the senior discount notes in the form of anincrease in the accreted value of such notes. Thereafter, cash intereston the senior 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. At September 30, 2004, the seniordiscount notes had an accreted value of approximately $683.00 per$1,000 principal amount at maturity of notes, resulting in a totalaccreted value of $474.0 million. The $3.8 million difference betweenthe carrying value of the notes and the total accreted value representsa premium which is being amortized over the term of the notes.

The Company and the Issuers do not generate any revenue, and NalcoFinance Holdings Inc. was incorporated solely to accommodate theissuance of the notes by Nalco Finance Holdings LLC. All of theCompany's consolidated assets are owned, and all of theCompany's consolidated net sales are earned, by its direct andindirect subsidiaries. As of September 30, 2004, the Company'ssubsidiaries had $967.5 million of restricted net assets. The terms ofNalco Company's senior credit agreement fully prohibit NalcoHoldings LLC and its subsidiaries from paying dividends or otherwisetransferring their assets to the Issuers or the Company. Further, theterms of the indentures governing the senior notes and seniorsubordinated notes of Nalco Company significantly restrict NalcoCompany and the Issuers' other subsidiaries from paying dividendsor otherwise transferring assets to the Issuers or the Company. Theability of Nalco Company to make such payments is governed by a formulabased on its consolidated net income, as well as meeting certain otherconditions. Notwithstanding such restrictions, such indentures permitan aggregate of $50.0 million of such payments to be made whether ornot there is availability under the formula or the conditions to itsuse are met. The Issuers' subsidiaries will be permitted underthe terms of the senior credit facilities and other indebtedness toincur additional indebtedness that may severely restrict or prohibitthe making of distributions, the payment of dividends or the making ofloans by such subsidiaries to the Issuers or the Company.

6.    Unitholders'Equity

Unitholders' equity consists of thefollowing:

|                                        |  |                   |        |                   |  |        |         |         |  |  |
|----------------------------------------|--|-------------------|--------|-------------------|--|--------|---------|---------|--|--|
|                                   |  | September30, 2004 |        | December 31, 2003 |
| Capitalaccount                         |  | $                 | 564.3  |              |  | $      | 1,001.9 |    |
| Accumulateddeficit                     |  |              | (146.4 | )            |  |   | (24.1   | )  |
| Accumulatedother comprehensiveincome:  |  |              |   |              |  |   |    |    |
| Foreign currencytranslationadjustments |  |              | 72.9   |              |  |   | 91.2    |    |
| Totalunitholders'equity                |  | $                 | 490.8  |              |  | $      | 1,069.0 |    |
|                                        |

Duringthe nine months ended September 30, 2004, Nalco Finance Holdings LLCused the net proceeds of the issuance of the senior discount notes due2014 to make a return of capital distribution of approximately $446.9million to its parent, Nalco Investment Holdings LLC, which in turnmade a distribution to the holders of its membership interests.

Also during the nine months ended September 30, 2004, the Companyreceived additional capital contributions of $9.3 million from itsdirect parent company, Nalco Investment Holdings LLC. This resultedfrom capital contributions received by the Company's ultimateparent company, Nalco LLC, comprised of an additional equity investmentof $1.2 million by Dr. William H. Joyce and $8.1 million in proceedsfrom the sale of equity interests to certain officers and key employeesunder the Nalco LLC 2004 Unit Plan.

11

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7.    Pensionand Other Postretirement Benefit Plans

The components of netperiodic pension cost and the cost of other postretirement benefits forthe three months and nine months ended September 30, 2004 and 2003 wereas follows:

|                                   |  |                                   |         |                                   |  |                                  |         |                                  |  |        |         |         |  |        |       |         |  |  |
|-----------------------------------|--|-----------------------------------|---------|-----------------------------------|--|----------------------------------|---------|----------------------------------|--|--------|---------|---------|--|--------|-------|---------|--|--|
|                              |  | PensionBenefits                   |
|                              |  | Successor                         |         | Predecessor                       |  | Successor                        |         | Predecessor                      |
|                              |  | ThreeMonthsendedSeptember 30,2004 |         | ThreeMonthsendedSeptember 30,2003 |  | NineMonthsendedSeptember 30,2004 |         | NineMonthsendedSeptember 30,2003 |
| Servicecost                       |  | $                                 | 6.6     |                              |  | $                                | 5.1     |                             |  | $      | 21.1    |    |  | $      | 17.7  |    |
| Interestcost                      |  |                              | 9.0     |                              |  |                             | 7.7     |                             |  |   | 29.1    |    |  |   | 27.7  |    |
| Expectedreturn on plan assets     |  |                              | (6.3    | )                            |  |                             | (6.6    | )                           |  |   | (19.9   | )  |  |   | (24.4 | )  |
| Amortizationof prior service cost |  |                              | — |                              |  |                             | (0.5    | )                           |  |   | — |    |  |   | (1.9  | )  |
| Recognizednet actuarial loss      |  |                              | — |                              |  |                             | 3.0     |                             |  |   | — |    |  |   | 11.1  |    |
| Specialtermination benefits       |  |                              | — |                              |  |                             | — |                             |  |   | — |    |  |   | 0.6   |    |
| Settlementcharge                  |  |                              | — |                              |  |                             | — |                             |  |   | — |    |  |   | 0.7   |    |
| Curtailment                       |  |                              | — |                              |  |                             | — |                             |  |   | — |    |  |   | 0.9   |    |
| Netperiodic cost                  |  | $                                 | 9.3     |                              |  | $                                | 8.7     |                             |  | $      | 30.3    |    |  | $      | 32.4  |    |
|                                   |

|                                   |  |                                   |         |                                   |  |                                  |      |                                  |  |        |         |        |  |        |      |         |  |  |
|-----------------------------------|--|-----------------------------------|---------|-----------------------------------|--|----------------------------------|------|----------------------------------|--|--------|---------|--------|--|--------|------|---------|--|--|
|                              |  | OtherPostretirementBenefits       |
|                              |  | Successor                         |         | Predecessor                       |  | Successor                        |      | Predecessor                      |
|                              |  | ThreeMonthsendedSeptember 30,2004 |         | ThreeMonthsendedSeptember 30,2003 |  | NineMonthsendedSeptember 30,2004 |      | NineMonthsendedSeptember 30,2003 |
| Servicecost                       |  | $                                 | 1.2     |                              |  | $                                | 1.0  |                             |  | $      | 4.1     |   |  | $      | 3.6  |    |
| Interestcost                      |  |                              | 1.8     |                              |  |                             | 1.7  |                             |  |   | 6.2     |   |  |   | 6.4  |    |
| Amortizationof prior service cost |  |                              | — |                              |  |                             | (2.0 | )                           |  |   | — |   |  |   | (7.1 | )  |
| Recognizednet actuarial loss      |  |                              | — |                              |  |                             | 1.4  |                             |  |   | — |   |  |   | 5.1  |    |
| Netperiodic cost                  |  | $                                 | 3.0     |                              |  | $                                | 2.1  |                             |  | $      | 10.3    |   |  | $      | 8.0  |    |
|                                   |

OnDecember 8, 2003, the Medicare Prescription Drug, Improvement andModernization Act of 2003 (the Act) was signed into law. The Actexpands Medicare, primarily adding a prescription drug benefit forMedicare-eligible retirees starting in 2006. The Company has determinedthat prescription drug benefits that it provides to its retirees do notqualify for the federal subsidy provided by the Act. Accordingly, noaccounting recognition is required.

The Company contributed $4.1million to its principal domestic pension plan during the third quarter2004.

8.    EquityCompensation Plan

Nalco LLC, the Company's ultimateparent company, established the Nalco LLC 2004 Unit Plan (the"Plan") for purposes of (i) attracting andretaining exceptional officers and other key employees, non-employeedirectors and consultants of Nalco LLC and the Company and (ii)enabling such individuals to acquire an equity interest in Nalco LLCand to participate in the long-term growth and financial success ofNalco LLC and the Company.

During the second quarter 2004, NalcoLLC granted certain officers and key employees of the Company rights topurchase a designated number of one or more classes of equity interests("Units") in Nalco LLC. Those officers andkey employees who elected to purchase such Units did so at their fairvalue, as determined by an independent valuation advisor.

