<PAGE>
 
                                                                           1996
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                                   FORM 10-K
 
(MARK ONE)
  [X]          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
              THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
                  For the fiscal year ended December 31, 1996
                                      OR
  [_]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
             THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
             For the transition period from           to
                         COMMISSION FILE NUMBER 1-4957
 
                            NALCO CHEMICAL COMPANY
                     INCORPORATED IN THE STATE OF DELAWARE
                 I.R.S. EMPLOYER IDENTIFICATION NO. 36-1520480
               ONE NALCO CENTER, NAPERVILLE, ILLINOIS 60563-1198
                            TELEPHONE 630-305-1000
          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
                                           NAME OF EACH EXCHANGE ON WHICH
          TITLE OF EACH CLASS                        REGISTERED
 
 
  COMMON STOCK PAR VALUE $0.1875 PER    CHICAGO STOCK EXCHANGE NEW YORK STOCK
                 SHARE                                EXCHANGE
          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                                     None
  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
                              Yes   X   No
  Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ((S)229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.   [_]
 
  The aggregate market value of the voting stock held by non-affiliates of the
registrant was $2,429,327,728 at February 20, 1997.*
 
  The number of shares outstanding of each of the issuer's classes of Common
Stock, as of February 20, 1997 was 66,924,647 shares of Common Stock.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
  Portions of the Registrant's 1996 Annual Report to Shareholders are
incorporated by reference into Parts I and II.
 
  Portions of the Registrant's Proxy Statement dated March 18, 1997 for the
April 17, 1997 Annual Meeting of Shareholders are incorporated by reference
into Part III.
--------------
   * Excludes reported beneficial ownership by all directors and executive
     officers of the Registrant; however, this determination does not
     constitute an admission of affiliate status for any of these
     stockholders.
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<PAGE>
 
                               TABLE OF CONTENTS
 
                                     PART I
 
<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
 <C>     <S>                                                                <C>
 Item 1  Business........................................................     1
         Executive Officers of the Registrant............................     3
 Item 2  Properties......................................................     4
 Item 3  Legal Proceedings...............................................     5
 Item 4  Submission of Matters to a Vote of Security Holders.............     5
 
                                    PART II
 
         Market for the Registrant's Common Stock and Related Security
 Item 5  Holder Matters..................................................     5
 Item 6  Selected Financial Data.........................................     5
         Management's Discussion and Analysis of Financial Condition and
 Item 7  Results of Operations...........................................     5
 Item 8  Financial Statements and Supplementary Data.....................     6
         Changes in and Disagreements with Accountants on Accounting and
 Item 9  Financial Disclosure............................................     6
 
                                    PART III
 
 Item 10 Directors and Executive Officers of the Registrant..............     6
 Item 11 Executive Compensation..........................................     6
 Item 12 Security Ownership of Certain Beneficial Owners and Management..     6
 Item 13 Certain Relationships and Related Transactions..................     6
 
                                    PART IV
 
 Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K.     6
</TABLE>
<PAGE>
 
                                     PART I
 
ITEM 1. BUSINESS.
 
  Nalco Chemical Company was incorporated in 1928 in Delaware and has its
principal executive offices at One Nalco Center, Naperville, Illinois 60563.
Its telephone number is 630-305-1000. As used in this report, "Company" and
"Nalco" refer to Nalco Chemical Company and its consolidated subsidiaries.
 
  Nalco is engaged in the manufacture and sale of highly specialized Service
Chemicals. Specified financial information by geographic area is shown in Note
2 of the Notes to Consolidated Financial Statements in the Company's 1996
Annual Report to Shareholders and is incorporated herein by reference.
 
  Nalco is in the business of providing services, chemicals, technology,
equipment, and systems (monitoring and surveillance) used in water treatment,
pollution control, energy conservation, steelmaking, papermaking, mining and
mineral processing, electricity generation, other industrial processes, and
commercial building utility systems. Service Chemicals are developed,
formulated, and manufactured to meet specific customer needs. They are part of
value added programs designed to help customers maintain a high level of
operating performance and efficiency in their facilities, improve the quality
of customers' end products, or help customers meet environmental discharge
limits in a cost-effective way. Nalco products are used for purposes such as:
control of scale, corrosion, foam and fouling in cooling systems, boilers, and
other equipment; clarification of water; separation of liquids and solids;
improving combustion; control of dust; lubrication and corrosion protection in
rolling, drawing and forming of metals; improving production of pulp and
qualities of paper; recovery of minerals; and specialized process applications
in a variety of industries. The quality and on-site availability of technical
expertise provided through highly qualified Nalco personnel are very important
considerations to customers. The effective use of the Company's products
requires a substantial amount of problem solving, monitoring, and technical
assistance on the part of Nalco employees.
 
  Service Chemicals are usually marketed through Nalco's own organization
because of the high degree of technical service required. The worldwide field
sales force is trained in the application and use of Nalco Service Chemicals,
and is supported by a marketing and research staff of specialists in the
technology and use of various Nalco Service Chemicals.
 
