8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):   December 1, 2011

ECOLAB INC.

(Exact name of registrant as specified in charter)

Delaware	1-9328	41-0231510
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

370 Wabasha Street North Saint Paul, Minnesota	55102
(Address of principal executive offices and Zip Code)	(Zip Code)

Registrant’s telephone number, including area code: 1-800-232-6522

Not applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01               Completion of Acquisition or Disposition of Assets.

On December 1, 2011, pursuant to the Agreement and Plan of Merger dated as of July 19, 2011 (the “Merger Agreement”) by and among Ecolab Inc., a Delaware corporation (the “Company”),  Sustainability Partners Corporation, a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and Nalco Holding Company, a Delaware corporation (“Nalco”), Nalco merged with and into Merger Sub (the “Merger”), with Merger Sub surviving the Merger as a wholly-owned subsidiary of the Company.

Pursuant to the terms of the Merger Agreement, each outstanding share of Nalco common stock, other than shares owned by the Company, Nalco or any of their respective direct or indirect wholly-owned subsidiaries (which were cancelled as a result of the Merger) and shares in respect of which appraisal rights were properly exercised and not withdrawn, if any, was converted into the right to receive, at the election of the stockholder (subject to certain proration and reallocation procedures described in the Merger Agreement), either 0.7005 shares of the Company’s common stock or $38.80 in cash, without interest. No fractional shares of the Company’s common stock will be issued in the Merger, and Nalco’s former stockholders will receive cash in lieu of fractional shares, if any, of the Company’s common stock.

Under the Merger Agreement, approximately 70% of the issued and outstanding shares of Nalco common stock as of immediately prior to the effective time of the Merger converted into the right to receive shares of the Company’s common stock and approximately 30% of the issued and outstanding shares of Nalco common stock as of immediately prior to the effective time of the Merger converted into the right to receive cash.   In order to achieve this 70%/30% stock-cash mix of consideration, the Merger Agreement provides for pro-rata adjustments to and reallocation of the stock and cash elections made by Nalco stockholders, as well as the allocation of consideration paid with respect to Nalco shares owned by stockholders who fail to make an election.

The deadline for former Nalco stockholders to make their stock-cash election in accordance with the Merger Agreement will be 5:00 p.m., New York City time, December 7, 2011.  In accordance with the procedures set forth in the Merger Agreement, any former Nalco stockholder who has not made an election by such time will be deemed to have made an election to receive cash in the Merger.

The Company paid the cash component of the merger consideration through commercial paper borrowings backed by its syndicated credit facility and the proceeds from the issuance of $500 million of private placement notes.

Upon the closing of the Merger, the shares of Nalco’s common stock, which previously traded under the ticker symbol “NLC” on the New York Stock Exchange (the “NYSE”), ceased trading on and were delisted from the NYSE.

The foregoing description of the Merger and the Merger Agreement is not complete and is qualified in its entirety by reference to the Merger Agreement, which was filed as Exhibit 2.1 to the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission (the “Commission”) on July 20, 2011, and is incorporated herein by reference.

Item 5.03               Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

At a special meeting of the stockholders of the Company held on November 30, 2011, the Company’s stockholders approved an amendment and restatement of the Restated Certificate of Incorporation of the Company to increase the number of authorized shares of the Company’s common stock.  On December 1, 2011, the Company filed a restated certificate of incorporation with the Secretary of State of the State of Delaware providing for an increase in the number of authorized shares of capital stock to 815,000,000 shares, consisting of 800,000,000 shares of common stock, par value $1.00 per share, and 15,000,000 shares of preferred stock, without par value.

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A copy of the Company’s Restated Certificate of Incorporation, as so amended and restated, is included as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 8.01               Other Events.

On December 1, 2011, the Company issued press releases announcing the receipt of the final required regulatory approval for the Merger, the completion of the Merger effective on December 1, 2011 and the declaration of a dividend payable January 17, 2012.  Copies of the press releases are included as Exhibits 99.1, 99.2 and 99.3 to this Current Report on Form 8-K and are incorporated herein by reference.

The risk factors contained in Item 1A of Nalco’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 are included as Exhibit 99.4 to this Current Report on Form 8-K and are incorporated by reference herein.

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Item 9.01               Financial Statements and Exhibits.

(a)          Financial statements of businesses acquired.

The audited consolidated balance sheets of Nalco as of December 31, 2010 and 2009 and the consolidated statements of operations, equity and cash flows of Nalco for each of the three years in the period ended December 31, 2010, and notes related thereto, are included as part of Exhibit 99.5 to this Current Report on Form 8-K and are incorporated herein by reference.

The Report of Independent Registered Public Accounting Firm dated February 25, 2011issued by PricewaterhouseCoopers LLP relating to the consolidated balance sheet of Nalco as of December 31, 2010 and the related consolidated statements of operations, equity and cash flows for the year ended December 31, 2010 is included as part of Exhibit 99.5 to this Current Report on Form 8-K and is incorporated herein by reference.

The Report of Independent Registered Public Accounting Firm dated February 26, 2010 issued by Ernst & Young LLP relating to the consolidated balance sheet of Nalco as of December 31, 2009 and the related consolidated statements of operations, equity and cash flows for the years ended December 31, 2009 and 2008 is included as part of Exhibit 99.5 to this Current Report on Form 8-K and is incorporated herein by reference.

The unaudited condensed consolidated balance sheet of Nalco as of September 30, 2011 and the condensed consolidated statements of operations and cash flows of Nalco for the three- and nine-month periods ended September 30, 2011 and 2010, and notes related thereto, are included as Exhibit 99.6 to this Current Report on Form 8-K and are incorporated herein by reference.

(b)          Pro forma financial information.

The unaudited condensed combined pro forma financial statements of Ecolab as of and for the nine-month period ended September 30, 2011 and for the year ended December 31, 2010, and notes related thereto, required by Section 9.01(b) of Form 8-K and Article 11 of Regulation S-X are included as Exhibit 99.7 to this Current Report on Form 8-K and are incorporated herein by reference.

(d)          Exhibits.

Exhibit No.	Description
2.1	Agreement and Plan of Merger dated as of July 19, 2011, among Ecolab Inc., Sustainability Partners Corporation and Nalco Holding Company (filed as Exhibit 2.1 to the Current Report on Form 8-K filed with the Commission on July 20, 2011and incorporated herein by reference).
3.1	Restated Certificate of Incorporation of Ecolab Inc.
23.1	Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm for Nalco Holding Company.
23.2	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm for Nalco Holding Company.
99.1	Press Release dated December 1, 2011.
99.2	Press Release dated December 1, 2011.
99.3	Press Release dated December 1, 2011.
99.4	Risk factors from Nalco Holding Company’s Annual Report on Form 10-K for fiscal year ended December 31, 2010.
99.5	Report of Independent Registered Accounting Firm, issued by PricewaterhouseCoopers LLP dated February 25, 2011, relating to the Nalco Holding Company financial statements; Report of Independent Registered Accounting Firm, issued by Ernst & Young LLP dated February 26, 2010, relating to the Nalco Holding Company financial statements; and the audited consolidated balance sheets of Nalco Holding Company as of December 31, 2010 and 2009 and the consolidated statements of operations, equity and cash flows for each of the three years in the period ended December 31, 2010, and the notes related thereto.

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99.6	The unaudited condensed consolidated balance sheet of Nalco Holding Company as of September 30, 2011 and the condensed consolidated statements of operations and cash flows for the three and nine-month periods ended September 30, 2011 and 2010, and the notes related thereto.
99.7	The unaudited pro forma condensed combined financial statements of Ecolab Inc. as of and for the nine-month period ended September 30, 2011 and for the year ended December 31, 2010.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated:    December 2, 2011
	ECOLAB INC.
	/s/ MICHAEL C. MCCORMICK
	Michael C. McCormick
	Assistant Secretary

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EXHIBIT INDEX

Exhibit No.	Description
2.1	Agreement and Plan of Merger dated as of July 19, 2011, among Ecolab Inc., Sustainability Partners Corporation and Nalco Holding Company (filed as Exhibit 2.1 to the Current Report on Form 8-K filed with the Commission on July 20, 2011and incorporated herein by reference).
3.1	Restated Certificate of Incorporation of Ecolab Inc.
23.1	Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm for Nalco Holding Company.
23.2	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm for Nalco Holding Company.
99.1	Press Release dated December 1, 2011.
99.2	Press Release dated December 1, 2011.
99.3	Press Release dated December 1, 2011.
99.4	Risk factors from Nalco Holding Company’s Annual Report on Form 10-K for fiscal year ended December 31, 2010.
99.5	Report of Independent Registered Accounting Firm, issued by PricewaterhouseCoopers LLP dated February 25, 2011, relating to the Nalco Holding Company financial statements; Report of Independent Registered Accounting Firm, issued by Ernst & Young LLP dated February 26, 2010, relating to the Nalco Holding Company financial statements; and the audited consolidated balance sheets of Nalco Holding Company as of December 31, 2010 and 2009 and the consolidated statements of operations, equity and cash flows for each of the three years in the period ended December 31, 2010, and the notes related thereto.
99.6	The unaudited condensed consolidated balance sheet of Nalco Holding Company as of September 30, 2011 and the condensed consolidated statements of operations and cash flows for the three and nine-month periods ended September 30, 2011 and 2010, and the notes related thereto.
99.7	The unaudited pro forma condensed combined financial statements of Ecolab Inc. as of and for the nine-month period ended September 30, 2011 and for the year ended December 31, 2010.

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EX-3.1

Exhibit 3.1

RESTATED CERTIFICATE OF INCORPORATION

OF

ECOLAB INC.

Ecolab Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:

1.             The name of the corporation is Ecolab Inc. (the “Corporation”).  The original Certificate of Incorporation was filed on February 18, 1924, with the Delaware Secretary of State under the name of Economics Laboratory, Inc.

2.             This Restated Certificate of Incorporation restates and integrates and further amends the provisions of the Restated Certificate of Incorporation of the Corporation by amending the first sentence of the first paragraph of Article III of the Restated Certificate of Incorporation such that the it states the following:

“The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is eight hundred fifteen million (815,000,000) consisting of eight hundred million (800,000,000) shares of Common Stock of the par value of One Dollar ($1.00) per share and fifteen million (15,000,000) shares of Preferred Stock without par value.”

3.             This Restated Certificate of Incorporation was duly proposed by the directors and adopted by shareholders in the manner and by the vote prescribed by Section 242 and duly adopted pursuant to Section 245 of the General Corporation Law of the State of Delaware.

4.             This Restated Certificate of Incorporation shall be effective upon the filing of this Restated Certificate of Incorporation with the Secretary of State of the State of Delaware.

5.             The text of the Restated Certificate of Incorporation of the Corporation, as amended, is hereby amended and restated in its entirety to read as follows:

ARTICLE I

The name of the Corporation is Ecolab Inc.

ARTICLE II

The purposes of the Corporation are to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware, and without limiting the foregoing, to hold shares of the capital stock of other corporations and to engage in services of all kinds, and produce, manufacture, develop, construct, transport, buy, hold, sell and generally deal in products, materials and property, both tangible and intangible.

ARTICLE III

The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is eight hundred fifteen million (815,000,000) consisting of eight hundred million (800,000,000) shares of Common Stock of the par value of One Dollar ($1.00) per share and fifteen million (15,000,000) shares of Preferred Stock without par value.  The number of authorized shares of any class of capital stock may be increased or decreased by the affirmative vote of the holders of a majority of capital stock of the Corporation entitled to vote.

The Board of Directors of the Corporation is granted full and complete authority to fix by resolution or resolutions the designation, and the powers, preferences and rights of the Preferred Stock and any series thereof, and the qualifications, limitations or restrictions on such powers, preferences and rights.

Series A Junior Participating Preferred Stock

A series of Preferred Stock of the Corporation is hereby created and the designation, amount thereof and the working powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows:

Section 1.               Designation and Amount. The shares of such series shall be designated as “Series A Junior Participating Preferred Stock” and the number of shares constituting such series shall be 400,000.

Section 2.               Dividends and Distributions.

(A)          Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock, if any, issued from time to time ranking prior and superior to the shares of Series A Junior Participating Preferred Stock with respect to dividends, the holders of shares of Series A Junior Participating Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the fifteenth day of February, May, August and November in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Junior Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $10.00 or (b) subject to the provision for adjustment hereinafter set forth, 1000 times the aggregate per share amount of all cash dividends, and 1000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock, par value $1.00 per share, of the Corporation (the “Common Stock”) since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Junior Participating Preferred Stock. In the event the Corporation shall at any time after February 24, 2006 (the “Rights Declaration Date”) (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(B)           The Corporation shall declare a dividend or distribution on the Series A Junior Participating Preferred Stock as provided in paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $10.00 per share as such amount may be adjusted pursuant to the last sentence of the preceding paragraph on the Series A Junior Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

(C)           Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Junior Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Junior Participating Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Junior Participating Preferred

Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 60 days prior to the date fixed for the payment thereof.

Section 3.               Voting Rights. The holders of shares of Series A Junior Participating Preferred Stock shall have the following voting rights:

(A)          Subject to the provision for adjustment hereinafter set forth, each share of Series A Junior Participating Preferred Stock shall entitle the holder thereof to 1000 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(B)           Except as otherwise provided herein or by law, the holders of shares of Series A Junior Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

(C)           (i)  If at any time dividends on any Series A Junior Participating Preferred Stock shall be in arrears in an amount equal to six (6) quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a “default period”) which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all shares of Series A Junior Participating Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of Preferred Stock (including holders of the Series A Junior Participating Preferred Stock) with dividends in arrears in an amount equal to six (6) quarterly dividends thereon, voting as a class, irrespective of series, shall have the right to elect two (2) Directors.

(ii)        During any default period, such voting right of the holders of Series A Junior Participating Preferred Stock may be exercised initially at a special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of stockholders, and thereafter at annual meetings of stockholders, provided that neither such voting right nor the right of the holders of any other series of Preferred Stock, if any, to increase, in certain cases, the authorized number of Directors shall be exercised unless the holders of ten percent (10%) in number of shares of Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Preferred Stock of such voting right. At any meeting at which the holders of Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting as a class, to elect Directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two (2) Directors or, if such right is exercised at an annual meeting, to elect two (2) Directors. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Preferred Stock shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by them of the required number. After the holders of the Preferred Stock shall have exercised their right to elect Directors in any default period and during the continuance of such period, the number of Directors shall not be increased or decreased except by vote of the holders of Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the Series A Junior Participating Preferred Stock.

(iii)       Unless the holders of Preferred Stock shall, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may order, or any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding, irrespective of series, may request, the calling of a special meeting of the holders of Preferred Stock, which meeting shall thereupon be called by the President, a Vice President or the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to

vote pursuant to this paragraph (C) (iii) shall be given to each holder of record of Preferred Stock by mailing a copy of such notice to him at his last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 20 days and not later than 60 days after such order or request or in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of the stockholders.

(iv)       In any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to be entitled to elect the whole number of Directors until the holders of Preferred Stock shall have exercised their right to elect two (2) Directors voting as a class, after the exercise of which right (x) the Directors so elected by the holders of Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may (except as provided in paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class of stock which elected the Director whose office shall have become vacant. References in this paragraph (C) to Directors elected by the holders of a particular class of stock shall include Directors elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence.

(v)        Immediately upon the expiration of a default period, (x) the right of the holders of Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors elected by the holders of Preferred Stock as a class shall terminate, and (z) the number of Directors shall be such number as may be provided for in the Restated Certificate of Incorporation or By-Laws irrespective of any increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number being subject, however, to change thereafter in any manner provided by law or in the Restated Certificate of Incorporation or By-Laws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining Directors.

(D)          Except as set forth herein, holders of Series A Junior Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

Section 4.               Certain Restrictions.

(A)          Whenever quarterly dividends or other dividends or distributions payable on the Series A Junior Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Junior Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

(i)         declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Stock;

(ii)        declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Participating Preferred Stock, except dividends paid ratably on the Series A Junior Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(iii)       redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Participating Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Junior Participating Preferred Stock; or

(iv)       purchase or otherwise acquire for consideration any shares of Series A Junior Participating Preferred Stock, or any shares of stock ranking on a parity with the Series A Junior Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

(B)           The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

Section 5.               Reacquired Shares. Any shares of Series A Junior Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein.

Section 6.               Liquidation, Dissolution or Winding Up.

(A)          Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Junior Participating Preferred Stock shall have received $1000 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the “Series A Liquidation Preference”). Following the payment of the full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the “Common Adjustment”) equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 1000 (as appropriately adjusted as set forth in subparagraph (C) below to reflect such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock) (such number in clause (ii), the “Adjustment Number”). Following the payment of the full amount of the Series A Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A Junior Participating Preferred Stock and Common Stock, respectively, holders of Series A Junior Participating Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively.

(B)           In the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences of all other series of Preferred Stock, if any, which rank on a parity with the Series A Junior Participating Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. In the event, however, that there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock.

(C)           In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

Section 7.               Consolidation, Merger, Etc.  In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Junior Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per

share (subject to the provision for adjustment hereinafter set forth) equal to 1000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Junior Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

Section 8.               No Redemption. The shares of Series A Junior Participating Preferred Stock shall not be redeemable.

Section 9.               Ranking.  The Series A Junior Participating Preferred Stock shall rank junior to all other series of the Corporation’s Preferred Stock which may be issued from time to time as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise.

Section 10.             Amendment.  At any time when any shares of Series A Junior Participating Preferred Stock are outstanding, neither the Restated Certificate of Incorporation of the Corporation nor this Certificate of Designation shall be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Junior Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding shares of Series A Junior Participating Preferred Stock, voting separately as a class.

Section 11.             Fractional Shares.  Series A Junior Participating Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Junior Participating Preferred Stock.

No stockholder shall have any preemptive right to subscribe to an additional issue of capital stock or to any security convertible into such capital stock.

ARTICLE IV

The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors. Except to the extent prohibited by law, the Board of Directors shall have the right (which, to the extent exercised, shall be exclusive) to establish the rights, powers, duties, rules and procedures (a) that from time to time shall govern the Board of Directors and each of its members including without limitation the vote required for any action by the Board of Directors, and (b) that from time to time shall affect the directors’ power to manage and direct the business and affairs of the Corporation; and Article V notwithstanding, no By-Law shall be adopted by the stockholders of the Corporation which shall impair or impede the implementation of the foregoing.

The Board of Directors shall consist of a number of directors, which number shall be determined from time to time exclusively by the Board of Directors pursuant to a resolution adopted by affirmative vote of a majority of the entire Board of Directors. The directors shall be divided into three classes as nearly equal in number as possible, designated Class I, Class II and Class III. At the 1983 annual meeting of stockholders, Class I directors shall be elected for a term expiring at the 1984 annual meeting of stockholders, Class II directors shall be elected for a term expiring at the 1985 annual meeting of stockholders, and Class III directors shall be elected for a term expiring at the 1986 annual meeting of stockholders. At each annual meeting of stockholders following such initial classification and election, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election. Notwithstanding the foregoing, (1) at the 2011 annual meeting of stockholders, the directors whose terms expire at that meeting shall be elected to hold office for a two-year term expiring at the 2013 annual meeting of stockholders; (2) at the 2012 annual meeting of stockholders, the directors whose terms expire at that meeting shall be elected to hold office for a one-year term expiring at the 2013 annual meeting of stockholders; and (3) at the 2013 annual meeting of stockholders and each

annual meeting of stockholders thereafter, all directors shall be elected for a one-year term expiring at the next annual meeting of stockholders. Pursuant to such procedures, effective as of the 2013 annual meeting of stockholders, the Board of Directors will no longer be classified under Section 141(d) of the General Corporation Law of Delaware.

Notwithstanding the foregoing, whenever the holders of any one or more classes or series of Preferred Stock shall have the right, voting separately by class or series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of the applicable designation of the powers, preferences and rights made pursuant to Article III, and such directors so elected shall not be divided into classes pursuant to this Article IV unless expressly provided by such terms.

Subject to the rights of the holders of any class or series of the then outstanding capital stock of the Corporation entitled to vote generally in the election of directors, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause may be filled only by a majority vote of the directors then in office, though less than a quorum, and directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which they have been elected expires. No decrease in the number of authorized directors constituting the entire Board of Directors shall shorten the term of any incumbent director. Subject to the rights of the holders of any class or series of the capital stock then outstanding, (x) until the 2013 annual meeting of stockholders and in accordance with Section 141(k)(1) of the General Corporation Law of Delaware, any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and (y) from and after the 2013 annual meeting of stockholders, any director, or the entire Board of Directors, may be removed from office at any time, with or without cause.

No director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty by such director as a director; provided, however, that this Article IV shall not eliminate or limit the liability of a director to the extent provided by applicable law (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of Delaware, or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this Article IV shall apply to, or have any effect on, the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.

ARTICLE V

The Board of Directors may from time to time, by vote of a majority of its members, alter, amend or rescind all or any of the By-Laws of the Corporation, as permitted by law, subject to the power of the stockholders to change or repeal such By-Laws.

ARTICLE VI

(A)          (1)  In addition to any affirmative vote required by law or the Certificate of Incorporation or By-Laws of the Corporation, and except as otherwise expressly provided in paragraph B of this Article VI.

(a)           any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with (i) any Interested Stockholder (as hereinafter defined) or (ii) any other corporation (whether or not itself an Interested Stockholder) which is, or after such merger or consolidation would be, an Affiliate (as hereinafter defined) of an Interested Stockholder; or

(b)           any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Interested Stockholder or any Affiliate of any Interested Stockholder involving any assets or securities of the Corporation, any Subsidiary or any Interested Stockholder or

any Affiliate of any Interested Stockholder, having an aggregate Fair Market Value (as hereinafter defined) of $10,000,000 or more; or

(c)           the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of an Interested Stockholder or any Affiliate of any Interested Stockholder; or

(d)           any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any other transaction (whether or not with or otherwise involving an Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly beneficially owned by any Interested Stockholder or any Affiliate of any Interested Stockholder; or

(e)           any agreement, contract or other arrangement providing for any one or more of the actions specified in clauses (a) to (d) of this subparagraph (1), shall require the affirmative vote of at least eighty percent (80%) of the voting power of all of the then outstanding shares of the Voting Stock (as hereinafter defined) voting together as a single class (it being understood that, for purposes of this Article VI, each share of the Preference Stock (as hereinafter defined) which is Voting Stock shall have the number of votes granted to it pursuant to the applicable Preferred Stock Designation (as hereinafter defined) or Article III of this Certificate of Incorporation). Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise.

(2)           The term “Business Combination” as used in this Article VI shall mean any transaction which is referred to in any one or more of clauses (a) through (e) of subparagraph (1) of paragraph A.

(B)           The provisions of paragraph A of this Article VI shall not be applicable to any particular Business Combination, and such Business Combination shall require only such affirmative vote, if any, as is required by law and any other provision of the Certificate of Incorporation or the By-Laws of the Corporation, if all of the conditions specified in either of the following subparagraphs (1) or (2) are met:

(1)           The Business Combination shall have been approved (whether such approval is made prior to or subsequent to the acquisition of beneficial ownership of the Voting Stock which caused the Interested Stockholder to become an Interested Stockholder) by a majority of the Continuing Directors (as hereinafter defined).

(2)           All of the following conditions shall have been met:

(a)           The consideration to be received by holders of a particular class of outstanding Voting Stock shall be in cash or in the same form as previously paid by or on behalf of the Interested Stockholder in connection with its direct or indirect acquisition of beneficial ownership of shares of such class of Voting Stock. If the consideration so paid for shares of any class of Voting Stock varied as to form, the form of consideration for such class of Voting Stock shall be either cash or the form used to acquire beneficial ownership of the largest number of shares of such class of Voting Stock previously acquired by the Interested Stockholder.

(b)           The aggregate amount of (x) cash and (y) the Fair Market Value as of the date of the consummation of the Business Combination of consideration other than cash to be received per share by holders of Common Stock in such Business Combination shall be at least equal to the higher amount determined under subclauses (i) and (ii) below:

(i)         (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by or on behalf of the Interested Stockholder for any share of Common Stock in connection with the acquisition by the Interested Stockholder of beneficial ownership of such share (x) within the two-year period immediately prior to the first public announcement of the proposal of the

Business Combination (the “Announcement Date”) or (y) in the transaction in which the Interested Stockholder became an Interested Stockholder, whichever is higher; and

(ii)        the Fair Market Value per share of Common Stock on the Announcement Date or on the date on which the Interested Stockholder became an Interested Stockholder (such latter date is referred to in this Article VI as the “Determination Date”), whichever is higher.

(c)           The aggregate amount of (x) cash and (y) the Fair Market Value as of the date of the consummation of the Business Combination of consideration other than cash to be received per share by holders of shares of any class of outstanding Preference Stock, shall be at least equal to the highest amount determined under subclauses (i), (ii) and (iii) below:

(iii)       (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by or on behalf of the Interested Stockholder for any share of such class of Preference Stock in connection with the acquisition by the Interested Stockholder of beneficial ownership of such share (x) within the two-year period immediately prior to the Announcement Date or (y) in the transaction in which the Interested Stockholder became an Interested Stockholder, whichever is higher;

(iv)       the Fair Market Value per share of such class of Preference Stock on the Announcement Date or on the Determination Date, whichever is higher; and

(v)        the highest preferential amount per share to which the holders of shares of such class of Preference Stock would be entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, regardless of whether the Business Combination to be consummated constitutes such an event.

The provisions of this subparagraph (2) (c) shall be required to be met with respect to every class of outstanding Preference Stock, whether or not the Interested Stockholder has previously acquired beneficial ownership of any shares of a particular class of Preference Stock.

(d)           After such Interested Stockholder has become an Interested Stockholder and prior to the consummation of such Business Combination: (i) there shall have been no failure to declare and pay at the regular date therefor any full dividends (whether or not cumulative) on the outstanding Preference Stock, except as approved by a majority of the Continuing Directors; (ii) there shall have been (x) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivision of the Common Stock), except as approved by a majority of the Continuing Directors, and (y) an increase in such annual rate of dividends as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of Common Stock unless the failure so to increase such annual rate is approved by a majority of the Continuing Directors; and (iii) such Interested Stockholder shall not have become the beneficial owner of any additional shares of Voting Stock except as part of the transaction which results in such Interested Stockholder becoming an Interested Stockholder and except in a transaction which, after giving effect thereto, would not result in any increase in the Interested Stockholder’s percentage beneficial ownership of any class of Voting Stock.

(e)           After becoming an Interested Stockholder, such Interested Stockholder shall not have received the benefit, directly or indirectly (except proportionately as a stockholder of the Corporation), of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by the Corporation, whether in anticipation of or in connection with such Business Combination or otherwise.

(f)            A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder (“the Act”) (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to all stockholders of the Corporation at least 30 days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or any subsequent provisions).

(g)           Such Interested Stockholder shall not have made any major change in the Corporation’s business or equity capital structure without the approval of a majority of the Continuing Directors.

(C)          For the purposes of this Article VI:

(1)           The term “person” shall mean any individual, firm, corporation or other entity.

(2)           The term “Interested Stockholder” shall mean any person (other than the Corporation or any Subsidiary) who or which:

(a)           is the beneficial owner, directly or indirectly, of more than ten percent (10%) of the voting power of the outstanding Voting Stock; or

(b)           is an Affiliate of the Corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of ten percent (10%) or more of the voting power of the then outstanding Voting Stock; or

(c)           is an assignee of or has otherwise succeeded to any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by an Interested Stockholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933.

(3)           A person shall be a “beneficial owner” of any Voting Stock:

(a)           which such person or any of its Affiliates or Associates beneficially owns, directly or indirectly; or

(b)           which such person or any of its Affiliates or Associates has, directly or indirectly, (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (ii) the right to vote pursuant to any agreement, arrangement or understanding; or

(c)           which are beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Voting Stock.

(4)           For the purposes of determining whether a person is an Interested Stockholder pursuant to subparagraph (2) of this paragraph C, the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned through application of subparagraph (3) of this paragraph C but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.

(5)           The terms “Affiliate” or “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on January 1, 1983.

(6)           The term “Subsidiary” means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Interested Stockholder set forth in subparagraph (2) of this paragraph C, the term “Subsidiary” shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation.