TheUnits subject to the Plan include Class A, Class B, Class C, and ClassD Units. The Class A Units are fully vested at the time of purchase byan employee and have economic characteristics that are similar to thoseof shares of common stock in a private corporation. The Class B, ClassC, and Class D Units are subject to vesting provisions, meaning that inorder for such Units to be entitled to distributions or other benefits,an employee will have to continue to provide services for a certain

12

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8.    EquityCompensation Plan  (continued)

period of time. However, with respect to theClass C and Class D Units, such vesting will be accelerated if theCompany achieves certain performance targets. The Units also becomefully vested 18 months after a change in control of the Company,subject to certain other conditions.

Though the Plan wasestablished by the Company's ultimate parent company, the Companywill account for the Plan since its economic substance is substantiallythe same for the Company and its employees. As permitted by SFAS No.123, Accounting for Stock-Based Compensation, the Companyaccounts for employee stock-based compensation in accordance withAccounting Principles Board Opinion No. 25, Accounting for StockIssued to Employees. Since the price of the Units offered was theirfair value, no earned or unearned compensation expense was recognizedon the grant date. The grant date represents the measurement date forthe Class A, Class B, and Class C Units, and these Units will besubject to "fixed" plan accounting. However,due to the vesting provisions of the Class D Units, the measurementdate is not yet determined, and the Class D Units will be subject to"variable" plan accounting.

As aresult of the purchase of Units under the Plan by key officers andemployees, the Company received an additional contribution of capitalof $8.1 million.

9.    BusinessOptimization Expenses

During 2002, the Predecessor began aprogram to realign its support for the petroleum, petrochemical, pulp,and paper industries to provide one-stop process improvement and watertreatment sales and service to these key customers. As a result, thePredecessor incurred expenses of $5.1 million and $13.2 million duringthe three months and nine months ended September 30, 2003,respectively, which consisted primarily of severance, outplacement, andemployee relocations. This program was completed in 2003.

As aresult of acquiring Exxon's interest in the Nalco/Exxon EnergyChemicals, L.P. (Nalco/Exxon) joint venture in 2001, the Predecessorincurred costs related to integrating the operations of the jointventure with those of the Predecessor. Certain costs which were relatedto the integration, including severance, relocations, and assetimpairments, were accrued as a liability on the date of acquisition.The Predecessor also incurred consulting and other expenses that werecharged to business optimization expenses during 2003 and 2002,including $0.4 million and $2.0 million during the three months andnine months ended September 30, 2003, respectively.

10.    Summary of Other Income (Expense)

The components of other income (expense), net for the three monthsand nine months ended September 30, 2004 and 2003, include thefollowing:

|                                                  |  |                                   |         |                                   |  |                                  |         |                                  |  |        |         |         |  |        |         |         |  |  |
|--------------------------------------------------|--|-----------------------------------|---------|-----------------------------------|--|----------------------------------|---------|----------------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                             |  | Successor                         |         | Predecessor                       |  | Successor                        |         | Predecessor                      |
|                                             |  | ThreeMonthsendedSeptember 30,2004 |         | ThreeMonthsendedSeptember 30,2003 |  | NineMonthsendedSeptember 30,2004 |         | NineMonthsendedSeptember 30,2003 |
| Gain(loss) on sale of business                   |  | $                                 | — |                              |  | $                                | (5.7    | )                           |  | $      | — |    |  | $      | (5.0    | )  |
| Sponsor monitoring fees                          |  |                              | (2.7    | )                            |  |                             | — |                             |  |   | (8.4    | )  |  |   | — |    |
| Suezmanagement fees                              |  |                              | — |                              |  |                             | (0.8    | )                           |  |   | — |    |  |   | (2.3    | )  |
| Franchisetaxes                                   |  |                              | (0.8    | )                            |  |                             | 3.8     |                             |  |   | (2.3    | )  |  |   | 1.0     |    |
| Equityin earnings of unconsolidated subsidiaries |  |                              | 1.1     |                              |  |                             | 0.4     |                             |  |   | 2.4     |    |  |   | 1.7     |    |
| Foreigncurrency exchange adjustments             |  |                              | 0.2     |                              |  |                             | (0.4    | )                           |  |   | (1.0    | )  |  |   | 2.8     |    |
| Terminationof interest rate swap                 |  |                              | — |                              |  |                             | (10.9   | )                           |  |   | — |    |  |   | (10.9   | )  |
| Other                                            |  |                              | 1.0     |                              |  |                             | 0.8     |                             |  |   | 2.8     |    |  |   | (0.3    | )  |
|                                             |  | $                                 | (1.2    | )                            |  | $                                | (12.8   | )                           |  | $      | (6.5    | )  |  | $      | (13.0   | )  |
|                                                  |

13

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11.    Income Taxes

Thedifference between the Company's effective tax rate and the U.S.federal tax rate of 35% for the three months ended September 30,2004 is primarily attributable to the one-time impact of creating atax-efficient method of repatriating earnings from certain offshoresubsidiaries, incremental U.S. taxes on the repatriation of othernon-U.S. earnings, and the interest expense on the senior discountnotes issued in January 2004. Under U.S. tax law, the deduction forthis interest is passed directly to the Company's owners.

The difference between the Predecessor's effective tax rateand the U.S. federal tax rate of 35% for the three months endedSeptember 30, 2003 was primarily attributable to the income tax impacton the loss on the sale of the Predecessor's South Africansubsidiary.

The difference between the Company's and thePredecessor's effective tax rate and the U.S. federal tax rate of35% for the nine months ended September 30, 2004 and September30, 2003 is primarily attributable to the nondeductible $122.3 millioncharge for purchased IPR&D and the $244.4 million of nondeductiblegoodwill impairment, respectively. Other factors contributing to thedifference are the incremental tax costs of repatriating non-U.S.earnings, the 2004 interest expense on the senior discount notes,non-U.S. taxes, state taxes and other permanent differences.

12.    Comprehensive Income

Total comprehensive incomeand its components, net of related tax, for the three months and ninemonths ended September 30, 2004 and 2003, are as follows:

|                                                |  |                                   |         |                                   |  |                                  |      |                                  |  |        |         |         |  |        |        |         |  |  |
|------------------------------------------------|--|-----------------------------------|---------|-----------------------------------|--|----------------------------------|------|----------------------------------|--|--------|---------|---------|--|--------|--------|---------|--|--|
|                                           |  | Successor                         |         | Predecessor                       |  | Successor                        |      | Predecessor                      |
|                                           |  | ThreeMonthsendedSeptember 30,2004 |         | ThreeMonthsendedSeptember 30,2003 |  | NineMonthsendedSeptember 30,2004 |      | NineMonthsendedSeptember 30,2003 |
| Netincome (loss)                               |  | $                                 | 2.0     |                              |  | $                                | 33.7 |                             |  | $      | (122.3  | )  |  | $      | (154.0 | )  |
| Othercomprehensive income, net of incometaxes: |  |
| Gain on derivative instruments                 |  |                              | — |                              |  |                             | 8.0  |                             |  |   | — |    |  |   | 8.5    |    |
| Foreigncurrency translation adjustments        |  |                              | 44.3    |                              |  |                             | 13.2 |                             |  |   | (18.3   | )  |  |   | 50.9   |    |
| Comprehensiveincome (loss)                     |  | $                                 | 46.3    |                              |  | $                                | 54.9 |                             |  | $      | (140.6  | )  |  | $      | (94.6  | )  |
|                                                |

13.    SegmentInformation

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

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

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

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

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

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

14

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13.    SegmentInformation  (continued)

Beginning with the three months endedSeptember 30, 2004, the Company began reporting Pacific region resultsrelated to the Industrial and Institutional Services segment and thePaper Services segment with those segments. These results hadpreviously been reported in the Other segment. Amounts for priorperiods have been restated to conform with this change in thecomposition of the Company's reportable segments.

TheCompany evaluates the performance of its segments based on"direct contribution", which is defined asnet sales, less cost of products sold (excluding variances to standardcosts), selling and service expenses, marketing expenses and researchexpenses directly attributable to each segment. There are nointersegment revenues. Prior year data have been reclassified betweensegments to conform to the current year presentation.