  Competitive conditions vary for Nalco depending on the industries served and
the products involved. Management believes the Company is one of the most
important worldwide suppliers of water treatment products and Service Chemical
programs, based on estimated sales of comparable products for industrial
customers on the process side (e.g., the manufacturing process, which a plant
uses to produce its end product) and the water treatment side (e.g., boilers
for power generation or cooling systems for process temperature control). The
Company sells its products and Service Chemical programs in more than 120
countries, and is the largest or second largest supplier of those products in
most of the countries it does business. All aspects of this business are
considered to be very competitive, and companies providing similar products or
programs range in size from very large multinational companies to small local
manufacturers. The number of competitors varies by product application and
ranges from a few large companies to hundreds of small local companies. The
Company's principal method of competition is based on quality service, product
performance and technology through safe, practical applied science.
 
  In October 1996, the Company completed the sale of its discontinued
superabsorbent chemicals business. The gain on the sale was $3 million, net of
income taxes of $1 million. This business generated revenue of approximately
$63 million up to the date of the sale.
 
  In June 1996, the Company completed the acquisition of Diversey Water
Technologies, a middle market water treatment business with operations in North
America and Europe and annual revenues of approximately $60 million. In
December 1996, the Company purchased the water treatment services chemicals
business of Albright & Wilson, which serves customers such as steel and
electric utility companies throughout the United Kingdom. Annual revenues are
approximately $5 million.
 
                                       1
<PAGE>
 
  In January 1997, the Company completed the acquisition of International Water
Consultants Beheer B.V. (IWC) and the assets of Nutmeg Technologies, Inc.
(Nutmeg). IWC, which serves the water treatment needs of customers in the
Netherlands, Belgium, Germany and the Commonwealth of Independent States,
reported 1996 revenues of approximately $20 million. Nutmeg, a water treatment
company which serves markets mainly in the Northeast United States, had 1996
sales of approximately $9 million.
 
  There were no other significant changes in the markets served or in the
methods of distribution since the beginning of 1996.
 
  Although no single Service Chemicals product represents a material portion of
the business, historically, new product and new market developments have been
designed to increase market penetration and to maintain sales and earnings
growth.
 
OTHER MATTERS
 
  Primarily as a result of the formation of the Nalco/Exxon joint venture, the
Company adopted a worldwide consolidation plan in 1994 for manufacturing and
support operations. The production volume reduction caused by redundancies
associated with the joint venture formation required the Company to down size,
close, and consolidate operations. In addition, certain support functions have
been or are being regionalized on a pan-European basis in order to more
efficiently serve customers. The majority of these activities have been
completed, and all should be completed by the end of 1997.
 
  The principal raw materials used by Nalco ordinarily are available in
adequate quantities from several sources of supply in the United States and in
foreign countries. Purchases of chemicals are made in the ordinary course of
business and in accordance with the requirements of production.
 
  Inventories of Service Chemicals are maintained in Nalco-owned facilities and
in warehouses situated throughout the United States and in countries in which
subsidiaries operate. Shipments to customers may be made from either
manufacturing plants or warehouse stocks.
 
  Nalco owns or is licensed under a large number of patents relating to a
number of products and processes. Nalco's rights under such patents and
licenses are of significant importance in the operation of the business, but no
single patent or license is believed to be material with respect to its
business. Over 800 patents existed at the end of 1996 with remaining durations
ranging from less than one year to 20 years with an average duration of about
10 years.
 
  Nalco's business is considered nonseasonal. Large dollar amounts of backlogs
are unusual since chemicals are normally shipped within a few days of the
receipt of orders. The dollar amount of the normal backlog of orders is not
considered to be significant in relation to the total annual dollar volume of
sales of Nalco.
 
  The Company does not depend upon either a single customer, or very few
customers, for a material part of the business.
 
  Nalco's laboratories are involved in research and development of chemical
products and in providing technical support, including chemical analyses of
water and process samples. Research and development expenses of continuing
operations amounted to $41.9 million in 1996, compared to $39.8 million in
1995, and $45.7 million in 1994.
 
  There were approximately 6,500 persons employed full time by Nalco at the end
of 1996.
 
  Compliance with Federal, State, and local regulations relating to the
discharge of materials into the environment, or otherwise relating to the
protection of the environment, has not had a material effect upon the capital
expenditures, earnings, or competitive position of Nalco. There are no material
capital expenditures for environmental control facilities anticipated during
1997. Compliance with increasingly stringent regulations should not have a
material effect upon earnings but may strengthen the competitive position of
Nalco because of available capital and technical resources.
 