(7)           The term “Continuing Director” means any member of the Board of Directors of the Corporation (the “Board”), who is unaffiliated with the Interested Stockholder and was a member of the Board prior to the time that the Interested Stockholder became an Interested Stockholder, and any successor

of a Continuing Director, while such successor is a member of the Board, who is unaffiliated with the Interested Stockholder and is recommended or elected to succeed a Continuing Director by a majority of Continuing Directors.

(8)           The term “Fair Market Value” means (a) in the case of stock, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States Securities Exchange registered under the Securities Exchange Act of 1934 on which such stock is listed, or, on the National Association of Securities Dealers, Inc. (“NASD”) National Market if such stock is not listed on a registered Securities Exchange but is quoted on the NASD National Market, or, if such stock is not so listed or quoted, the highest closing bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the NASD Automated Quotations System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by a majority of the Continuing Directors in good faith; and (b) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined in good faith by a majority of the Continuing Directors.

(9)           The term “Preference Stock” shall mean the Preferred Stock and any other class of preference stock which may from time to time be authorized in or by the Certificate of Incorporation of the Corporation and which by the terms of its issuance is specifically designated “Preference Stock” for purposes of this Article VI.

(10)         The term “Preferred Stock Designation” shall mean any designation of the powers, preferences and rights made pursuant to Article III and filed with the Secretary of State of the State of Delaware.

(11)         The term “Voting Stock” shall mean all of the shares of capital stock of the Corporation outstanding from time to time and entitled to vote generally in the election of directors.

(12)         In the event of any Business Combination in which the Corporation survives, the phrase “consideration other than cash to be received” as used in subparagraphs (2)(b) and (c) of paragraph B of Article VI shall include the shares of Common Stock and/or the shares of any other class of Voting Stock retained by the holders of such shares.

(D)          Nothing contained in this Article VI shall be construed to relieve any Interested Stockholder from any fiduciary obligation imposed by law.

(E)           The fact that any Business Combination complies with the provisions of paragraph B of this Article VI shall not be construed to impose any fiduciary duty, obligation or responsibility on the Board of Directors, or any member thereof, to approve such Business Combination or recommend its adoption or approval to the stockholders of the Corporation, nor shall such compliance limit, prohibit or otherwise restrict in any manner the Board of Directors, or any member thereof, with respect to evaluations of or actions and responses taken with respect to such Business Combination.

(F)           Notwithstanding any other provisions of the Certificate of Incorporation of the Corporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of Voting Stock required by law, the Certificate of Incorporation of the Corporation or any Preferred Stock Designation, the affirmative vote of the holders of at least eighty percent (80%) of the voting power of all of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to amend or repeal this Article VI, or adopt any provisions inconsistent with this Article VI; provided that, this paragraph F shall not apply to, and such eighty percent (80%) vote shall not be required for, any amendment, repeal or adoption unanimously recommended by the Board of Directors of the Corporation if all of such directors are persons who would be eligible to serve as Continuing Directors.

ARTICLE VII

The address of the Corporation’s registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.

IN WITNESS WHEREOF, Ecolab Inc. has caused this Restated Certificate of Incorporation to be signed by Michael C. McCormick, its Corporate Compliance Officer, Associate General Counsel and Assistant Secretary, this 1st day of December, 2011.

ECOLAB INC.
/s/ Michael C. McCormick
By:	Michael C. McCormick
Its:	Corporate Compliance
	Officer, Associate General
	Counsel and Assistant
	Secretary

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (Nos. 2-90702; 33-18202; 33-55986; 33-56101; 333-95043; 333-109890; 33-34000; 33-56151; 333-18627; 333-109891; 33-39228; 33-56125; 333-70835; 33-60266; 333-95041; 333-18617; 333-79449; 333-40239; 333-95037; 333-50969; 333-58360; 333-97927; 333-115567; 333-129427; 333-129428; 333-140988; 333-115568; 333-132139; 333-147148; 333-163837; 333-163838; 333-165130; 333-165132; 333-166646; and 333-174028) and Form S-4 (No. 333-176601) of Ecolab Inc. of our report dated February 25, 2011 relating to the financial statements of Nalco Holding Company for the year ended December 31, 2010, which appears in this Current Report on Form 8-K of Ecolab Inc. filed on December 2, 2011.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

December 2, 2011

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Current Report on Form 8-K of Ecolab Inc. and to the incorporation by reference in the Registration Statements of Ecolab Inc.  (Form S-8 Nos. 2-90702; 33-18202; 33-55986; 33-56101; 333-95043; 333-109890; 33-34000; 33-56151; 333-18627; 333-109891; 33-39228; 33-56125; 333-70835; 33-60266; 333-95041; 333-18617; 333-79449; 333-40239; 333-95037; 333-50969; 333-58360; 333-97927; 333-115567; 333-129427; 333-129428; 333-140988; 333-115568; 333-132139; 333-147148; 333-163837; 333-163838; 333-165130; 333-165132; 333-166646; and 333-174028 and Form S-4 No. 333-176601) of our report dated February 26, 2010 with respect to the consolidated financial statements of Nalco Holding Company as of December 31, 2009 and for each of the two years in the period ended December 31, 2009.

/s/ Ernst & Young LLP

Ernst & Young LLP

Chicago, Illinois

December 2, 2011

EX-99.1

Exhibit 99.1

News Release

Ecolab Inc.

370 Wabasha Street North

St. Paul, Minnesota  55102

FOR IMMEDIATE RELEASE

Michael J. Monahan            651.293.2809

Ecolab Receives Final Required Antitrust Clearance for Merger with Nalco

ST. PAUL, Minn.—(BUSINESS WIRE)— Ecolab Inc. announced today that it has received clearance from the China antitrust authority to proceed with its previously announced merger with Nalco Holding Company.

Ecolab and Nalco have now received clearances from all antitrust authorities which require pre-clearance in order to complete the Nalco merger.

Shareholders from both Ecolab Inc. and Nalco Holding Company overwhelmingly approved the merger of the two companies on November 30, 2011. The completion of the merger remains subject only to customary closing conditions, and Ecolab anticipates that the parties will proceed to complete the merger effective today.

Based on the closing date of the transaction, the deadline for former Nalco stockholders to make their election to receive cash or shares of Ecolab common stock in accordance with the merger agreement will be 5:00 p.m., New York City time, December 7, 2011.

With sales of $6 billion and more than 26,000 associates, Ecolab (NYSE: ECL) is the global leader in cleaning, sanitizing, food safety and infection prevention products and services. Ecolab delivers comprehensive programs and services to the foodservice, food and beverage processing, healthcare, and hospitality markets in more than 160

countries. More Ecolab news and information is available at www.ecolab.com.

Cautionary Statements Regarding Forward-Looking Information

This communication contains certain statements relating to future events and our intentions, beliefs, expectations and predictions for the future which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Words or phrases such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “we believe,” “we expect,” “estimate,” “project,” “may,” “will,” “intend,” “plan,” “believe,” “target,” “forecast” (including the negative or variations thereof) or similar terminology used in connection with any discussion of future plans, actions or events generally identify forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding the expected closing of the merger, benefits of the merger, integration plans and expected synergies, anticipated future financial and operating performance and results, including estimates for growth, and share repurchases. These statements are based on the current expectations of management of Ecolab and Nalco. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this communication. These risks and uncertainties include (i) problems that may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected, (ii) the possibility that the merger may involve unexpected costs, unexpected liabilities or unexpected delays, (iii) the risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies currently expect, (iv) the risk that the businesses of the companies may suffer as a result of uncertainty surrounding the merger and (v) the risk that disruptions from the transaction will harm relationships with customers, employees and suppliers.

Other unknown or unpredictable factors could also have material adverse effects on future results, performance or achievements of Ecolab, Nalco and the combined company. For a further discussion of these and other risks and uncertainties applicable to the respective businesses of Ecolab and Nalco, see the Annual Reports on Form 10-K of Ecolab and Nalco for the fiscal year ended December 31, 2010 and the companies’ other public filings with theSecurities and Exchange Commission, or SEC. These risks,

as well as other risks associated with the merger, are more fully discussed in the joint proxy statement/prospectus included in the Registration Statement on Form S-4 thatEcolab has filed with the SEC in connection with the merger, which was declared effective by the SEC on October 28, 2011. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this communication may not occur. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communication. Neither Ecolab nor Nalco undertakes, and each of them expressly disclaims, any duty to update any forward-looking statement whether as a result of new information, future events or changes in their respective expectations, except as required by law.

###

(ECL-A)

EX-99.2

Exhibit 99.2

News Release

Ecolab Inc.

370 Wabasha Street North

St. Paul, Minnesota  55102

FOR IMMEDIATE RELEASE

Michael J. Monahan            651.293.2809

ECOLAB CLOSES ON MERGER WITH NALCO

ST. PAUL, Minn., December 1, 2011- Ecolab Inc. announced that it has completed its merger with Nalco Holding Company effective today.  On November 30, 2011 shareholders of both Ecolab and Nalco overwhelmingly approved the merger of the two companies. Subsequently, Ecolab received the final remaining antitrust approval.

Based on the closing date of the transaction, the deadline for former Nalco stockholders to make their election to receive cash or shares of Ecolab common stock in accordance with the merger agreement will be 5:00 p.m., New York City time, December 7, 2011.

With 2011 annualized sales of $11 billion and more than 38,000 employees, Ecolab Inc. (NYSE: ECL) is the global leader in water, hygiene and energy technologies and services that provide and protect clean water, safe food, abundant energy and healthy environments. Ecolab delivers comprehensive programs and services to the food, energy, healthcare, industrial and hospitality markets in more than 160 countries. More Ecolab news and information is available at www.ecolab.com.

###

(ECL-A)

EX-99.3

Exhibit 99.3

News Release

Ecolab Inc.

370 Wabasha Street North

St. Paul, Minnesota  55102

FOR IMMEDIATE RELEASE

Michael J. Monahan            651.293.2809

ECOLAB RAISES CASH DIVIDEND 14 PERCENT

20th consecutive annual dividend rate increase

Ecolab has paid dividends for 75 consecutive years

ST. PAUL, Minn., December 1, 2011 - The Board of Directors of Ecolab Inc. today increased the company’s quarterly cash dividend by 14% to $0.20 per common share, to be paid January 17, 2012, to shareholders of record at the close of business on December 20, 2011.  This results in a new indicated annual cash dividend of a record $0.80 per share for 2012, and represents Ecolab’s 20th consecutive annual dividend rate increase.  Ecolab has paid cash dividends on its common stock for 75 consecutive years.  Ecolab last increased its dividend in December 2010.

Commenting on the increase, Douglas M. Baker, Jr., Ecolab’s Chairman and Chief Executive Officer said, “We are pleased to once again increase our dividend and continue our strong cash dividend record following our merger with Nalco.  We have achieved this outstanding dividend record through our excellent business model and strong financial position, and we believe our recent actions have strengthened our growth prospects, cash flow and ability to deliver superior shareholder returns going forward.”

With 2011 annualized sales of $11 billion and more than 38,000 employees, Ecolab Inc. (NYSE: ECL) is the global leader in water, hygiene and energy technologies and services that provide and protect clean water, safe food, abundant energy and healthy environments. Ecolab delivers comprehensive programs and services to the food, energy, healthcare, industrial and hospitality markets in more than 160 countries. More Ecolab news and information is available at www.ecolab.com.

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Cautionary Statements Regarding Forward-Looking Information

This news release contains various “Forward-Looking Statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements concerning the indicated annual cash dividend for 2012 and our outlook for further growth.  These statements, which represent Ecolab’s expectations or beliefs concerning various future events, are based on current expectations that involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. We caution that undue reliance should not be placed on forward-looking statements, which speak only as of the date made.  The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

More detailed information about risks and uncertainties that may affect our operating results and business performance may be found in our and, prior to December 1, 2011, Nalco’s filings with the Securities and Exchange Commission, including under Item 1A of reports filed on Form 10-K and Form 10-Q, and include the vitality of the markets we serve; the impact of worldwide economic factors such as the worldwide economy, credit markets, interest rates and foreign currency risk fluctuations in raw material and delivered product costs; our ability to develop competitive advantages through value, innovation and customer support; restraints on pricing flexibility due to contractual obligations; pressure on operations from consolidation of customers and vendors; our ability to promptly and effectively integrate the businesses of Ecolab and Nalco and to achieve the cost savings and synergies we anticipate from the Nalco acquisition within the expected time frame or at all; the Nalco acquisition may involve unexpected costs, unexpected liabilities or unexpected delays; the ability to acquire other complementary businesses and to effectively integrate such businesses; the costs and effects of complying with laws and regulations relating to the environment, including evolving climate change standards, and to the manufacture, storage, distribution, sale and use of our products, as well as to the conduct of our business generally, including employment and labor laws; the occurrence of litigation or claims; acts of war, terrorism or hostilities, natural or man-made disasters, water shortages or severe weather conditions which impact our markets; our ability to attract and retain high caliber management talent; and other risks or uncertainties reported from time to

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time in our filings with the Securities and Exchange Commission.

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(ECL-D)

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EX-99.4

Exhibit 99.4

RISK FACTORS

If we are unable to respond to the changing needs of a particular industry and to anticipate, respond to or utilize changing technologies and develop new offerings, it could become more difficult for us to respond to our customers’ needs and cause us to be less competitive.

We have historically been able to maintain our market positions and margins through continuous innovation of products and development of new offerings to create value for our customers. Recent innovations and developments that we have relied on include our 3D TRASAR system for controlling and monitoring chemical feed. We may not be successful in continuing to make similar innovations in the future. Our future operating results will depend to a significant extent on our ability to continue to introduce new products and applications and to develop new offerings that offer distinct value for our customers. Many of our products may be affected by rapid technological change and new product introductions and enhancements. We expect to continue to enhance our existing products and identify, develop and manufacture new products with improved capabilities and make improvements in our productivity in order to maintain our competitive position. We intend to devote sizeable resources to the development of new technologically advanced products and systems and to continue to devote a substantial amount of expenditures to the research and development functions of our business. However, we cannot assure you that:

• we will be successful in developing new products or systems or bringing them to market in a timely manner;

• products or technologies developed by others will not render our offerings obsolete or non-competitive;

• the market will accept our innovations;

• our competitors will not be able to produce our core non-patented products at a lower cost;

• we will have sufficient resources to research and develop all promising new technologies and products; or

• significant research and development efforts and expenditures for products will ultimately prove successful.

Our ability to anticipate, respond to and utilize changing technologies is crucial because we compete with many companies in each of the markets in which we operate. For example, we compete with hundreds of companies in the water treatment chemicals market, including our largest global water treatment competitor, GE Water Technologies. Our ability to compete effectively is based on a number of considerations, such as product and service innovation, product and service quality, distribution capability and price. Moreover, water treatment for industrial customers depends on the particular needs of the industry. For example, the paper industry requires a specific water quality for bleaching paper; certain industrial boilers require demineralized water; the pharmaceuticals industry requires ultra pure water for processing; and, in the case of municipal services, water treatment includes clarification for re-use, sludge dewatering and membrane ultra filtration. We may not have sufficient financial resources to respond to the changing needs of a particular industry and to continue to make investments in our business, which could cause us to become less competitive.

Our substantial leverage could harm our business by limiting our available cash and our access to additional capital.

As of December 31, 2010, our total consolidated indebtedness was $2,872.0 million and we had $230.8 million of borrowing capacity available under our revolving credit facility, which reflects no outstanding borrowings and reduced availability as a result of $19.2 million in outstanding letters of credit. We had $128.1 million of cash and cash equivalents at December 31, 2010.

Our high degree of leverage could have important consequences for investors, including the following:

• It may limit our and our subsidiaries’ ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes on favorable terms or at all;

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• A substantial portion of our subsidiaries’ cash flows from operations must be dedicated to the payment of principal and interest on their and our indebtedness and thus will not be available for other purposes, including operations, capital expenditures and future business opportunities;

• It may limit our ability to adjust to changing market conditions and place us at a competitive disadvantage compared to those of our competitors that are less highly-leveraged;

• It may restrict our ability to make strategic acquisitions or cause us to make non-strategic divestitures; and

• We may be more vulnerable than a less leveraged company to a downturn in general economic conditions or in our business, or we may be unable to carry out capital spending that is important to our growth.

At December 31, 2010, we had $1,162.7 million of variable rate debt. A 1% increase in the average interest rate would increase future interest expense by approximately $11.6 million per year.

Despite our current leverage, we may still be able to substantially increase our indebtedness. This could further exacerbate the risks that we and our subsidiaries face.

We and our subsidiaries may be able to substantially increase our indebtedness in the future. The terms of the indentures governing our subsidiaries’ notes do not fully prohibit our subsidiaries or us from doing so. Nalco Company’s revolving credit facility provides commitments of up to $250.0 million, of which $230.8 million would have been available for future borrowings as of December 31, 2010, due to $19.2 million in outstanding letters of credit. If new debt is added to our current debt levels, the related risks that we and our subsidiaries now face could intensify.

Our subsidiaries’ debt agreements contain restrictions that limit our flexibility in operating our business.

Nalco Company’s senior credit agreement and the indentures governing our subsidiaries’ existing notes contain a number of significant covenants that, among other things, restrict our or our subsidiaries’ ability to:

• incur additional indebtedness;

• pay dividends on or make other distributions or repurchase certain capital stock;

• make certain investments;

• enter into certain types of transactions with our affiliates;

• pay dividends or other payments by restricted subsidiaries;

• use assets as security in other transactions; and

• sell certain assets or merge with or into other companies.

In addition, under the senior credit agreement, Nalco Holdings LLC is required to satisfy and maintain specified financial ratios and tests. Events beyond our control may affect its ability to comply with those provisions and Nalco Holdings LLC may not be able to meet those ratios and tests. The breach of any of these covenants would result in a default under the senior credit agreement and the lenders could elect to declare all amounts borrowed under the senior credit agreement, together with accrued interest, to be due and payable and could proceed against the collateral securing that indebtedness.

The terms of Nalco Company’s senior credit agreement limit Nalco Holdings LLC and its subsidiaries from paying dividends or otherwise transferring their assets to us.

Our operations are conducted through our subsidiaries and our ability to make payments on any obligations we may have is dependent on the earnings and the distribution of funds from our

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subsidiaries. However, the terms of Nalco Company’s senior credit agreement limit the amount of dividends and other transfers by Nalco Holdings LLC and its subsidiaries to us.

We could suffer material claims arising from the supply of products and services.

We assume contractual and tort risks as a natural result of providing sophisticated services and products to our customers. Broadly speaking, this includes risk of product liability claims (negligence and strict liability), contract claims, professional liability claims or other tort claims, including Legionella exposure. The types of damage that might be claimed include property damage, personal injury or economic losses. Although we take reasonable steps to limit exposure to these types of claims and mitigate losses should a claim occur, the nature of our business raises the potential of this risk.

Our significant non-U.S. operations expose us to global economic, political and legal risks that could impact our profitability.

We have significant operations outside the United States, including joint ventures and other alliances. We conduct business in approximately 150 countries and, in 2010, approximately 51% of our net sales originated outside the United States and some of our business is conducted in politically unstable countries. There are inherent risks in our international operations, including:

• exchange controls and currency restrictions;

• currency fluctuations and devaluations;

• tariffs and trade barriers;

• export duties and quotas;

• changes in local economic conditions;

• changes in laws and regulations;

• difficulties in managing international operations and the burden of complying with foreign laws;

• exposure to possible expropriation, nationalization or other government actions;

• restrictions on our ability to repatriate dividends from our subsidiaries;

• unsettled political conditions, military action, civil unrest, acts of terrorism, force majeure, war or other armed conflict; and

• countries whose governments have been hostile to U.S.-based businesses.

Our international operations also expose us to different local political and business risks and challenges. For example, in certain countries we are faced with periodic political issues that could result in difficulties in collecting receivables or realizing other assets, currency risks or the risk that we are required to include local ownership or management in our businesses. Also, because of uncertainties regarding the interpretation and application of laws and regulations and the enforceability of intellectual property and contract rights, we face risks in some countries that our intellectual property rights and contract rights would not be enforced by local governments. We are also periodically faced with the risk of economic uncertainty, which has impacted our business in these countries. Other risks in international business also include difficulties in staffing and managing local operations, including our obligations to design local solutions to manage credit risk to local customers and distributors.

Further, our operations outside the United States require us to comply with a number of United States and international regulations, including anti-corruption laws such as the United States Foreign Corrupt Practices Act and the United Kingdom Bribery Act. We have internal policies, practices and training relating to such regulations. However, there is risk that such policies and procedures will not always protect us from the reckless acts of employees or representatives, and violations of such laws could result in investigations of the Company and sanctions.

Our overall success as a global business depends, in part, upon our ability to succeed in differing economic, social, legal and political conditions. We may not continue to succeed in developing and implementing policies and strategies that are effective in each location where we do business, which could negatively affect our profitability.

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Our subsidiaries are defendants in pending lawsuits alleging negligence and injury resulting from the use of our COREXIT dispersant in response to the Deepwater Horizon oil spill, which could expose us to monetary damages or settlement costs.

On April 22, 2010, the deepwater drilling platform, the Deepwater Horizon, operated by a subsidiary of BP plc, sank in the Gulf of Mexico after a catastrophic explosion and fire that began on April 20, 2010. A massive oil spill resulted. Approximately one week following the incident, subsidiaries of BP plc, under the authorization of the responding federal agencies, formally requested our indirect subsidiary, Nalco Company, to supply large quantities of COREXIT 9500, a Nalco oil dispersant product listed on the U.S. EPA National Contingency Plan Product Schedule. Nalco Company responded immediately by providing available COREXIT and increasing production to supply the product to BP’s subsidiaries for use, as authorized and directed by agencies of the federal government. Prior to the incident, Nalco Holding Company and its subsidiaries had not provided products or services or otherwise had any involvement with the Deepwater Horizon platform. On July 15, 2010, BP announced that it had capped the leaking well, and the application of dispersants by the responding parties ceased shortly thereafter.

On May 1, 2010, the President appointed retired U.S. Coast Guard Commandant Admiral Thad Allen to serve as the National Incident Commander in charge of the coordination of the response to the incident at the national level. EPA directed numerous tests of all the dispersants on the National Contingency Plan Product Schedule, including those provided by Nalco Company, “to ensure decisions about ongoing dispersant use in the Gulf of Mexico are grounded in the best available science.” We cooperated with this testing process and continued to supply COREXIT 9500 as requested by BP and government authorities. After review and testing of a number of dispersants, on June 30, 2010, and on August 2, 2010, EPA released toxicity data for eight oil dispersants. The data is available on the EPA Web site at www.epa.gov/bpspill/dispersants-testing.html.

The use of dispersants by the responding parties has been one tool used by the government and BP to avoid and reduce damage to the Gulf area from the spill. Since the spill occurred, EPA and other federal agencies have closely monitored conditions in areas where dispersant has been applied. We have encouraged ongoing monitoring and review of COREXIT and other dispersants and have cooperated fully with the governmental review and approval process. However, in connection with its provision of COREXIT, Nalco Company is a defendant in several lawsuits as described below.

Nalco Company is a defendant in three putative class action lawsuits relating to the use of our COREXIT dispersant in the Gulf of Mexico in response to the Deepwater Horizon oil spill. The actions, as currently pleaded, allege several causes of action, including negligence and gross negligence. The plaintiffs in these actions seek, among other things, compensatory and punitive damages, and attorneys’ fees and costs. In addition, Nalco Company is a defendant in seven civil actions brought by individual plaintiffs that contains factual allegations substantially similar to the putative class action lawsuits against Nalco Company, with the addition of claims of nuisance, trespass, battery, and strict liability for the physical injuries and property damage allegedly sustained by the plaintiffs. The plaintiffs in those action seek, among other things, compensatory and punitive damages, and attorneys’ fees and costs. Nalco, the incident defendants and the other responder defendants have also been named as a third party defendant by Transocean Deepwater Drilling, Inc.

Nalco has been served in all but two of the actions. Each of these cases has been administratively transferred for pre-trial purposes to a judge in the United States District Court for the Eastern District of Louisiana with other related cases under In Re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, Case No. 10-md-02179 (E.D. La.) (the “MDL”). Pursuant to orders issued in the MDL, the claims have been consolidated in several master complaints, including one naming Nalco and others who responded to the Gulf Oil Spill (known as the “B3 Bundle”). At this time, we do not know how many cases will be in the B3 Bundle. A tentative list of cases includes fifteen cases (including some putative class actions) in the B3 Bundle. Six cases previously filed against Nalco are not included in the B3 Bundle.

We believe the claims are without merit and intend to defend these lawsuits vigorously. We also believe that we have rights to contribution and/or indemnification (including legal expenses) from third parties.

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However, we cannot predict the outcome of these lawsuits, the involvement we might have in these matters in the future or the potential for future litigation. Similar lawsuits may also be filed or the current lawsuits amended, in which event we will provide information in our periodic reports to the Securities and Exchange Commission.

Environmental, safety and production and product regulations or concerns could subject us to liability for fines or damages, require us to modify our operations and increase our manufacturing and delivery costs.

We are subject to the requirements of environmental and occupational safety and health laws and regulations in the United States and other countries. These include obligations to investigate and clean up environmental contamination on or from properties or at off-site locations where we are identified as a responsible party. For example, we are currently identified as a potentially responsible party at certain waste management sites. We have also been named as a defendant in multi-party and individual lawsuits based on claims of exposure to hazardous materials and claims that our products are defective or dangerous. We have also been named as a defendant in lawsuits where our products have not caused injuries, but the claimants wish to be monitored for potential future injuries. We cannot predict with certainty the outcome of any such tort claims or the involvement we or our products might have in such matters in the future and there can be no assurance that the discovery of previously unknown conditions will not require significant expenditures. In each of these chemical exposure cases, our insurance carriers have accepted the claims on our behalf (with or without reservation) and our financial exposure should be limited to the amount of our deductible; however, we cannot predict the number of claims that we may have to defend in the future and we may not be able to continue to maintain such insurance.

We have made and will continue to make capital and other expenditures to comply with environmental requirements. Although we believe we are in material compliance with environmental law requirements, we may not have been and will not at all times be in complete compliance with all of these requirements, and may incur material costs, including fines or damages, or liabilities in connection with these requirements in excess of amounts we have reserved. In addition, these requirements are complex, change frequently and have tended to become more stringent over time. In the future, we may discover previously unknown contamination that could subject us to additional expense and liability. In addition, future requirements could be more onerous than current requirements.

The activities at our production facilities are subject to a variety of federal, state, local and foreign laws and regulations (“production regulations”). Similarly, the solid, air and liquid waste streams produced from our production facilities are subject to a variety of regulations (“waste regulations”) and many of our products and the handling of our products are governmentally regulated or registered (“product regulations”). Each of the production, waste and product regulations is subject to expansion or enhancement. Any new or tightened regulations could lead to increases in the direct and indirect costs we incur in manufacturing and delivering products to our customers. For example, the European Commission has imposed new chemical registration requirements on the manufacturers and users of all chemicals, not just those which are considered to be harmful or hazardous. Such regulations, referred to as REACH, will cause all chemical companies to incur additional costs to conduct their businesses in European Commission countries. Similarly, the need for certain of our products and services is dependent upon — or triggered by — governmental regulation, and changes in such regulation could impact our sales of these products or services. In addition to an increase in costs in manufacturing and delivering products, a change in production regulations or product regulations could result in interruptions to our business and potentially cause economic or consequential losses should we be unable to meet the demands of our customers for products.

We may not be able to achieve all of our expected cost savings.

For the years 2004 through 2008, our average annual cost savings were $84 million, during which our historic annual target was $75 million. In both 2010 and 2009, we achieved cost savings of $122 million,

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which was well above our increased annual goal of $100 million each year. A variety of risks could cause us not to achieve the benefits of our expected cost savings, including, among others, the following:

• higher than expected severance costs related to staff reductions;

• higher than expected retention costs for employees that will be retained;

• delays in the anticipated timing of activities related to our cost-saving plan, including the reduction of inefficiencies in our administrative and overhead functions; and

• other unexpected costs associated with operating the business.

We have experienced in the past, and could again experience in the future, difficulties in securing the supply of certain raw materials we and our competitors need to manufacture some of our products, and we have also been impacted by significant increases in raw material costs.

