<PAGE>

                                                                           1997
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                      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, 1997
                                      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 $2,584,316,152 at February 20, 1998.*

  The number of shares outstanding of each of the issuer's classes of Common
Stock, as of February 20, 1998 was 66,146,687 shares of Common Stock.

                      DOCUMENTS INCORPORATED BY REFERENCE

  Portions of the Registrant's 1997 Annual Report to Shareholders are
incorporated by reference into Parts I and II.

  Portions of the Registrant's Proxy Statement dated March 16, 1998 for the
April 16, 1998 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
                                                                           ----
<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

Item 5  Market for the Registrant's Common Stock and Related Security
        Holder Matters....................................................   5
Item 6  Selected Financial Data...........................................   5
Item 7  Management's Discussion and Analysis of Financial Condition and
        Results of Operations.............................................   6
Item 7A Quantitative and Qualitative Disclosures About Market Risk........   6
Item 8  Financial Statements and Supplementary Data.......................   6
Item 9  Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure..............................................   7

                                    PART III

Item 10 Directors and Executive Officers of the Registrant................   7
Item 11 Executive Compensation............................................   7
Item 12 Security Ownership of Certain Beneficial Owners and Management....   7
Item 13 Certain Relationships and Related Transactions....................   7

                                    PART IV

Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K...   7
</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-
1198. 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 1997
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;
improved 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 January 1997, the Company acquired the stock 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.

  In May 1997, the Company acquired the pulp and paper enzyme business of Ciba
Specialty Chemicals, Inc. The enzyme technology which was acquired is used in
paper mills to enhance fiber quality and water drainage during the paper
making process. Also in May 1997, the Company increased its investment in
Taiwan Nalco Chemical Co. Ltd. from 55 percent to 79 percent.

                                       1
<PAGE>

  In August 1997, the Company acquired a majority interest in Green Label
Products Inc. (Green Label). Green Label is located in Gainesville, Georgia
and supplies odor control products, technology and application systems for
chemically neutralizing objectionable odors of various processes.

  During October 1997, the Company acquired the assets of Chemical
Technologies, Incorporated (CTI). CTI, with annual sales of approximately $18
million, is located in Jackson, Michigan and is a manufacturer and marketer of
synthetic fluids and lubricants that are used in cooling and lubricating
tooling employed in the machining of metal products. Also during October 1997,
the Company acquired Gamus Quimica, Ltda., a Brazilian manufacturer and
marketer of water treatment chemical products with annual sales of about $2
million.

  During November 1997, the Company acquired Chemco Water Technology, Inc.
(Chemco). Chemco, which is located in Vancouver, Washington, manufactures and
markets boiler and cooling water treatment chemicals and services to steel,
paper, co-generation, chemical, petrochemical, food and beverage facilities
throughout the United States. Chemco has annual sales of approximately $7
million.

  In November 1997, the Company announced it had signed a letter of intent to
sell its 50 percent interest in Nalco Fuel Tech.

  In January 1998, the Company completed the acquisitions of USF Houseman
Waterbehandeling BV (Houseman), a Dutch water treatment company based in
Bergen op Zoom, Holland, and Trident Chemical Company (Trident) of Baton
Rouge, Louisiana. Houseman provides boiler and cooling water chemicals and
services to office buildings, retail outlets and manufacturing facilities
throughout Holland, Spain and Belgium. Houseman has annual sales of more than
$3 million. Trident manufactures and markets water treatment chemicals and
services to refinery, petrochemical and utility customers throughout the Gulf
Coast region of the United States. Trident had 1997 annual sales of
approximately $9 million.

  In February 1998, the Company completed the merger of its South African
water treatment interest with those of Chemical Services Limited. The merged
entity, Nalco-Chemserve, is South Africa's largest specialty chemicals
company. Estimated 1998 sales are anticipated to be approximately $35 million.

  There were no other significant changes in the markets served or in the
methods of distribution since the beginning of 1997.