                                       2
<PAGE>
 
  Although inflation is not a significant factor domestically, the Company
adjusts selling prices to maintain profit margins wherever possible.
Investments are made in modern plants and equipment that will increase
productivity and thereby minimize the effect of rising costs. In addition, the
last-in, first-out (LIFO) valuation method is used for some of the Company's
inventories, so that changing material costs are recognized in reported income
and pricing decisions. The impact of inflation in foreign exchange movements
at foreign subsidiaries is managed by minimizing assets exposed to currency
movements and by increasing sales prices to parallel increases in local
inflation rates. The Company emphasizes working capital management, frequent
dividend remittance, timely settlement of intercompany account balances,
foreign currency borrowings, and selected hedging. In most hyperinflationary
economies, the rate of local currency devaluation is related to and
approximately equal to the local inflation rate. Therefore, Nalco attempts to
increase its local selling prices to help offset the impact of devaluation on
exposed assets and the impact of increases in local content costs.
 
EXECUTIVE OFFICERS OF THE REGISTRANT
 
  The executive officers of the Registrant are named below together with their
principal occupation. During the last 5 years all of the executive officers
have been employed by the Company, as indicated, except for W. E. Buchholz.
 
  E. J. Mooney has been Chairman of the Board and Chief Executive Officer of
the Company since 1994 and President since 1990. He had been Chief Operating
Officer since 1992 and an Executive Vice President since 1988.
 
  M. B. Harp has been Executive Vice President, Operations since 1995. He had
been Executive Vice President, International Operations since 1993 and a Group
Vice President since 1988.
 
  W. S. Weeber has been Executive Vice President, Operations Staff since 1993.
He had been a Group Vice President since 1986.
 
  P. Dabringhausen has been Group Vice President and President, Process
Chemicals Division since 1993. He had been a Vice President since 1991, and
was President, Nalco Pacific from 1989 to 1992.
 
  S. D. Newlin has been Group Vice President, President, Nalco Europe since
1994. He had been Vice President, President, Nalco Pacific since 1992. During
1992 he was General Manager, Pulp and Paper Chemicals Group; and from 1990 to
1992 he was General Manager of UNISOLV(R).
 
  J. D. Tinsley has been Group Vice President and President, Water and Waste
Treatment Division since 1993. During 1992 he was a Group Vice President and
President, Process Chemicals Division; and from 1986 to 1992 he was Vice
President, Corporate Development.
 
  G. M. Brannon was elected Group Vice President, President, Nalco Pacific
effective February 1997. He had been Vice President, President, Nalco Pacific
since 1994; and from 1990 to 1994 he was General Manager of the Utility
Chemicals Group.
 
  G. Pinzon was elected Group Vice President, President, Nalco Latin America
effective February 1997. He had been Vice President, President, Nalco Latin
America since 1994. He was Division Vice President, Latin America from 1989 to
1994, and Company Manager of Nalco de Venezuela, C.A. from 1992 to 1994.
 
  W. E. Buchholz was elected Senior Vice President and Chief Financial Officer
effective February 1997. He had been Vice President and Chief Financial
Officer since 1993. He was formerly Vice President--Finance and Chief
Financial Officer for Cincinnati Milacron, Inc. (a manufacturer of industrial
equipment, supplies and services for the metal cutting and plastic processing
industries) since 1987.
 
  The corporate officers of the Registrant are usually elected at the annual
meeting of directors and hold office for a term of one year.
 
                                       3
<PAGE>
 
  There is no family relationship between any of the executive officers. No
arrangement or understanding exists between the executive officers and any
other person pursuant to which such officers were selected as officers of the
Registrant.
 
  For further information on the executive officers of the Registrant, please
refer to page 42 of the Company's 1996 Annual Report to Shareholders, which is
incorporated herein by reference.
 
ITEM 2. PROPERTIES.
 
  Nalco has facilities used to produce and store inventories and service
customer needs at 9 domestic and 26 foreign locations. Primary domestic
manufacturing plants are located in:
 
<TABLE>
<CAPTION>
                                                         LAND AREA BUILDING AREA
                                                          (ACRES)    (SQ. FT.)
                                                         --------- -------------
      <S>                                                <C>       <C>
      Carson, California................................     21        84,000
      Jonesboro, Georgia................................     12        35,000
      Chicago, Illinois.................................     39       750,000
      Garyville, Louisiana..............................    246       170,000
      Paulsboro, New Jersey.............................     14        33,000
      Chagrin Falls, Ohio...............................     14        28,000
</TABLE>
 
  Other domestic manufacturing and/or warehouse facilities are located in:
Oklahoma City, Oklahoma; Clarksburg, West Virginia; and Vancouver, Washington.
 
  The general offices of the Company are located on a 146-acre site in
Naperville, Illinois. This facility includes three five-story buildings
totaling 417,000 square feet. About 317,000 square feet is used for office
space and the balance is used for support services and storage. A power plant
with a cogeneration system (steam and electricity) serves both the Corporate
and Technical Centers and has 31,000 square feet of space.
 
  The primary domestic research facility is located in Naperville, Illinois.
The Naperville Technical Center is adjacent to the Corporate Center and houses
process simulation areas in buildings which total 235,000 square feet.
 