Net salesby reportable segment were as follows:

|                                       |  |                                   |       |                                   |  |                                  |       |                                 |  |        |         |        |  |        |         |        |  |  |
|---------------------------------------|--|-----------------------------------|-------|-----------------------------------|--|----------------------------------|-------|---------------------------------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                                  |  | Successor                         |       | Predecessor                       |  | Successor                        |       | Predecessor                     |
|                                  |  | ThreeMonthsendedSeptember 30,2004 |       | ThreeMonthsendedSeptember 30,2003 |  | NineMonthsendedSeptember 30,2004 |       | NineMonthsendedSeptember30,2003 |
| Industrial and Institutional Services |  | $                                 | 355.4 |                              |  | $                                | 336.1 |                            |  | $      | 1,036.7 |   |  | $      | 954.6   |   |
| EnergyServices                        |  |                              | 200.1 |                              |  |                             | 180.8 |                            |  |   | 592.2   |   |  |   | 531.1   |   |
| PaperServices                         |  |                              | 164.7 |                              |  |                             | 159.8 |                            |  |   | 490.0   |   |  |   | 463.2   |   |
| Other                                 |  |                              | 54.0  |                              |  |                             | 34.7  |                            |  |   | 109.0   |   |  |   | 115.2   |   |
| Netsales                              |  | $                                 | 774.2 |                              |  | $                                | 711.4 |                            |  | $      | 2,227.9 |   |  | $      | 2,064.1 |   |
|                                       |

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

|                                            |  |                                   |         |                                   |  |                                  |         |                                 |  |        |         |         |  |        |         |         |  |  |
|--------------------------------------------|--|-----------------------------------|---------|-----------------------------------|--|----------------------------------|---------|---------------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                       |  | Successor                         |         | Predecessor                       |  | Successor                        |         | Predecessor                     |
|                                       |  | ThreeMonthsendedSeptember 30,2004 |         | ThreeMonthsendedSeptember 30,2003 |  | NineMonthsendedSeptember 30,2004 |         | NineMonthsendedSeptember30,2003 |
| Segment directcontribution:                |  |
| Industrial and InstitutionalServices       |  | $                                 | 88.0    |                              |  | $                                | 94.0    |                            |  | $      | 257.7   |    |  | $      | 239.9   |    |
| EnergyServices                             |  |                              | 40.0    |                              |  |                             | 41.0    |                            |  |   | 124.8   |    |  |   | 121.9   |    |
| PaperServices                              |  |                              | 35.8    |                              |  |                             | 39.5    |                            |  |   | 112.1   |    |  |   | 108.2   |    |
| Other                                      |  |                              | (4.1    | )                            |  |                             | (10.7   | )                          |  |   | (45.4   | )  |  |   | (32.6   | )  |
| Totalsegment direct contribution           |  |                              | 159.7   |                              |  |                             | 163.8   |                            |  |   | 449.2   |    |  |   | 437.4   |    |
| Income(expenses) not allocated tosegments: |  |
| Administrative expenses                    |  |                              | (42.0   | )                            |  |                             | (51.8   | )                          |  |   | (139.3  | )  |  |   | (158.7  | )  |
| Amortizationof intangible assets           |  |                              | (23.9   | )                            |  |                             | (20.5   | )                          |  |   | (73.0   | )  |  |   | (61.8   | )  |
| Impairmentof goodwill                      |  |                              | — |                              |  |                             | — |                            |  |   | — |    |  |   | (244.4  | )  |
| In-processresearch and development         |  |                              | — |                              |  |                             | — |                            |  |   | (122.3  | )  |  |   | — |    |
| Businessoptimization expenses              |  |                              | — |                              |  |                             | (5.5    | )                          |  |   | — |    |  |   | (15.2   | )  |
| Operatingearnings (loss)                   |  |                              | 93.8    |                              |  |                             | 86.0    |                            |  |   | 114.6   |    |  |   | (42.7   | )  |
| Otherincome (expense), net                 |  |                              | (1.2    | )                            |  |                             | (12.8   | )                          |  |   | (6.5    | )  |  |   | (13.0   | )  |
| Interestincome                             |  |                              | 2.3     |                              |  |                             | 1.1     |                            |  |   | 7.7     |    |  |   | 5.4     |    |
| Interestexpense                            |  |                              | (64.0   | )                            |  |                             | (9.7    | )                          |  |   | (187.7  | )  |  |   | (29.2   | )  |
| Earnings(loss) before income taxes         |  | $                                 | 30.9    |                              |  | $                                | 64.6    |                            |  | $      | (71.9   | )  |  | $      | (79.5   | )  |
|                                            |

14.    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 

15

----

14.    Contingenciesand Litigation  (continued)

have not had a material impact on theconsolidated financial position of the Company. However, the Companycannot predict the outcome of any litigation or the potential forfuture litigation.

The Company has been named as a potentiallyresponsible party (PRP) by the Environmental Protection Agency or stateenforcement agencies at three waste sites where some financialcontribution is or may be required. These agencies have also identifiedmany other parties who may be responsible for clean up costs at thesewaste disposal sites. The Company's financial contribution toremediate these sites is expected to be minor. There has been nosignificant financial impact on the Company up to the present, nor isit anticipated that there will be in the future, as a result of thesematters. The Company has made and will continue to make provisions forthese costs if the Company's liability becomes probable and whencosts can be reasonably estimated. The Company's undiscountedreserves for known environmental clean up costs were $2.0 million atSeptember 30, 2004.

These environmental reserves representmanagement's current estimate of its proportional clean-up costsand are based upon negotiation and agreement with enforcement agencies,its previous experience with respect to clean-up activities, a detailedreview by the Company of known conditions, and information about otherPRPs. They are not reduced by any possible recoveries from insurancecompanies or other PRPs not specifically identified. Althoughmanagement cannot determine whether or not a material effect on futureoperations is reasonably likely to occur, given the evolving nature ofenvironmental regulations, it believes that the recorded reserve levelsare appropriate estimates of the potential liability. Althoughsettlement will require future cash outlays, it is not expected thatsuch outlays will materially impact the Company's liquidityposition. Expenditures for the three months and nine months endedSeptember 30, 2004, relating to environmental compliance and clean upactivities were not significant.

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

The Company has received subpoenas fromthe U.S. Department of Justice for documents and testimony relating toits storage of claimed hazardous materials and the claimed leakage ofwastewater at its plant in Garyville, Louisiana. No charges orindictments have been filed, but the outcome of this investigation isunknown to the Company.

In the ordinary course of its business,the Company is also a party to a number of lawsuits and is subject tovarious claims relating to trademarks, employee matters, contracts andchemicals, the outcome of which, in the opinion of management, shouldnot have a material effect on the consolidated financial position ofthe Company. However, we cannot predict the outcome of any litigationor the potential for future litigation. The Company maintains accrualsand/or has insurance in those instances where there is reason tobelieve that significant costs might be incurred.

15.    Guarantees

No significant guarantees wereoutstanding at September 30, 2004, other than subsidiary-relatedperformance guarantees.

The Company had $34.5 million of lettersof credit outstanding at September 30,2004.

16

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

The followingdiscussion and analysis of our financial condition and results ofoperations covers periods prior to the Transactions, defined as theacquisition of Ondeo Nalco Group, comprised of Nalco Company and NalcoInternational SAS Subsidiaries, by Nalco Holdings and the relatedfinancings in connection with such acquisition. Accordingly, thediscussion and analysis of historical periods prior to the Transactionsdo not reflect the significant impact that the Transactions have had onus. In addition, the statements in the discussion and analysisregarding industry outlook, our expectations regarding the performanceof our business and the other non-historical statements in thediscussion and analysis are forward-looking statements. Theseforward-looking statements are subject to numerous risks anduncertainties. Our actual results may differ materially from thosecontained in or implied by any forward-looking statements. You shouldread the following discussion together with the consolidated andcombined financial statements of Nalco Finance Holdings LLC includedelsewhere in this report.

"SafeHarbor" Statement Under Private Securities LitigationReform Act of 1995

This Quarterly Report for the fiscal quarterended September 30, 2004 (the "QuarterlyReport") includes "forward-lookingstatements" within the meaning of Section 27A of theSecurities Act of 1933 and Section 21E of the Securities Exchange Actof 1934. These forward-looking statements include statements concerningour plans, objectives, goals, strategies, future events, future revenueor performance, capital expenditures, financing needs, plans orintentions relating to acquisitions, business trends and otherinformation that is not historical information. When used in thisQuarterly Report, the words "estimates,""expects,""anticipates,""projects,""plans," "intends,"" believes,""forecasts," or future or conditional verbs,such as "will,""should," "could"or "may," and variations of such words orsimilar expressions are intended to identify forward-lookingstatements. All forward-looking statements, including, withoutlimitation, management's examination of historical operatingtrends and data are based upon our current expectations and variousassumptions. Our expectations, beliefs and projections are expressed ingood faith and we believe there is a reasonable basis for them.However, there can be no assurance that management'sexpectations, beliefs and projections will be achieved.