In 2004 and 2005, certain of the raw materials used by us and other chemical companies faced supply limitation. If these limitations occur again in the future, we risk shortfalls in our sales and the potential of claims from our customers if we are unable to fully meet contractual requirements.

Also, limitations on raw materials and rising prices for underlying materials have resulted in the past, and could result in the future, in price increases for raw materials we purchase. In the past, our margins have been impacted by such raw materials price increases, and our margins could be similarly impacted in the future if we are unable to pass any future raw material price increases through to our customers.

Our pension plans are currently underfunded and we may have to make significant cash payments to the plans, reducing the cash available for our business.

We sponsor various pension plans worldwide that are underfunded and require significant cash payments. For example, in 2009 and 2010, we contributed $72.9 million and $66.9 million, respectively, to our pension plans. We expect to contribute approximately $66 million to our pension plans in 2011. If the performance of the assets in our pension plans does not meet our expectations, or if other actuarial assumptions are modified, our contributions could be even higher than we expect. If our cash flow from operations is insufficient to fund our worldwide pension liability, we may be forced to reduce or delay capital expenditures, seek additional capital or seek to restructure or refinance our indebtedness.

As of December 31, 2010, our worldwide pension plans were underfunded by $405.1 million (based on the actuarial assumptions used for financial reporting purposes). Our U.S. pension plans are subject to the Employee Retirement Income Security Act of 1974, or ERISA. Under ERISA, the Pension Benefit Guaranty Corporation, or PBGC, has the authority to terminate an underfunded pension plan under certain circumstances. In the event our U.S. pension plans are terminated for any reason while the plans are underfunded, we will incur a liability to the PBGC that may be equal to the entire amount of the underfunding.

We have recorded a significant amount of goodwill and other identifiable intangible assets, and we may never realize the full value of our intangible assets.

We have recorded a significant amount of goodwill and other identifiable intangible assets, including customer relationships, trademarks and developed technologies. Goodwill and other net identifiable intangible assets were approximately $2.9 billion as of December 31, 2010, or approximately 55% of our total assets. Goodwill, which represents the excess of cost over the fair value of the net assets of the businesses acquired, was $1.8 billion as of December 31, 2010, or 35% of our total assets. Goodwill and net identifiable intangible assets are recorded at fair value on the date of acquisition and, in accordance with authoritative guidance issued by the Financial Accounting Standards Board, will be reviewed at least annually for impairment. Impairment may result from, among other things, deterioration in our performance, adverse market conditions, adverse changes in applicable laws or regulations, including changes that restrict the activities of or affect the products and services sold by our business, and a

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variety of other factors. We recognized a $544.2 million goodwill impairment charge in 2008 and an additional $4.9 million charge in 2010, reducing the goodwill balance of our Paper Services reporting unit to zero. Some of the products and services we sell to our customers are dependent upon laws and regulations, and changes to such laws or regulations could impact the demand for our products and services. The amount of any quantified impairment must be expensed immediately as a charge to results of operations. Depending on future circumstances, it is possible that we may never realize the full value of our intangible assets. Any future determination of impairment of a significant portion of goodwill or other identifiable intangible assets would have an adverse effect on our financial condition and results of operations.

Our future success will depend in part on our ability to protect our intellectual property rights, and our inability to enforce these rights could permit others to offer products competitive with ours, which could reduce our ability to maintain our market position and maintain our margins.

We rely on the patent, trademark, copyright and trade secret laws of the United States and other countries to protect our intellectual property rights. However, we may be unable to prevent third parties from using our intellectual property without authorization, and we face risks in some countries that our intellectual property rights and contract rights would not be enforced by local governments. The use of our intellectual property by others could reduce any competitive advantage we have developed or otherwise harm our business. If we had to litigate to protect these rights, any proceedings could be costly, and we may not prevail.

We have obtained and applied for several U.S. and foreign trademark registrations, and will continue to evaluate the registration of additional service marks and trademarks, as appropriate. Our pending applications may not be approved by the applicable governmental authorities and, even if the applications are approved, third parties may seek to oppose or otherwise challenge these registrations. A failure to obtain trademark registrations in the United States and in other countries could limit our ability to protect our trademarks and impede our marketing efforts in those jurisdictions.

We may be subject to information technology system failures, network disruptions and breaches in data security.

We rely to a large extent upon sophisticated information technology systems and infrastructure. The size and complexity of our computer systems make them potentially vulnerable to breakdown, malicious intrusion and random attack. Likewise, data privacy breaches by employees and others with permitted access to our systems may pose a risk that sensitive data may be exposed to unauthorized persons or to the public. While we have invested heavily in protection of data and information technology, there can be no assurance that our efforts will prevent breakdowns or breaches in our systems that could adversely affect our business.

The market price of our common stock may be volatile, which could cause the value of your investment to decline.

Securities markets worldwide experience significant price and volume fluctuations. This market volatility, as well as general economic, market or potential conditions, could reduce the market price of our common stock in spite of our operating performance. In addition, our operating results could be below the expectations of securities analysts and investors, and in response, the market price of our common stock could decrease significantly.

Provisions in our amended and restated certificate of incorporation and bylaws and Delaware law may discourage a takeover attempt.

Provisions contained in our amended and restated certificate of incorporation and bylaws and Delaware law could make it more difficult for a third party to acquire us, even if doing so might be beneficial to our stockholders. Provisions of our amended and restated certificate of incorporation and bylaws impose various procedural and other requirements, which could make it more difficult for stockholders to effect

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certain corporate actions. For example, our amended and restated certificate of incorporation authorizes our Board of Directors to determine the rights, preferences, privileges and restrictions of unissued series of preferred stock, without any vote or action by our stockholders. Thus, our Board of Directors can authorize and issue shares of preferred stock with voting or conversion rights that could adversely affect the voting or other rights of holders of our common stock. These rights may have the effect of delaying or deterring a change of control of our company. In addition, a change of control of our company may be delayed or deterred as a result of our having three classes of directors. Additionally, Section 203 of the Delaware General Corporation Law provides that, subject to specified exceptions, a Delaware corporation shall not engage in business combinations with any entity that acquires enough shares of our common stock without the consent of our Board of Directors to be considered an “interested stockholder” under Delaware law for a three-year period following the time that the stockholder became an interested stockholder. These provisions could limit the price that certain investors might be willing to pay in the future for shares of our common stock.

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EX-99.5

Exhibit 99.5

Nalco Holding Company and Subsidiaries

Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm	Page 2
Consolidated Financial Statements	Page 4

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Nalco Holding Company

In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, equity and cash flows present fairly, in all material respects, the financial position of Nalco Holding Company and its subsidiaries at December 31, 2010, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audit.  We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

February 25, 2011

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Nalco Holding Company

We have audited the consolidated balance sheet of Nalco Holding Company and subsidiaries as of December 31, 2009, and the related consolidated statements of operations, equity, and cash flows for each of the years ended December 31, 2009 and 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Nalco Holding Company and subsidiaries at December 31, 2009, and the consolidated results of their operations and their cash flows for each of the years ended December 31, 2009 and 2008, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Ernst & Young LLP

Chicago, Illinois

February 26, 2010

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Nalco Holding Company and Subsidiaries

Consolidated Balance Sheets

(dollars in millions)

	December 31, 2010			December 31, 2009
Assets
Current assets:
Cash and cash equivalents	$	128.1		$	127.6
Trade accounts receivable, less allowances of $13.2 and $17.8 in 2010 and 2009, respectively		765.5			681.2
Inventories		330.0			313.8
Deferred income taxes		63.9			25.6
Prepaid expenses, taxes and other current assets		147.2			96.6
Total current assets		1,434.7			1,244.8
Property, plant, and equipment, net		729.1			678.1
Goodwill		1,844.1			1,800.0
Other intangible assets, net		1,023.3			1,055.9
Deferred financing costs		73.6			60.9
Other noncurrent assets		118.9			125.1
Total assets	$	5,223.7		$	4,964.8
Liabilities and equity
Current liabilities:
Accounts payable	$	356.5		$	315.4
Accrued expenses		214.2			209.2
Accrued compensation		134.5			139.0
Short-term debt		90.0			229.8
Income taxes		63.0			32.4
Total current liabilities		858.2			925.8
Long-term debt		2,782.0			2,714.3
Deferred income taxes		260.3			202.9
Accrued pension benefits		405.6			418.1
Other liabilities		190.1			212.1
Total liabilities		4,496.2			4,473.2
Equity:
Nalco Holding Company shareholders’ equity:
Common stock, par value $0.01 per share; authorized 500,000,000 shares; 147,925,072 shares and 147,730,531 shares issued in 2010 and 2009, respectively		1.4			1.4
Additional paid-in capital		800.7			776.1
Treasury stock, at cost; 9,535,943 shares in 2010 and 2009		(211.3	)		(211.3	)
Accumulated deficit		(45.6	)		(227.8	)
Accumulated other comprehensive income		151.6			133.2
Nalco Holding Company shareholders’ equity		696.8			471.6
Noncontrolling interests		30.7			20.0
Total equity		727.5			491.6
Total liabilities and equity	$	5,223.7		$	4,964.8

See notes to consolidated financial statements.

4

Nalco Holding Company and Subsidiaries

Consolidated Statements of Operations

(dollars in millions, except per share amounts)

	Year ended December 31
	2010			2009			2008
Net sales	$	4,250.5		$	3,746.8		$	4,212.4
Operating costs and expenses:
Cost of product sold		2,336.7			2,040.9			2,381.8
Selling, administrative and research expenses		1,285.4			1,206.3			1,246.5
Amortization of intangible assets		43.2			47.9			56.8
Restructuring expenses		2.6			47.8			33.4
Gain on divestiture		—			—			(38.1	)
Impairment of goodwill		4.9			—			544.2
Total operating costs and expenses		3,672.8			3,342.9			4,224.6
Operating earnings (loss)		577.7			403.9			(12.2	)
Other income (expense), net		(45.1	)		(17.6	)		(17.4	)
Interest income		4.3			3.9			8.3
Interest expense		(231.9	)		(254.5	)		(258.8	)
Earnings (loss) before income taxes		305.0			135.7			(280.1	)
Income tax provision		103.3			67.8			54.5
Net earnings (loss)		201.7			67.9			(334.6	)
Less: Net earnings attributable to noncontrolling interests		5.5			7.4			8.0
Net earnings (loss) attributable to Nalco Holding Company	$	196.2		$	60.5		$	(342.6	)
Net earnings (loss) per share attributable to Nalco Holding Company common shareholders:
Basic	$	1.42		$	0.44		$	(2.44	)
Diluted	$	1.41		$	0.44		$	(2.44	)
Weighted-average shares outstanding (millions):
Basic		138.3			138.2			140.1
Diluted		139.4			138.6			140.1

See notes to consolidated financial statements.

5

Nalco Holding Company and Subsidiaries

Consolidated Statements of Equity

(dollars in millions, except per share amounts)

	Nalco Holding Company Shareholders’ Equity
	Common Stock				Treasury Stock					Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income			Noncontrolling Interests			Comprehensive Income (Loss)
	Shares		Amount		Shares		Amount
Balance at January 1, 2008		144,377,068	$	1.4		4,588,500	$	(108.0	)	$	749.7	$	100.7		$	374.0		$	16.7
Share-based compensation		238,647		—		—		—			6.5		—			—			—
Reclassification of restricted stock no longer subject to cash settlement		—		—		—		—			8.0		—			—			—
Warrant exercise		2,126,650		—		—		—			—		—			—			—
Exercise of stock options		21,665		—		—		—			0.3		—			—			—
Increase in redemption value of noncontrolling interest		—		—		—		—			—		(5.1	)		—			—
Purchases of treasury stock		—		—		4,947,443		(103.3	)		—		—			—			—
Dividends on common stock ($0.14 per share)		—		—		—		—			—		(19.6	)		—			—
Dividends paid to noncontrolling interests on subsidiary common stock		—		—		—		—			—		—			—			(7.7	)
Other changes in noncontrolling interests		—		—		—		—			—		—			—			(0.3	)
Net loss		—		—		—		—			—		(342.6	)		—			8.0		$	(334.6	)
Other comprehensive income (loss):
Net actuarial losses — net of tax benefit of $18.6		—		—		—		—			—		—			(30.7	)		—			(30.7	)
Net prior service cost — net of tax benefit of $1.6		—		—		—		—			—		—			(5.2	)		—			(5.2	)
Gain on derivatives — net of tax of $0.8		—		—		—		—			—		—			1.3			—			1.3
Currency translation adjustments — net of tax of $12.3		—		—		—		—			—		—			(231.4	)		2.7			(228.7	)
Comprehensive loss																						(597.9	)

6

Nalco Holding Company and Subsidiaries

Consolidated Statements of Equity (continued)

(dollars in millions, except per share amounts)

	Nalco Holding Company Shareholders’ Equity
	Common Stock				Treasury Stock					Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income			Noncontrolling Interests		Comprehensive Income (Loss)
	Shares		Amount		Shares		Amount
Less: Comprehensive income attributable to noncontrolling interests																			—		10.7
Comprehensive loss attributable to Nalco Holding Company																			—	$	(608.6	)
Adjustment to adopt ASC 715-20-65-1 measurement provision:
Service cost, interest cost and expected return on plan assets for December 2007, net of tax benefit of $1.4		—		—		—		—			—		(2.7	)		—			—
Amortization of net prior service credit for December 2007, net of tax of $0.2		—		—		—		—			—		0.4			(0.4	)		—
Amortization of net gain for December 2007, net of tax of $0.1		—		—		—		—			—		0.1			(0.1	)		—
Balance at December 31, 2008		146,764,030		1.4		9,535,943		(211.3	)		764.5		(268.8	)		107.5			19.4

7

Nalco Holding Company and Subsidiaries

Consolidated Statements of Equity (continued)

(dollars in millions, except per share amounts)

	Nalco Holding Company Shareholders’ Equity
	Common Stock				Treasury Stock					Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income			Noncontrolling Interests			Comprehensive Income (Loss)
	Shares		Amount		Shares		Amount
Share-based compensation		308,272		—		—		—			11.1		—			—			—
Warrant exercise		625,299		—		—		—			—		—			—			—
Exercise of stock options		32,930		—		—		—			0.5		—			—			—
Increase in redemption value of noncontrolling interest		—		—		—		—			—		(0.2	)		—			—
Dividends on common stock ($0.14 per share)		—		—		—		—			—		(19.3	)		—			—
Dividends paid to noncontrolling interests on subsidiary common stock		—		—		—		—			—		—			—			(7.2	)
Other changes in noncontrolling interests		—		—		—		—			—		—			—			0.5
Net earnings		—		—		—		—			—		60.5			—			7.4		$	67.9
Other comprehensive income (loss):
Net actuarial losses — net of tax benefit of $36.2		—		—		—		—			—		—			(106.4	)		—			(106.4	)
Net prior service credit — net of tax benefit of $2.1		—		—		—		—			—		—			14.0			—			14.0
Gain on derivatives — net of tax of $0.4		—		—		—		—			—		—			0.6			—			0.6
Currency translation adjustments — net of tax benefit of $8.1		—		—		—		—			—		—			117.5			(0.1	)		117.4
Comprehensive income																						93.5
Less: Comprehensive income attributable to noncontrolling interests																						7.3
Comprehensive income attributable to Nalco Holding Company																					$	86.2
Balance at December 31, 2009		147,730,531		1.4		9,535,943		(211.3	)		776.1		(227.8	)		133.2			20.0

8

Nalco Holding Company and Subsidiaries

Consolidated Statements of Equity (continued)

(dollars in millions, except per share amounts)

	Nalco Holding Company Shareholders’ Equity
	Common Stock				Treasury Stock					Additional Paid-In Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income			Noncontrolling Interests			Comprehensive Income (Loss)
	Shares		Amount		Shares		Amount
Share-based compensation		128,257		—		—		—			18.7			—			—			—
Exercise of stock options		66,284		—		—		—			1.2			—			—			—
Acquisition without the transfer of consideration		—		—		—		—			10.3			—			—			10.2
Dividends on common stock ($0.14 per share)		—		—		—		—			—			(19.3	)		—			—
Dividends paid to noncontrolling interests on subsidiary common stock		—		—		—		—			—			—			—			(6.4	)
Additional investments in subsidiaries and other changes in non-controlling interests		—		—		—		—			(5.6	)		5.3			—			(0.7	)
Net earnings		—		—		—		—			—			196.2			—			5.5		$	201.7
Other comprehensive income (loss):
Net actuarial losses — net of tax benefit of $3.4		—		—		—		—			—			—			(4.5	)		(0.1	)		(4.6	)
Net prior service credit — net of tax of $2.8		—		—		—		—			—			—			3.6			—			3.6
Currency translation adjustments — net of tax of $7.4		—		—		—		—			—			—			19.3			2.2			21.5
Comprehensive income																							222.2
Less: Comprehensive income attributable to noncontrolling interests																							7.6
Comprehensive income attributable to Nalco Holding Company																						$	214.6
Balance at December 31, 2010		147,925,072	$	1.4		9,535,943	$	(211.3	)	$	800.7		$	(45.6	)	$	151.6		$	30.7

See notes to consolidated financial statements.

9

Nalco Holding Company and Subsidiaries

Consolidated Statements of Cash Flows

(dollars in millions)

	Year ended December 31
	2010			2009			2008
Operating activities
Net earnings (loss)	$	201.7		$	67.9		$	(334.6	)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation		123.1			142.3			136.6
Amortization		43.2			47.9			56.8
Gain on divestiture		—			—			(38.1	)
Impairment of goodwill		4.9			—			544.2
Amortization of deferred financing costs and accretion of senior discount notes		11.8			11.0			48.0
Loss on early extinguishment of debt		27.4			20.5			—
Equity in earnings of unconsolidated subsidiaries, net of distributions		0.7			1.2			1.9
Deferred income taxes		15.0			(6.3	)		(30.7	)
Amortization of unearned employee profit sharing and accretion of obligation		—			23.3			20.1
Defined benefit pension plan expense		21.6			47.3			45.1
Defined benefit pension plan contributions		(66.9	)		(72.9	)		(86.2	)
Other, net		51.4			42.6			14.2
Changes in current assets and liabilities:
Trade accounts receivable		(92.1	)		133.7			(18.0	)
Inventories		(15.9	)		117.1			(92.8	)
Accounts payable		37.1			7.5			(7.0	)
Other		(15.8	)		10.7			23.6
Net cash provided by operating activities		347.2			593.8			283.1
Investing activities
Additions to property, plant, and equipment, net		(156.3	)		(102.2	)		(133.1	)
Business purchases		(39.5	)		(27.6	)		(21.7	)
Net proceeds from business divestiture		—			—			74.1
Other investing activities		1.8			(6.0	)		(14.7	)
Net cash used for investing activities		(194.0	)		(135.8	)		(95.4	)
Financing activities
Cash dividends		(19.3	)		(19.3	)		(19.7	)
Proceeds from long-term debt		1,823.4			1,511.6			34.0
Payments of long-term debt		(1,724.3	)		(1,772.9	)		(70.8	)
Short-term debt, net		(157.4	)		(45.7	)		(65.8	)
Redemption premium on early extinguishment of debt		(17.8	)		(9.2	)		—
Deferred financing costs		(28.9	)		(54.7	)		—
Purchases of treasury stock		—			—			(103.3	)
Other financing activities		(11.3	)		(8.4	)		(7.3	)
Net cash used for financing activities		(135.6	)		(398.6	)		(232.9	)
Effect of foreign exchange rate changes on cash and cash equivalents		(17.1)			6.4			(12.9)
Increase (decrease) in cash and cash equivalents		0.5			65.8			(58.1	)
Cash and cash equivalents at beginning of the period		127.6			61.8			119.9
Cash and cash equivalents at end of the period	$	128.1		$	127.6		$	61.8
Supplemental cash flows information
Cash paid during the period for:
Interest	$	226.2		$	234.0		$	213.7
Income taxes		94.3			68.5			84.5

See notes to consolidated financial statements.

10

Nalco Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(dollars in millions, except per share amounts)

December 31, 2010

1.    Description of Business and Change in Ownership

Description of Business

We provide essential expertise for water, energy and air through the worldwide manufacture and sale of highly specialized service chemical programs. This includes production and service related to the sale and application of chemicals and technology used in water treatment, pollution control, energy conservation, oil production and refining, steelmaking, papermaking, mining, and other industrial processes.

Change in Ownership

On November 4, 2003, Nalco Holding Company’s indirect subsidiary, Nalco Holdings LLC (the “Buyer”), a newly formed entity controlled by affiliates of The Blackstone Group, L.P., Apollo Management, L.P., and The Goldman Sachs Group, Inc. (collectively, the “Sponsors”), pursuant to a Stock Purchase Agreement (as amended, the “Stock Purchase Agreement”) with Suez S.A. (“Suez”) and certain of its affiliates, acquired the net assets of Ondeo Nalco Group (as defined below) for $4,127.1 million, including direct costs of the acquisition of $125.6 million, excluding assumed debt of $30.2 million, and subject to certain closing and post-closing adjustments (the “Acquisition”).

The Ondeo Nalco Group (the “Predecessor”) included Ondeo Nalco Company and subsidiaries (“ONC”) and certain subsidiaries of Nalco International SAS (“NIS”) plus Calgon Europe Limited (UK), owned by Degremont (a former related party). Ondeo Industrial Solutions North America, a subsidiary of ONC, was excluded from the Predecessor, as the Buyer did not acquire it.

2.    Summary of Significant Accounting Policies

Basis of Presentation

All intercompany balances and transactions are eliminated. Investments in companies or partnerships in which we do not have control, but have the ability to exercise significant influence over operating and financial policies, are reported using the equity method.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Certain minor reclassifications have been made to the consolidated balance sheet at December 31, 2009 and consolidated statements of operations for the years ended December 31, 2009 and 2008 to conform to the current year presentation. These reclassifications had no effect on net earnings or equity reported for any period.

Foreign Currency Translation

Local currencies are the functional currencies for most foreign operations. Their balance sheets and income statements are translated at current and average exchange rates, respectively, with any resulting

11

2.    Summary of Significant Accounting Policies (continued)

translation adjustments included in the currency translation adjustment account in shareholders’ equity. The financial statements of any foreign subsidiaries that operate in highly inflationary environments are translated using a combination of current, average, and historical exchange rates, with the resulting translation impact included in results of operations. Exchange adjustments resulting from transactions executed in different currencies are included in other income (expense), net in the statements of operations. (See Note 17.)

Concentration of Credit Risk

Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed to perform as contracted. We believe the likelihood of incurring material losses due to concentration of credit risk is remote. The principal financial instruments subject to credit risk are as follows:

Cash and Cash Equivalents

A formal policy exists of placing these instruments in investment grade companies and institutions and limiting the size of deposits with any single entity.

Accounts Receivable

A large number of customers in diverse industries and geographies, as well as the practice of establishing reasonable credit lines, limits credit risk. The allowance for doubtful accounts is adequate to cover potential credit risk losses.

Foreign Exchange Contracts and Derivatives

Formal policies exist, which establish credit limits and investment grade credit criteria of “A” or better for all counterparties.

Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and highly liquid investments with original maturities of three months or less.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are carried at their face amounts less an allowance for doubtful accounts. On a periodic basis, we evaluate our accounts receivable and establish the allowance for doubtful accounts based on a combination of specific customer circumstances and credit conditions and based on a history of write-offs and collections. Our policy is generally to not charge interest on trade receivables after the invoice becomes past due. A receivable is considered past due if payments have not been received within agreed upon invoice terms. Write-offs are recorded at the time a customer receivable is deemed uncollectible.

Inventory Valuation

Inventories are valued at the lower of cost or market. Approximately 66% and 64% of the inventories at December 31, 2010 and 2009, respectively, are valued using the average cost or first-in, first-out (FIFO) method. The remaining inventories are valued using the last-in, first-out (LIFO) method. Reported inventory amounts would have been $24.3 million and $9.7 million higher at December 31, 2010 and 2009, respectively, if the FIFO method of accounting had been used for all inventories.

The LIFO method is used only in the United States. Most of the countries outside of the United States where we have subsidiaries do not permit the use of the LIFO method. In those countries where its use is permitted, we have not adopted the LIFO method of inventory valuation because the value of the inventories in those countries is not significant.

12

2.    Summary of Significant Accounting Policies (continued)

Inventories consist of the following:

	December 31, 2010		December 31, 2009
Finished products	$	246.0	$	232.6
Raw materials and work-in-process		84.0		81.2
	$	330.0	$	313.8

As of December 31, 2010 and 2009, our finished products inventories included $50.1 million and $47.4 million, respectively, of consignment inventories at customer sites to better serve and meet the needs of our customers.

Property, Plant, and Equipment

Property, plant, and equipment (including major improvements) are recorded at cost. Depreciation of buildings and equipment is calculated over their estimated useful lives generally using the straight-line method. We classify depreciation expense in our consolidated statements of operations as cost of product sold or selling, administrative and research expenses consistent with the utilization of the underlying assets.

Depreciation expense for the years ended December 31, 2010, 2009 and 2008 is as follows:

	2010		2009		2008
Depreciation expense	$	123.1	$	142.3	$	136.6

The estimated useful lives of the major classes of depreciable assets are as follows:

Classification	Estimated Useful Lives
Buildings	33 to 40 years
Software	5 years
Equipment	3 to 15 years

Property, plant, and equipment consist of the following:

	December 31, 2010			December 31, 2009
Land	$	83.7		$	83.6
Buildings		248.6			226.3
Software		153.8			154.9
Equipment		1,142.9			1,018.0
		1,629.0			1,482.8
Accumulated depreciation		(899.9	)		(804.7	)
Property, plant, and equipment, net	$	729.1		$	678.1

Goodwill and Other Intangible Assets

We assess the recoverability of goodwill and other intangible assets with indefinite lives annually or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be fully recoverable.

We have defined our operating segments as our reporting units. We use a two-step process to test goodwill for impairment. First, the reporting unit’s fair value is compared to its carrying value. Fair value

13

2.    Summary of Significant Accounting Policies (continued)

is estimated using a discounted cash flow approach. If a reporting unit’s carrying amount exceeds its fair value, an indication exists that the reporting unit’s goodwill may be impaired, and the second step of the impairment test would be performed, which is used to measure the amount of the impairment loss, if any. In the second step, the implied fair value of the reporting unit’s goodwill is determined by allocating the reporting unit’s fair value to all of its assets and liabilities other than goodwill in a manner similar to a purchase price allocation. The implied fair value of the goodwill that results from the application of this second step is then compared to the carrying amount of the goodwill and an impairment charge would be recorded for the difference if the carrying value exceeds the implied fair value of the goodwill.

We test the carrying value of other intangible assets with indefinite lives by comparing the fair value of the intangible assets to the carrying value. Fair value is estimated using a relief of royalty approach, a discounted cash flow methodology.

We amortize most customer relationship intangibles using a declining-balance method over an estimated useful life of 16 years to reflect the pattern in which the economic benefits of that asset are realized. This amortization method considers the expected rate of customer attrition, which was based on historical attrition data that was also used in estimating the fair value of the customer relationship intangible acquired at the Acquisition date.

The straight-line method is used for all other assets subject to amortization. Patents and developed technology are primarily being amortized over an estimated useful life of 10 years.

Deferred Financing Costs

Deferred financing costs are incurred to obtain long-term financing and are amortized using the effective interest method over the term of the related debt. The amortization of deferred financing costs, which is classified in interest expense in the statement of operations, for the years ended December 31, 2010, 2009 and 2008 is as follows:

	2010		2009		2008
Amortization of deferred financing costs	$	11.8	$	7.7	$	9.7

Asset Retirement Obligations

The fair value of a liability for an asset retirement obligation is recognized in the period in which it is incurred. The liability is adjusted to its present value in subsequent periods as accretion expense is recorded. The corresponding asset retirement costs are capitalized as part of the carrying amount of the related long-lived asset and depreciated over the asset’s useful life.