  Primary foreign manufacturing plants are located in:
 
<TABLE>
<CAPTION>
                                                         LAND AREA BUILDING AREA
                                                          (ACRES)    (SQ. FT.)
                                                         --------- -------------
      <S>                                                <C>       <C>
      Botany, Australia.................................     10       102,000
      Suzano, Brazil....................................     14        81,000
      Burlington, Canada................................     14       138,000
      Cheshire, England.................................     15       226,000
      Biebesheim, Germany...............................     28       103,000
      Cisterna di Latina, Italy.........................     25        88,000
      Celra, Spain......................................     25       109,000
      Anaco, Venezuela..................................     43        76,000
</TABLE>
 
  Other foreign facilities are located in: Perth, Australia; Vienna, Austria;
Buenos Aires, Argentina; Santiago, Chile; Suzhou, The People's Republic of
China; Soledad, Colombia; Lerma, Mexico; West Bengal, India; Bogor, Indonesia;
Kashima, Japan; Tilburg, the Netherlands; Auckland, New Zealand; Calamba,
Laguna, Philippines; Dammam, Saudi Arabia; Jurong Town, Singapore; Hsin Chu
Hsien, Taiwan; and Maracaibo, Venezuela.
 
 
                                       4
<PAGE>
 
  The Company also has a 72,000 square-foot business and technical center on a
12-acre site in Oegstgeest, the Netherlands. This facility serves customers
throughout Europe.
 
  In addition to the property mentioned above, Nalco occupies general and
sales offices and warehouses which are rented under short-term leases. Except
for land leased in the Philippines, Saudi Arabia, Chile, The People's Republic
of China, and Argentina, all other real property (including all production
facilities) is owned by Nalco.
 
  While the plants are of varying ages, the Company believes that they are
well maintained, are equipped with modern and efficient equipment, and are in
good operating condition and suitable for the purposes for which they are
being used.
 
  In 1996, the Company opened a new manufacturing plant, laboratory and
offices on a four-acre site in Suzhou, The People's Republic of China. This
30,000 square-foot facility is located near Shanghai.
 
  Consolidation of operations continued in 1996 with the closing of the
Edmonton, Canada plant. Also in 1996, the Company sold its superabsorbent
polymer production plant located in Garyville, Louisiana, and its plant in
Jordbro, Sweden.
 
  A new manufacturing plant, under construction near Buenos Aires, Argentina,
is scheduled to open in 1997.
 
  Capital expenditures for 1997 should approximate $100.0 million compared to
the $92.5 million spent in 1996, if planned sales and earnings for 1997 are
reached.
 
ITEM 3. LEGAL PROCEEDINGS.
 
  For information on this item, please refer to Note 19 of the Notes to
Consolidated Financial Statements in the Company's 1996 Annual Report to
Shareholders, which is incorporated herein by reference.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
  Not Applicable.
 
                                    PART II
 
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS.
 
  The Registrant's Common Stock is listed on the New York and Chicago Stock
Exchanges. The number of holders of record of Common Stock, par value $0.1875
per share, at December 31, 1996 was 5,349. Dividends and Common Stock market
prices included in the Quarterly Summary in the Company's 1996 Annual Report
to Shareholders are incorporated herein by reference.
 
ITEM 6. SELECTED FINANCIAL DATA.
 
  Selected Financial Data including net sales, earnings from continuing
operations, earnings from continuing operations per common share, total
assets, long-term debt, and cash dividends paid are reported in the Eleven
Year Summary in the Company's 1996 Annual Report to Shareholders and are
incorporated herein by reference.
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
 
 Financial Condition and Results of Operations
 
  Management's discussion and analysis of financial condition and results of
operations which is included in the section titled "Management's Discussion
and Analysis--1996 vs. 1995," "Management's Discussion and Analysis--1995 vs.
1994," and "Management's Discussion and Analysis--Financial Condition" in the
Company's 1996 Annual Report to Shareholders is incorporated herein by
reference.
 
                                       5
<PAGE>
 
 Liquidity and Capital Resources
 
  Management's discussion of liquidity and capital resources which is included
in the section titled "Management's Discussion and Analysis--Cash Flows" in the
Company's 1996 Annual Report to Shareholders is incorporated herein by
reference.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
  The Report of Independent Accountants, the Consolidated Financial Statements,
and the Notes to Consolidated Financial Statements of the Registrant and its
subsidiaries, included in the Company's 1996 Annual Report to Shareholders, are
incorporated herein by reference.
 
  The Quarterly Summary in the Company's 1996 Annual Report to Shareholders is
incorporated herein by reference.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
 
  Not applicable.
 
                                    PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
 
  Item 10 information is set forth in Part I, Item 1, under Executive Officers
of the Registrant and also in the Company's Proxy Statement dated March 18,
1997, under Election of Directors through Election of Directors--Meeting of the
Board and Committees of the Board, which is incorporated herein by reference.
 
ITEM 11. EXECUTIVE COMPENSATION.
 