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

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

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

|              |                             |
|--------------|-----------------------------|
| •  | increases ininterest rates; |

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

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

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

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

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

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

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

|              |                                            |
|--------------|--------------------------------------------|
| •  | our significantpension benefitobligations; |

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

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

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

There may be other factors thatmay cause our actual results to differ materially from theforward-looking statements. All forward-looking statements attributableto us or persons acting on our behalf apply only as of the date of thisQuarterly Report and are expressly qualified in their entirety by thecautionary statements included in this Quarterly Report. We undertakeno obligation to update or revise forward-looking statements which maybe made to reflect events or circumstances that arise after the datemade or to reflect the occurrence of unanticipated events.

Executive Overview

During the three monthsended September 30, 2004, we generated strong sales growth compared tothe three months ended September 30, 2003, which enabled us to makediscretionary debt reduction payments during the three months endedSeptember 30, 2004, including paying down $90.0 million of term loandebt. These accelerated payments helped reduce our indebtedness, net ofour change in cash and cash equivalents, by $81.0 million during thethree months ended September 30, 2004.

Net sales for thethree months ended September 30, 2004 increased 8.8% to $774.2million from $711.4 million for the same period last year. Changes inforeign currency translation rates accounted for 3.3% of thegrowth. A total of $4.5 million, or 0.6%, of the increase insales came from net acquisition/divestiture activity, driven primarilyby the addition of Katayama Nalco sales above the amount we contributedto the Japanese joint venture, minus sales from our divested SouthAfrica business. On an organic basis, which excludes the impacts ofchanges in foreign currency translation rates and acquisitions anddivestitures, our sales grew 4.9% even as cool summer weatherand hurricane-based plant shutdowns modestly affected sales.

All three of our major segments contributed to our salesgrowth during the three months ended September 30, 2004, led by theEnergy Services segment, which increased sales 10.7% compared tothe three months ended September 30, 2003. Industrial and InstitutionalServices sales grew 5.7%, while Paper Services improved sales by3.1%. The Other segment, consisting mainly of Katayama Nalco,our operations in India, our Integrated Channels Group and somemiscellaneous sales, grew 55.6% compared to the three monthsended September 30, 2003, primarily as a result of our consolidation ofKatayama Nalco's sales.

Gross margins declinedfrom 52.5% in the three months ended September 30, 2004 to49.0% in the three months ended September 30, 2003, largely dueto freight and raw material cost increases and changes in product mix,with lower gross margin mining and oil and gas exploration servicesgrowing significantly faster than our other business units, whileabove-average gross margin cooling water sales grew more slowly as aresult of cooler than normal July and August weather in NorthAmerica.

During the three months ended September 30, 2004,supply constraints of acrylic acid, cationic monomer and siliconechallenged us to raise prices and develop alternate suppliers andproducts. While we had anticipated increased costs during this period,the magnitude of the cost increases has been higher than we hadpreviously anticipated. We have, however, not faced shortages in a fewsignificant raw materials since vendors have allocated to us suppliesof these materials.

We have a number of options to counter thesecost increases, including active price management, using existingalternative technologies and developing new offerings. All of theseoptions take a period of time before the benefits can be reflected inour results.

We have quickly moved to replace some productscontaining supply-constricted materials with alternative products whilemaintaining or improving customer performance as fully as possible. Wehave also announced additional price increases in September 2004designed to begin taking effect during the fourth quarter of 2004. Weexpect these price increases to offset higher freight costs, inaddition to offsetting raw material costs that continued to risethrough the three months ended September 30, 2004. Because of theservice nature of our business, it generally takes several monthsbefore the full impacts of price increases are reflected in ourresults.

Certain of our new product programs also reduce ourdependence on selected raw materials. Our 3D TRASAR®stress management system for cooling water improves customerperformance while 

18

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

reducing demand for acrylic-acid-basedproducts. In the three months ended September 30, 2004, we hadapproximately $7.0 million of sales of our 3D TRASAR®stress management system.

Corporate-level cost reductionscontributed to a 9.1% improvement in operating earnings in thethree months ended September 30, 2004 compared to the same period lastyear, of which 6.3% was organic (i.e., excluding the impacts ofchanges in foreign currency translation rates and acquisitions anddivestitures).

Net income was $2.0 million in the three monthsended September 30, 2004, compared to $33.7 million in the three monthsended September 30, 2003. This change is primarily due to changes ininterest expense, which was $64.0 million during the three months endedSeptember 30, 2004 compared to $9.7 million during the three monthsended September 30, 2003, prior to the Acquisition.

Our largestcapital expenditure project in 2004 is for information systems. InOctober 2004, we successfully completed conversion of our North Americabusiness to a new SAP platform. We expect our European operations toconvert to the SAP platform at the beginning of January 2005. Inanticipation of a possible interruption in product shipments due to theconversion, we plan to encourage our European customers to acceptproduct shipments early, under normal terms of sale, which will resultin the shifting of some sales from the first quarter of 2005 to thefourth quarter of 2004. We cannot reasonably estimate the impact ofthese sales on our fourth quarter results at this time, but we expectthe amounts to be fairly limited. We intend to clarify these impacts onour results when announcing fourth quarter sales and earnings.

The capital demands on our business remain low. For the three monthsended September 30, 2004, our net capital expenditures were $22.8million compared to $26.5 million in the three months ended September30, 2003, with nearly one-third of the expenditures attributed to ourSAP project. We expect capital costs for information technology todecline in 2005 with the completion of the SAP project in Europe.However, we expect our annual capital spending to remain atapproximately $100 million in 2005 as we expand capacity in a fewselect areas, such as our supply chain, to meet volume growth.

Results of Operations

Three Months Ended September30, 2004 Compared to the Three Months Ended September 30, 2003

Net sales for the quarters ended September 30, 2004 and September30, 2003 may be compared asfollows:

|                                       |  |                    |       |                   |  |                     |       |                                                |  |         |      |         |  |        |     |         |  |        |      |          |  |        |      |         |  |  |
|---------------------------------------|--|--------------------|-------|-------------------|--|---------------------|-------|------------------------------------------------|--|---------|------|---------|--|--------|-----|---------|--|--------|------|----------|--|--------|------|---------|--|--|
|                                  |  | Successor          |       | Predecessor       |  |                |       | Attributableto Changesin the Following Factors |
|                                  |  | Three MonthsEnded  |       | %Change           |  |                     |
| (dollarsin millions)                  |  | September 30, 2004 |       | September 30,2003 |  | CurrencyTranslation |       | Acquisitions/Divestitures                      |  | Organic |      |
| Industrial& InstitutionalServices |  | $                  | 355.4 |              |  | $                   | 336.1 |                                           |  |    | 5.7  | %  |  |   | 3.5 | %  |  |   | (0.4 | )%  |  |   | 2.6  | %  |
| EnergyServices                        |  |               | 200.1 |              |  |                | 180.8 |                                           |  |    | 10.7 | %  |  |   | 3.2 | %  |  |   | (1.9 | )%  |  |   | 9.4  | %  |
| PaperServices                         |  |               | 164.7 |              |  |                | 159.8 |                                           |  |    | 3.1  | %  |  |   | 3.0 | %  |  |   | (1.4 | )%  |  |   | 1.5  | %  |
| Other                                 |  |               | 54.0  |              |  |                | 34.7  |                                           |  |    | 55.6 | %  |  |   | 4.0 | %  |  |   | 33.1 | %   |  |   | 18.5 | %  |
| Netsales                              |  | $                  | 774.2 |              |  | $                   | 711.4 |                                           |  |    | 8.8  | %  |  |   | 3.3 | %  |  |   | 0.6  | %   |  |   | 4.9  | %  |
|                                       |

NetSales.    Net sales for the three months ended September 30,2004 were $774.2 million, an 8.8% increase over the $711.4million reported for the three months ended September 30, 2003. Afteradjusting for the favorable effects of changes in foreign currencytranslation rates and the impact of acquisitions and divestitures, netsales were up 4.9%. This improvement was driven by favorablesales growth broadly spread across our customer base. The EnergyServices division, led by strong oil and gas production service sales,posted significant organic growth in sales of 9.4% over the sameperiod 

19

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

last year. The Industrial and InstitutionalServices division reported broad-based growth across most of themarkets and geographic regions it serves, led by its global miningbusiness. Solid gains in our water treatment business in the MiddleEast, Latin America and the Pacific region, also contributed to the2.6% organic growth reported by the Industrial and InstitutionalServices division. Organically, Paper Services division sales wereslightly favorable compared to a year ago, reflecting continued growthin the Pacific region, Latin America and Europe, partly offset by thelingering effect of 2003 price and contract concessions in NorthAmerica. The variation in revenue recognition adjustments for Europeand North America accounted for most of the organic change in"other" sales. In addition,"other" sales include the sales of a newJapanese joint venture, Katayama Nalco, which was formed with KatayamaChemical Inc. to accelerate our development in this importantindustrialized market. The increase in"other" sales attributable toacquisitions/divestitures includes the incremental impact of KatayamaNalco, which was partially offset by the effect of the 2003 divestitureof the Predecessor's South African subsidiary.