A reconciliation of the beginning and ending aggregate carrying amount of the asset retirement obligation is shown in the following table:

	2010			2009
Balance as of January 1	$	14.7		$	4.8
Liabilities incurred		0.9			5.7
Liabilities settled		(0.9	)		—
Accretion expense		0.2			0.4
Revisions in estimated liabilities		(5.2	)		3.4
Changes due to translation of foreign currencies		(0.3	)		0.4
Balance as of December 31		9.4			14.7
Less current portion		(2.5	)		(3.7	)
Asset retirement obligation, long term	$	6.9		$	11.0

14

2.    Summary of Significant Accounting Policies (continued)

A liability has been recorded for remediation and demolition activities at certain manufacturing sites where legal obligations associated with the retirement of tangible long-lived assets exist and potential settlement dates can be determined. The liability for other asset retirement obligations cannot currently be measured as the retirement dates are not yet determinable. We will recognize the liability when sufficient information exists to estimate potential settlement dates.

Income Taxes

Income taxes are recognized during the period in which transactions enter into the determination of financial statement income, with deferred income taxes being provided for the tax effect of temporary differences between the carrying amount of assets and liabilities and their tax bases.

Deferred income taxes are provided on the undistributed earnings of foreign subsidiaries except to the extent such earnings are considered to be permanently reinvested in the subsidiary. In cases where available foreign tax credits will not offset income taxes, appropriate provisions are included in the consolidated statement of operations.

Valuation allowances are determined based on the realizability of the deferred tax assets. Relevant factors to determine the realizability of the assets include future taxable income, the expected timing of the reversal of temporary differences, tax planning strategies and the expiration dates of the various tax attributes. Valuation allowances are established for those assets that are determined to be more likely than not to expire without benefit, or for which income of the proper character is not anticipated.

The effect of a valuation allowance for a deferred tax asset that is expected to originate in the current year is included in the annual effective tax rate for the year. The effect of a change in the beginning-of-the-year balance of a valuation allowance resulting from a change in judgment about the realizability of the related deferred tax asset in future years is recognized in the interim period in which the change occurs.

We record liabilities for income tax uncertainties in accordance with the recognition and measurement criteria prescribed in authoritative guidance issued by the Financial Accounting Standards Board (“FASB”). The tax benefits and related reserves are measured throughout the year, taking into account new legislation, regulations, case law and audit results. We recognize income tax-related interest and penalties within the income tax provision.

Derivative Instruments

Derivatives are recognized as either assets or liabilities in the consolidated balance sheets at fair value.

Revenue Recognition

Revenue from sales of products, including amounts billed to customers for shipping and handling costs, is recognized at the time: (1) persuasive evidence of an arrangement exists, (2) ownership and all risks of loss have been transferred to the buyer, (3) the price is fixed and determinable, and (4) collectability is reasonably assured. Revenue from saleable services is recognized when the services are provided to the customer.

Cost of Product Sold

Cost of product sold includes the cost of inventory (materials and conversion costs) sold to customers, shipping and handling costs, and certain warehousing costs. It also includes inbound freight charges, purchasing and receiving costs, packaging, quality assurance costs, internal transfer costs, and other costs

15

2.    Summary of Significant Accounting Policies (continued)

of our distribution network. It also includes supply chain administration, safety, health and environmental administration, and the costs of labor for services provided, whether as saleable services or as part of a multiple deliverables arrangement.

Selling, Administrative and Research Expenses

Selling expenses include the cost of our sales force and marketing staff and their related expenses.

Administrative expenses primarily represent the cost of support functions, including information technology, finance, human resources and legal, as well as expenses for support facilities, executive management and management incentive plans.

Research and development expenses represent the cost of our research and development personnel and their related expenses, including research facilities. Research and development costs are charged to expense as incurred.

Selling, administrative and research expenses for the years ended December 31, 2010, 2009 and 2008 are as follows:

	2010		2009		2008
Selling expenses	$	958.2	$	875.6	$	969.7
Administrative expenses		246.8		256.3		203.5
Research expenses		80.4		74.4		73.3

Recent Accounting Pronouncements

In June 2009, the FASB issued authoritative guidance that eliminates the qualifying special purpose entity concept, changes the requirements for derecognizing financial assets and requires enhanced disclosures about transfers of financial assets. The guidance also revises earlier guidance for determining whether an entity is a variable interest entity, requires a new approach for determining who should consolidate a variable interest entity, changes when it is necessary to reassess who should consolidate a variable interest entity, and requires enhanced disclosures related to an enterprise’s involvement in variable interest entities. We adopted the guidance effective January 1, 2010, which did not have a material effect on our financial statements.

In October 2009, the FASB issued authoritative guidance that amends earlier guidance addressing the accounting for contractual arrangements in which an entity provides multiple products or services (deliverables) to a customer. The amendments address the unit of accounting for arrangements involving multiple deliverables and how arrangement consideration should be allocated to the separate units of accounting, when applicable, by establishing a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific nor third-party evidence is available. The amendments also require that arrangement consideration be allocated at the inception of an arrangement to all deliverables using the relative selling price method. The guidance is effective for us on January 1, 2011. We do not expect adoption of the guidance to have a material effect on our financial statements.

In October 2009, the FASB issued authoritative guidance that amends earlier guidance for revenue arrangements that include both tangible products and software elements. Tangible products containing software components and nonsoftware components that function together to deliver the tangible product’s essential functionality are no longer within the scope of guidance for recognizing revenue from the sale of software, but would be accounted for in accordance with other authoritative guidance. The guidance is effective for us on January 1, 2011. We do not expect adoption of the guidance to have a material effect on our financial statements.

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2.    Summary of Significant Accounting Policies (continued)

In January 2010, the FASB issued authoritative guidance that changes the disclosure requirements for fair value measurements. Specifically, the changes require a reporting entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. The changes also clarify existing disclosure requirements related to how assets and liabilities should be grouped by class and valuation techniques used for recurring and nonrecurring fair value measurements. We adopted the guidance in the first quarter 2010, which did not have an impact on our financial position, results of operations or cash flows.

In December 2010, the FASB issued authoritative guidance that amends the criteria for performing Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts and requires performing Step 2 if qualitative factors indicate that it is more likely than not that a goodwill impairment exists. The guidance is effective for us January 1, 2011. Any impairment to be recorded upon adoption is to be recognized as an adjustment to beginning retained earnings. We do not expect adoption of the guidance to have any impact on our consolidated financial statements.

In December 2010, the FASB issued authoritative guidance that addresses diversity in practice about the interpretation of the pro forma revenue and earnings disclosure requirements for business combinations. The guidance clarifies that when presenting comparative financial statements, an entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The guidance also requires a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The guidance is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Since this guidance impacts disclosure requirements only, its adoption will not have a material impact on our financial statements.

3.    Acquisitions and Divestitures

In December 2007, we purchased an 87.5% interest in Mobotec USA, Inc. (“Mobotec”), a leading provider of combustion optimization and emission reduction capabilities, including engineering, equipment and chemistry for industrial and utility boilers. Concurrent with the purchase of the 87.5% interest in Mobotec, we entered into an agreement with the minority shareholder that provided us with the option to purchase the remaining shares of Mobotec. In August 2010, we exercised our option and acquired the remaining 12.5% interest for approximately $6.1 million.

In July 2010, we acquired substantially all of the business assets of Fabrication Technologies, Inc. (“FabTech”), a North American supplier of enhanced oil recovery (“EOR”) mixing and injection equipment, for an initial installment of $21.5 million. The purchase agreement provides for a final installment of $2.5 million, which was paid in December 2010 and up to $8.0 million of additional contingent consideration payable in cash if specified gross profit targets are achieved in the years 2010, 2012 or 2013. This additional consideration is not contingent on the former shareholder remaining employed. The agreement also provides for an adjustment to the purchase price for projects that were

in-process at the acquisition date, which was settled in December 2010 for $2.4 million.

The acquisition of FabTech was made to complete our integrated EOR solutions platform that we started in 2008. The purchase price, including the estimated fair value of the additional contingent consideration, exceeded the fair value of the net tangible assets acquired by $18.9 million, of which $15.6 million was allocated to goodwill and $3.3 million was allocated to other intangible assets. The goodwill resulting from this acquisition was allocated to the Energy Services segment and consists largely of our expected future product sales and synergies from combining FabTech’s products with our other EOR product offerings. All of the goodwill is expected to be deductible for income tax purposes. The fair

17

3.    Acquisitions and Divestitures (continued)

value of the additional contingent consideration was measured using internal cash flow estimates (i.e., Level 3 in the fair value hierarchy established by authoritative guidance issued by the FASB for fair value measurements).

In April 2010, we purchased the assets of Res-Kem Corp. and General Water Services Corp., leading regional suppliers of water treatment services and equipment, including deionized water, for an initial installment of $6.0 million. The purchase agreement provides for a second and final installment of $1.0 million, which was paid in October 2010, and $0.5 million of additional contingent consideration if specified revenue targets are achieved through March 2015. This additional consideration is not contingent on any selling shareholders remaining employed. The purchase price, including the estimated fair value of the additional contingent consideration, exceeded the fair value of the net tangible assets acquired by $6.3 million, of which $5.5 million was allocated to goodwill and $0.8 million was allocated to other intangible assets. The goodwill resulting from this acquisition, all of which is expected to be deductible for income tax purposes, was allocated to the Water Services segment. The fair value of the additional contingent consideration was measured using internal cash flow estimates (i.e., Level 3 in the fair value hierarchy established by authoritative guidance issued by the FASB for fair value measurements).

In January 2010, we acquired a 50.1% controlling financial interest in Nalco Africa, a new entity formed with Protea Chemicals, one of Africa’s largest suppliers of industrial chemicals and services. Protea Chemicals is a division of the Omnia Group, a diversified and specialist chemical services company located in Johannesburg, South Africa. The new entity enables us to re-enter the water and process treatment markets of southern Africa. The business combination did not involve the transfer of consideration, but under the terms of a technical assistance and license agreement executed at the time of the combination, we have licensed to Nalco Africa rights to certain of our patents, know-how and trademarks. The fair value of the business acquired was $20.1 million, of which $16.0 million was allocated to goodwill, $5.7 million was allocated to other intangible assets, and $1.6 million was allocated to a deferred tax liability. The goodwill consists primarily of our expectation of future sales growth in this geographic market and intangible assets that do not qualify for separate recognition. The goodwill was allocated to the Water Services segment and is not expected to be deductible for tax purposes. The fair value of the business acquired was measured using internal cash flow estimates (i.e., Level 3 in the

fair value hierarchy established by authoritative guidance issued by the FASB for fair value measurements).

In March 2009, we acquired the assets of Crossbow Water, a regional high-purity water and water pre-treatment company, for $22.1 million. The purchase agreement provides for up to $21.0 million of additional contingent consideration, payable in cash, based upon the achievement of specified revenue targets measured through March 2014. This additional consideration is not contingent on any selling shareholders remaining employed. The purchase price, including the estimated fair value of the additional contingent consideration, exceeded the fair value of the net tangible assets acquired by $25.1 million, of which $10.8 million was allocated to goodwill and $14.3 million was allocated to other intangible assets. The goodwill resulting from this acquisition was allocated to the Water Services segment and largely consists of expected sales growth and synergies resulting from the acquisition. All of the goodwill is expected to be deductible for income tax purposes.

During 2008, we purchased 100% of the outstanding shares of TIORCO, Inc., a company engaged in the enhanced oil recovery business, for $8.5 million, net of cash acquired. The purchase agreement included a provision for two contingent payments. The first payment of $3.1 million was paid during 2008, and the second payment, which was paid in 2009, was $4.8 million. Both payments were accounted for as additional purchase price. The purchase price, including the contingent payments, exceeded the fair value of the net tangible assets acquired by $15.8 million, of which $10.2 million was allocated to goodwill and $5.6 million was allocated to other intangible assets. The goodwill from this acquisition resulted from the expectation of sales growth into this new market and other expected synergies. The goodwill was allocated to the Energy Services segment and is not expected to be deductible for tax purposes.

18

3.    Acquisitions and Divestitures (continued)

In August 2008, we purchased the assets of G&L Soap Injection Enterprise, LLC and Six Degrees, LLC, companies engaged in the business of treating gas and oil wells, for $7.0 million. The purchase price exceeded the fair value of the net tangible assets acquired by $6.3 million, of which $3.5 million was allocated to goodwill and $2.8 million was allocated to other intangible assets. The purchase agreement included a provision for three contingent payments totaling $2.0 million that are earned if certain targets are achieved in the years 2009, 2010 and 2011. The 2009 target was achieved, and a payment of $0.7 million was made in 2009, which was accounted for as additional purchase price. The 2010 target was achieved, and a payment of $0.7 million was made in January 2011 that will be accounted for as additional purchase price. The goodwill resulting from this acquisition was allocated to the Energy Services segment and is expected to be deductible for tax purposes.

Other small business acquisitions were made during 2008 for a combined purchase price of $3.1 million, net of cash acquired. The purchase price exceeded the fair value of the net tangible assets acquired by $2.1 million, which was allocated to goodwill.

In September 2008, we completed the sale of our Finishing Technologies surface treatment business to Chemetall Corp., a subsidiary of Rockwood Holdings, Inc. Proceeds from the sale were $74.1 million, net of selling and other cash expenses of $0.9 million, and resulted in a gain of $38.1 million before income taxes. A plant in Jackson, Michigan, dedicated to the Finishing Technologies business, was included in the sale, along with dedicated Finishing Technologies sales, service, marketing, research and supply chain employees. The sale also included products, goodwill, customer relationships and other related assets. The Finishing Technologies business was not presented as a discontinued operation because its operations and cash flows were not clearly distinguished from the rest of the entity. On an after-tax basis, the transaction increased diluted earnings per share by 11 cents for the year ended December 31, 2008.

The pro forma impact as if the aforementioned acquisitions had occurred at the beginning of the respective years is not significant.

4.    Securitization of Accounts Receivable

We have an accounts receivable securitization facility with a commercial paper conduit sponsored by Credit Agricole Corporate and Investment Bank that provides up to $150.0 million in funding, based on availability of eligible receivables and satisfaction of other customary conditions, which expires in June 2013. This facility replaced the previous facility that provided up to $160.0 million in funding that expired in June 2010.

Under the facility, Nalco Company (the “Seller”), a wholly owned indirect subsidiary of Nalco Holding Company, transfers all eligible trade accounts receivable (the “Receivables”) to a bankruptcy-remote, wholly owned, special purpose limited liability company (the “Transferor”). Pursuant to a Receivables Transfer Agreement, the Transferor then transfers an undivided interest in the Receivables to the commercial paper conduit or the related bank sponsor (the “Transferees”) in exchange for cash.

The financing fee charged by the Transferees under the facility is based on the amount funded and the conduit’s cost of funds for issuing commercial paper plus a margin that varies based on the leverage ratio as calculated under our senior credit facilities. The Transferees also charge a facility fee of 0.5% per annum on 102% of the total funding commitment under the facility.

Availability of funding under the facility depends primarily upon the outstanding Receivables balance from time to time. The facility may be terminated for, among other reasons, material breaches of representations and warranties, bankruptcies of the Seller or the Transferor, a judgment or order for the payment of money rendered against the Transferor, cross-defaults to our other debt, or breach of specified financial covenants. We are currently in compliance with these covenants.

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4.    Securitization of Accounts Receivable (continued)

The facility is accounted for as a general financing agreement resulting in the funding and related Receivables being shown as liabilities and assets, respectively, on our consolidated balance sheet and the costs associated with the facility being recorded as interest expense. We had $67.8 million of outstanding borrowings at December 31, 2010 and no outstanding borrowings at December 31, 2009.

5.    Goodwill

Changes in the carrying value of goodwill from January 1, 2009 to December 31, 2010 are summarized below:

	Water Services			Paper Services			Energy Services			Total
Balance as of January 1, 2009:
Goodwill	$	1,176.8		$	544.2		$	523.3		$	2,244.3
Accumulated impairment losses		—			(544.2	)		—			(544.2	)
		1,176.8			—			523.3			1,700.1
Acquisitions		16.2			—			—			16.2
Contingent consideration		—			—			5.5			5.5
Purchase price allocations		—			—			(3.5	)		(3.5	)
Other		1.6			—			—			1.6
Effect of foreign currency translation		58.0			—			22.1			80.1
Balance as of December 31, 2009:
Goodwill		1,252.6			544.2			547.4			2,344.2
Accumulated impairment losses		—			(544.2	)		—			(544.2	)
		1,252.6			—			547.4			1,800.0
Acquisitions		21.5			—			15.6			37.1
Purchase price allocations		(5.4	)		—			—			(5.4	)
Correction of purchase price allocation		10.7			4.9			4.5			20.1
Impairment charge		—			(4.9	)		—			(4.9	)
Reclassifications		4.5			—			(4.5	)		—
Other		1.1			—			1.1			2.2
Effect of foreign currency translation		(5.5	)		—			0.5			(5.0	)
Balance as of December 31, 2010:
Goodwill		1,279.5			549.1			564.6			2,392.2
Accumulated impairment losses		—			(549.1	)		—			(549.1	)
	$	1,279.5		$	—		$	564.6		$	1,844.1

During 2004, as part of the allocation of the purchase price paid for the Predecessor by the Sponsors, certain deferred tax assets totaling $20.1 million were recorded, with a corresponding reduction to goodwill. During 2010, we determined that these deferred tax assets were recorded in error. In accordance with authoritative guidance issued by the FASB, we corrected this error in the purchase price allocation by reversing the deferred tax asset and increasing goodwill.

Of the $20.1 million adjustment to goodwill, $4.9 million was allocated to our Paper Services reporting unit. Because the entire balance of goodwill of our Paper Services reporting unit was written off in 2008, when it was determined that it was impaired, the $4.9 million was immediately written off.

We performed our annual impairment test during the fourth quarter of 2010 and 2009 with no goodwill impairment indicated.

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6.    Other Intangible Assets

Intangible assets are summarized as follows:

	December 31, 2010					December 31, 2009
	Gross Amount		Accumulated Amortization			Gross Amount		Accumulated Amortization
Intangible assets subject to amortization:
Customer relationships	$	529.4	$	(394.3	)	$	521.5	$	(365.4	)
Patents and developed technology		130.5		(80.4	)		130.4		(67.8	)
Other		6.7		(3.4	)		5.4		(2.6	)
Intangibles not subject to amortization:
Trademarks and trade names		834.8		—			834.4		—
	$	1,501.4	$	(478.1	)	$	1,491.7	$	(435.8	)

Estimated annual amortization expense for the years 2011 through 2015 is as follows:

Year ending December 31
2011	$	39.0
2012		34.9
2013		29.8
2014		18.7
2015		16.1

7.    Profit Sharing and Savings Plan

We sponsor a defined contribution profit sharing and savings plan that enables most U.S. employees to share in our success and growth, and that provides them with additional income for retirement. Under the plan, annual profit sharing contributions are made to the accounts of participating employees that vary based on our financial performance. In addition, the plan provides for matching contributions of up to 4% of pay for employees who elect to contribute to 401(k) accounts. All contributions are made to the Profit Sharing, Investment and Pay Deferral Plan Trust (the “Trust”).

Prior to 2010, participants in the domestic pension plan received lower profit sharing and 401(k) matching contributions than other employees. However, because the domestic pension plan was amended in 2009 such that pension plan participants would no longer earn service credit beginning in 2010, the profit sharing and 401(k) matching contributions for those employees were increased to the same level as all other employees.

The Predecessor previously had an Employee Stock Ownership Plan (“ESOP”), which gave most U.S. employees an additional opportunity to share in the ownership of the Predecessor’s stock. Preferred shares were allocated to eligible employees based on a percentage of pretax earnings.

At the inception of the ESOP, the Predecessor and a trustee entered into a trust agreement, constituting the ESOP Trust, to fund benefits under the Predecessor’s ESOP. As part of its acquisition of Nalco Chemical Company in November 1999, Suez purchased from the trustee all of the issued and outstanding Series B ESOP Convertible Preferred Stock. The trustee credited proceeds from the sale of allocated shares to participants’ accounts. Under the terms of an agreement (the “Contribution Agreement”), the Predecessor and the ESOP trustee agreed that the trustee would use proceeds from the sale of shares held in the loan suspense account to repay the outstanding principal and accrued interest on the ESOP loans. It was also agreed that all proceeds remaining after the repayment of the loans and accrued interest would be allocated to participants’ accounts. In return, the Predecessor agreed to make contributions to the Trust on or before December 31, 2010, having a present value equal to $124.6 million, the outstanding principal and accrued interest paid on the ESOP loans. The plan was amended

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7.    Profit Sharing and Savings Plan (continued)

effective January 1, 2003 to also permit matching contributions under the Company’s 401(k) plan to count as contributions to the Trust. The Contribution Agreement provided for specified minimum annual contributions to be made to the Trust, with interest accruing on the outstanding contribution balance at an annual rate of 8.5% compounded monthly.

Pursuant to the Stock Purchase Agreement, we entered into an agreement (the “Reimbursement Agreement”) with Suez on November 4, 2003, whereby Suez would reimburse us for all contributions we made to the Trust in order to satisfy our obligation under the Contribution Agreement. As part of the allocation of the Acquisition purchase price, we recorded a receivable from Suez of $112.7 million, equivalent to our recorded liability to the Trust, and recorded a $115.0 million unearned employee profit sharing asset, which was amortized to reflect profit sharing and 401(k) matching contribution expenses in the period earned by employees. The unearned employee profit sharing asset was fully amortized during 2009, and we paid our remaining obligation under the Contribution Agreement to the Trust during 2010, which was reimbursed to us by Suez. At December 31, 2010, both the receivable from Suez and our obligation to the Trust under the Contribution Agreement were zero.

Because Suez reimbursed us for payments that we made toward satisfying our obligation under the Contribution Agreement, expenses related to the Contribution Agreement were non-cash in nature. All profit sharing and 401(k) matching contribution expenses recognized subsequent to fulfilling our remaining obligation under the Contribution Agreement will require the use of cash. We had a payable to the Trust of $38.9 million at December 31, 2010, which will be paid during 2011.

Contributions to the Trust, profit sharing and 401(k) matching contribution expenses, and expenses recorded related to the Contribution Agreement for the years 2010, 2009 and 2008 were as follows:

	2010		2009		2008
Contributions to the Trust	$	34.6	$	19.0	$	27.0
Expense recorded:
Amortization of unearned employee profit sharing	$	—	$	22.1	$	17.4
Profit sharing and 401(k) matching contribution expense		49.0		7.4		—
Accretion of obligation to Trust		1.6		1.3		2.7
Total included in operating expenses	$	50.6	$	30.8	$	20.1

Payments received from Suez and income recorded related to the Reimbursement Agreement for the years 2010, 2009 and 2008 were as follows:

	2010		2009		2008
Payments received from Suez	$	16.2	$	20.0	$	27.0
Income recorded:
Accretion of receivable from Suez	$	1.6	$	1.3	$	2.7

8.    Income Tax

The provision for income taxes was calculated based upon the following components of earnings (loss) before income taxes for the years ended December 31, 2010, 2009 and 2008:

	2010		2009		2008
United States	$	117.0	$	34.5	$	(120.8	)
Foreign		188.0		101.2		(159.3	)
Earnings (loss) before income taxes	$	305.0	$	135.7	$	(280.1	)

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8.    Income Tax (continued)

Earnings (loss) before income taxes, as shown above, are based on the location of the entity to which such earnings are attributable.

The components of the income tax provision for the years ended December 31, 2010, 2009 and 2008 are as follows:

	2010		2009			2008
Current:
Federal	$	17.9	$	—		$	2.1
State and local		4.3		1.8			4.1
Foreign		66.1		72.3			79.0
Total current		88.3		74.1			85.2
Deferred:
Federal		11.9		2.7			(36.1	)
State and local		0.5		(6.1	)		0.1
Foreign		2.6		(2.9	)		5.3
Total deferred		15.0		(6.3	)		(30.7	)
Income tax provision	$	103.3	$	67.8		$	54.5

The effective rate of the provision for income taxes differs from the United States statutory federal tax rate for the years ended December 31, 2010, 2009 and 2008 due to the following items:

	2010			2009			2008
United States statutory federal tax rate	$	106.8		$	47.5		$	(98.0	)
State income taxes, net of federal benefits		3.0			1.1			5.5
Changes in tax laws		2.6			(5.4	)		—
Nondeductible goodwill		1.7			—			163.3
Foreign tax rate differential		(25.9	)		(19.3	)		(27.4	)
Withholding taxes		11.4			9.6			7.0
United States tax on foreign earnings		(21.7	)		1.9			4.6
Credits and incentives		(2.4	)		(2.5	)		(4.6	)
Changes in valuation allowances		(0.7	)		29.0			(15.6	)
Uncertain tax positions		18.2			2.6			1.6
Nondeductible items		10.6			8.2			18.1
Other		(0.3	)		(4.9	)		—
Income tax provision	$	103.3		$	67.8		$	54.5

As displayed in the table above, the tax provision for the year ended December 31, 2010 was favorably impacted by $21.7 million, reflecting a reduction of our U.S. income tax provision due to repatriations of foreign earnings and taxes, which were available for U.S. foreign tax credit. In addition, the tax provision was favorably impacted by immaterial prior-period adjustments of $6.5 million, which are primarily included in foreign tax rate differential above.

No provision has been made for United States or foreign income taxes related to approximately $466.8 million of undistributed earnings of foreign subsidiaries at December 31, 2010, as we consider these earnings to be permanently reinvested. It is not practicable to estimate the additional income taxes, including applicable withholding taxes, that would be payable on the remittance of such undistributed earnings.

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8.    Income Tax (continued)

Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement basis and the tax basis of assets and liabilities using enacted statutory tax rates applicable to future years. Net deferred income tax assets (liabilities) as of December 31, 2010 and 2009 are as follows:

	2010			2009
Retirement benefits	$	79.8		$	59.7
Pension		74.9			116.2
State and local net operating loss carryforwards		10.9			8.9
Foreign tax loss carryforwards		73.3			66.9
United States foreign tax credits		92.0			73.6
Other deferred tax assets		93.6			136.8
Total deferred tax assets		424.5			462.1
Valuation allowance		(86.5	)		(95.2	)
Net deferred tax assets	$	338.0		$	366.9
Property	$	(84.2	)	$	(87.7	)
Intangible assets		(418.8	)		(437.0	)
Other deferred tax liabilities		(37.4	)		(22.8	)
Total deferred tax liabilities		(540.4	)		(547.5	)
Net deferred tax assets		338.0			366.9
Total deferred income taxes	$	(202.4	)	$	(180.6	)
Included in:
Deferred income taxes — current asset	$	63.9		$	25.6
Other noncurrent assets		9.9			8.5
Income taxes		(15.9	)		(11.8	)
Deferred income taxes — noncurrent liability		(260.3	)		(202.9	)
	$	(202.4	)	$	(180.6	)

These deferred tax assets and liabilities are classified in the balance sheet based on the balance sheet classification of the related assets and liabilities. In some instances, certain deferred tax attributes are not related to items otherwise included in financial reporting. Such items are classified in the balance sheet based on their expected reversal date.

Nalco Holding Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions, as required. With few exceptions, we are no longer subject to U.S. federal, state and local, or foreign income tax examinations by tax authorities for periods prior to 2005. To the extent we are subject to additional tax assessments greater than $150,000 related to tax periods before November 4, 2003, we are indemnified by our former shareholder, Suez, and therefore have recorded a receivable for the related indemnity claim.

Authoritative guidance issued by the FASB clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

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8.    Income Tax (continued)

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

	Unrecognized Tax Benefit			Suez Portion			Nalco Portion
Balance at January 1, 2008	$	5.2		$	1.6		$	3.6
Additions related to current year		0.3			—			0.3
Additions related to prior years		6.6			0.2			6.4
Reduction for positions taken in prior years		(5.1	)		—			(5.1	)
Settlements		(1.0	)		—			(1.0	)
Balance at December 31, 2008		6.0			1.8			4.2
Additions related to current year		2.3			—			2.3
Additions related to prior years		0.8			0.1			0.7
Reduction for positions taken in prior years		(0.4	)		—			(0.4	)
Settlements		—			—			—
Balance at December 31, 2009		8.7			1.9			6.8
Additions related to current year		1.7			—			1.7
Additions related to prior years		19.3			0.1			19.2
Reduction for positions taken in prior years		(3.3	)		(0.6	)		(2.7	)
Settlements		—			—			—
Balance at December 31, 2010	$	26.4		$	1.4		$	25.0

Unrecognized tax benefits were comprised of the following at December 31, 2010:

	Unrecognized Tax Benefit		Suez Portion		Nalco Portion
Unrecognized tax position	$	24.8	$	1.0	$	23.8
Interest		1.4		0.4		1.0
Penalties		0.2		—		0.2
Balance at December 31, 2010	$	26.4	$	1.4	$	25.0

As of December 31, 2010, full recognition of the $26.4 million of tax benefits not previously recognized would have resulted in a reduction of the Suez receivable of $1.4 million and a favorable impact to the income tax provision of $25.0 million.