  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

  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 1997 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.

                                       2
<PAGE>

  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 $43.0 million in 1997, compared to $41.9 million in
1996 and $39.8 million in 1995.

  There were approximately 6,900 persons employed full time by Nalco at the
end of 1997.

  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
1998. 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.

  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.

  E. J. Mooney has been Chairman of the Board and Chief Executive Officer of
the Company since 1994 and President since 1990.

  M. B. Harp has been Executive Vice President, Operations since 1995. He had
been Executive Vice President, International Operations since 1993.

  W. S. Weeber has been Executive Vice President, Operations Staff since 1993.

  P. Dabringhausen has been Group Vice President, President, Pulp & Paper
Division since January 1, 1998. He had been Group Vice President and
President, Process Chemicals Division since 1993.

  S. D. Newlin has been Group Vice President, President, Specialty Division
since January 1, 1998. He had been Group Vice President, President, Nalco
Europe since 1994, and from 1992 to 1994 he was Vice President, President,
Nalco Pacific.

  G. M. Brannon has been Group Vice President, President, Industrial Division
since January 1, 1998. He had been Group Vice President, President, Nalco
Pacific since February 1997. He was Vice President, President Nalco Pacific
from 1994 to 1997, and from 1990 to 1994 he was General Manager of the Utility
Chemicals Group.

                                       3
<PAGE>

  G. Pinzon has been Group Vice President, President, Nalco Latin America
since 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 has been Senior Vice President and Chief Financial Officer
since February 1997. He had been Vice President and Chief Financial Officer
since 1993.

  The corporate officers of the Registrant are usually elected at the annual
meeting of directors and hold office for a term of one year.

  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 the Inside Back Cover of the Company's 1997 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 11 domestic and 26 foreign locations. Primary domestic
manufacturing plants are located in:

<TABLE>
<CAPTION>
                                                                 LAND   BUILDING
                                                                 AREA     AREA
                                                                (ACRES) (SQ.FT.)
                                                                ------- --------
      <S>                                                       <C>     <C>
      Carson, California.......................................    21    84,000
      Jonesboro, Georgia.......................................    12    35,000
      Chicago, Illinois........................................    39   750,000
      Garyville, Louisiana.....................................   225   170,000
      Paulsboro, New Jersey....................................    14    34,000
      Chagrin Falls, Ohio......................................    13    28,000
</TABLE>

  Other domestic manufacturing and/or warehouse facilities are located in:
Oklahoma City, Oklahoma; Charlotte, North Carolina; Jackson, Michigan; Baton
Rouge, Louisiana; 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   BUILDING
                                                                 AREA     AREA
                                                                (ACRES) (SQ.FT.)
                                                                ------- --------
      <S>                                                       <C>     <C>
      Botany, Australia........................................   10    102,000
      Suzano, Brazil...........................................   14     90,000
      Burlington, Canada.......................................   14    138,000
      Cheshire, England........................................   15    226,000
      Biebesheim, Germany......................................   28    103,000
      Cisterna di Latina, Italy................................   25    115,000
      Celra, Spain.............................................   25    109,000
      Anaco, Venezuela.........................................   43     82,000
</TABLE>


                                       4
<PAGE>

  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.

  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 Charlotte, North Carolina; the Philippines; Saudi Arabia;
Chile and The People's Republic of China, 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 1997, the Company opened a new manufacturing facility in Charlotte, North
Carolina and purchased facilities in Jackson, Michigan and Vancouver,
Washington. In January 1998, the Company purchased a facility located in Baton
Rouge, Louisiana.

  Consolidation of operations continued in 1997 with the closing of the
Clarksburg, West Virginia plant at year end.

  Capital expenditures for 1998 should approximate $100.0 million compared to
the $101.4 million spent in 1997, if planned sales and earnings for 1998 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 1997 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, 1997 was 5,047. Dividends and Common Stock market
prices, included in the Quarterly Summary appearing on page 39 of the
Company's 1997 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 on pages 36 and 37 of the Company's 1997 Annual Report to
Shareholders and are incorporated herein by reference.