  The information contained under Election of Directors--Directors'
Remuneration and Retirement Policies through Election of Directors--Change in
Control in the Company's Proxy Statement dated March 18, 1997, with respect to
executive compensation and transactions, is incorporated herein by reference in
response to this item.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
 
  The information contained under Shares Outstanding and Voting Rights in the
Company's Proxy Statement dated March 18, 1997, with respect to security
ownership of certain beneficial owners and management, is incorporated herein
by reference in response to this item.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 
  None.
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
 
  (a)(1) The following consolidated financial statements of the Registrant and
its subsidiaries included in the Company's 1996 Annual Report to Shareholders
are incorporated herein by reference in Item 8:
 
<TABLE>
   <S>                                                    <C>
   Statements of Consolidated Financial Condition
    December 31, 1996 and 1995
   Statements of Consolidated Earnings
    Years ended December 31, 1996, 1995 and 1994
   Statements of Consolidated Cash Flows
    Years ended December 31, 1996, 1995 and 1994
   Statement of Consolidated Common Shareholders' Equity
    Years ended December 31, 1996, 1995 and 1994
   Notes to Consolidated Financial Statements
   Quarterly Summary (Unaudited)
    Years ended December 31, 1996 and 1995
   Report of Independent Accountants
</TABLE>
 
 
                                       6
<PAGE>
 
  (2) The following consolidated financial statement schedule for the years
1996, 1995 and 1994 is submitted herewith:
 
  Report of Independent Accountants on Financial Statement Schedule
 
  Schedule II--Valuation and Qualifying Accounts
 
  All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.
 
  (3) Exhibits
 
<TABLE>
   <C>     <C> <S>
   Exhibit  3A --Restated Certificate of Incorporation/2/
   Exhibit  3B --Certificates of Correction and Amendment to the Restated
                Certificate of Incorporation/6/
   Exhibit  3C --Certificate of Designations, Preferences and Rights of Series
                B ESOP Convertible Preferred Stock/4/
   Exhibit  3D --Certificate of Designations, Preference and Rights of Series C
                Junior Participating Preferred Stock/1//2/
   Exhibit  3E --By-laws/9/
   Exhibit 10A --Form of Key Executive Agreement/1/
           10B --Agreements to Restore Benefits Reduced by Excess ERISA-Related
                Limits/1/
           10C --Form of Death Benefit Agreement/2/
           10D --Management Incentive Plan/8/
           10E --Restricted Stock Plan/6/
           10F --1982 Stock Option Plan as amended April 26, 1984, January 30,
                1987, February 12, 1993, and October 17, 1996/1//0/
           10G --Deferred Compensation Plan for Directors/3/
           10H --Supplemental Retirement Income Plan/5/
           10I --1990 Stock Option Plan as amended April 23, 1992, February 12,
                1993, and October 17, 1996/1//0/
           10J --Stock Option Plan for Non-Employee Directors/7/
           10K --Directors Benefit Protection Trust of Nalco Chemical
                Company/5/
           10L --Management Benefit Protection Trust of Nalco Chemical
                Company/5/
           10M --Restricted Stock Trust of Nalco Chemical Company/5/
           10N --Performance Share Plan as amended effective February 16, 1996
                and October 17, 1996/1//0/
           10O --Employee Stock Compensation Plan as amended effective January
                1, 1996 and October 17, 1996/1//0/
           10P --Non-Employee Directors Stock Compensation Plan/8/
   Exhibit 11  --Computation of Earnings Per Share
   Exhibit 13  --Those portions of the 1996 Annual Report to Shareholders
                expressly incorporated herein by reference
   Exhibit 21  --Subsidiaries of the Registrant
   Exhibit 23  --Consent of Independent Accountants
   Exhibit 27  --Financial Data Schedule
   Exhibit 99A --Notice of Annual Meeting and Proxy Statement/1//3/
   Exhibit 99B --September 16, 1996 Letter to Shareholders with Summaries of
                the Preferred Share Purchase Rights Agreement/1//1/
   Exhibit 99C --Form 11-K Annual Report
</TABLE>
  Exhibit Nos. 10A-10P constitute management contracts, compensation plans,
  or arrangements covering directors and officers of the Company.
 
 
                                       7
<PAGE>
 
(b) Reports on Form 8-K filed in the fourth quarter of 1996 are: None
--------
 /1Incorporated/herein by reference from the Registrant's Form 10-K for the
   year ended 1986.
 /2Incorporated/herein by reference from the Registrant's Form 10-K for the
   year ended 1987.
 /3Incorporated/herein by reference from the Registrant's Form 8-K dated July
   24, 1986.
 /4Incorporated/herein by reference from the Registrant's Form 8-K dated May
   15, 1989.
 /5Incorporated/herein by reference from the Registrant's Form 10-K for the
   year ended 1990.
 /6Incorporated/herein by reference from the Registrant's Form 10-K for the
   year ended 1991.
 /7Incorporated/herein by reference from the Registrant's Form 10-K for the
   year ended 1992.
 /8Incorporated/herein by reference from the Registrant's Notice of Annual
   Meeting and Proxy Statement dated March 18, 1996.
 /9Incorporated/herein by reference from the Registrant's Form 10-Q for the
   quarter ended June 30, 1996.
/1/Incorporated/herein0by/reference from the Registrant's Form 10-Q for the
   quarter ended September 30, 1996.
/1/Incorporated/herein1by/reference from the Registrant's Form 8-K dated June
   24, 1996.
/1/Incorporated/herein2by/reference from the Registrant's Form 8-A dated June
   24, 1996.
/1/Incorporated/herein3by/reference from the Registrant's Notice of Annual
   Meeting and Proxy Statement dated March 18, 1997.
 