In our financial statements, interest and penalties, when applicable, are an element of the income tax provision. For 2010, interest and penalties related to unrecognized tax benefits negatively impacted the income tax provision by $0.6 million.

During 2010, the Nalco portion of the unrecognized tax benefits reported above increased by $18.2 million. This was caused, in large part, by expanded audit and controversy activity in multiple non-U.S. income tax jurisdictions, much of which occurred in the fourth quarter.

Based on the status of examinations in multiple tax jurisdictions, it is reasonably possible the total amount of unrecognized tax benefits could change during the next 12 months within a range of zero to $6.0 million.

Our balance sheet continues to report state and local tax loss carryforwards, having a gross amount of $138.8 million, a related deferred tax asset balance of $10.9 million and varying expiration dates as the losses relate to multiple tax jurisdictions. No valuation allowances have been placed against these deferred tax assets.

At December 31, 2010, the U.S. foreign tax credit carryforward stands at $92.0 million. The credits have a ten-year carryforward period, and will expire between 2015 and 2021 if not utilized. Utilization of the

25

8.    Income Tax (continued)

foreign tax credits is dependent upon future U.S. taxable income with the appropriate attributes. We assessed the realizability of the foreign tax credit carryforwards by considering historical trends and future projections of U.S. taxable income, including temporary differences. Disregarding any applicable tax loss carry forwards, we generated U.S. taxable income in 2008 and 2009 and also estimate we will do so for 2010. The U.S. income expectations for future years were evaluated along with the expiration dates of the carryforwards. We concluded that recognizing the tax benefits of these credit carryforwards is appropriate.

As of December 31, 2010, amounts and expiration dates of net operating loss carryforwards in various tax jurisdictions were as follows:

	As of December 31, 2010
Expiration Dates	2013 - 2029		Unlimited		Total
Amounts	$	88.4	$	187.8	$	276.2

The losses listed above relate primarily to Brazil, France, the Netherlands and United Kingdom. The losses listed above have related deferred tax assets of $73.7 million.

Valuation allowances associated with these deferred tax assets total $66.1 million. We have valuation allowances on certain other foreign net deferred tax assets totaling $20.4 million.

9.    Debt

Debt consists of the following:

	December 31, 2010		December 31, 2009
Short-term
Checks outstanding and bank overdrafts	$	24.0	$	7.5
Notes payable to banks		55.5		44.8
Current maturities of long-term debt		10.5		177.5
	$	90.0	$	229.8
Long-term
Securitized trade accounts receivable facility	$	67.8	$	—
Term loan B, due November 2010		—		167.0
Term loan B, due October 2017 (including discount of $3.1 in 2010)		645.3		—
Term loan B, due May 2016		—		746.2
Term loan C, due May 2016 (including discount of $22.5 in 2010 and $26.7 in 2009.)		274.5		273.3
Term loan C-1, due May 2016 (including discount of $4.3 in 2010)		95.4		—
Senior notes, due January 2019		750.0		—
Senior notes (euro), due January 2019		267.4		—
Senior subordinated notes, due November 2013		—		465.0
Senior subordinated notes (euro), due November 2013		—		287.7
Senior discount notes, due February 2014 (including premium of $0.4 in 2010 and $1.1 in 2009)		200.4		461.9
Senior notes, due May 2017 (including discount of $8.5 in 2010 and $9.8 in 2009)		491.5		490.2
Other		0.2		0.5
		2,792.5		2,891.8
Less: Current portion		10.5		177.5
	$	2,782.0	$	2,714.3

26

9.    Debt (continued)

The weighted-average interest rate on short-term debt was 5.81% and 2.80% at December 31, 2010 and December 31, 2009, respectively.

Senior Secured Credit Facilities

As part of a series of refinancing transactions in May 2009, Nalco Company entered into new senior secured credit facilities consisting of a revolving credit facility expiring in May 2014 and a $750.0 million term loan B facility maturing in May 2016. As part of a refinancing transaction described below, the outstanding balance of the term loan B facility was repaid in October 2010.

The revolving credit facility provides for borrowings of up to $250.0 million and replaced the former $250.0 million revolving credit facility that would have otherwise expired in November 2009. The U.S. dollar equivalent of $150.0 million under the revolving credit facility can be used, subject to certain collateral obligations, for borrowings by Nalco Company and certain non-U.S. subsidiaries in euros, pounds sterling and other currencies to be agreed. At December 31, 2010, we had $230.8 million of borrowing capacity available under our revolving credit facility, which reflects no outstanding borrowings and reduced availability as a result of $19.2 million in outstanding letters of credit.

The terms of the senior secured credit facilities allowed us to make future additional term loan borrowings of up to $250.0 million on terms to be agreed with future lenders. In November 2009, the senior secured credit facilities were amended to increase the amount of future additional term loan borrowings from $250.0 million to $550.0 million. The senior secured credit facilities were further amended in May 2010 to increase the aggregate principal amount of additional term loan borrowings from $550.0 million to an amount that would not cause the secured leverage ratio of Nalco Holdings LLC (the direct parent company of Nalco Company) and its subsidiaries on a consolidated basis to exceed 2.00 to 1.00.

In December 2009, Nalco Company entered into a Joinder Agreement to the senior secured credit facilities that provided for a $300.0 million term loan C, which was borrowed at a discount of $27.0 million and matures in May 2016.

In October 2010, Nalco Company entered into two Joinder Agreements to the senior secured credit facilities. One of the Joinder Agreements provided for an additional $650.0 million term loan B facility maturing in October 2017, and the other Joinder Agreement provided for a $100.0 million addition (term loan C-1) to the existing term loan C that matures in May 2016. We borrowed the full amount of these term loans in October 2010, net of an original issue discount equal to 0.5% and 4.5% for the term loan B facility and the term loan C-1 facility, respectively. The net proceeds of these borrowings were used to repay the term loan B that had been borrowed in May 2009 and that was to mature in May 2016.

Borrowings under the revolving credit facility and term loan C bear interest at a floating base rate plus an applicable margin. The applicable margin for borrowings under the revolving credit facility ranges from 2.00% to 3.00% with respect to base rate borrowings and 3.00% to 4.00% with respect to LIBOR or Eurocurrency borrowings depending on our leverage ratio as defined by the revolving credit agreement. The initial margin for the revolving credit facility is 2.50% with respect to base rate borrowings and 3.50% with respect to LIBOR or Eurocurrency borrowings. The applicable margin for borrowings under term loan C is 0.75% with respect to base rate borrowings and 1.75% with respect to LIBOR or Eurocurrency borrowings.

Term loan B bears interest at a floating base rate plus a credit-rating-based margin of 2.75% or 3.00% with respect to LIBOR borrowings and 3.75% or 4.00% with respect to base rate borrowings. It also provides for a LIBOR minimum of 1.50%. Term loan C-1 bears interest at a floating base rate plus a margin of 1.75% with respect to LIBOR borrowings and a margin of 2.75% with respect to base rate borrowings.

27

9.    Debt (continued)

Interest is generally due quarterly in arrears, and is also due upon expiration of any particular loan. In addition, there is an annual loan commitment fee of 0.50% on the unused portion of the revolving credit facility. We are also required to pay a participation fee in respect of the undrawn portion of the letters of credit, at a rate per annum equal to the applicable margin for LIBOR or Eurocurrency borrowings under the revolving credit facility, a fronting fee at a rate of 0.25% per annum of the daily average amount, as well as customary letter of credit fees.

Term loan B, term loan C and term loan C-1 are subject to amortization at 1% of the original principal amount per annum, payable quarterly. The remaining principal amount of term loan B is due on October 5, 2017, and the remaining principal amounts of term loan C and term loan C-1 are due on May 13, 2016.

The senior secured credit facilities are unconditionally guaranteed by Nalco Company, Nalco Holdings LLC, and certain domestic subsidiaries of Nalco Holdings LLC. The repayment of these facilities is secured by substantially all the assets of Nalco Company and the guarantors, including, but not limited to, a pledge of their capital stock and 65% of the capital stock of each non-U.S. subsidiary owned by the guarantors.

At December 31, 2010, the weighted-average interest rate on borrowings under the senior secured credit facilities was 3.57%. Amounts outstanding, as well as the base rates and applicable margins, at December 31, 2010 and December 31, 2009 were as follows:

	December 31, 2010								December 31, 2009
	Amount		Weighted- Average Base Rate			Applicable Margin			Amount		Weighted- Average Base Rate			Applicable Margin
Revolving credit facility	$	—		—			—		$	—		—			—
Term loan B		—		—			—			746.2		3.00	%		3.50	%
Term loan B (before discount of $3.1)		648.4		1.50	%		3.00	%		—		—			—
Term Loan C (before discount of $22.5 in 2010 and $26.7 in 2009)		297.0		0.30	%		1.75	%		300.0		0.23	%		1.75	%
Term Loan C-1 (before discount of $4.3)		99.7		0.28	%		1.75	%		—		—			—

Senior Notes, Senior Subordinated Notes and Senior Discount Notes

On December 22, 2010, Nalco Company issued $750 million aggregate principal amount of 6.625% senior unsecured notes (“Dollar Notes”) and €200 million aggregate principal amount of 6.875% senior unsecured notes (“Euro Notes”, and, together with the Dollar Notes, the “2010 Notes”). The 2010 Notes mature on January 15, 2019, with interest payable in cash on January 15 and July 15 of each year beginning on July 15, 2011. Additional interest is payable in certain circumstances if we do not consummate an exchange offer or shelf registration for the 2010 Notes within 365 days following their issuance. The 2010 Notes do not have required principal payments prior to maturity. Each of the direct and indirect subsidiaries of Nalco Holdings LLC and Nalco Company that guarantees Nalco Company’s obligations under its senior secured credit facilities guarantees the 2010 Notes.

The net proceeds from the issuance of the 2010 Notes, along with cash on hand, were used to fund: (i) the repurchase of $113.1 million of the $465.0 million 8.875% dollar-denominated senior subordinated notes due 2013, and €114.5 million of the €200.0 million aggregate principal amount of 9% euro-denominated senior subordinated notes due 2013, tendered pursuant to a tender offer launched on December 7, 2010 and related tender offer premium; (ii) the redemption of the remaining $351.9 million dollar notes and €85.5 million euro notes; (iii) the repurchase of $260.8 million aggregate principal amount of 9.0% senior discount notes due 2014 co-issued by Nalco Finance Holdings LLC, our direct wholly-owned subsidiary, and Nalco Finance Holdings Inc., and to pay a related premium; and (iv) the

28

9.    Debt (continued)

payment of fees and expenses incurred in connection with the issuance of the 2010 Notes and the tender offer. As a result, we incurred a $27.4 million loss on extinguishment of debt, which is included in other income (expense), net for the year ended December 31, 2010. The loss was comprised of a $17.8 million premium paid to redeem the existing senior subordinated notes and discount notes, $5.4 million of accelerated amortization of deferred financing costs related to the existing senior subordinated notes and discount notes, and $4.2 million of other related charges.

At any time prior to January 15, 2014, Nalco Company may redeem all or a part of the 2010 Notes at a redemption price equal to 100% of the principal amount of the notes plus a specified “make-whole” premium.

On and after January 15, 2014, Nalco Company may redeem some or all of the 2010 Notes at the redemption prices (expressed as percentages of principal amount of the notes to be redeemed) set forth below, plus accrued interest , if any, if redeemed during the twelve-month period beginning on January 15 of each of the years indicated below:

Period	Dollar  Notes Redemption Price			Euro Notes Redemption Price
2014		104.969	%		105.156	%
2015		103.313	%		103.438	%
2016		101.656	%		101.719	%
2017 and thereafter		100.000	%		100.000	%

In May 2009, Nalco Company issued $500.0 million aggregate principal amount of 8.25% senior unsecured notes (the “2009 Notes”). The 2009 Notes were issued at a discount of $10.7 million. The 2009 Notes mature on May 15, 2017, with interest payable semi-annually on May 15 and November 15 of each year. The 2009 Notes do not have required principal payments prior to maturity. Each of the direct and indirect subsidiaries of Nalco Holdings LLC and Nalco Company that guarantees Nalco Company’s obligations under the senior secured credit facilities guarantees the 2009 Notes.

At its option, Nalco Company has the right to redeem some or all of the 2009 Notes beginning May 15, 2013, at the redemption prices set forth below (expressed as a percentage principal amount), plus accrued interest, if any, if redeemed during the twelve-month period commencing on May 15 of the years set forth below:

Period	Redemption Price
2013		104.125	%
2014		102.063	%
2015 and thereafter		100.000	%

Nalco Company also has the right to redeem some or all of the Notes prior to May 15, 2013, at a price equal to the principal amount of the notes, plus a specified “make-whole” premium.

In May 2009, net proceeds from the 2009 Notes and term loan B were used to repay $735.0 million of existing term loan borrowings and to redeem $475.0 million aggregate principal amount of dollar-denominated senior notes due November 2011. In December 2009, available cash and net proceeds from term loan C were used to redeem €200.0 million aggregate principal amount of euro-denominated senior notes due November 2011 and the remaining $190.0 million aggregate principal amount of dollar-denominated senior notes due November 2011. As a result, we incurred a $20.5 million loss on extinguishment of debt, which is included in other income (expense), net for the year ended December 31, 2009. The loss was comprised of $10.4 million of accelerated amortization of deferred financing costs related to the existing term loans and senior notes, a $9.2 million premium paid to redeem the $475.0 million of existing senior notes, and $0.9 million of other related charges.

29

9.    Debt (continued)

In January 2004, Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. (together, the “Issuers”), issued $694.0 million aggregate principal amount at maturity of 9.00% senior discount notes due 2014. In December 2004, the Issuers redeemed a portion of the senior discount notes using proceeds from the initial public offering of common stock of Nalco Holding Company. In December 2010, the Issuers redeemed an additional $260.8 million of the senior discount notes using proceeds from the 2010 Notes.

After the partial redemption in 2004, the aggregate principal amount at maturity of the notes declined to $460.8 million. Prior to February 1, 2009, interest accrued on the notes in the form of an increase in the accreted value of such notes. The accreted value of each note increased from the date of issuance until February 1, 2009, at a rate of 9.00% per annum, reflecting the accrual of non-cash interest, such that the accreted value equaled the then principal amount at maturity of $460.8 million. Cash interest payments on the notes became due and payable beginning in August 2009. After the additional partial redemption in 2010, the aggregate principal amount at maturity of the notes declined to $200.0 million.

Nalco Holding Company and the Issuers do not generate any revenue, and Nalco Finance Holdings Inc. was incorporated solely to accommodate the issuance of the senior discount notes by Nalco Finance Holdings LLC. All of Nalco Holding Company’s consolidated assets are owned, and all of its consolidated net sales are earned, by its direct and indirect subsidiaries. As of December 31, 2010, Nalco Holding Company’s subsidiaries had $607.5 million of restricted net assets.

The terms of the senior secured credit facilities limit the amount of dividends and other transfers by Nalco Holdings LLC and its subsidiaries to the Issuers or Nalco Holding Company. Further, the terms of the indentures governing the 2010 Notes and 2009 Notes significantly restrict Nalco Company and the Issuers’ other subsidiaries from paying dividends or otherwise transferring assets to the Issuers or Nalco Holding Company. The ability of Nalco Company to make such payments is governed by a formula based on its consolidated net income, as well as meeting certain other conditions. Notwithstanding such restrictions, such indentures permit an aggregate of the lower of $150.0 million or 3% of total assets of such payments to be made whether or not there is availability under the formula or the conditions to its use are met.

Covenants

The senior secured credit facilities, the 2009 Notes, the 2010 Notes, and the senior discount notes contain a number of covenants that, among other things, restrict, subject to certain exceptions, our ability to sell assets; incur additional indebtedness or issue preferred stock; repay other indebtedness; pay dividends and distributions or repurchase certain capital stock; create liens on assets; make investments, loans or advances; make acquisitions, mergers or consolidations; enter into sale and leaseback transactions; engage in certain transactions with affiliates; amend certain material agreements governing our indebtedness; change our business; and enter into hedging agreements. In addition, we must maintain financial covenants, including a maximum total leverage ratio, a maximum secured leverage ratio, a minimum interest coverage ratio, and a maximum capital expenditure limitation. We were in compliance with all covenants at December 31, 2010.

The following table presents the projected annual maturities of long-term debt for years after 2010:

Year ending December 31
2011	$	10.5
2012		10.5
2013		78.3
2014		210.5
2015		10.5
Thereafter		2,510.2
	$	2,830.5

30

9.    Debt (continued)

The $38.0 million difference between the total projected annual maturities of long-term debt of $2,830.5 million and the carrying value of $2,792.5 million is attributable to the $22.5 million discount on term loan C, the $8.5 million discount on the senior notes due 2017, the $4.3 million discount on term loan C-1, the $3.1 million discount on the term loan B and the $0.4 million unamortized premium attributable to the senior discount notes.

10.    Leases

We lease administrative, research, manufacturing, and warehouse facilities and data processing and other equipment under non-cancelable leases that expire at various dates through 2040. Rent expense for the years ended December 31, 2010, 2009 and 2008 is as follows:

	2010		2009		2008
Rent expense	$	47.1	$	44.4	$	43.1

Future minimum rental payments for operating leases related to facilities, with initial or remaining terms greater than one year, are as follows:

Year ending December 31
2011	$	56.9
2012		26.6
2013		20.1
2014		17.4
2015		15.1
Thereafter		129.5
	$	265.6

The amounts in the table above include future minimum rental payments for our corporate headquarters and research facility of $35.1 million in 2011, $12.7 million in each of the years 2012 through 2015, and $99.3 million from 2016 through 2023.

11.    Pension and Other Postretirement Benefit Plans

We have several noncontributory, defined benefit pension plans covering most employees in the U.S. and those with certain foreign subsidiaries. We also provide a supplementary, nonqualified, unfunded plan for U.S. employees whose pension benefits exceed ERISA limitations. In addition, we have defined benefit postretirement plans that provide medical and life insurance benefits for substantially all U.S. retirees and eligible dependents. We retain the right to change or terminate these benefits.

In 2009, the domestic pension plan was amended such that effective January 1, 2010, participants no longer earn service credit. The net periodic pension cost for this plan no longer has a service component beginning in 2010.

31

11.    Pension and Other Postretirement Benefit Plans (continued)

The following tables detail the changes in the funded status of defined benefit pension and other postretirement benefit plans for the years 2010 and 2009:

	Pension Benefits
	U.S.						Non-U.S.
	2010			2009			2010			2009
Change in benefit obligation
Benefit obligation at beginning of year	$	459.8		$	391.0		$	374.2		$	290.5
Service cost		—			13.9			9.1			8.1
Interest cost		25.1			25.3			18.5			18.0
Participant contributions		—			—			0.8			1.6
Plan amendments		—			—			—			(17.3	)
Settlements and curtailments		—			—			(1.2	)		(5.3	)
Actuarial loss		67.0			105.6			0.4			64.2
Benefits paid		(7.5	)		(76.0	)		(10.9	)		(11.0	)
Other		—			—			0.4			0.3
Foreign currency exchange rate changes		—			—			(17.0	)		25.1
Benefit obligation at end of year		544.4			459.8			374.3			374.2
Change in plan assets
Fair value of plan assets at beginning of year		197.3			183.4			218.0			176.3
Actual return on plan assets		32.5			36.1			27.8			20.4
Employer contributions		50.8			53.8			16.1			19.1
Participant contributions		—			—			0.8			1.6
Settlements		—			—			(1.6	)		(5.1	)
Benefits paid		(7.5	)		(76.0	)		(10.9	)		(11.0	)
Foreign currency exchange rate changes		—			—			(9.7	)		16.7
Fair value of plan assets at end of year		273.1			197.3			240.5			218.0
Funded status at December 31	$	(271.3	)	$	(262.5	)	$	(133.8	)	$	(156.2	)
Accumulated benefit obligation	$	468.2		$	353.1		$	334.3		$	333.9

	Other Postretirement Benefits
	2010			2009
Change in benefit obligation
Benefit obligation at beginning of year	$	158.5		$	140.4
Service cost		4.2			3.6
Interest cost		8.5			9.0
Participant contributions		7.4			7.0
Medicare subsidy		—			0.7
Actuarial (gain) loss		(30.4	)		9.6
Prior service credit		(11.6	)		—
Other		0.1			0.3
Benefits paid		(13.7	)		(12.1	)
Benefit obligation at end of year		123.0			158.5
Change in plan assets
Fair value of plan assets at beginning of year		—			—
Employer contributions		6.3			5.1
Participant contributions		7.4			7.0
Benefits paid		(13.7	)		(12.1	)
Fair value of plan assets at end of year		—			—
Funded status at December 31	$	(123.0	)	$	(158.5	)

32

11.    Pension and Other Postretirement Benefit Plans (continued)

Amounts recognized in the balance sheets at December 31, 2010 and 2009 consist of:

	Pension Benefits												Other Postretirement Benefits
	U.S.						Non-U.S.
	2010			2009			2010			2009			2010			2009
Other assets	$	—		$	—		$	4.6		$	3.0		$	—		$	—
Accrued compensation		(0.3	)		(0.4	)		(3.7	)		(3.2	)		(6.6	)		(7.2	)
Accrued pension benefits		(271.0	)		(262.1	)		(134.7	)		(156.0	)		—			—
Other liabilities		—			—			—			—			(116.4	)		(151.3	)
Net amount recognized	$	(271.3	)	$	(262.5	)	$	(133.8	)	$	(156.2	)	$	(123.0	)	$	(158.5	)

The following amounts that have not yet been recognized in net pension expense and net other postretirement benefit expense are included in accumulated other comprehensive income at December 31, 2010:

	Pension Benefits						Other Postretirement Benefits
	U.S.			Non-U.S.
Net prior service (credit)	$	(16.0	)	$	(15.3	)	$	(11.0	)
Net actuarial loss (gain)		193.4			3.1			(58.4	)

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for all defined benefit pension plans with projected benefit obligations in excess of plan assets at December 31, 2010 and 2009 were as follows:

	U.S.				Non-U.S.
	2010		2009		2010		2009
Projected benefit obligation	$	544.4	$	459.8	$	374.3	$	359.0
Accumulated benefit obligation		468.2		353.1		334.3		323.6
Fair value of plan assets		273.1		197.3		240.5		199.5

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for all defined benefit pension plans with accumulated benefit obligations in excess of plan assets at December 31, 2010 and 2009 were as follows:

	U.S.				Non-U.S.
	2010		2009		2010		2009
Projected benefit obligation	$	544.4	$	459.8	$	349.8	$	352.3
Accumulated benefit obligation		468.2		353.1		317.8		319.2
Fair value of plan assets		273.1		197.3		213.8		194.5

Net pension expense for all defined benefit pension plans for the years ended December 31, 2010, 2009 and 2008 was comprised of:

	U.S.									Non-U.S.
	2010			2009			2008			2010			2009			2008
Service cost	$	—		$	13.9		$	15.4		$	9.1		$	8.1		$	10.2
Interest cost		25.1			25.3			26.6			18.5			18.0			20.9
Expected return on plan assets		(21.1	)		(23.0	)		(22.2	)		(14.1	)		(13.8	)		(14.5	)
Amortization of prior service cost (credit)		(2.3	)		(2.3	)		(2.3	)		(1.0	)		0.1			0.1
Amortization of net actuarial (gain) loss		6.2			0.6			0.2			0.2			(2.3	)		0.1
Settlements and curtailments		0.3			22.2			10.5			0.7			0.5			0.1
Net benefit expense	$	8.2		$	36.7		$	28.2		$	13.4		$	10.6		$	16.9

33

11.    Pension and Other Postretirement Benefit Plans (continued)

The principal U.S. defined benefit pension plan provides terminating participants with an option to receive their pension benefits in the form of lump sum payments. Authoritative guidance for pension accounting requires settlement accounting if lump sum payments exceed the sum of the service and interest cost components of net periodic pension cost of the plan for the fiscal year. During 2009, a number of terminating participants received lump sum benefit payments, and the settlement accounting requirement was triggered, resulting in a $21.4 million settlement loss attributable to the principal U.S. pension plan in 2009.

Net other postretirement benefit expense for the years ended December 31, 2010, 2009 and 2008 was comprised of:

	2010			2009			2008
Service cost	$	4.2		$	3.6		$	4.3
Interest cost		8.5			9.0			8.9
Amortization of prior service credit		(1.9	)		(3.3	)		(4.7	)
Amortization of net actuarial gain		(2.5	)		(3.8	)		(2.6	)
Net benefit expense	$	8.3		$	5.5		$	5.9

The following amounts included in accumulated other comprehensive income at December 31, 2010 are expected to be recognized in net pension expense and net other postretirement benefit expense during the year ended December 31, 2011:

	Pension Benefits						Other Postretirement Benefits
	U.S.			Non-U.S.
Net prior service credit	$	(2.3	)	$	(1.1	)	$	(2.1	)
Net actuarial loss (gain)		14.1			0.4			(6.8	)

The weighted-average assumptions used for the U.S. defined benefit plan obligations as of December 31, 2010 and 2009 were as follows:

	Pension Benefits						Other Postretirement Benefits
	2010			2009			2010			2009
Discount rates		4.65	%		5.50	%		5.15	%		5.85	%
Rates of increase in compensation levels		3.44	%		4.44	%		3.37	%		4.37	%

The weighted-average assumptions used for the non-U.S. defined benefit pension plan obligations as of December 31, 2010 and 2009 were as follows:

	2010			2009
Discount rates		5.28	%		5.31	%
Rates of increase in compensation levels		2.44	%		2.43	%

34

11.    Pension and Other Postretirement Benefit Plans (continued)

The weighted-average assumptions used to determine net pension and other postretirement benefit expense for the years ended December 31, 2010, 2009 and 2008 for the U.S. defined benefit plans were as follows:

	2010			2009			2008
Discount rates:
Pension benefits		5.50	%		6.02	%		6.25	%
Other postretirement benefits		5.85	%		6.80	%		6.45	%
Rates of increase in compensation levels:
Pension benefits		4.44	%		4.44	%		4.44	%
Other postretirement benefits		4.37	%		4.37	%		4.37	%
Expected long-term return on plan assets		8.00	%		8.25	%		8.25	%

The weighted-average assumptions used to determine net pension expense for the non-U.S. defined benefit pension plans for the years ended December 31, 2010, 2009 and 2008 were as follows:

	2010			2009			2008
Discount rates		5.31	%		6.08	%		5.78	%
Rates of increase in compensation levels		2.43	%		3.48	%		3.88	%
Expected long-term return on plan assets		6.25	%		6.32	%		6.44	%

The assets in the principal domestic pension plan are invested to obtain a reasonable long-term rate of return at an acceptable level of investment risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and corporate financial condition. Investment risk is measured and monitored on an ongoing basis through periodic investment portfolio reviews, liability measurements and asset/liability studies. A similar approach to assessing investment risk and obtaining reasonable investment returns is employed for the foreign pension plans.

The assets in the principal domestic pension plan are diversified across equity, fixed income and alternative investments such as hedge funds and private equity. The investment portfolio has target allocations of approximately 49% equity, 32% fixed income and 19% alternative investments. Other assets such as real estate may be used judiciously to enhance portfolio returns and diversification. The foreign pension plans have comparable asset allocation to the principal domestic plan, with some variances for local practices.

The expected long-term rate of return is established using historical market data for each asset class as well as the target allocation. Historical markets are analyzed and long-term historical relationships between equity and fixed income investments are preserved consistent with the widely accepted capital market principle that assets with higher volatility will generate a greater return over the long run. The total weighted-average return on each asset class supports the long-term expected rate of return assumption.