GrossProfit.    Gross profit, defined as the difference between netsales and costs of products sold, of $379.5 million for the threemonths ended September 30, 2004 increased by $6.0 million, or1.6%, over the $373.5 million reported for the three monthsended September 30, 2003. Adjusted for the favorable effects of changesin foreign currency translation rates and the impact of acquisitionsand divestitures, gross profit decreased by $7.0 million, or1.9%. The most notable factors contributing to this decreasewere the aforementioned increase in sales volumes, which favorablyimpacted gross profit by approximately $15.5 million, but which wasmore than offset by margin erosion mainly due to product mix ($11.0million), increased raw material ($4.5 million), and freight costs($4.0 million). The most significant margin erosion was in theIndustrial and Institutional Services division, whose gross profitmargin declined 3.9% from the three months ended September 30,2003. A significant portion of this decline was driven by the strongersales growth in lower margin business, primarily global mining. Thisunfavorable mix impact was amplified by raw material and freightincreases. In addition, both the Paper Services division and the EnergyServices division gross profit margin declined by more than 3%compared to the three months ended September 30, 2003. Paper Serviceswas mostly affected by the negative price impact resulting fromcontract renegotiations and by increased freight costs, whereas EnergyServices was mostly affected by a combination of mix — strongerorganic growth of lower margin upstream businesses — and higherraw material costs.

Selling, Administrative and ResearchExpenses.    Selling, administrative and research expenses forthe three months ended September 30, 2004 were $261.8 million, anincrease of $0.3 million, or 0.1%, from $261.5 million for thethree months ended September 30, 2003. Adjusted for the unfavorableeffects of changes in foreign currency translation rates and the impactof acquisitions and divestitures, selling, administrative, and researchexpenses decreased by $9.7 million, or 3.7%, primarily due tospending reduction initiatives launched at the end of 2003 andtightened spending controls in 2004.

Amortization ofIntangible Assets.    Amortization of intangible assets was$23.9 million and $20.5 million for the three months ended September30, 2004 and 2003, respectively. The increase resulted from higheramortization of intangible assets as a result of the Acquisition.

Business Optimization Expenses.    Business optimizationexpenses of $5.5 million for the three months ended September 30, 2003primarily represented expenses associated with the Predecessor'ssales and marketing business realignment launched in 2002.

Other Income (Expense), Net.    Other income (expense),net was an expense of $1.2 million and $12.8 million for the threemonths ended September 30, 2004 and 2003, respectively. Included in thethree months ended September 30, 2003 was a $10.9 million chargeresulting from the discontinuance of hedge accounting for an interestrate swap and a $5.3 million loss on the sale of thePredecessor's South African subsidiary. Franchise taxes were $0.8million for the three months ended September 30, 2004 compared to acredit of $3.8 million for the same period in 2003. This credit was dueto an adjustment of the Predecessor's franchise tax accruals as aresult of the planned sale of the 

20

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

Predecessor and the expected change incapitalization. Suez management fees incurred by the Predecessor forthe three months ended September 30, 2003 were $0.8 million, whereasSponsor monitoring fees for the three months ended September 30, 2004were $2.7 million.

Net Interest Expense.    Netinterest expense, defined as the combination of interest income andinterest expense, was $61.7 million for the three months endedSeptember 30, 2004, an increase of $53.1 million from the $8.6 millionreported for the three months ended September 30, 2003. The increase isdue primarily to the interest charges incurred on the new debt used tofinance the Acquisition and the issuance of the senior discountnotes.

Effective Tax Rate.    The effective tax ratewas 88.0% for the three months ended September 30, 2004. Theeffective tax rate for the three months ended September 30, 2003, afteradjusting for the aforementioned sale of the Predecessor's SouthAfrican subsidiary, was 37.5%. The effective tax rate in 2004 ishigher than 2003 mostly because of the one-time impact of creating atax-efficient method of repatriating earnings from certain offshoresubsidiaries, incremental U.S. taxes on the repatriation of othernon-U.S. earnings, and the interest on the senior discount notes issuedin January 2004. Under U.S. tax law, the deduction for this interest ispassed directly to the Company's owners.

MinorityInterest Expense.    Minority interest expense was $0.3 millionhigher for the three months ended September 30, 2004 than the $1.4million for the three months ended September 30, 2003.

Nine Months Ended September 30, 2004 Compared to the NineMonths Ended September 30, 2003

Net sales for the nine monthsended September 30, 2004 and September 30, 2003 may be compared asfollows:

|                                       |  |                    |         |                   |  |                     |         |                                               |  |         |      |          |  |        |     |         |  |        |      |          |  |        |      |          |  |  |
|---------------------------------------|--|--------------------|---------|-------------------|--|---------------------|---------|-----------------------------------------------|--|---------|------|----------|--|--------|-----|---------|--|--------|------|----------|--|--------|------|----------|--|--|
|                                  |  | Successor          |         | Predecessor       |  |                |         | Attributableto Changesin the FollowingFactors |
|                                  |  | Nine MonthsEnded   |         | %Change           |  |                     |
| (dollarsin millions)                  |  | September 30, 2004 |         | September 30,2003 |  | CurrencyTranslation |         | Acquisitions/Divestitures                     |  | Organic |      |
| Industrial& InstitutionalServices |  | $                  | 1,036.7 |              |  | $                   | 954.6   |                                          |  |    | 8.6  | %   |  |   | 4.4 | %  |  |   | (0.2 | )%  |  |   | 4.4  | %   |
| EnergyServices                        |  |               | 592.2   |              |  |                | 531.1   |                                          |  |    | 11.5 | %   |  |   | 3.8 | %  |  |   | (0.9 | )%  |  |   | 8.6  | %   |
| PaperServices                         |  |               | 490.0   |              |  |                | 463.2   |                                          |  |    | 5.8  | %   |  |   | 3.7 | %  |  |   | 1.3  | %   |  |   | 0.8  | %   |
| Other                                 |  |               | 109.0   |              |  |                | 115.2   |                                          |  |    | (5.4 | )%  |  |   | 3.8 | %  |  |   | (4.8 | )%  |  |   | (4.4 | )%  |
| Netsales                              |  | $                  | 2,227.9 |              |  | $                   | 2,064.1 |                                          |  |    | 7.9  | %   |  |   | 4.1 | %  |  |   | (0.3 | )%  |  |   | 4.1  | %   |
|                                       |

NetSales.    Net sales for the nine months ended September 30, 2004were $2,227.9 million, a 7.9% increase over the $2,064.1 millionreported for the nine months ended September 30, 2003. After adjustingfor the favorable effects of changes in foreign currency translationrates and the net impact of acquisitions and divestitures, net saleswere up 4.1%. The Energy Services division reported organicgrowth in sales of 8.6% over last year, with double-digitimprovements posted by both of its upstream business groups. Led by itsglobal mining business, the Industrial and Institutional Servicesdivision reported a 4.4% organic increase in sales. PaperServices division sales were nearly flat on an organic basis comparedto a year ago, as the lingering effect of price and contractconcessions in North America in 2003 were offset by new business gainedand good growth in the Pacific region, Europe and Latin America. Theunfavorable organic growth in "other" ismainly due to the decision made last year to reduce certain low-marginbusiness with a major customer, slightly offset by organic growth inIndia. The effect of this decision also reduced the organic growth oftotal net sales by 0.4%.