                                       8
<PAGE>
 
                                  SIGNATURES
 
  PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE COMPANY HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
 
                                          NALCO CHEMICAL COMPANY
 
                                                       E. J. Mooney
                                          By___________________________________
                                                       E. J. Mooney
                                             Chairman, Chief Executive Officer
                                                       and President
 
                                          Date: March 27, 1997
 
  PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW ON MARCH 27, 1997 BY THE FOLLOWING PERSONS ON
BEHALF OF THE REGISTRANT AND IN THE CAPACITIES INDICATED.
 
<TABLE>
<CAPTION>
                   NAME                                        TITLE
                   ----                                        -----
 
 
<S>                                         <C>
              W. E. Buchholz                Senior Vice President and Chief Financial
___________________________________________   Officer
              W. E. Buchholz
 
               R. L. Ratliff                Controller
___________________________________________
               R. L. Ratliff
 
             J. L. Ballesteros              Director
___________________________________________
             J. L. Ballesteros
 
              H. G. Bernthal                Director
___________________________________________
              H. G. Bernthal
 
                H. Corless                  Director
___________________________________________
                H. Corless
 
                H. M. Dean                  Director
___________________________________________
                H. M. Dean
 
             J. P. Frazee, Jr.              Director
___________________________________________
             J. P. Frazee, Jr.
 
                A. L. Kelly                 Director
___________________________________________
                A. L. Kelly
 
              F. A. Krehbiel                Director
___________________________________________
              F. A. Krehbiel
 
               E. J. Mooney                 Director
___________________________________________
               E. J. Mooney
 
                W. A. Pogue                 Director
___________________________________________
                W. A. Pogue
 
                J. J. Shea                  Director
___________________________________________
                J. J. Shea
</TABLE>
 
                                       9
<PAGE>
 
                     REPORT OF INDEPENDENT ACCOUNTANTS ON
                         FINANCIAL STATEMENT SCHEDULE
 
To the Board of Directors
of Nalco Chemical Company
 
  Our audits of the consolidated financial statements referred to in our
report dated February 3, 1997 appearing on page 17 of the 1996 Annual Report
to Shareholders of Nalco Chemical Company (which report and consolidated
financial statements are incorporated by reference in this Annual Report on
Form 10-K) also included an audit of the Financial Statement Schedule listed
in Item 14(a) of this Form 10-K. In our opinion, this Financial Statement
Schedule presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements.
 
Price Waterhouse LLP
 
Chicago, Illinois
February 3, 1997
 
                                      10
<PAGE>
 
                    NALCO CHEMICAL COMPANY AND SUBSIDIARIES
 
                                --------------
 
                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
 
<TABLE>
<CAPTION>
         COL. A             COL. B          COL. C               COL. D       COL. E
         ------           ---------- ----------------------   ------------  ----------
                                           ADDITIONS
                                     ----------------------
                                                    (2)
                                        (1)      CHARGED TO
                          BALANCE AT CHARGED TO    OTHER                    BALANCE AT
                          BEGINNING  COSTS AND   ACCOUNTS--   DEDUCTIONS--    END OF
      DESCRIPTION         OF PERIOD   EXPENSES    DESCRIBE      DESCRIBE      PERIOD
      -----------         ---------- ----------  ----------   ------------  ----------
<S>                       <C>        <C>         <C>          <C>           <C>
Reserves deducted in the
 Statements of
 Consolidated Financial
 Condition from the
 assets to which they
 apply
  Allowance for doubtful
   accounts
    Year Ended:
    December 31, 1996...  $4,439,000 $  388,000   $738,000(A)   $629,000(B) $4,936,000
                          ========== ==========   ========      ========    ==========
    December 31, 1995...  $5,605,000 $ (648,000)  $    --       $518,000(B) $4,439,000
                          ========== ==========   ========      ========    ==========
    December 31, 1994...  $4,470,000 $1,845,000   $    --       $710,000(B) $5,605,000
                          ========== ==========   ========      ========    ==========
</TABLE>
--------
Note A--Valuation of assets acquired.
Note B--Excess of accounts written off over recoveries.
 