  In 1997, the Company adopted Statement of Financial Accounting Standards No.
128 (SFAS 128), "Earnings Per Share." In accordance with the requirements of
SFAS 128, the Company has restated all prior period earnings per share data
presented.

                                       5
<PAGE>

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--1997 vs. 1996," "Management's Discussion and Analysis--1996 vs.
1995" and "Management's Discussion and Analysis--Financial Condition," on
pages 17 to 19 of the Company's 1997 Annual Report to Shareholders, is
incorporated herein by reference.

 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" on pages 20 and 21 of the Company's 1997 Annual Report to Shareholders,
is incorporated herein by reference.

 Year 2000 Compliance

  Management's discussion of the effects of the Year 2000 Issue, which is
included in the section titled "Management's Discussion and Analysis--Year
2000 Compliance" on page 21 of the Company's 1997 Annual Report to
Shareholders, is incorporated herein by reference.

 EURO Currency

  The Company has initiated actions to determine the requirements of
customers, vendors and government/regulatory agencies in regard to the
European Economic and Monetary Union's (EMU) conversion to a single currency
(EURO). Accordingly, no estimates are currently available for incremental
costs, if any, that would be incurred to enable the Company to be compliant
with any requirements that may be generated by the EMU's conversion to a
single currency.

 Forward-Looking Statements

  Management's Discussion and Analysis of Financial Condition and Results of
Operations and other sections of this Annual Report contain forward-looking
statements that are based on current expectations, estimates and assumptions
regarding the worldwide economy, technological innovation, competitive
activity, interest rates, pricing, currency movements, and the development of
certain markets. These statements are not guarantees of future results or
events, and involve certain risks and uncertainties which are difficult to
predict and many of which are beyond the control of the Company. Actual
results and events could differ materially from those anticipated by the
forward-looking statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

  Management's discussion of its market risk exposures and its risk management
strategies, which is included in the section titled "Management's Discussion
and Analysis--1997 vs. 1996" on pages 17 and 18 of the Company's 1997 Annual
Report to Shareholders, is incorporated herein by reference.

  The Registrant's market-risk-sensitive instruments do not subject the
Registrant to material market risk exposures.

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 1997 Annual Report to Shareholders,
are incorporated herein by reference.

  The Quarterly Summary in the Company's 1997 Annual Report to Shareholders is
incorporated herein by reference.

  In 1997, the Company adopted SFAS 128, "Earnings Per Share." In accordance
with the requirements of SFAS 128, the Company has restated all prior period
earnings per share data presented.

                                       6
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE.

  None.

                                   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 16,
1998, 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 16, 1998, 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 16, 1998, 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 1997 Annual Report to Shareholders
are incorporated herein by reference in Item 8:

  Statements of Consolidated Financial Condition
   December 31, 1997 and 1996
  Statements of Consolidated Earnings
   Years ended December 31, 1997, 1996 and 1995
  Statements of Consolidated Cash Flows
   Years ended December 31, 1997, 1996 and 1995
  Statements of Consolidated Common Shareholders' Equity
   Years ended December 31, 1997, 1996 and 1995
  Notes to Consolidated Financial Statements
  Quarterly Summary (Unaudited)
   Years ended December 31, 1997 and 1996
  Report of Independent Accountants

  (2) The following consolidated financial statement schedule for the years
1997, 1996 and 1995 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.