GrossProfit.    Gross profit, defined as the difference between netsales and costs of products sold, of $1,099.5 million for the ninemonths ended September 30, 2004 increased by $28.2 million, or2.6%, over the $1,071.3 million reported for the nine monthsended September 30, 2003. Adjusted for the favorable effect of changesin foreign currency translation rates and the net unfavorable impact ofacquisitions and divestitures, gross profit decreased by $9.4 million,or 0.9%. Expensing a portion of 

21

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

the adjustment made to increase inventoriesto fair value at the date of the Acquisition unfavorably impacted grossprofit by $14.5 million. Other significant factors contributing to theorganic change in gross profit were the aforementioned increase insales volumes, which favorably impacted gross profit by approximately$43.4 million, but which was partly offset by margin erosion mainly dueto product mix ($25.0 million), raw material cost increases ($6.3million) and freight increases ($9.0 million). Gross profit margin forthe nine months ended September 30, 2004 declined to 49.4% from51.9% for the same period last year. The impact of the expensingof a portion of the adjustment made to increase inventories to fairvalue at the date of Acquisition accounted for approximately one-fourthof this decline.

Selling, Administrative, and ResearchExpenses.    Selling, administrative, and research expenses forthe nine months ended September 30, 2004 of $789.6 million decreased by$3.0 million, or 0.4%, from the same period last year. Adjustedfor the unfavorable effects of changes in foreign currency translationrates, selling, administrative, and research expenses decreased by$30.6 million, or 3.9%, primarily due to spending reductionsinitiatives launched in the fourth quarter 2003 and tightened spendingcontrols in 2004. The net favorable impact from acquisitions anddivestitures also contributed $1.1 million to the change.

Impairment of Goodwill.    The impairment of goodwill of$244.4 million for the nine months ended September 30, 2003 resultedfrom the Predecessor's evaluation of its goodwill, based on thepurchase price for the Acquisition and the fair value of its assets andliabilities.

Amortization of IntangibleAssets.    Amortization of intangible assets was $73.0 millionand $61.8 million for the nine months ended September 30, 2004 and2003, respectively. The increase resulted from higher amortization ofintangible assets as a result of the Acquisition.

In-ProcessResearch and Development.    In-process research and developmentwas a one-time charge of $122.3 million recorded during the nine monthsended September 30, 2004, as a result of preliminary purchaseaccounting entries related to the Acquisition. The value of purchasedIPR&D was comprised of five ongoing development projects at thedate of the Acquisition. Purchased IPR&D was derived by assigningvalues to those projects identified by management as having economicvalue, but that had not yet reached technological feasibility and hadno alternative future use.

Business OptimizationExpenses.    Business optimization expenses of $15.2 million forthe nine months ended September 30, 2003 were mostly attributable tothe Predecessor's sales and marketing business realignmentlaunched in 2002.

Other Income (Expense),Net.    Other income (expense), net was an expense of $6.5million and $13.0 million for the nine months ended September 30, 2004and 2003, respectively. This $6.5 million decrease is primarilyattributable to a $10.9 million charge in 2003 resulting from thediscontinuance of hedge accounting for an interest rate swap and a $5.3million loss on the sale of the Predecessor's South Africansubsidiary in 2003, partially offset by unfavorable changes infranchise taxes of $3.3 million. In addition, Suez management feesexpensed by the Predecessor for the nine months ended September 30,2003 were $2.3 million, whereas Sponsor monitoring fees for the ninemonths ended September 30, 2004 were $8.4 million. Lower franchisetaxes partly offset these unfavorable changes.

Net InterestExpense.    Net interest expense, defined as the combination ofinterest income and interest expense, of $180.0 million for the ninemonths ended September 30, 2004 increased by $156.2 million from the$23.8 million reported for the nine months ended September 30, 2003.The increase is due primarily to the interest charges incurred on thenew debt used to finance the Acquisition and the issuance of the seniordiscount notes.

Effective Tax Rate.    The effectivetax rate, excluding the impact of the aforementioned charge forpurchased IPR&D, was 92.9% for the nine months endedSeptember 30, 2004. The effective tax rate for the nine months endedSeptember 30, 2003, excluding the impact of the goodwill impairment

22

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

charge and the sale of thePredecessor's South African subsidiary, was 39.2%. Theeffective tax rate in 2004 is significantly higher than 2003 mostlybecause of the one-time impact of creating a tax-efficient method ofrepatriating earnings from certain offshore subsidiaries, incrementalU.S. taxes on the repatriation of other non-U.S. earnings, and theinterest on the senior discount notes issued in January 2004. UnderU.S. tax law, the deduction for this interest is passed directly to theCompany's owners.

Minority InterestExpense.    Minority interest expense was $0.8 million lowerthan the $4.4 million for the nine months ended September 30, 2003, duemostly to the sale of the Predecessor's South African subsidiaryin 2003.

Liquidity and Capital Resources

Operatingactivities.    Historically, the Company's main source ofliquidity has been its solid cash flow generated by operatingactivities. For the nine months ended September 30, 2004, cash providedby operating activities was $256.1 million, a $6.6 million decreasefrom the same period last year. This decrease primarily resulted fromhigher interest payments in 2004, due to higher debt from theAcquisition, partly offset by lower working capital requirements,reflecting efforts to more effectively manage working capital.

Investing activities.    Cash used for investingactivities was $37.5 million for the nine months ended September 30,2004. Net property additions of $57.7 million were partly offset by a$25.3 million purchase price adjustment related to the Acquisition.Approximately 40% of the capital spending was attributable tothe Company's implementation of a common SAP platform in NorthAmerica and Europe.

Net property additions of $66.9 millionaccounted for slightly more than half of the $127.9 million of cashused for investing activities by the Predecessor during the nine monthsended September 30, 2003. The purchase of the remaining 60% ofthe common shares of Oekophil AG and the purchase of a UK company froma related Suez company accounted for most of the $25.6 million net useof cash for business purchases/sales. Other investing activities of$35.4 million were mainly comprised of additional advances to a formerrelated party and an investment in a former affiliated company.

Financing activities.    Net cash used for financingactivities totaled $253.3 million during the nine months endedSeptember 30, 2004. This was primarily comprised of a net repayment ofborrowings, since the proceeds of the senior discount notes issued onJanuary 21, 2004 were used to make a return of capital distribution tothe Company's parent company, Nalco Investment Holdings LLC, andto pay fees and expenses related to that offering.

During thenine months ended September 30, 2004, the Company repaid $287.1 millionof term loans and $15.0 million of revolving credit facility debt.These debt repayments included $99.1 million of mandatory amortizationand $203.0 million of discretionary debt repayments.

In June2004, the Company entered into a three-year accounts receivablesecuritization facility with a commercial paper conduit sponsored byone of the lenders under the Company's senior credit facilities.The facility provides up to $100 million in funding. Of the $287.1million of term loan debt repayments, $92.0 million was funded from theinitial proceeds from borrowings under the facility. As of September30, 2004, the outstanding balance for the facility was $47.6million.

The Company received $9.3 million of additional capitalduring the nine months ended September 30, 2004. This was the directresult of additional equity received by the Company's ultimateparent company, Nalco LLC, and was comprised of an equity investment of$1.2 million from Dr. William H. Joyce, the Company's Chairmanand Chief Executive Officer, and $8.1 million in proceeds from the saleof equity interests to certain officers and key employees under theNalco LLC 2004 Unit Plan, an equity compensation plan. Using proceedsfrom the issuance of the senior discount notes in January 2004, theCompany made a return of capital distribution of $446.9 million to itsparent company, Nalco Investment Holdings LLC.

23

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

During the nine months ended September 30,2003, net cash used for financing activities by the Predecessor totaled$106.8 million, reflecting cash dividends of $29.0 million, netrepayments of debt of $106.8 million and capital contributions of $31.6million from Nalco International SAS, a former related party owned bySuez.

Prior to the Transactions, the Predecessor obtainedshort-term financing from Suez Finance LP, a finance company operatedby Suez to provide funding to its North American subsidiaries, ratherthan from external sources.

As a result of the Transactions, theCompany is highly leveraged. Its liquidity requirements aresignificant, primarily due to debt service requirements as well asresearch and development and capital investment. Its primary source ofliquidity will continue to be cash flow generated from operations, butthe Company also has availability under a $250 million revolving creditfacility, subject to certain conditions. This revolving credit facilityis part of the Company's senior credit facilities. The revolvingcredit is available for general corporate purposes, subject to certainconditions, and matures in November 2009. The Company's seniorcredit facilities also include a $300 million six-year term loan Afacility (which includes an €88.0 million tranche) whichmatures in November 2009 and a $1,300 million seven-year term loan Bfacility which matures in November 2010. Borrowings under the seniorcredit facilities bear interest at a floating base rate plus anapplicable margin. The initial applicable margin for borrowings underthe revolving credit facility and the term loan A facility is LIBORplus 2.50% and for borrowings under the term loan B facility isLIBOR plus 2.50%.