                                       11
<PAGE>
 
                                                                    EXHIBIT (11)
 
                STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
 
                    NALCO CHEMICAL COMPANY AND SUBSIDIARIES
 
<TABLE>
<CAPTION>
                                                    YEAR ENDED DECEMBER 31
                                                   ---------------------------
                                                     1996      1995     1994
                                                   --------  --------  -------
                                                    (AMOUNTS IN THOUSANDS,
                                                    EXCEPT PER SHARE DATA)
<S>                                                <C>       <C>       <C>
PRIMARY
  Average shares outstanding during the year......   67,280    67,495   68,460
  Net effect of dilutive stock options and shares
   contingently issuable-based on the treasury
   stock method using average market price........      319       410      569
                                                   --------  --------  -------
    TOTALS........................................   67,599    67,905   69,029
                                                   ========  ========  =======
  Earnings from continuing operations............. $145,936  $135,664  $73,248
  Earnings from discontinued operations, net of
   taxes..........................................    8,546    18,034   23,863
                                                   --------  --------  -------
  Net earnings....................................  154,482   153,698   97,111
  Preferred stock dividends, net of taxes.........  (11,363)  (11,208) (11,026)
                                                   --------  --------  -------
  Net earnings to common shareholders............. $143,119  $142,490  $86,085
                                                   ========  ========  =======
  Per share amounts:
  Earnings from continuing operations............. $   1.99  $   1.83  $   .90
  Earnings from discontinued operations, net of
   taxes..........................................      .13       .27      .35
                                                   --------  --------  -------
  Net earnings to common shareholders............. $   2.12  $   2.10  $  1.25
                                                   ========  ========  =======
</TABLE>
<PAGE>
 
                                                                    EXHIBIT (11)
 
                STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
 
                    NALCO CHEMICAL COMPANY AND SUBSIDIARIES
 
<TABLE>
<CAPTION>
                                                    YEAR ENDED DECEMBER 31
                                                   ---------------------------
                                                     1996      1995     1994
                                                   --------  --------  -------
                                                    (AMOUNTS IN THOUSANDS,
                                                    EXCEPT PER SHARE DATA)
<S>                                                <C>       <C>       <C>
FULLY DILUTED
  Average shares outstanding......................   67,280    67,495   68,460
  Average dilutive effect of assumed conversion of
   ESOP Convertible Preferred Shares..............    7,930     8,037    8,125
  Additional shares assuming exercise of dilutive
   stock options and shares contingently issuable-
   based on the treasury stock method using the
   year-end market price, if higher than average
   market price...................................      406       415      575
                                                   --------  --------  -------
    TOTALS........................................   75,616    75,947   77,160
                                                   ========  ========  =======
  Earnings from continuing operations............. $145,936  $135,664  $73,248
  Earnings from discontinued operations, net of
   taxes..........................................    8,546    18,034   23,863
                                                   --------  --------  -------
  Net earnings....................................  154,482   153,698   97,111
  Additional ESOP contribution resulting from
   assumed conversion, net of taxes...............   (4,515)   (4,643)  (4,911)
  Tax adjustment on assumed common dividends......     (920)     (793)    (684)
                                                   --------  --------  -------
  Net earnings to common shareholders............. $149,047  $148,262  $91,516
                                                   ========  ========  =======
  Per share amounts:
  Earnings from continuing operations............. $   1.86  $   1.71  $   .88
  Earnings from discontinued operations, net of
   taxes..........................................      .11       .24      .31
                                                   --------  --------  -------
  Net earnings to common shareholders............. $   1.97  $   1.95  $  1.19
                                                   ========  ========  =======
</TABLE>
<PAGE>
 
                                                                    EXHIBIT (21)
 
                    NALCO CHEMICAL COMPANY AND SUBSIDIARIES
 
                                --------------
 
                         SUBSIDIARIES OF THE REGISTRANT
 
  Subsidiaries of the registrant, all of which are wholly-owned unless
otherwise indicated, are as follows:
 
<TABLE>
<CAPTION>
                                                               STATE OR OTHER
                                                               JURISDICTION OF
                                                              INCORPORATION OR
                          COMPANY                               ORGANIZATION
                          -------                            -------------------
<S>                                                          <C>
Domestic:
  ADX....................................................... Michigan
  Aluminate Sales Corporation............................... Illinois
  Chicago Chemical Company.................................. Illinois
  Board Chemistry, Inc...................................... Illinois
  Diversey Water Technologies, Inc.......................... Delaware
  Nalco Delaware............................................ Delaware
  Nalco Foreign Sales Corporation........................... U.S. Virgin Islands
  Nalco FT, Inc............................................. Delaware
  Nalco Japan Company, Ltd.................................. Delaware
  Nalco Leasing Corporation................................. Delaware
  Nalco Neighborhood Development Corporation................ Delaware
  Nalco Resources Investment Company........................ Texas
  Nalco TWO, Inc............................................ Delaware
  NalFirst Holding Inc...................................... Delaware(1)
  NalFirst Leasing Corporation.............................. Delaware(1)
  Nalgreen, Inc............................................. Delaware
  NalTech, Inc.............................................. Delaware
  Oil Products & Chemical Company, Inc...................... Illinois
  The Flox Company.......................................... Minnesota
  Visco Products Company.................................... Texas
Foreign:
  Deutsche Nalco-Chemie, G.m.b.H............................ Germany
  Deutsche Nalco Equipment G.m.b.H.......................... Germany
  Diversey Water Technologies Limited....................... United Kingdom
  Diversey Water Technologies, Ltd.......................... Canada
  DWT SRL................................................... Italy
  Nalco Anadolu A.S......................................... Turkey
  Nalco Applied Services of Europe B.V...................... Netherlands
  Nalco Argentina, S.A...................................... Argentina
  Nalco Australia Pty. Limited.............................. Australia
  Nalco Belgium N.V./S.A.................................... Belgium
  Nalco Brazil Ltda......................................... Brazil
  Nalco Canada, Inc......................................... Canada
  Nalco Chemical A.B........................................ Sweden
  Nalco Chemical B.V........................................ Netherlands
  Nalco Chemical Company (Philippines) Inc.................. Philippines
  Nalco Chemical Company (Thailand) Limited................. Thailand
  Nalco Chemical Gesellschaft m.b.H......................... Austria
  Nalco Chemical (H.K.) Limited............................. Hong Kong
  Nalco Chemie.............................................. Czechoslovakia
</TABLE>
<PAGE>
 