35

11.    Pension and Other Postretirement Benefit Plans (continued)

The fair values of our pension plan assets by asset category at December 31, 2010 were as follows:

Asset Category	Total		Quoted Prices (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
U.S.:
Equity securities:
Large-cap disciplined (1)	$	90.7	$	90.7	$	—	$	—
Small/mid-cap (2)		21.7		21.7		—		—
International		33.2		33.2		—		—
Emerging markets		3.4		3.4		—		—
Fixed income securities:
Corporate and government		59.2		59.2		—		—
High-yield bonds		18.9		18.9		—		—
Emerging markets		5.2		5.2		—		—
Alternative investments:
Private equity funds (3)		15.5		—		—		15.5
Hedge funds (4)		23.5		—		—		23.5
Other		1.8		1.3		0.5		—
Total plan assets — U.S.	$	273.1	$	233.6	$	0.5	$	39.0
Non-U.S.:
Equity securities	$	114.8	$	114.7	$	0.1	$	—
Fixed income securities		101.2		101.0		0.2		—
Other		24.5		1.8		—		22.7
Total plan assets — Non-U.S.	$	240.5	$	217.5	$	0.3	$	22.7

36

11.    Pension and Other Postretirement Benefit Plans (continued)

The fair values of our pension plan assets by asset category at December 31, 2009 were as follows:

Asset Category	Total		Quoted Prices (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
U.S.:
Equity securities:
Large-cap disciplined (1)	$	63.2	$	63.2	$	—	$	—
Small/mid-cap (2)		16.0		16.0		—		—
International		24.0		24.0		—		—
Emerging markets		2.2		2.2		—		—
Fixed income securities:
Corporate and government		41.1		41.1		—		—
High-yield bonds		14.9		14.9		—		—
Emerging markets		4.1		4.1		—		—
Alternative investments:
Private equity funds (3)		9.4		—		—		9.4
Hedge funds (4)		21.3		—		—		21.3
Other		1.1		—		1.1		—
Total plan assets — U.S.	$	197.3	$	165.5	$	1.1	$	30.7
Non-U.S.:
Equity securities	$	103.4	$	103.4	$	—	$	—
Fixed income securities		87.5		87.5		—		—
Other		17.1		0.1		17.0		—
		208.0	$	191.0	$	17.0		—
All Other		10.0
Total plan assets — Non-U.S.	$	218.0

(1) Primarily common stocks included in the S&P 500 index.

(2) Primarily common stocks with market capitalizations in the range of companies in the Russell 2500 index.

(3) Primarily limited partnership interests in corporate finance and venture capital funds.

(4) Consists of index-listed and over-the-counter securities including U.S. and international common and preferred stocks, debt securities, asset-backed securities and derivative instruments.

Changes in the fair values of U.S. pension plan level 3 assets for the years ended December 31, 2010 and 2009 were as follows:

	Total			Private Equity  Funds			Hedge Funds
Balance at January 1, 2009	$	27.3		$	9.2		$	18.1
Actual return on plan assets:
Relating to assets still held at year end		(0.5	)		(3.2	)		2.7
Relating to assets sold during the year		—			—			—
Purchases, sales and settlements		3.9			3.4			0.5
Balance at December 31, 2009		30.7			9.4			21.3
Actual return on plan assets:
Relating to assets still held at year end		3.3			1.1			2.2
Relating to assets sold during the year		—			—			—
Purchases, sales and settlements		5.0			5.0			—
Balance at December 31, 2010	$	39.0		$	15.5		$	23.5

37

11.    Pension and Other Postretirement Benefit Plans (continued)

Changes in the fair values of non-U.S. pension plan level 3 assets, which consisted entirely of insurance contracts, for the year ended December 31, 2010 were as follows:

	Insurance Contracts
Balance at January 1, 2010	$	—
Reclassification from Level 2		16.6
Amounts not classified at December 31, 2009		4.3
Actual return on plan assets:
Relating to assets still held at year end		2.9
Relating to assets sold during the year		—
Purchases, sales and settlements		0.1
Exchange rate loss		(1.2	)
Balance at December 31, 2010	$	22.7

The assumed health care cost trend rates used as of December 31, 2010 and 2009 were as follows:

	2010			2009
Health care cost trend rate assumed for next year
Pre-age 65		8.0	%		8.5	%
Post-age 65		9.0	%		9.5	%
Ultimate trend rate
Pre-age 65		5.5	%		5.5	%
Post-age 65		5.5	%		5.5	%
Year that the rate reaches the ultimate trend rate
Pre-age 65		2016			2016
Post-age 65		2018			2018

A one-percentage-point change in assumed health care cost trend rates would have the following effects:

	One-Percentage-Point
	Increase			Decrease
Effect on total of service and interest cost components	$	(0.1	)	$	—
Effect on postretirement benefit obligation		(0.4	)		(1.2	)

We expect to contribute $66.2 million to our pension plans and $6.6 million to our other postretirement benefit plans in 2011.

The following estimated future benefit payments are expected to be paid in the years indicated:

	Pension Benefits				Other Postretirement Benefits
Year	U.S.		Non-U.S.		Gross		Medicare Subsidy		Net
2011	$	53.0	$	11.6	$	7.4	$	0.8	$	6.6
2012		52.4		10.9		8.2		1.0		7.2
2013		53.3		12.9		7.8		—		7.8
2014		53.2		13.2		8.5		—		8.5
2015		50.4		14.6		9.1		—		9.1
2016-2020		225.2		74.7		52.3		—		52.3

12.     Equity Compensation Plans

The Nalco Holding Company 2004 Stock Incentive Plan (the “Plan”) was adopted to aid us in recruiting and retaining key employees, directors and consultants and to motivate them to exert their best efforts on our behalf. The Plan, which permits the grant of stock options, stock appreciation rights, restricted

38

12.     Equity Compensation Plans (continued)

stock and other stock-based awards for up to 7.5 million shares of common stock, is administered by the Compensation Committee of the Board of Directors. The Compensation Committee may delegate its duties and powers in whole or in part as it determines.

In connection with his employment as our President and Chief Executive Officer in 2008, J. Erik Fyrwald was granted 200,000 shares of restricted stock and 190,000 stock options outside the Plan. Of the restricted stock awards, 100,000 shares vest on each of the third and fourth anniversaries after the grant date. Of the stock option awards, which have a contractual term of ten years, 75,000 options vest on each of the third and fourth anniversaries after the grant date. The remaining 40,000 options vest ratably beginning on December 31, 2008, and on December 31 of the following three years.

Stock option awards granted under the Plan have a contractual term of ten years, and usually vest ratably over four years after the grant date. The exercise price of option awards is usually equal to the market price of Nalco Holding Company common stock on the date granted.

The fair value of option awards granted in 2010, 2009 and 2008 was estimated using the Black-Scholes option-pricing model and the following assumptions:

	2010	2009	2008
Expected life (years)	5.5 - 7.0	6.25	6.125 - 6.75
Risk-free interest rate	1.90% - 3.05%	2.55%	2.83% - 3.42%
Expected volatility	28.36% - 34.50%	58.68%	38.34% - 55.63%
Expected dividend yield	0.50% - 0.60%	1.17%	0.61% - 0.98%

The expected volatility of the option awards was estimated using an implied volatility from traded options on Nalco Holding Company common stock. Since historical information concerning option exercise behavior by our employees is very limited and such information is not readily available from a peer group of companies, the expected life was estimated using the “simplified method” permitted by Staff Accounting Bulletin Nos. 107 and 110 issued by the SEC.

The following table summarizes the status of option awards as of December 31, 2010, and changes during the year then ended:

	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2010		1,151,582		$	16.86
Granted		273,803			23.55
Exercised		(66,284	)		18.55
Forfeited		(36,263	)		16.14
Outstanding at December 31, 2010		1,322,838			18.18		7.8	$	18.2
Exercisable at December 31, 2010		661,367			17.23		7.4	$	9.7

The following table summarizes the weighted-average grant-date fair value of option awards granted, the total intrinsic value of options exercised and the total cash received from the exercise of options for the years ended December 31, 2010, 2009 and 2008:

	2010		2009		2008
Weighted-average grant-date fair value of options granted	$	9.09	$	6.16	$	8.20
Total intrinsic value of options exercised	$	0.7	$	0.5	$	0.5
Total cash received from exercise of options		1.2		0.6		0.4

39

12.     Equity Compensation Plans (continued)

Restricted stock awards are granted to non-management directors and certain key employees. Awards granted to non-management directors vest approximately two years after the grant date. Awards granted to key employees vest over periods ranging from approximately one to five years following the grant date. The fair value of restricted stock awards is determined based on the market price of Nalco Holding Company common stock on the date of grant.

The following table summarizes the status of restricted stock awards as of December 31, 2010, and changes during the year then ended:

	Number of Shares			Weighted- Average Grant-Date Fair Value
Nonvested restricted stock awards at January 1, 2010		892,018		$	16.63
Granted		720,581			23.76
Vested		(88,387	)		22.29
Forfeited		(100,696	)		13.68
Nonvested restricted stock awards at December 31, 2010		1,423,516			20.09

The following table summarizes the weighted-average grant-date fair value of restricted stock awards granted and the total fair value of restricted stock awards vested for the years ended December 31, 2010, 2009 and 2008:

	2010		2009		2008
Weighted-average grant-date fair value of restricted stock awards granted	$	23.76	$	12.49	$	21.15
Total fair value of restricted stock awards vested	$	2.3	$	0.4	$	0.9

We recognize compensation expense related to option and restricted stock awards on a straight-line basis over the vesting periods. As of December 31, 2010, there was $18.3 million of total unrecognized compensation cost related to nonvested option and restricted stock awards. We expect to recognize that cost over a weighted-average period of 2.2 years.

Performance share awards provide for the issuance of common stock to certain key employees if specified performance targets are achieved. For most performance share awards, the number of common shares that will be issued is dependent upon vesting and actual performance of the Company relative to certain financial targets approved by our Board of Directors, and could range from 0% to 200% of the performance shares granted. For most performance share awards granted prior to 2009, the number of shares issued could range from 0% to 150% of the performance shares granted. The performance shares vest approximately three years following the grant date. The fair value of performance share grants is determined based on the market price of Nalco Holding Company common stock on the date of grant, and the amount of compensation expense recognized reflects estimated forfeiture rates and management’s assessment of the probability that performance goals will be achieved. We recognize compensation expense related to performance share grants ratably over the vesting periods.

The following table summarizes the status of performance share awards as of December 31, 2010, and changes during the year then ended:

	Number of Shares			Weighted- Average Grant-Date Fair Value
Nonvested performance share awards at January 1, 2010		850,666		$	14.67
Granted		416,074			22.32
Vested		(178,442	)		21.28
Forfeited		(96,170	)		15.41
Nonvested performance share awards at December 31, 2010		992,128			16.62

40

12.     Equity Compensation Plans (continued)

There was $7.6 million of total unrecognized compensation cost related to performance share awards as of December 31, 2010, which we expect to recognize over a weighted-average period of 1.8 years. The total fair value of performance share awards that vested during the years ended December 31, 2010, 2009 and 2008 was $5.7 million, $2.1 million and $1.0 million, respectively.

The following table summarizes compensation cost charged to earnings for all equity compensation plans discussed above and the total income tax benefit recognized in the consolidated statement of operations for the years ended December 31, 2010, 2009 and 2008:

	2010		2009		2008
Compensation cost charged to earnings	$	18.7	$	11.1	$	5.9
Income tax benefit recognized		7.0		4.2		2.2

The windfall tax benefit associated with share-based compensation transactions was not material for the years ended December 31, 2010, 2009 and 2008.

In November 2007, it was announced that Dr. William H. Joyce, our then Chairman and Chief Executive Officer, had stated his intention to retire on December 30, 2007. At the same time, it was also announced that we had entered into an amended Employment and Consulting Agreement with Dr. Joyce concerning his remaining service as CEO through the remainder of 2007, his consulting services through March 2008, and certain compensation matters. As part of the agreement, Dr. Joyce received a grant of nonvested common stock valued at $12.0 million. Vesting of the stock was subject to certain performance targets for 2008 and 2009 and other conditions. During 2008, 349,677 shares vested at a fair value of $5.6 million. No vesting occurred in 2009.

Because Dr. Joyce was not required to provide substantive services to us subsequent to 2007 and vesting of the stock was considered probable at the time, we charged the entire $12.0 million of compensation expense to earnings and recognized an income tax benefit of $4.6 million in 2007. Also, because the grant included a provision requiring cash settlement in the event of the death of Dr. Joyce, the $12.0 million was classified with other liabilities in the balance sheet until such time that cash settlement was no longer possible. We reclassified $8.0 million from other liabilities to additional paid-in capital during 2008 for that portion of the grant no longer subject to cash settlement. During 2009, $4.0 million of compensation cost related to 2009 performance was reversed once it was determined that targeted performance criteria would not be achieved.

13.     Equity

Equity consists of the following:

	December 31, 2010			December 31, 2009
Preferred stock, par value $0.01 per share; authorized 100,000,000 shares; none issued	$	—		$	—
Common stock		1.4			1.4
Additional paid-in capital		800.7			776.1
Treasury stock		(211.3	)		(211.3	)
Accumulated deficit		(45.6	)		(227.8	)
Accumulated other comprehensive income:
Net prior service credit		32.4			28.8
Net actuarial loss		(95.6	)		(91.1	)
Currency translation adjustments		214.8			195.5
		151.6			133.2
Nalco Holding Company shareholders’ equity		696.8			471.6
Noncontrolling interests		30.7			20.0
Total equity	$	727.5		$	491.6

41

13.     Equity (continued)

In November 2004, a warrant to purchase, for $0.01 per share, up to 6,191,854 shares of Nalco Holding Company common stock was issued as part of a dividend to Nalco LLC, our sole stockholder on the record date of the dividend. Nalco LLC had previously established the Nalco LLC 2004 Unit Plan and granted certain of our officers and key employees rights to purchase a designated number of one or more classes of equity interests (“Units”) in Nalco LLC. Certain classes of Units were subject to vesting provisions. The warrant enabled Nalco LLC to deliver shares to members of our management who had the right to put, or sell, their vested class B, class C and class D Units to Nalco LLC. Subject to limited exceptions, the warrant became exercisable upon the occurrence of the same specified events applicable to the vesting of the Nalco LLC class B Units, class C Units and class D Units (except that there was no service requirement comparable to that applicable to the individual holders of the class B, class C and class D Units). At December 31, 2008, Nalco LLC could repurchase up to 1,414,399 shares of Nalco Holding Company common stock under the warrant. Nalco LLC exercised warrants to acquire 625,299 shares of common stock during the year ended December 31, 2009, and agreed to terminate and waive all of its remaining rights under the warrant. Accordingly, the warrant for the remaining 789,100 shares was cancelled. Nalco LLC exercised warrants to acquire 2,126,650 shares of Nalco Holding Company common stock during 2008.

On July 31, 2007, our Board of Directors authorized a $300 million share repurchase program, and gave our management discretion in determining the conditions under which shares may be purchased from time to time. The program has no stated expiration date. We repurchased 4,947,443 shares at a cost of $103.3 million during 2008 and 4,588,500 shares at a cost of $108.0 million during 2007. No additional shares were repurchased during 2009 or 2010.

14.     Financial Instruments

We use derivative instruments to manage our foreign exchange exposures, and we have also used derivative instruments to manage our energy cost exposures. All derivative instruments are recognized in the consolidated balance sheets at fair value. Changes in the fair value of derivatives that are not designated as hedges are recognized in earnings as they occur. If the derivative instruments are designated as hedges, depending on their nature, the effective portions of changes in their fair values are either offset in earnings against the changes in the fair values of the items being hedged, or reflected initially in accumulated other comprehensive income (“AOCI”) and subsequently recognized in earnings when the hedged items are recognized in earnings. The ineffective portions of changes in the fair values of derivative instruments designated as hedges are immediately recognized in earnings.

Counterparties to derivative financial instruments expose us to credit-related losses in the event of nonperformance, but we do not expect any counterparties to fail to meet their obligations given their high credit ratings. We also mitigate our risk of material losses by diversifying our selection of counterparties.

Net Investment Hedges

We use euro-denominated borrowings of Nalco Company as a hedge of our net investment in subsidiary companies whose assets, liabilities, and operations are measured using the euro as their functional currency. Because of the high degree of effectiveness between the hedging instruments and the exposure being hedged, fluctuations in the value of the euro-denominated debt due to exchange rate changes are offset by changes in the net investment. Accordingly, changes in the value of the euro-denominated debt are recognized in foreign currency translation adjustments, a component of AOCI, to offset changes in the value of our net investment in subsidiary companies whose financial statements are measured using the euro as their functional currency.

42

14.     Financial Instruments (continued)

The carrying value of euro-denominated debt designated as a net investment hedge was $267.4 million and $287.7 million at December 31, 2010 and 2009, respectively. Gains and losses from the net investment hedge reported as a component of other comprehensive income in the foreign currency translation adjustments account for the years ended December 31, 2010, 2009 and 2008 were as follows:

	2010		2009			2008
Gain (loss) before tax	$	20.3	$	(22.4	)	$	35.1
Income tax (benefit)		7.6		(8.6	)		13.6
Net gain (loss)	$	12.7	$	(13.8	)	$	21.5

We formally assess, on a quarterly basis, whether the euro-denominated debt is effective at offsetting changes in the value of the underlying exposure. No hedge ineffectiveness was recorded in earnings during 2010, 2009, and 2008.

Cash Flow Hedges

We have used derivative instruments such as foreign exchange forward contracts to hedge the variability of the cash flows from certain forecasted royalty payments due to changes in foreign exchange rates, and we have used commodity forward contracts to manage our exposure to fluctuations in the cost of natural gas used in our business. These instruments are designated as cash flow hedges, with changes in their fair values included in AOCI to the extent the hedges are effective. Amounts included in AOCI are reclassified into earnings in the same period during which the hedged transaction is recognized in earnings. Changes in fair value representing hedge ineffectiveness are recognized in current earnings. No derivative instruments were designated as a cash flow hedge at December 31, 2010 and 2009, and no cash flow hedges were discontinued during 2010, 2009 and 2008.

Fair Value Hedges

For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in current earnings. No derivative instruments were designated as a fair value hedge at December 31, 2010 and 2009.

Derivatives Not Designated as Hedging Instruments

We use foreign currency contracts to offset the impact of exchange rate changes on recognized assets and liabilities denominated in non-functional currencies, including intercompany receivables and payables. The gains or losses on these contracts, as well as the offsetting losses or gains resulting from the impact of changes in exchange rates on recognized assets and liabilities denominated in non-functional currencies, are recognized in current earnings.

Derivative instruments are not held or issued for trading or speculative purposes.

The notional amounts of derivative instruments outstanding as of December 31, 2010 and 2009 were as follows:

	2010		2009
Derivatives designated as hedges:
Foreign exchange contracts	$	—	$	—
Commodity contracts		—		—
Total derivatives designated as hedges		—		—
Derivatives not designated as hedges:
Foreign exchange contracts		87.9		119.4
Total derivatives	$	87.9	$	119.4

43

14.     Financial Instruments (continued)

The fair value and balance sheet presentation of derivative instruments as of December 31, 2010 and 2009 were as follows:

	Balance Sheet Location	2010		2009
Asset derivatives:
Derivatives not designated as hedges:
Foreign exchange contracts	Prepaid expenses, taxes and other current assets	$	1.1	$	0.3
		$	1.1	$	0.3
Liability derivatives:
Derivatives not designated as hedges:
Foreign exchange contracts	Other current liabilities	$	0.3	$	0.9
		$	0.3	$	0.9

The impact on AOCI and earnings for the years ended December 31, 2010 and 2009 from derivative instruments that qualified as cash flow hedges was as follows:

	Location	2010		2009
Unrealized gain (loss) recognized into AOCI (effective portion):
Commodity contracts	AOCI (equity)	$	—	$	(1.8)
Foreign exchange contracts	AOCI (equity)		—		—
		$	—	$	(1.8)
Gain (loss) reclassified from AOCI into earnings (effective portion):
Commodity contracts	Cost of product sold	$	—	$	(4.9)
Foreign exchange contracts	Other income (expense), net		—		2.0
		$	—	$	(2.9)

The impact on earnings for the years ended December 31, 2010 and 2009 from derivative instruments that were not designated as hedges was as follows:

	Location	2010		2009
Gain (loss) recognized in earnings:
Foreign exchange contracts	Other income (expense), net	$	6.5	$	(2.9)

15.    Fair Value Measurements

Authoritative guidance issued by the FASB defines fair value as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels:

Level 1 — Quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2 — Observable inputs other than quoted prices in active markets.

Level 3 — Unobservable inputs for which there is little or no market data available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

44

15.    Fair Value Measurements (continued)

Assets and Liabilities Measured at Fair Value

Assets and liabilities measured at fair value on a recurring basis were as follows:

	Balance December 31, 2010		Level 1		Level 2		Level 3
Assets:
Foreign exchange forward contracts	$	1.1	$	—	$	1.1	$	—
Money market funds held in rabbi trusts		12.5		12.5		—		—
	$	13.6	$	12.5	$	1.1	$	—
Liabilities:
Foreign exchange forward contracts	$	0.3	$	—	$	0.3	$	—
Contingent consideration		20.1		—		—		20.1
	$	20.4	$	—	$	0.3	$	20.1

	Balance December 31, 2009		Level 1		Level 2		Level 3
Assets:
Foreign exchange forward contracts	$	0.3	$	—	$	0.3	$	—
Money market funds held in rabbi trusts		0.8		0.8		—		—
	$	1.1	$	0.8	$	0.3	$	—
Liabilities:
Foreign exchange forward contracts	$	0.9	$	—	$	0.9	$	—
Contingent consideration		12.6		—		—		12.6
	$	13.5	$	—	$	0.9	$	12.6

Foreign exchange forward contracts are classified within Level 2 because these contracts are not actively traded but are valued using quoted forward foreign exchange prices at the reporting date. Money market funds held in rabbi trusts are classified within Level 1 because they are valued using quoted prices in active markets.

For business acquisitions after December 31, 2008, contingent consideration obligations are recognized and measured at fair value at the acquisition date. After initial recognition, contingent consideration obligations are remeasured at fair value, with changes in fair value recognized in earnings. Contingent consideration obligations are classified within Level 3 because fair value is measured based on the probability-weighted present value of the consideration expected to be transferred.

Changes in the fair value of contingent consideration obligations for the years 2010 and 2009 were as follows:

	2010		2009
Balance at beginning of year	$	12.6	$	—
Liabilities recognized at acquisition date		6.5		13.3
Losses (gains) recognized in earnings		1.0		(0.7	)
Balance at end of year	$	20.1	$	12.6

45

15.    Fair Value Measurements (continued)

Financial Instruments

The carrying values of cash and cash equivalents, trade accounts receivable, accounts payable and short-term debt approximate their fair values at December 31, 2010 and 2009, because of the short-term maturities and nature of these balances.

The estimated fair value of long-term debt at December 31, 2010 and 2009 was $2,864.9 million and $2,769.7 million, respectively, and the related carrying value was $2,782.0 million and $2,714.3 million, respectively. The fair value of our fixed-rate borrowings was estimated based on their quoted market prices. The carrying value of amounts outstanding under our senior secured credit facilities is considered to approximate fair value because interest accrues at rates that fluctuate with interest rate trends. The carrying value of other long-term debt outstanding also approximates fair value due to the variable nature of their interest rates.

16.    Restructuring Expenses

We continuously redesign and optimize our business and work processes, and restructure our organization accordingly. During the year ended December 31, 2009, plans were approved to set a lower cost base through restructuring actions, primarily in Europe. As a result, we recognized $47.8 million of restructuring costs in 2009, which included $27.1 million in charges for employee severance and related costs, reflecting a reduction in force of more than 300 positions. In addition, certain long-lived assets held and used were written down to their estimated fair value, resulting in an impairment loss of $20.2 million. The fair value of the assets was measured using a combination of market participant inputs and internal cash flow estimates (i.e., Level 3 in the fair value hierarchy established by authoritative guidance issued by the FASB for fair value measurements). We also recognized $0.5 million of losses on assets disposed of as part of our restructuring activities.

Restructuring expenses, representing mostly employee severance and related costs, for the years ended December 31, 2010, 2009 and 2008 were as follows:

	2010		2009		2008
Restructuring expenses	$	2.6	$	47.8	$	33.4

46

16.    Restructuring Expenses (continued)

Restructuring accruals of $11.5 million and $29.5 million as of December 31, 2010 and 2009, respectively, were included in other current liabilities on the consolidated balance sheet. All restructuring-related payments in 2010, 2009 and 2008 were funded with cash from operations, and we expect that future payments also will be funded with cash from operations. The following table summarizes the activity for the restructuring charges discussed above and the related accrual:

	Severance, Termination Benefits and Other			Asset Impairments and Disposals			Total
Balance as of January 1, 2008	$	8.4		$	—		$	8.4
Charges to restructuring expense		33.4			—			33.4
Cash payments		(11.5	)		—			(11.5	)
Currency translation adjustments		(2.1	)		—			(2.1	)
Balance as of December 31, 2008		28.2			—			28.2
Charges to restructuring expense		27.1			20.7			47.8
Cash payments		(26.5	)		—			(26.5	)
Asset writedowns and disposals		—			(20.7	)		(20.7	)
Currency translation adjustments		0.7			—			0.7
Balance as of December 31, 2009		29.5			—			29.5
Charges (credits) to restructuring expense		10.6			(3.2	)		7.4
Reversal of previously accrued amounts		(4.8	)		—			(4.8	)
Cash payments		(21.8	)		—			(21.8	)
Gain on asset disposals		—			3.2			3.2
Currency translation adjustments		(2.0	)		—			(2.0	)
Balance as of December 31, 2010	$	11.5		$	—		$	11.5

17.    Summary of Other Income (Expense), Net

The components of other income (expense), net in the consolidated statements of operations for the years ended December 31, 2010, 2009 and 2008 include the following:

	2010			2009			2008
Loss on early extinguishment of debt	$	(27.4	)	$	(20.5	)	$	—
Franchise taxes		(1.0	)		(0.9	)		0.1
Equity in earnings of unconsolidated subsidiaries		1.5			0.6			0.3
Foreign currency exchange adjustments		(17.8	)		1.9			(10.7	)
Other income (expense), net		(0.4	)		1.3			(7.1	)
	$	(45.1	)	$	(17.6	)	$	(17.4	)

Foreign currency exchange adjustments

Effective January 1, 2010, Venezuela’s economy was designated as highly inflationary under U.S. generally accepted accounting principles, since it had experienced a rate of general inflation in excess of 100% over the latest three-year period. Accordingly, the functional currency of our subsidiary company in Venezuela was changed to the U.S. dollar, and all gains and losses resulting from the remeasurement of its financial statements since January 1, 2010 were recorded in the statement of operations. Our Venezuelan subsidiary accounted for approximately 2% of our consolidated net sales for each of the years ended December 31, 2010 and 2009.

On January 8, 2010, the Venezuelan government announced the devaluation of the bolivar fuerte and the establishment of a two-tier exchange structure. As a result, the official exchange rate changed from 2.15 to 2.60 for essential items and 4.30 for non-essential items. We remeasured our Venezuelan subsidiary’s balance sheet accounts to reflect the devaluation by using the exchange rate for non-essential items, which resulted in a foreign exchange loss of $23.2 million. Because about half of the

47

17.    Summary of Other Income (Expense), Net (continued)

products imported by our Venezuelan subsidiary were classified as essential, this loss was subsequently reduced by approximately $7.8 million of foreign exchange gains that were recognized when payments were made using the exchange rate for essential products. We remeasure the financial statements of our Venezuelan subsidiary at the 4.30 exchange rate, the rate at which we expect to remit dividends.

In December 2010, the Venezuelan government announced the elimination of the two-tier exchange rate structure, effective January 1, 2011, and the official exchange rate of 4.30 was established for substantially all items. As a result, the exchange rate for essential items cannot be used for our unsettled amounts at December 31, 2010. The elimination of the two-tier rate structure did not have a significant impact on our financial position or results of operations.

18.    Earnings Per Share

Basic earnings per share is computed by dividing net earnings attributable to Nalco Holding Company common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock.