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

The term loan A facility amortizes each year in quarterly amounts ata rate of 5% per annum in year one, 10% per annum in yeartwo, 15% per annum in year three, 20% per annum in yearfour and 25% per annum in each of years five and nine.

The term loan B facility amortizes each year in an amount equal to1% per annum in equal quarterly installments for the first sixyears and nine months, with the remaining amount payable on the datethat is seven years from the date of the closing of the senior creditfacilities. Principal amounts outstanding under the revolving creditfacility will be due and payable in full at maturity, six years fromthe date of the closing of the senior credit facilities.

Thesenior credit facilities contain a number of covenants that, amongother things, restrict, subject to certain exceptions, our ability andour subsidiaries' ability, including Nalco Company, to sellassets, incur additional indebtedness or issue preferred stock, repayother indebtedness (including the notes), pay dividends anddistributions or repurchase our capital stock, create liens on assets,make investments, loans or advances, make certain acquisitions, engagein mergers or consolidations, enter into sale and leasebacktransactions, engage in certain transactions with affiliates, amendcertain material agreements governing our indebtedness, including thenotes, change the business conducted by us and our subsidiaries(including Nalco Company) and enter into hedging agreements. Inaddition, the senior credit facilities require Nalco Company tomaintain the following financial covenants: a maximum total leverageratio, a minimum interest coverage ratio and a maximum capitalexpenditures limitation. The Company was in compliance with allcovenants at September 30, 2004.

The indentures governing thesenior notes and senior subordinated notes limit our ability and theability of our restricted subsidiariesto:

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

|              |                                                                             |
|--------------|-----------------------------------------------------------------------------|
| •  | pay dividends onor make other distributions or repurchase our capitalstock; |

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

24

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

|              |                                                         |
|--------------|---------------------------------------------------------|
| •  | enterinto certain types of transactions withaffiliates; |

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

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

|              |                                                           |
|--------------|-----------------------------------------------------------|
| •  | sellcertain assets or merge with or into other companies. |

Subject tocertain exceptions, the indentures governing the senior notes andsenior subordinated notes permit the Company and its restrictedsubsidiaries to incur additional indebtedness, including securedindebtedness.

Certain of our non-U.S. subsidiaries have lines ofcredit to support local requirements. As of September 30, 2004, theoutstanding balance under these local lines of credit was approximately$14.4 million. Certain of these lines of credit are equally and ratablysecured with obligations under our senior credit facilities.

Webelieve that funds generated from operations and our borrowing capacitywill be adequate to fund these requirements. Our ability to fund theseitems and to reduce debt may be affected by general economic,financial, competitive, legislative and regulatory factors, and thecost of litigation claims, among other things.

We believe thatour financial position and financing structure will provide flexibilityin worldwide financing activities and permit it to respond to changingconditions in credit markets.

Adjusted EBITDA

Our new senior credit facility and our indentures contain a numberof significant covenants as described above. Adjusted EBITDA is used todetermine our compliance with many of these covenants.

AdjustedEBITDA is defined as EBITDA adjusted to exclude unusual items and otheradjustments permitted in calculating covenant compliance under theindentures governing the notes and our senior credit facility. Webelieve that the inclusion of supplementary adjustments to EBITDAapplied in presenting Adjusted EBITDA are appropriate to provideadditional information to investors to demonstrate compliance with ourfinancing covenants.

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

25

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

Adjusted EBITDA is calculated asfollows:

|                                  |  |                                 |         |                                 |  |                                     |       |                                     |  |        |         |         |  |        |        |         |  |  |
|----------------------------------|--|---------------------------------|---------|---------------------------------|--|-------------------------------------|-------|-------------------------------------|--|--------|---------|---------|--|--------|--------|---------|--|--|
|                             |  | Successor                       |         | Predecessor                     |  | Successor                           |       | Predecessor                         |
|                             |  | QuarterEnded September 30, 2004 |         | Quarter Ended September30, 2003 |  | Nine Months Ended September 30,2004 |       | Nine Months Ended September 30,2003 |
| Net income(loss)                 |  | $                               | 2.0     |                            |  | $                                   | 33.7  |                                |  | $      | (122.3  | )  |  | $      | (154.0 | )  |
| Interest,net                     |  |                            | 61.7    |                            |  |                                | 8.6   |                                |  |   | 180.0   |    |  |   | 23.8   |    |
| Incometaxprovision               |  |                            | 27.2    |                            |  |                                | 29.5  |                                |  |   | 46.8    |    |  |   | 70.1   |    |
| Depreciation                     |  |                            | 23.8    |                            |  |                                | 30.9  |                                |  |   | 80.7    |    |  |   | 91.6   |    |
| Amortization                     |  |                            | 23.9    |                            |  |                                | 20.5  |                                |  |   | 73.0    |    |  |   | 61.8   |    |
| EBITDA                           |  | $                               | 138.6   |                            |  | $                                   | 123.2 |                                |  | $      | 258.2   |    |  | $      | 93.3   |    |
| Non-cashcharges(1)               |  |                            | 14.5    |                            |  |                                | 4.7   |                                |  |   | 167.5   |    |  |   | 266.8  |    |
| Businessoptimization expenses(2) |  |                            | — |                            |  |                                | 5.5   |                                |  |   | — |    |  |   | 15.2   |    |
| Unusualitems(3)                  |  |                            | 2.2     |                            |  |                                | 20.6  |                                |  |   | 6.7     |    |  |   | 29.0   |    |
| Otheradjustments(4)              |  |                            | 1.9     |                            |  |                                | (2.8  | )                              |  |   | 5.6     |    |  |   | (5.0   | )  |
| Costsavings(5)                   |  |                            | — |                            |  |                                | 7.5   |                                |  |   | — |    |  |   | 22.5   |    |
| AdjustedEBITDA                   |  | $                               | 157.2   |                            |  | $                                   | 158.7 |                                |  | $      | 438.0   |    |  | $      | 421.8  |    |
|                                  |

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

|                                                |  |                                 |         |                                 |  |                                     |         |                                     |  |        |         |        |  |        |         |        |  |  |
|------------------------------------------------|--|---------------------------------|---------|---------------------------------|--|-------------------------------------|---------|-------------------------------------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                                           |  | Successor                       |         | Predecessor                     |  | Successor                           |         | Predecessor                         |
|                                           |  | QuarterEnded September 30, 2004 |         | Quarter Ended September30, 2003 |  | Nine Months Ended September 30,2004 |         | Nine Months Ended September 30,2003 |
| Impairment of goodwill                         |  | $                               | — |                            |  | $                                   | — |                                |  | $      | — |   |  | $      | 244.4   |   |
| In-process research anddevelopment             |  |                            | — |                            |  |                                | — |                                |  |   | 122.3   |   |  |   | — |   |
| Inventorystep-up                               |  |                            | — |                            |  |                                | — |                                |  |   | 14.5    |   |  |   | — |   |
| Assetwrite-offs                                |  |                            | — |                            |  |                                | 0.6     |                                |  |   | — |   |  |   | 4.5     |   |
| Profitsharing expense and 401(k) funded bySuez |  |                            | 8.0     |                            |  |                                | 5.7     |                                |  |   | 24.0    |   |  |   | 17.4    |   |
| Other                                          |  |                            | 6.5     |                            |  |                                | 1.6     |                                |  |   | 6.7     |   |  |   | 0.5     |   |
| Non-cashcharges                                |  | $                               | 14.5    |                            |  | $                                   | 4.7     |                                |  | $      | 167.5   |   |  | $      | 266.8   |   |
|                                                |

    Impairmentof goodwill

Goodwill impairment of $244.4million was recorded by the Predecessor in accordance with SFAS No.142, Goodwill and Other Intangible Assets. Goodwill wasevaluated for impairment based on the purchase price for thePredecessor.

    In-process Research and Development

In-process research and development was a one timecharge of $122.3 million recorded during the nine months endedSeptember 30, 2004, as a result of preliminary purchase accountingentries related to the Acquisition.