                                       7
<PAGE>

  (3) Exhibits

   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(/12/)
   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(/10/)
           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(/10/)
           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(/10/)
           10O --Employee Stock Compensation Plan as amended effective January
                1, 1996 and October 17, 1996(/10/)
           10P --Non-Employee Directors Stock Compensation Plan (/8/)
   Exhibit 11  --Computation of Earnings Per Share
   Exhibit 13  --Those portions of the 1997 Annual Report to Shareholders
                expressly incorporated herein by reference
   Exhibit 21  --Subsidiaries of the Registrant
   Exhibit 23  --Consent of Independent Accountants
   Exhibit 27A --Financial Data Schedule
   Exhibit 27B --Restated Financial Data Schedules
   Exhibit 99A --Notice of Annual Meeting and Proxy Statement(/13/)
   Exhibit 99B --September 16, 1996 Letter to Shareholders with Summaries of
                the Preferred Share Purchase Rights Agreement(/11/)
   Exhibit 99C --Form 11-K Annual Report
   Exhibit Nos. 10A-10P constitute management contracts, compensation plans, or
     arrangements covering directors and officers of the Company.

  (b) Reports on Form 8-K filed in the fourth quarter of 1997 are: None
--------
 (/1/Incorporated)herein by reference from the Registrant's Form 10-K for the
     year ended 1986.
 (/2/)Incorporated herein by reference from the Registrant's Form 10-K for the
year ended 1987.
 (/3/)Incorporated herein by reference from the Registrant's Form 8-K dated
July 24, 1986.
 (/4/)Incorporated herein by reference from the Registrant's Form 8-K dated May
15, 1989.
 (/5/)Incorporated herein by reference from the Registrant's Form 10-K for the
year ended 1990.
 (/6/)Incorporated herein by reference from the Registrant's Form 10-K for the
year ended 1991.
 (/7/)Incorporated herein by reference from the Registrant's Form 10-K for the
year ended 1992.

                                       8
<PAGE>

 (/8/Incorporated)herein by reference from the Registrant's Notice of Annual
     Meeting and Proxy Statement dated March 18, 1996.
 (/9/)Incorporated herein by reference from the Registrant's Form 10-Q for the
quarter ended June 30, 1996.
(/1//Incorporated0herein/by)reference from the Registrant's Form 10-Q for the
     quarter ended September 30, 1996.
(/1//Incorporated1herein/by)reference from the Registrant's Form 8-K dated
     June 24, 1996.
(/1//Incorporated2herein/by)reference from the Registrant's Form 8-A dated
     June 24, 1996.
(/1//Incorporated3herein/by)reference from the Registrant's Notice of Annual
     Meeting and Proxy Statement dated March 16, 1998.

                                       9
<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, 1998

  PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW ON MARCH 27, 1998 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

                B. S. Kelly                 Director
___________________________________________
                B. S. Kelly

              F. A. Krehbiel                Director
___________________________________________
              F. A. Krehbiel

               E. J. Mooney                 Director
___________________________________________
               E. J. Mooney

               S. A. Penrose                Director
___________________________________________
               S. A. Penrose

                W. A. Pogue                 Director
___________________________________________
                W. A. Pogue

                J. J. Shea                  Director
___________________________________________
                J. J. Shea
</TABLE>

                                      10
<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 2, 1998 appearing on page 38 of the 1997 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 2, 1998

                                      11
<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
                                     ---------------------
                                        (1)        (2)
                                      CHARGED   CHARGED TO
                          BALANCE AT TO COSTS     OTHER                    BALANCE AT
                          BEGINNING     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:
                                                               $938,000(B)
December 31, 1997.......  $4,936,000 $ 630,000   $ 22,000(A)    480,000(C) $4,170,000
                          ========== =========   ========      ========    ==========
                                                 $738,000(A)
December 31, 1996.......  $4,439,000 $ 388,000     17,000(C)   $646,000(B) $4,936,000
                          ========== =========   ========      ========    ==========
December 31, 1995.......  $5,605,000 $(648,000)  $ 73,000(C)   $591,000(B) $4,439,000
                          ========== =========   ========      ========    ==========
</TABLE>
--------
Note A--Valuation of assets acquired.
Note B--Excess of accounts written off over recoveries.
Note C--Foreign currency translation adjustments.

                                       12