Basic and diluted earnings per share for the years ended December 31, 2010, 2009 and 2008 were calculated as follows:

(in millions)	2010		2009		2008
Numerator for basic and diluted earnings per share attributable to Nalco Holding Company common shareholders:
Net earnings (loss) attributable to Nalco Holding Company	$	196.2	$	60.5	$	(342.6	)
Denominator for basic earnings per share – weighted average common shares outstanding		138.3		138.2		140.1
Effect of dilutive securities:
Share-based compensation plans		1.1		0.4		—
Denominator for diluted earnings per share		139.4		138.6		140.1

There were 0.3 million shares, 0.5 million shares and 2.4 million shares potentially issuable under share-based compensation plans at December 31, 2010, 2009 and 2008, respectively, that were excluded from our diluted earnings per share computation, as the effect of including such shares would be anti-dilutive.

19.    Segment Information

We provide integrated water treatment and process improvement services for industrial and institutional applications, using technologically advanced solutions, combining chemical products and equipment, and consistent, reliable on-site service and expertise.

These solutions and services enable our customers to improve production yields, lower manufacturing costs, extend asset lives and maintain environmental standards at costs that represent a small share of their overall production expense.

We operate three reportable segments:

Water Services — This segment serves the global water treatment and process chemical needs of the industrial, institutional, and municipal markets.

Paper Services — This segment serves the process chemicals and water treatment needs of the global pulp and paper industry.

48

19.    Segment Information (continued)

Energy Services — This segment serves the process chemicals and water treatment needs of the global petroleum and petrochemical industries in both upstream and downstream applications.

We evaluate the performance of our segments based on “direct contribution”, which is defined as net sales, less cost of products sold, selling and service expenses, marketing expenses, and research expenses directly attributable to each segment. There are no intersegment revenues.

Net sales by reportable segment for the years ended December 31, 2010, 2009 and 2008 were as follows:

	2010		2009		2008
Water Services	$	1,809.6	$	1,636.3	$	1,890.5
Paper Services		755.2		683.5		794.7
Energy Services		1,685.7		1,427.0		1,527.2
Net sales	$	4,250.5	$	3,746.8	$	4,212.4

The following table presents direct contribution by reportable segment and reconciles the total segment direct contribution to earnings (loss) before income taxes for the years ended December 31, 2010, 2009 and 2008:

	2010			2009			2008
Segment direct contribution:
Water Services	$	352.5		$	315.3		$	364.2
Paper Services		127.9			119.4			104.3
Energy Services		394.8			321.3			319.1
Total segment direct contribution		875.2			756.0			787.6
Expenses not allocated to segments:
Administrative expenses		246.8			256.4			203.5
Amortization of intangible assets		43.2			47.9			56.8
Restructuring expenses		2.6			47.8			33.4
Gain on divestiture		—			—			(38.1	)
Impairment of goodwill		4.9			—			544.2
Operating earnings (loss)		577.7			403.9			(12.2	)
Other income (expense), net		(45.1	)		(17.6	)		(17.4	)
Interest income		4.3			3.9			8.3
Interest expense		(231.9	)		(254.5	)		(258.8	)
Earnings (loss) before income taxes	$	305.0		$	135.7		$	(280.1	)

Administrative expenses primarily represent the cost of support functions, including information technology, finance, human resources and legal, as well as expenses for support facilities, executive management and management incentive plans.

We have a single supply chain function that serves all the reportable segments. As such, asset and capital expenditure information by reportable segment has not been reported and is not available, since we do not produce such information internally. In addition, although depreciation expense is a component of each reportable segment’s direct contribution, it is not discretely identifiable.

49

19.    Segment Information (continued)

Net sales by geographic region for the years ended December 31, 2010, 2009 and 2008 were as follows:

	2010		2009		2008
United States	$	2,081.1	$	1,799.5	$	2,028.2
Other Americas		451.3		396.4		411.1
Europe/Middle East/Africa		1,010.5		960.4		1,154.3
Asia/Pacific		707.6		590.5		618.8
	$	4,250.5	$	3,746.8	$	4,212.4

Long-lived assets by geographic region as of December 31, 2010 and 2009 were as follows:

	2010		2009
United States	$	2,208.7	$	2,168.6
Other Americas		353.3		333.0
Europe/Middle East/Africa		846.0		871.2
Asia/Pacific		381.0		347.2
	$	3,789.0	$	3,720.0

Net sales by geographic area were determined based on origin of sale. Geographic data on long-lived assets is based on physical location of those assets. There were no sales from a single foreign country or customer that were material to our consolidated net sales.

20.    Contingencies and Litigation

Various claims, lawsuits and administrative proceedings are pending or threatened against us, arising from the ordinary course of business with respect to commercial, contract, intellectual property, product liability, employee, environmental and other matters. Historically, these matters have not had a material impact on our consolidated financial position. However, we cannot predict the outcome of any litigation or the potential for future litigation.

We have been named as a potentially responsible party (“PRP”) by the Environmental Protection Agency (“EPA”) or state enforcement agencies at seven waste sites where some financial contribution is or may be required. These agencies have also identified many other parties who may be responsible for clean up costs at these waste disposal sites. We are also remediating a small ground contamination that we discovered at our plant in Pilar, Argentina. Our financial contribution to remediate these sites is not expected to be material. There has been no significant financial impact on us up to the present, nor is it anticipated that there will be in the future, as a result of these matters. We have made and will continue to make provisions for these costs if our liability becomes probable and when costs can be reasonably estimated.

Our undiscounted reserves for known environmental cleanup costs were $2.2 million at December 31, 2010. These environmental reserves represent our current estimate of our proportional clean-up costs and are based upon negotiation and agreement with enforcement agencies, our previous experience with respect to clean-up activities, a detailed review by us of known conditions, and information about other PRPs. They are not reduced by any possible recoveries from insurance companies or other PRPs not specifically identified. Although we cannot determine whether or not a material effect on future operations is reasonably likely to occur, given the evolving nature of environmental regulations, we believe that the recorded reserve levels are appropriate estimates of the potential liability. Although settlement will require future cash outlays, it is not expected that such outlays will materially impact our liquidity position.

50

20.    Contingencies and Litigation (continued)

Expenditures for the year ended December 31, 2010, relating to environmental compliance and clean up activities, were not significant.

We have been named as a defendant in lawsuits based on claimed involvement in the supply of allegedly defective or hazardous materials and the claimed presence of hazardous substances at our plants. We have also been named as a defendant in lawsuits where our products have not caused injuries, but the claimants seek amounts so they might be monitored in the future for potential injuries arising from our products. The plaintiffs in these cases seek damages for alleged personal injury or potential injury resulting from exposure to our products or other chemicals. These matters have had a de minimis impact on our business historically, and we do not anticipate these matters will present any material risk to our business in the future. Notwithstanding, we cannot predict the outcome of any such lawsuits or the involvement we might have in these matters in the future.

In the ordinary course of our business, we are also a party to a number of lawsuits and are subject to various claims relating to trademarks, employee matters, contracts, customer claims, negligence, transactions, chemicals and other matters, the outcome of which, in our opinion, should not have a material effect on our consolidated financial position.

However, we cannot predict the outcome of any litigation or the potential for future litigation. Were an unfavorable ruling to occur, there exists the possibility of a material adverse impact on the results of operations for the period in which the ruling occurs. We maintain accruals where the outcome of the matter is probable and can be reasonably estimated.

Matters Related to Deepwater Incident Response

On April 22, 2010, the deepwater drilling platform, the Deepwater Horizon, operated by a subsidiary of BP plc, sank in the Gulf of Mexico after a catastrophic explosion and fire that began on April 20, 2010. A massive oil spill resulted. Approximately one week following the incident, subsidiaries of BP plc, under the authorization of the responding federal agencies, formally requested Nalco Company, an indirect subsidiary of Nalco Holding Company, to supply large quantities of COREXIT 9500, a Nalco oil dispersant product listed on the U.S. EPA National Contingency Plan Product Schedule. Nalco Company responded immediately by providing available COREXIT and increasing production to supply the product to BP’s subsidiaries for use, as authorized and directed by agencies of the federal government. Prior to the incident, Nalco Holding Company and its subsidiaries had not provided products or services or otherwise had any involvement with the Deepwater Horizon platform. On July 15, 2010, BP announced that it had capped the leaking well, and the application of dispersants by the responding parties ceased shortly thereafter.

On May 1, 2010, the President appointed retired U.S. Coast Guard Commandant Admiral Thad Allen to serve as the National Incident Commander in charge of the coordination of the response to the incident at the national level. EPA directed numerous tests of all the dispersants on the National Contingency Plan Product Schedule, including those provided by Nalco Company, “to ensure decisions about ongoing dispersant use in the Gulf of Mexico are grounded in the best available science.” We cooperated with this testing process and continued to supply COREXIT 9500, as requested by BP and government authorities. After review and testing of a number of dispersants, on June 30, 2010, and on August 2, 2010, EPA released toxicity data for eight oil dispersants.

The use of dispersants by the responding parties has been one tool used by the government and BP to avoid and reduce damage to the Gulf area from the spill. Since the spill occurred, EPA and other federal agencies have closely monitored conditions in areas where dispersant has been applied. We have encouraged ongoing monitoring and review of COREXIT and other dispersants and have cooperated fully with the governmental review and approval process. However, in connection with its provision of COREXIT, Nalco Company has been named in several lawsuits as described below.

51

20.    Contingencies and Litigation (continued)

Putative Class Action Litigation

In June, July and August 2010, Nalco Company was named, along with other unaffiliated defendants, in six putative class action complaints filed in either the United States District Court for the Eastern District of Louisiana (Parker, et al. v. Nalco Company, et al., Civil Action No. 2:10-cv-01749-CJB-SS; Harris, et al. v. BP, plc, et al., Civil Action No. 2:10-cv-02078-CJB-SS), the United States District Court for the Southern District of Alabama, Southern Division (Lavigne, et al. v. BP PLC, et al., Civil Action No. 1:10-cv-00222-KD-C; Wright, et al. v. BP, plc, et al., Civil Action No. 1:10-cv-00397-B) or the United States District Court for the Northern District of Florida, Pensacola Division (Walsh, et al. v. BP, PLC, et al., Civil Action No. 3:10-cv-00143-RV-MD; Petitjean, et al. v. BP, plc, et al., Civil Action No. 3:10-cv-00316-RS-EMT) on behalf of various potential classes of persons who live and work in or derive income from the Coastal Zone. The Parker, Lavigne and Walsh cases have since been voluntarily dismissed. Each of the remaining actions contains substantially similar allegations, generally alleging, among other things, negligence relating to the use of our COREXIT dispersant in connection with the Deepwater Horizon oil spill. The plaintiffs in each of these putative class action lawsuits are generally seeking awards of unspecified compensatory and punitive damages, and attorneys’ fees and costs.

Other Related Claims

In July, August, September, October and December 2010, Nalco Company was also named, along with other unaffiliated defendants, in eight complaints filed by individuals in either the United States District Court for the Eastern District of Louisiana (Ezell v. BP, plc, et al., Civil Action No. 2:10-cv-01920-KDE-JCW), the United States District Court for the Southern District of Alabama, Southern Division (Monroe v. BP, plc, et al., Civil Action No. 1:10-cv-00472-M; Hill v. BP, plc, et al., Civil Action No. 1:10-cv-00471-CG-N; Hudley v. BP, plc, et al., Case No 10-cv-00532-N), the United States District Court for the Northern District of Florida, Tallahassee Division (Capt Ander, Inc. v. BP, plc, et al., Civil Action No. 4:10-cv-00364-RH-WCS), the United States District Court for the Southern District of Mississippi, Southern Division (Trehern v. BP, plc, et al., Civil Action No. 1:10-cv-00432-HSO-JMR) or the United States District Court for the Southern District of Texas (Chatman v. BP Exploration & Production, Case No. 10-cv-04329; Brooks v. Tidewater Marine LLC, et al., Case No. 11-cv-00049). The complaints generally allege, among other things, negligence and injury resulting from the use of our COREXIT dispersant in connection with the Deepwater Horizon oil spill. The complaints seeks unspecified compensatory and punitive damages, and attorneys’ fees and costs. The Chatman case was voluntarily dismissed. Nalco, the incident defendants and the other responder defendants have also been named as a third party defendant by Transocean Deepwater Drilling, Inc. and its affiliates (In re the Complaint and Petition of Triton Asset Leasing GmbH, et al, MDL No. 2179, Civil Action 10-2771).

All of the cases pending against Nalco Company have been administratively transferred for pre-trial purposes to a judge in the United States District Court for the Eastern District of Louisiana with other related cases under In Re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, Case No. 10-md-02179 (E.D. La.) (the “MDL”). Nalco has not yet been served in Harris, et al. v. BP plc, et al. or in Petitjean, et al. v. BP, plc, et al. Pursuant to orders issued by Judge Barbier in the MDL, the claims have been consolidated in several master complaints, including one naming Nalco and others who responded to the Gulf Oil Spill (known as the “B3 Bundle”). Plaintiffs are required by Judge Barbier to prepare a list designating previously-filed lawsuits that assert claims within the B3 Bundle regardless of whether the lawsuit named each defendant named in the B3 Bundle master complaint. We have received a draft list from the plaintiffs’ steering committee. The draft list identifies fifteen cases in the B3 Bundle, some of which are putative class actions. Six cases previously filed against Nalco are not included in the B3 Bundle.

We believe the claims are without merit and intend to defend these lawsuits vigorously. We also believe that we have rights to contribution and/or indemnification (including legal expenses) from third parties. However, we cannot predict the outcome of these lawsuits, the involvement we might have in these matters in the future or the potential for future litigation.

52

21.    2010 Quarterly Results of Operations (Unaudited)

	First Quarter		Second Quarter			Third Quarter			Fourth Quarter (1)
2010
Net sales	$	956.6	$	1,086.6		$	1,088.3		$	1,119.0
Cost of product sold		514.8		592.3			602.2			627.4
Restructuring expenses		1.5		0.7			(0.3	)		0.7
Earnings before income taxes		47.7		98.7			98.4			60.2
Net earnings		26.1		56.9			60.9			57.8
Net earnings attributable to Nalco Holding Company		25.2		56.7			58.9			55.4
Net earnings per share attributable to Nalco Holding Company common shareholders:
Basic	$	0.18	$	0.41		$	0.43		$	0.40
Diluted	$	0.18	$	0.41		$	0.42		$	0.40
	First Quarter		Second Quarter  (2)			Third Quarter  (3)			Fourth Quarter  (2)
2009
Net sales	$	868.4	$	913.1		$	957.0		$	1,008.3
Cost of product sold		489.4		502.7			505.4			543.4
Restructuring expenses		0.3		43.9			2.7			0.9
Earnings (loss) before income taxes		36.3		(29.1	)		53.9			74.6
Net earnings (loss)		24.7		(27.3	)		29.5			41.0
Net earnings (loss) attributable to Nalco Holding Company		23.2		(29.2	)		28.0			38.5
Net earnings (loss) per share attributable to Nalco Holding Company common shareholders:
Basic	$	0.17	$	(0.21	)	$	0.20		$	0.28
Diluted	$	0.17	$	(0.21	)	$	0.20		$	0.28

(1) Earnings before income taxes includes the impact of a loss on extinguishment of debt of $27.4 million and the impact of a $4.9 million charge for the impairment of goodwill.

(2) Earnings (loss) before income taxes includes the impact of a loss on extinguishment of debt of $16.4 million and $4.1 million in the second quarter of 2009 and fourth quarter of 2009, respectively.

(3) Earnings (loss) before income taxes includes the impact of a $20.6 million settlement loss attributable to the principal domestic pension plan.

22.    Subsequent Events

On January 6, 2011, we announced that we had entered into a definitive agreement to sell our marine chemicals business to Norway’s Wilhelmsen Ships Service for approximately $41.0 million. The sale, which closed on February 1, 2011, included goodwill, customer relationships, products and dedicated marine chemicals employees. The sale did not include any supply chain-related assets.

On January 26, 2011, we announced that we had sold our personal care products business to Lubrizol Corporation for $166.0 million. The sale included goodwill, customer relationships, dedicated personal care products employees and other related assets. The sale did not include any supply chain-related assets. We will continue to supply certain products to Lubrizol relating to the personal care products business.

The total estimated after-tax gain on the sale of these two businesses is expected to range from $75 million to $85 million, which would increase diluted earnings per share by an estimated 54 cents per share to 61 cents per share.

The marine chemicals and personal care products businesses were not presented as discontinued operations because their operations and cash flows were not clearly distinguished from the rest of the entity. The assets sold in these two transactions, consisting mostly of goodwill and customer relationships, were not separately classified as held for sale, because the amounts were not material relative to the total balances of the respective assets at December 31, 2010.

53

EX-99.6

Exhibit 99.6

Nalco Holding Company and Subsidiaries

Condensed Consolidated Balance Sheets

(dollars in millions)

	(Unaudited) September 30, 2011		December 31, 2010
Assets
Current assets:
Cash and cash equivalents	$	120.8	$	128.1
Accounts receivable, less allowances of $15.6 in 2011 and $13.2 in 2010		900.8		765.5
Inventories:
Finished products		310.3		246.0
Materials and work in process		114.8		84.0
		425.1		330.0
Prepaid expenses, taxes and other current assets		215.5		211.1
Total current assets		1,662.2		1,434.7
Property, plant, and equipment, net		752.1		729.1
Intangible assets:
Goodwill		1,771.5		1,844.1
Other intangibles, net		993.2		1,023.3
Other assets		200.5		192.5
Total assets	$	5,379.5	$	5,223.7
Liabilities and equity
Current liabilities:
Accounts payable	$	378.8	$	356.5
Short-term debt		115.2		90.0
Other current liabilities		425.5		411.7
Total current liabilities		919.5		858.2
Other liabilities:
Long-term debt		2,644.5		2,782.0
Deferred income taxes		283.4		260.3
Accrued pension benefits		387.1		405.6
Other liabilities		205.0		190.1
Total liabilities		4,439.5		4,496.2
Equity:
Nalco Holding Company shareholders’ equity		910.5		696.8
Noncontrolling interests		29.5		30.7
Total equity		940.0		727.5
Total liabilities and equity	$	5,379.5	$	5,223.7

See accompanying notes to condensed consolidated financial statements.

1

Nalco Holding Company and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(dollars in millions, except per share amounts)

	Three Months ended September 30, 2011			Three Months ended September 30, 2010			Nine Months ended September 30, 2011			Nine Months ended September 30, 2010
Net sales	$	1,251.0		$	1,088.3		$	3,488.0		$	3,131.5
Operating costs and expenses:
Cost of product sold		730.6			610.6			2,041.2			1,735.0
Selling, administrative, and research expenses		343.3			307.7			1,006.9			924.8
Amortization of intangible assets		9.9			10.8			29.5			32.2
Restructuring expenses		(7.1	)		(0.3	)		4.9			1.9
Impairment of goodwill		—			5.4			—			5.4
Gain on divestitures		—			—			(136.0	)		—
Total operating costs and expenses		1,076.7			934.2			2,946.5			2,699.3
Operating earnings		174.3			154.1			541.5			432.2
Other income (expense), net		(6.0	)		(2.8	)		(11.8	)		(20.3	)
Interest income		0.1			0.8			1.1			3.7
Interest expense		(47.4	)		(59.1	)		(142.9	)		(176.2	)
Earnings before income taxes		121.0			93.0			387.9			239.4
Income tax provision		42.3			32.1			129.5			95.5
Net earnings		78.7			60.9			258.4			143.9
Less: Net earnings attributable to noncontrolling interests		2.0			2.0			5.9			3.1
Net earnings attributable to Nalco Holding Company	$	76.7		$	58.9		$	252.5		$	140.8
Net earnings per share attributable to Nalco Holding Company common shareholders:
Basic	$	0.55		$	0.43		$	1.82		$	1.02
Diluted	$	0.55		$	0.42		$	1.80		$	1.01
Weighted-average shares outstanding (millions):
Basic		138.8			138.3			138.8			138.3
Diluted		140.4			139.4			140.1			139.3
Cash dividends declared per share	$	0.035		$	0.035		$	0.105		$	0.105

See accompanying notes to condensed consolidated financial statements.

2

Nalco Holding Company and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(dollars in millions)

	Nine Months ended September 30, 2011			Nine Months ended September 30, 2010
Operating activities
Net earnings	$	258.4		$	143.9
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		100.2			92.0
Amortization		29.5			32.2
Gain on divestitures		(136.0	)		—
Impairment of goodwill		—			5.4
Amortization of deferred financing costs		8.8			9.1
Loss on early extinguishment of debt		2.8			—
Other, net		25.4			48.6
Changes in operating assets and liabilities		(221.4	)		(115.5	)
Net cash provided by operating activities		67.7			215.7
Investing activities
Additions to property, plant, and equipment, net		(125.6	)		(101.4	)
Business purchases		(7.3	)		(33.6	)
Net proceeds from business divestitures		198.4			—
Other, net		6.9			1.6
Net cash provided by (used for) investing activities		72.4			(133.4	)
Financing activities
Cash dividends		(14.6	)		(14.5	)
Changes in short-term debt, net		—			(128.9	)
Proceeds from long-term debt		90.0			125.9
Repayments of long-term debt		(208.7	)		(0.1	)
Redemption premium on early extinguishment of debt		(3.0	)		—
Deferred financing costs		(1.2	)		(1.2	)
Other, net		(10.2	)		(4.1	)
Net cash used for financing activities		(147.7	)		(22.9	)
Effect of exchange rate changes on cash and cash equivalents		0.3			(12.0	)
(Decrease) increase in cash and cash equivalents		(7.3	)		47.4
Cash and cash equivalents at beginning of period		128.1			127.6
Cash and cash equivalents at end of period	$	120.8		$	175.0

See accompanying notes to condensed consolidated financial statements.

3

Nalco Holding Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

September 30, 2011

1. Description of Business and Basis of Presentation

Description of Business

We provide essential expertise for water, energy and air through the worldwide manufacture and sale of highly specialized service chemical programs. This includes production and service related to the sale and application of chemicals and technology used in water treatment, pollution control, energy conservation, oil production and refining, steelmaking, papermaking, mining, and other industrial processes.

Basis of Presentation

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report for Nalco Holding Company and subsidiaries for the fiscal year ended December 31, 2010.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. Management believes these financial statements include all normal recurring adjustments considered necessary for a fair presentation of our financial position and results of operations. Operating results for the nine months ended September 30, 2011 are not necessarily indicative of results that may be expected for the year ended December 31, 2011. The condensed consolidated balance sheet as of December 31, 2010 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States.

Certain minor reclassifications have been made to the prior year data to conform to the current year presentation, which had no effect on net earnings or equity reported for any period.

In addition, during the first quarter 2011, we identified certain costs that were previously classified as selling, administrative and research expenses that we believe are more appropriately classified in cost of product sold. These expenses consisted of depreciation on certain manufacturing assets, incentive compensation for production employees, and compensation for certain engineers who provide product application services to customers. These reclassifications increased cost of product sold and reduced selling, administrative, and research expenses approximately $9.3 million and $27.8 million for the three months and nine months ended September 30, 2010, respectively. The total amount to be reclassified to cost of product sold from selling, administrative, and research expenses for fiscal year 2010 is approximately $37.0 million. There is no impact to earnings before income taxes or net earnings as a result of these adjustments.

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2. Merger with Ecolab

On July 19, 2011, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Ecolab Inc., a Delaware corporation (“Ecolab”), and Sustainability Partners Corporation, a Delaware corporation and a wholly-owned subsidiary of Ecolab (“Merger Sub”). The Merger Agreement, which has been unanimously approved by our Board of Directors, provides for the merger of Nalco with and into Merger Sub (the “Merger”), with Merger Sub continuing as the surviving corporation in the Merger. The Merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, each share of common stock of Nalco issued and outstanding immediately prior to the effective time (other than shares that are owned by Ecolab or Nalco or any of their respective wholly-owned subsidiaries and shares with respect to which appraisal rights are properly exercised and not withdrawn) will be converted into the right to receive, at the election of the stockholder (subject to a reallocation mechanism which will result in a mix of approximately 30% cash and 70% stock): (i) 0.7005 shares of common stock, par value $1.00 per share, of Ecolab, or (ii) $38.80 in cash, without interest. No fractional shares of Ecolab common stock will be issued in the Merger, and holders of Nalco common stock will receive cash in lieu of any fractional shares of Ecolab common stock.

The consummation of the Merger is subject to the satisfaction or waiver of closing conditions applicable to both Nalco and Ecolab, including, among others, (i) the receipt of required regulatory approvals, (ii) the adoption of the Merger Agreement by the Nalco stockholders and (iii) the approval of the issuance of Ecolab common stock to Nalco’s stockholders by the stockholders of Ecolab. The Merger is not subject to a financing condition. The transaction is expected to close in the fourth quarter 2011.

The Merger Agreement provides for termination rights on behalf of both parties, such that under specified circumstances Ecolab may be required to pay Nalco a termination fee of $275 million and that under specified circumstances Nalco may be required to pay Ecolab a termination fee of $135 million.

During the three months and nine months ended September 30, 2011, we recorded approximately $4.6 million of merger-related costs, primarily related to investment banking, legal, and other fees incurred as part of the Merger Agreement. Contingent upon the successful completion of the merger, additional investment banking fees of $22.5 million will become payable by Nalco.

5

3. Recent Accounting Pronouncements

In October 2009, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that amends earlier guidance addressing the accounting for contractual arrangements in which an entity provides multiple products or services (“deliverables” or “elements”) to a customer. The amendments address the unit of accounting for arrangements involving multiple deliverables and how arrangement consideration should be allocated to the separate units of accounting, when applicable, by establishing a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable is based on vendor-specific objective evidence (“VSOE”) if available, third-party evidence (“TPE”) if vendor-specific objective evidence is not available, or estimated selling price (“ESP”) if neither vendor-specific nor third-party evidence is available.

This guidance changes the units of accounting for certain of our service-related offerings. Specifically, on-site technical expertise that is included in bundled customer solutions will now be a separate unit of accounting since ESP must now be used to determine selling price. Generally, most products and services now qualify as separate units of accounting. Products are typically considered delivered upon shipment.

In certain arrangements, which are usually reserved for our largest customers, we provide some combination or all of the following deliverables: (1) chemicals, (2) equipment and (3) on-site technical expertise. Differences in customer equipment and processes drive substantial variation in the application of our chemicals and the individual programs we create. In these multiple element arrangements, we usually remain the owner of any equipment at the customer site. Additionally, our representatives may have a regular presence at a customer’s facility, which is usually provided under a contract. The regular presence of the representative permits us to closely track the results of the program and to make modifications to the program as necessary for the highest efficiency. This on-site presence is now allocated a portion of revenue.

For fiscal 2011 and future periods, pursuant to the new guidance, when a new or materially-modified sales arrangement contains multiple elements, we allocate revenue to each deliverable based on a selling price hierarchy. VSOE of fair value is based on the price charged when the element is sold separately. TPE of selling price is established by evaluating similar competitor services in stand-alone sales. However, as our on-site technical expertise and solutions are based on specific Nalco chemicals and each solution is generally highly customized, the comparable pricing of similar services typically cannot be obtained. Additionally, as we are unable to reliably determine what competitors’ selling prices for services are on a stand-alone basis, we are not typically able to determine TPE. The best estimate of selling price is established considering multiple factors including, but not limited to, pricing practices in different geographies, market conditions, gross margin objectives and internal costs.

6

3. Recent Accounting Pronouncements (continued)

The following types of commercial arrangements are the most commonly used for the sale of multiple deliverables:

Ship and Bill. Following the receipt of a purchase order from the customer, we invoice when the products are shipped, based on agreed pricing. At the end of each period, for those shipments where title to the product and the risks of loss and rewards of ownership do not transfer until the product has been received by the customer, or the service has not been performed, adjustments to revenues and cost of product sold are made to account for the delay. We recognize the service element of the ship and bill arrangements, in which we bundle the chemicals with on-site technical expertise, ratably over the term of the contract as we provide the services.