<TABLE>
<CAPTION>
                                                                STATE OR OTHER
                                                                JURISDICTION OF
                                                                 INCORPORATION
                            COMPANY                             OR ORGANIZATION
                            -------                             ---------------
<S>                                                             <C>
  Nalco de Venezuela, C.A...................................... Venezuela
  Nalco Ecuador, S.A........................................... Ecuador
  Nalco Chemical Egypt......................................... Egypt
  Nalco Espanola, S.A.......................................... Spain
  Nalco Europe B.V............................................. Netherlands
  Nalco France................................................. France
  Nalco Chem................................................... Russia
  Nalco Gulf Limited........................................... Dubai
  Nalco Hellas S.A............................................. Greece
  Nalco Holdings Australia Pty. Limited........................ Australia
  Nalco Investments Australia, Pty. Limited.................... Australia
  Nalco Investments U.K. Limited............................... United Kingdom
  Nalco Italiana, S.p.A........................................ Italy
  Nalco Japan Technical Center Co. Ltd......................... Japan
  Nalco Kemiai Kft............................................. Hungary
  Nalco Korea Co., Ltd......................................... South Korea
  Nalco Limited................................................ United Kingdom
  Nalco New Zealand, Ltd....................................... New Zealand
  Nalco Norge A/S.............................................. United Kingdom
  Nalco Pacific Pte. Ltd....................................... Singapore
  Nalco Poland................................................. Poland
  Nalco Portuguesa (Q.I.) Ltda................................. Portugal
  Nalco Productos Quimicos de Chile S.A........................ Chile
  Nalco Saudi Co., Ltd......................................... Saudi Arabia (2)
  Nalcochemical (Malaysia) SDN BHD............................. Malaysia
  Nalcomex, S.A. de C.V........................................ Mexico
  Nalfleet, Inc................................................ United Kingdom
  Nal-Lite Produtos Quimicos Ltda.............................. Brazil
  NCC Mauritius Limited........................................ Mauritius
  P.T. Nalco Perkasa........................................... Indonesia (3)
  Quimica Nalco de Colombia, S.A............................... Colombia
  Suomen Nalco Oy.............................................. Finland
  Taiwan Nalco Chemical Co., Ltd............................... Taiwan (4)
  Deryshares, B.V.............................................. Netherlands
  Nalco Chemical India, Ltd.................................... India (5)
  Nalco Chemical Company (Suzhou) Ltd.......................... China (6)
</TABLE>
--------
Note (1)--80% of voting securities owned by Registrant
Note (2)--60% of voting securities owned by Registrant
Note (3)--51% of voting securities owned by Registrant
Note (4)--55% of voting securities owned by Registrant
Note (5)--65% of voting securities owned by Registrant
Note (6)--95% of voting securities owned by Registrant
<PAGE>
 
                                                                    EXHIBIT (23)
 
                       CONSENT OF INDEPENDENT ACCOUNTANTS
 
  We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 (Numbers 33-57363,
33-53111, 2-97721, 33-9934 and 2-97721) and Form S-8 (Numbers 333-06955, 333-
06963, 33-54377, 33-38033, 33-38032, 33-29149, 2-97721, 2-97131 and 2-82642) of
our report dated February 3, 1997, which appears on page 17 of the 1996 Annual
Report to Shareholders of Nalco Chemical Company, which is incorporated by
reference in Nalco Chemical Company's Annual Report on Form 10-K for the year
ended December 31, 1996. We also consent to the incorporation by reference of
our report on the Financial Statement Schedule, which appears on page 10 of
this Form 10-K. We also consent to the incorporation by reference in the
Registration Statement of our report dated March 17, 1997 appearing on page 1
of the Annual Report of the Nalco Chemical Company Profit Sharing, Investment
and Pay Deferral Plan on Form 11-K for the year ended December 31, 1996.
 
Price Waterhouse LLP
 
Chicago, Illinois
March 27, 1997