    InventoryStep-Up

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

26

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

    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 charges includethe non-cash impact on earnings of our equity investments and minorityinterests. Successor non-cash charges also includes the non-cashportion of rent expense under the sublease that we entered into withSuez in conjunction with the Acquisition.

|           |                                                                                                                                                                                                                                                                                                                                          |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  | Businessoptimization expenses for 2003 includes cost associated with theintegration of the Nalco/Exxon Energy Chemicals, L.P. (Nalco/Exxon)joint venture and the implementation of global cost reduction programsin the sales, marketing, manufacturing and support services operations.See notes 2 and 9 to Item 1 for moreinformation. |

|           |                                                          |
|-----------|----------------------------------------------------------|
| (3)  | Unusual items are further detailed on thefollowingtable: |

|                                            |  |                                 |         |                                 |  |                                     |         |                                     |  |        |         |        |  |        |      |        |  |  |
|--------------------------------------------|--|---------------------------------|---------|---------------------------------|--|-------------------------------------|---------|-------------------------------------|--|--------|---------|--------|--|--------|------|--------|--|--|
|                                       |  | Successor                       |         | Predecessor                     |  | Successor                           |         | Predecessor                         |
|                                       |  | QuarterEnded September 30, 2004 |         | Quarter Ended September30, 2003 |  | Nine Months Ended September 30,2004 |         | Nine Months Ended September 30,2003 |
| Pension and OPEB settlement andcurtailment |  | $                               | — |                            |  | $                                   | — |                                |  | $      | — |   |  | $      | 1.6  |   |
| Loss (gain) on sales, net ofexpenses       |  |                            | — |                            |  |                                | 11.4    |                                |  |   | — |   |  |   | 11.3 |   |
| Otherunusual items(a)                      |  |                            | 2.2     |                            |  |                                | 8.6     |                                |  |   | 6.7     |   |  |   | 14.2 |   |
| Suezmanagement fees,net                    |  |                            | — |                            |  |                                | 0.6     |                                |  |   | — |   |  |   | 1.9  |   |
|                                       |  | $                               | 2.2     |                            |  | $                                   | 20.6    |                                |  | $      | 6.7     |   |  | $      | 29.0 |   |
|                                            |

|  |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (a) | In2003, our results were impacted by the effects of certain other unusualitems including a termination charge for the settlement of an interestrate swap; executive severance and relocation expenses; legal andenvironmental expenses that mainly related to events that occurredprior to Suez's 1999 acquisition of Nalco Chemical Company andlitigation costs not covered by our excess liability insurance policy;and consultancy expenses incurred on behalf of Suez. Our results for2004 were impacted by the effects of certain other unusual items,including expenses associated with the registration of publiclytradable senior notes and senior subordinated notes that were exchangedfor the privately placed notes issued in connection with theTransactions; costs related to changing the name of our operatingcompany from Ondeo Nalco Company to Nalco Company; and otherTransaction-related expenses. |

|           |                                                                                                                                                                                                                                                                                                                                  |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (4)  | We are required tomake adjustments to EBITDA for monitoring fees paid to the Sponsors,franchise taxes, 401(k) matching contributions and other pro formaadjustments. These pro forma adjustments include purchase accountingadjustments for pensions and the incremental rent expense we will incurunder our sublease with Suez. |

|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (5)  | Our financing agreementsalso permit us to adjust EBITDA on a pro forma basis for certain costsavings that we expect to achieve. We have initiated a comprehensivecost reduction plan that was expected to yield annual savings of atleast $30 million on a proforma basis in 2003. We implemented this planimmediately upon consummation of the Acquisition. The remainder of ourcost reduction plan is expected to realize incremental efficienciesthrough work process redesign and other targeted cost improvementprograms, which address inefficiencies in our administrative andoverhead functions, as well as other support functions around theworld. |

27

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

Our covenant levels and ratios for thefour quarters ended September 30, 2004 are asfollows:

|                                                                                                           |  |                                    |        |        |  |        |        |        |  |  |  |  |  |  |  |  |  |  |
|-----------------------------------------------------------------------------------------------------------|--|------------------------------------|--------|--------|--|--------|--------|--------|--|--|--|--|--|--|--|--|--|--|
|                                                                                                      |  | CovenantLevel at September 30,2004 |        | Ratios |  |
| **Senior creditfacility (1)**                                                                             |  |                               |   |   |  |
| Minimum AdjustedEBITDA to cash interestratio                                                              |  |                               | 1.65x  |   |  |   | 3.04x  |   |  |
| Maximum netdebt to Adjusted EBITDAratio                                                                   |  |                               | 6.75x  |   |  |   | 5.18x  |   |  |
| **Indentures(2)**                                                                                         |  |                               |   |   |  |   |   |   |  |
| Minimum AdjustedEBITDA to fixed charge ratio required to incur additional debt pursuantto ratioprovisions |  |                               | 2.00x  |   |  |   | 2.65x  |   |  |
|                                                                                                           |

|  |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (1) | Oursenior credit facility requires us to maintain an Adjusted EBITDA tocash interest ratio starting at a minimum of 1.65x and a net debt toAdjusted EBITDA ratio starting at a maximum of 6.75x, in each case forthe most recent four quarter period. Failure to satisfy these ratiorequirements would constitute a default under the senior creditagreement. If our lenders failed to waive any such default, ourrepayment obligations under the senior credit agreement could beaccelerated, which would also constitute a default under ourindentures. |

|  |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (2) | Our ability to incuradditional debt and make certain restricted payments under ourindentures, subject to specified exceptions, is tied to an AdjustedEBITDA to fixed charge ratio of at least 2.0 to 1, except that we mayincur certain debt and make certain restricted payments and certainpermitted investments without regard to the ratio, such as up to anaggregate principal amount of $1,950 million (including $1,321.5million that was outstanding under our term loan facilities as ofSeptember 30, 2004) and investments in similar business and otherinvestments equal to 6% of Nalco Finance Holdings LLCconsolidated assets. |

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

This facility istreated as a general financing agreement resulting in the funding andrelated receivables being shown as liabilities and assets,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, 2003.

Item 4.    Controls and Procedures

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

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

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

|        |                                                                                                                                                                                                                                                               |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | There were no changes in theCompany's internal controls over financial reporting thatoccurred during the most recent fiscal quarter that have materiallyaffected, or are reasonably likely to affect, the Company'sinternal controls over financialreporting. |

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PARTII.    OTHER INFORMATION

Item 1.    LegalProceedings

Various claims, lawsuitsand administrative proceedings are pending or threatened against theCompany and its subsidiaries, arising from the ordinary course ofbusiness with respect to commercial, intellectual property, productliability, employee and environmental matters. Historically thesematters have not had a material impact on the consolidated financialposition of the Company. However, the Company cannot predict theoutcome of any litigation or the potential for future litigation.

The Company has been named as a potentially responsible party (PRP)by the Environmental Protection Agency or state enforcement agencies atthree waste sites where some financial contribution is or may berequired. These agencies have also identified many other parties whomay be responsible for clean up costs at these waste disposal sites.The Company'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 September 30, 2004.

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 and nine months ended September 30,2004, relating to environmental compliance and clean up activities werenot significant.

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 historicallyand the Company does not anticipate these matters to present anymaterial risk to the Company's business in the future.Notwithstanding, the Company cannot predict the outcome of any suchlawsuits or the involvement the Company might have in these matters inthe future.

The Company has received subpoenas from the U.S.Department of Justice for documents and testimony relating to itsstorage of claimed hazardous materials and the claimed leakage ofwastewater at its plant in Garyville, Louisiana. No charges orindictments have been filed, but the outcome of this investigation isunknown to the Company.

In the ordinary course of its business,the Company is also a party to a number of lawsuits and is subject tovarious claims relating to trademarks, employee matters, contracts andchemicals, the outcome of which, in the opinion of management, shouldnot have a material effect on the consolidated financial position ofthe Company. However, we cannot predict the outcome of any litigationor the potential for future litigation. The Company maintains accrualsand/or has insurance in those instances where there is reason tobelieve that significant costs might be incurred.

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Item 6.    Exhibits

|               |                                                                                                                                 |
|---------------|---------------------------------------------------------------------------------------------------------------------------------|
| (31.1)   | Certification of Chief ExecutiveOfficer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the SecuritiesExchange Act, as amended |

|              |                                                                                                                                 |
|--------------|---------------------------------------------------------------------------------------------------------------------------------|
| (31.2)  | Certification of Chief Financial Officer pursuantto Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, asamended |

|             |                                                                                                                                                                            |
|-------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (32)   | Certification of ChiefExecutive Officer and Chief Financial Officer Pursuant to 18 U.S.C.Section 1350, as adopted pursuant to Section 906 of the Sarbanes-OxleyAct 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 HOLDINGSLLC |
|   |  |
|   |  |
|   |  | /s/BRADLEY J.BELL        |
|   |  | Name:          |  | Bradley J.Bell                                     |
|   |  | Title:                   |  | Executive VicePresident and Chief FinancialOfficer |
|        |

Dated: November 15,2004

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