Production-based arrangements. Our billing is based on a customer’s production-based formula (e.g., dollars per ton of paper produced) within certain technical parameters. We use a combination of our service chemicals, on-site technical expertise and equipment to satisfy the customer requirement. Because the chemicals and equipment used and on-site technical expertise required are highly correlated with the customer’s production, revenue for each element is recognized monthly based on the production-based formula.

Usage-based arrangements. For these arrangements, we invoice according to the consumption of chemicals by the customer. The agreed price by kilogram or pound of chemical consumed also includes the availability of on-site expertise and the use of equipment to satisfy the customer requirement. Revenue is recognized monthly based on the usage-based formula which approximates when transfer of title occurs for chemical sales and a ratable recognition of service revenue.

The implementation of this amended accounting guidance did not have a material impact on our consolidated financial position and results of operations in the period of adoption. In terms of the timing and pattern of revenue recognition, the new accounting guidance for revenue recognition is not expected to have a significant effect on total net revenues in periods after the initial adoption.

Our arrangements generally do not include any provisions for cancellation, termination, or refunds that would significantly impact recognized revenue.

We currently do not expect a material impact in the near term from changes in VSOE, TPE or ESP.

In October 2009, the FASB issued authoritative guidance that amends earlier guidance for revenue arrangements that include both tangible products and software elements. Tangible products containing software components and nonsoftware components that function together to deliver the tangible product’s essential functionality are no longer within the scope of guidance for recognizing revenue from the sale of software, but would be accounted for in accordance with other authoritative guidance. The adoption of the guidance in the first quarter 2011 did not have any impact on our consolidated financial statements.

In December 2010, the FASB issued authoritative guidance that amends the criteria for performing Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts and requires performing Step 2 if qualitative factors indicate that it is more likely than not that a goodwill impairment exists. Any impairment to be

7

3. Recent Accounting Pronouncements (continued)

recorded upon adoption is to be recognized as an adjustment to beginning retained earnings. We adopted the guidance in the first quarter 2011, which did not have any impact on our consolidated financial statements.

In December 2010, the FASB issued authoritative guidance that addresses diversity in practice about the interpretation of the pro forma revenue and earnings disclosure requirements for business combinations. The guidance clarifies that when presenting comparative financial statements, an entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The guidance also requires a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The guidance is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. This guidance impacts disclosure requirements only, and upon its adoption in the first quarter 2011, did not have any impact on our financial statements.

In May 2011, the FASB issued authoritative guidance amending fair value measurement and disclosure requirements in order to align U.S. GAAP and International Financial Reporting Standards. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. Some of the amendments clarify the intent about the application of existing fair value measurement requirements, while other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. We do not expect the adoption of this guidance on January 1, 2012 to have a material impact on our financial statements.

In June 2011, the FASB issued authoritative guidance amending the presentation requirements of other comprehensive income. All nonowner changes in stockholders’ equity will be required to be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. Full retrospective application is required and early adoption is permitted. We do not expect the adoption of this guidance on January 1, 2012 to have any impact on our financial statements, other than presentation.

In September 2011, the FASB issued new accounting guidance intended to simplify how entities test goodwill for impairment. The new guidance gives entities the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity believes, as a result of its qualitative assessment, that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test under existing accounting guidance is required to be performed. Otherwise, no further testing is required. These new provisions are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. However, early adoption is permitted in certain circumstances. We do not expect this new guidance to have a material effect on our consolidated financial statements.

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4. Acquisitions and Dispositions

In the first nine months of 2011 we acquired the business assets of two companies for $6.6 million. On a preliminary basis, the purchase price, including the estimated fair value of contingent consideration, exceeded the fair value of the net tangible assets acquired by approximately $6.0 million, of which $3.3 million was allocated to goodwill and $2.7 million was allocated to other intangible assets. The goodwill of these acquisitions is expected to be deductible for tax purposes.

In January 2011, we completed the sale of our personal care products business to Lubrizol Corporation. Proceeds from the sale were $157.8 million, net of selling and other expenses of $6.3 million, and resulted in a gain of $111.9 million before income taxes. The sale included goodwill, customer relationships, dedicated personal care products employees and other related assets. The sale did not include any supply chain-related assets. We will continue to supply certain products to Lubrizol relating to the personal care products business.

In February 2011, we completed the sale of our marine chemicals business to Norway’s Wilhelmsen Ships Service. Proceeds from the sale were $40.6 million, net of selling and other expenses of $0.4 million, and resulted in a gain of $24.1 million before income taxes. The sale included goodwill, customer relationships, products and dedicated marine chemicals employees. The sale did not include any supply chain-related assets.

The marine chemicals and personal care products businesses were not presented as discontinued operations because their operations and cash flows were not clearly distinguished from the rest of the entity. The assets sold in these two transactions, consisting mostly of goodwill and customer relationships, were not separately classified as held for sale, because the amounts were not material relative to the total balances of the respective assets at December 31, 2010. For the year ended December 31, 2010, the marine chemicals and personal care products businesses contributed approximately $70 million and $25 million to net sales and earnings before income taxes, respectively.

In January 2010, we acquired a 50.1% controlling financial interest in Nalco Africa, a new entity formed with Protea Chemicals, one of Africa’s largest suppliers of industrial chemicals and services. Protea Chemicals is a division of the Omnia Group, a diversified and specialist chemical services company located in Johannesburg, South Africa. The new entity enables us to re-enter the water and process treatment markets of southern Africa. The business combination did not involve the transfer of consideration, but under the terms of a technical assistance and license agreement executed at the time of the combination, we have licensed to Nalco Africa rights to certain of our patents, know-how and trademarks. The fair value of the business acquired was $20.1 million, of which $16.0 million was allocated to goodwill, $5.7 million was allocated to other intangible assets, and $1.6 million was allocated to a deferred tax liability. The goodwill consists primarily of our expectation of future sales growth in this geographic market and intangible assets that do not qualify for separate recognition. The goodwill was allocated to the Water

9

4. Acquisitions and Dispositions (continued)

Services segment and is not expected to be deductible for tax purposes. The fair value of the business acquired was measured using internal cash flow estimates (i.e., Level 3 in the fair value hierarchy established by authoritative guidance issued by the FASB for fair value measurements).

The pro forma impact as if the aforementioned acquisitions had occurred at the beginning of the respective years is not significant.

5. Goodwill

Changes in the carrying value of goodwill for the nine months ended September 30, 2011 are summarized below:

(dollars in millions)	Water Services			Paper Services			Energy Services			Total
Balance as of January 1, 2011:
Goodwill	$	1,279.5		$	549.1		$	564.6		$	2,393.2
Accumulated impairment losses		—			(549.1	)		—			(549.1	)
		1,279.5			—			564.6			1,844.1
Acquisitions		1.5			—			1.8			3.3
Divestitures		(56.6	)		—			—			(56.6	)
Effect of foreign currency translation		(15.7	)		—			(3.6	)		(19.3	)
Balance as of September 30, 2011:
Goodwill		1,208.7			549.1			562.8			2,320.6
Accumulated impairment losses		—			(549.1	)		—			(549.1	)
	$	1,208.7		$	—		$	562.8		$	1,771.5

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6. Debt

Debt consists of the following:

(dollars in millions)	September 30, 2011		December 31, 2010
Short-term
Checks outstanding and bank overdrafts	$	26.6	$	24.0
Notes payable to banks		57.6		55.5
Current maturities of long-term debt		31.0		10.5
	$	115.2	$	90.0
Long-term
Securitized trade accounts receivable facility	$	145.5	$	67.8
Term loan B, due October 5, 2017 (including discount of $2.8 in 2011 and $3.1 in 2010)		640.7		645.3
Term loan C, due May 13, 2016 (including discount of $19.4 in 2011 and $22.5 in 2010)		275.3		274.5
Term loan C-1, due May 13, 2016 (including discount of $3.7 in 2011 and $4.3 in 2010)		95.3		95.4
Senior notes, due January 15, 2019		750.0		750.0
Senior notes (euro), due January 15, 2019		269.7		267.4
Senior discount notes, due February 1, 2014 (including premium of $0.4 in 2010)		—		200.4
Senior notes, due May 15, 2017 (including discount of $7.5 in 2011 and $8.5 in 2010)		492.5		491.5
Other		6.5		0.2
		2,675.5		2,792.5
Less: Current portion		31.0		10.5
	$	2,644.5	$	2,782.0

Using the proceeds from the sale of our marine chemicals business and personal care products business, we repaid the remaining $200.4 million of senior discount notes in March 2011. In connection with this transaction, we incurred a $2.8 million loss on early extinguishment of debt during the quarter ended March 31, 2011.

We had $17.3 million of letters of credit outstanding at September 30, 2011 under our senior secured credit facilities.

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7. Equity

Equity consists of the following:

(dollars in millions, except per share amounts)	September 30, 2011			December 31, 2010
Nalco Holding Company shareholders’ equity:
Preferred stock, par value $0.01 per share; authorized 100,000,000 shares; none issued	$	—		$	—
Common stock, par value $0.01 per share; authorized 500,000,000 shares; 148,335,441 and 147,925,072 shares issued at September 30, 2011 and December 31, 2010, respectively		1.4			1.4
Additional paid-in capital		813.1			800.7
Treasury stock, at cost; 9,535,943 shares at September 30, 2011 and December 31, 2010		(211.3	)		(211.3	)
Retained earnings (accumulated deficit)		192.3			(45.6	)
Accumulated other comprehensive income:
Net prior service credit		29.7			32.4
Net actuarial loss		(89.6	)		(95.6	)
Currency translation adjustments		174.9			214.8
Nalco Holding Company shareholders’ equity		910.5			696.8
Noncontrolling interests		29.5			30.7
Total equity	$	940.0		$	727.5

In July 2007, our Board of Directors authorized a $300 million share repurchase program and gave our management discretion in determining the conditions under which shares may be purchased from time to time. The program has no stated expiration date. As of December 31, 2010, we had repurchased 9,535,943 shares at a cost of $211.3 million. No additional shares were repurchased during the nine months ended September 30, 2011.

8. Pension and Other Postretirement Benefit Plans

We have several noncontributory, defined benefit pension plans covering some employees in the U.S. and those with certain foreign subsidiaries. We also provide a supplementary, nonqualified, unfunded plan for U.S. employees whose pension benefits exceed ERISA limitations. The components of net periodic pension cost for the three months and nine months ended September 30, 2011 and 2010 were as follows:

	U.S.						Non-U.S.
(dollars in millions)	Three Months ended September 30, 2011			Three Months ended September 30, 2010			Three Months ended September 30, 2011			Three Months ended September 30, 2010
Service cost	$	—		$	—		$	2.3		$	2.5
Interest cost		6.0			6.3			5.0			4.7
Expected return on plan assets		(5.9	)		(5.3	)		(3.8	)		(3.7	)
Prior service credit		(0.6	)		(0.5	)		(0.2	)		(0.3	)
Net actuarial loss		3.3			1.5			0.1			0.1
Net periodic pension cost	$	2.8		$	2.0		$	3.4		$	3.3

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8. Pension and Other Postretirement Benefit Plans (continued)

	U.S.						Non-U.S.
(dollars in millions)	Nine Months ended September 30, 2011			Nine Months ended September 30, 2010			Nine Months ended September 30, 2011			Nine Months ended September 30, 2010
Service cost	$	—		$	—		$	7.0		$	7.1
Interest cost		18.0			18.9			16.3			13.9
Expected return on plan assets		(17.6	)		(15.9	)		(12.4	)		(10.7	)
Prior service credit		(1.8	)		(1.7	)		(0.9	)		(0.8	)
Net actuarial loss		10.0			4.6			0.3			0.2
Settlements		—			—			0.7			—
Net periodic pension cost	$	8.6		$	5.9		$	11.0		$	9.7

We also have defined benefit postretirement plans that provide medical and life insurance benefits for substantially all U.S. retirees and eligible dependents. The components of net periodic (benefit) cost of postretirement benefits other than pensions for the three months and nine months ended September 30, 2011 and 2010 were as follows:

(dollars in millions)	Three Months ended September 30, 2011			Three Months ended September 30, 2010			Nine Months ended September 30, 2011			Nine Months ended September 30, 2010
Service cost	$	0.8		$	1.1		$	2.3		$	3.1
Interest cost		1.5			2.1			4.5			6.3
Prior service credit		(0.5	)		(0.4	)		(1.6	)		(1.4	)
Net actuarial gain		(1.9	)		(0.6	)		(5.6	)		(1.8	)
Net periodic (benefit) cost	$	(0.1	)	$	2.2		$	(0.4	)	$	6.2

We now expect to contribute approximately $39.8 million to our pension plans in 2011 compared to the $66.2 million we had expected to contribute as of December 31, 2010. The decrease is mostly attributable to a $28.5 million reduction in expected contributions to the principal U.S. pension plan.

9. Restructuring Expenses

We continuously redesign and optimize our business and work processes, and restructure our organization accordingly. Restructuring expenses were a net credit of $7.1 million and a net charge of $4.9 million for the three months and nine months ended September 30, 2011, respectively.

A restructuring accrual of $12.3 million as of September 30, 2011 was included in other current liabilities on the condensed consolidated balance sheet. Restructuring expenses in 2011 reflected the planned reduction in force of approximately 100 positions, primarily in the Europe, Africa and Middle East region as part of an organizational realignment. Partially offsetting this was a gain on the sale of two manufacturing facilities of $8.1 million during the third quarter 2011. All restructuring-related payments in the first nine months of 2011 were funded with cash from operations. We expect that future payments also will be funded with cash from operations.

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9. Restructuring Expenses (continued)

Activity in the restructuring accrual for the nine months ended September 30, 2011 is summarized as follows:

(dollars in millions)	Severance, Termination Benefits and Other
Balance as of January 1, 2011	$	11.5
Charges to restructuring expense		13.0
Cash payments		(12.0	)
Currency translation adjustments		(0.2	)
Balance as of September 30, 2011	$	12.3

Charges to restructuring expense are offset by the $8.1 million gain on sale of two manufacturing facilities.

10. Summary of Other Income (Expense), Net

The components of other income (expense), net for the three months and nine months ended September 30, 2011 and 2010, include the following:

(dollars in millions)	Three Months ended September 30, 2011			Three Months ended September 30, 2010			Nine Months ended September 30, 2011			Nine Months ended September 30, 2010
Loss on early extinguishment of debt	$	—		$	—		$	(2.8	)	$	—
Franchise taxes		(0.4	)		(0.4	)		(1.4	)		(1.2	)
Equity in earnings of unconsolidated subsidiaries		(0.3	)		0.6			—			1.2
Foreign currency exchange adjustments		(5.2	)		(1.4	)		(5.0	)		(17.3	)
Other		(0.1	)		(1.6	)		(2.6	)		(3.0	)
Other income (expense), net	$	(6.0	)	$	(2.8	)	$	(11.8	)	$	(20.3	)

Foreign currency exchange adjustments

The $17.3 million of foreign currency exchange adjustments for nine months ended September 30, 2010 was mostly attributable to our subsidiary in Venezuela.

Effective January 1, 2010, Venezuela’s economy was designated as highly inflationary under U.S. generally accepted accounting principles, since it had experienced a rate of general inflation in excess of 100% over the last three-year period. Accordingly, the functional currency of our subsidiary company in Venezuela was changed to the U.S. dollar, and all gains and losses resulting from the remeasurement of its financial statements since January 1, 2010 were recorded in the statement of operations. Our Venezuelan subsidiary accounted for approximately 2% of our consolidated net sales for the year ended December 31, 2010.

On January 8, 2010, the Venezuelan government announced the devaluation of the bolivar fuerte and the establishment of a two-tier exchange structure. As a result, the official exchange rate changed from 2.15 to 2.60 for essential items and 4.30 for non-essential

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10. Summary of Other Income (Expense), Net (continued)

items. We remeasured our Venezuelan subsidiary’s balance sheet accounts to reflect the devaluation by using the exchange rate for non-essential items, which resulted in a foreign exchange loss of $23.2 million. Because about half of the products imported by our Venezuelan subsidiary were classified as essential, this loss was subsequently reduced by approximately $7.8 million of foreign exchange gains that were recognized during the nine months ended September 30, 2010, when payments were made using the exchange rate for essential products. We remeasure the financial statements of our Venezuelan subsidiary at the 4.30 exchange rate, the rate at which we expect to remit dividends.

In December 2010, the Venezuelan government announced the elimination of the two-tier exchange rate structure, effective January 1, 2011, and the official exchange rate of 4.30 was established for substantially all items. As a result, the exchange rate for essential items cannot be used for our unsettled amounts. The elimination of the two-tier rate structure did not have a significant impact on our financial position or results of operations.

We do not expect any significant ongoing impact of the currency devaluation on our results of operations.

11. Income Taxes

The income tax provision of $42.3 million for the three months ended September 30, 2011 reflects an actual effective tax rate of 35.0%. This includes net discrete tax benefits for the period of $0.4 million.

The income tax provision was $32.1 million for the three months ended September 30, 2010. The effective tax rate of 34.5% was favorably impacted by a $7.8 million net reduction to the income tax provision related to immaterial corrections of prior period items, consisting of adjustments with offsetting impacts to current and deferred income tax accounts.

For both the quarters ended September 30, 2011 and September 30, 2010, the income tax provision also varied from the U.S. federal statutory income tax rate due to foreign taxes provided at other than the 35% U.S. statutory rate, U.S. state income taxes, foreign tax credits, nondeductible expenses and other permanent differences.

Based upon the status of examinations in multiple tax jurisdictions and expanded audit and controversy activity in multiple non-U.S. jurisdictions, it is reasonably possible the total amount of unrecognized tax benefits could change during the next 12 months within a range of zero to $8 million.

We will continue to monitor our prior 36-month earnings history together with all other available evidence, both positive and negative, in determining whether it is more likely than not we will realize some or all of our net deferred tax assets. Based on current expectations, we do not anticipate releasing any valuation allowances during the next 12 months.

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11. Income Taxes (continued)

The income tax provision of $129.5 million for the nine months ended September 30, 2011 reflects an actual effective tax rate of 33.4%. This includes year-to-date net discrete tax benefits of $12.2 million, $11.8 million of which occurred in the second quarter, and an incremental tax charge, beyond 35.0%, of $4.2 million related to the gains on our first quarter divestitures. Those first quarter gains included the negative impact of nondeductible goodwill, partly offset by a favorable impact associated with their geographic mix, including, but not limited to, utilizing deferred tax assets against which a valuation allowance had been previously placed. The net discrete tax benefits of the second quarter consisted primarily of releasing $29.5 million of the valuation allowances previously placed against some of our deferred tax assets, partly offset by a net charge of $17.3 million related to unrecognized tax benefits, the latter of which was caused, in large part, by expanded audit and expected controversy activity in multiple non-U.S. income tax jurisdictions.

The income tax provision of $95.5 million for the nine months ended September 30, 2010 was unfavorably impacted by the tax consequences of U.S. healthcare reform legislation enacted in the first quarter 2010. The resulting one-time write-off of previously accrued tax benefits associated with the subsidy for postretirement prescription drug benefits increased our tax provision by $2.6 million. Also in the first quarter 2010, the Venezuelan government devalued its currency, resulting in a foreign exchange loss from remeasurement of the balance sheet accounts of our Venezuelan subsidiary. The loss produced relatively small tax benefits, which, when compared to the 35% U.S. federal statutory income tax rate, resulted in a $2.1 million increase to the income tax provision. The effective tax rate of 39.9% was also unfavorably impacted by increased earnings subjected to a relatively high U.S. tax rate. Foreign tax disputes and law changes enacted in 2010 also increased the effective tax rate. Partly offsetting these unfavorable impacts to the effective tax rate was the $7.8 million net reduction to the income tax provision recorded in the third quarter related to immaterial corrections of prior period items.

For the nine months ended September 30, 2011 and September 30, 2010, the income tax provision also varied from the U.S. federal statutory income tax rate due to foreign taxes provided at other than the 35% U.S. statutory rate, U.S. state income taxes, foreign tax credits, nondeductible expenses and other permanent differences.

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12. Comprehensive Income

Total comprehensive income and its components, net of related tax, for the three months and nine months ended September 30, 2011 and 2010, were as follows:

(dollars in millions)	Three Months ended September 30, 2011			Three Months ended September 30, 2010			Nine Months ended September 30, 2011			Nine Months ended September 30, 2010
Net earnings	$	78.7		$	60.9		$	258.4		$	143.9
Other comprehensive income (loss), net of income taxes:
Amortization of net prior service credit		(0.9	)		(0.9	)		(2.7	)		(2.7	)
Amortization of net actuarial loss		1.1			0.8			6.0			(6.9	)
Foreign currency translation adjustments		(115.1	)		105.2			(41.5	)		17.8
Comprehensive income (loss)		(36.2	)		166.0			220.2			152.1
Less: Comprehensive income attributable to noncontrolling interests		0.1			4.1			4.3			4.6
Comprehensive income (loss) attributable to Nalco Holding Company	$	(36.3	)	$	161.9		$	215.9		$	147.5

13. Segment Information

We operate three reportable segments:

Water Services — This segment serves the global water treatment and process chemical needs of the industrial, institutional, and municipal markets.

Paper Services — This segment serves the process chemicals and water treatment needs of the global pulp and paper industry.

Energy Services — This segment serves the process chemicals and water treatment needs of the global petroleum and petrochemical industries in both upstream and downstream applications.

We evaluate the performance of our segments based on “direct contribution”, which is defined as net sales, less cost of product sold, selling and service expenses, marketing expenses and research expenses directly attributable to each segment. There are no intersegment revenues.

Net sales by reportable segment were as follows:

(dollars in millions)	Three Months ended September 30, 2011		Three Months ended September 30, 2010		Nine Months ended September 30, 2011		Nine Months ended September 30, 2010
Water Services	$	521.4	$	465.3	$	1,452.8	$	1,308.6
Paper Services		219.4		194.4		628.0		554.0
Energy Services		510.2		428.6		1,407.2		1,268.9
Net sales	$	1,251.0	$	1,088.3	$	3,488.0	$	3,131.5

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13. Segment Information (continued)

The following table presents direct contribution by reportable segment and reconciles the total segment direct contribution to earnings before income taxes:

(dollars in millions)	Three Months ended September 30, 2011			Three Months ended September 30, 2010			Nine Months ended September 30, 2011			Nine Months ended September 30, 2010
Segment direct contribution:
Water Services	$	101.8		$	88.8		$	251.6		$	244.1
Paper Services		35.7			33.3			96.5			91.7
Energy Services		102.8			98.6			275.8			301.4
Total segment direct contribution		240.3			220.7			623.9			637.2
Expenses not allocated to segments:
Administrative expenses		63.2			50.7			184.0			165.5
Amortization of intangible assets		9.9			10.8			29.5			32.2
Restructuring expenses		(7.1	)		(0.3	)		4.9			1.9
Impairment of goodwill		—			5.4			—			5.4
Gain on divestitures		—			—			(136.0	)		—
Operating earnings		174.3			154.1			541.5			432.2
Other income (expense), net		(6.0	)		(2.8	)		(11.8	)		(20.3	)
Interest income		0.1			0.8			1.1			3.7
Interest expense		(47.4	)		(59.1	)		(142.9	)		(176.2	)
Earnings before income taxes	$	121.0		$	93.0		$	387.9		$	239.4

Administrative expenses primarily represent the cost of support functions, including information technology, finance, human resources and legal, as well as expenses for support facilities, executive management and management incentive plans.

14. Earnings Per Share

Basic earnings per share is computed by dividing net earnings attributable to Nalco Holding Company common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock.

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14. Earnings Per Share (continued)

Basic and diluted earnings per share were calculated as follows:

(in millions)	Three Months ended September 30, 2011		Three Months ended September 30, 2010		Nine Months ended September 30, 2011		Nine Months ended September 30, 2010
Numerator for basic and diluted earnings per share attributable to Nalco Holding Company common shareholders:
Net earnings attributable to Nalco Holding Company	$	76.7	$	58.9	$	252.5	$	140.8
Denominator for basic earnings per share attributable to Nalco Holding Company common shareholders — weighted average common shares outstanding		138.8		138.3		138.8		138.3
Effect of dilutive securities:
Share-based compensation plans 1		1.6		1.1		1.3		1.0
Denominator for diluted earnings per share attributable to Nalco Holding Company common shareholders		140.4		139.4		140.1		139.3

¹ Share-based compensation plans excludes 0.3 million and 0.2 million shares at September 30, 2011 and 2010, respectively, due to their anti-dilutive effect.

15. Contingencies and Litigation

Various claims, lawsuits and administrative proceedings are pending or threatened against us, arising from the ordinary course of business with respect to commercial, contract, intellectual property, product liability, employee, environmental and other matters. Historically, these matters have not had a material impact on our consolidated financial position. However, we cannot predict the outcome of any litigation or the potential for future litigation.

We have been notified of potential involvement or named as a potentially responsible party (“PRP”) by the Environmental Protection Agency, state enforcement agencies or private parties at nine pending waste sites where some financial contribution is or may be required. These agencies have also identified many other parties who may be responsible for clean-up costs at these waste disposal sites. Our financial contribution to remediate these sites is not expected to be material. There has been no significant financial impact on us up to the present, nor is it anticipated that there will be in the future, as a result of these matters. We have made and will continue to make provisions for these costs if our liability becomes probable and when costs can be reasonably estimated.

Our undiscounted reserves for known environmental clean-up costs were $2.2 million at September 30, 2011. These environmental reserves represent our current estimate of our proportional clean-up costs and are based upon negotiation and agreement with enforcement agencies, our previous experience with respect to clean-up activities, a detailed review by us of known conditions, and information about other PRPs. They are not reduced by any possible recoveries from insurance companies or other PRPs not specifically identified. Although we cannot determine whether or not a material effect on future operations is reasonably likely to occur, given the evolving nature of environmental

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15. Contingencies and Litigation (continued)

regulations, we believe that the recorded reserve levels are appropriate estimates of the potential liability. Although settlement will require future cash outlays, it is not expected that such outlays will materially impact our liquidity position.

Expenditures for the three months and nine months ended September 30, 2011, relating to environmental compliance and clean-up activities, were not significant.

We have been named as a defendant in lawsuits based on claimed involvement in the supply of allegedly defective or hazardous materials or products and the claimed presence of hazardous substances at our plants. We have also in the past been named as a defendant in lawsuits where our products have not caused injuries, but the claimants seek amounts so they might be monitored in the future for potential injuries arising from our products. The plaintiffs in these cases seek damages for alleged personal injury or potential injury resulting from exposure to our products or other chemicals. These matters have had a de minimis impact on our business historically, and we do not anticipate these matters will present any material risk to our business in the future. Notwithstanding, we cannot predict the outcome of any such lawsuits or the involvement we might have in these matters in the future.

In the ordinary course of our business, we are also a party to a number of lawsuits and are subject to various claims relating to patents, trademarks, intellectual property, employee matters, contracts, transactions, chemicals, services and other matters, the outcome of which, in our opinion, should not have a material effect on our consolidated financial position. However, we cannot predict the outcome of any litigation or the potential for future litigation. Were an unfavorable ruling to occur, there exists the possibility of a material adverse impact on the results of operations for the period in which the ruling occurs. We maintain accruals where the outcome of the matter is probable and can be reasonably estimated. We do not believe there is a risk of material loss in excess of these accruals.

Matters Related to Deepwater Horizon Incident Response

On April 22, 2010, the deepwater drilling platform, the Deepwater Horizon, operated by a subsidiary of BP plc, sank in the Gulf of Mexico after a catastrophic explosion and fire that began on April 20, 2010. A massive oil spill resulted. Approximately one week following the incident, subsidiaries of BP plc, under the authorization of the responding federal agencies, formally requested Nalco Company, an indirect subsidiary of Nalco Holding Company, to supply large quantities of COREXIT^® 9500, a Nalco oil dispersant product listed on the U.S. EPA National Contingency Plan Product Schedule. Nalco Company responded immediately by providing available COREXIT and increasing production to supply the product to BP’s subsidiaries for use, as authorized and directed by agencies of the federal government throughout the incident. Prior to the incident, Nalco Holding Company and its subsidiaries had not provided products or services or otherwise had any involvement with the Deepwater Horizon platform. On July 15, 2010, BP announced that it had capped the leaking well, and the application of dispersants by the responding parties ceased shortly thereafter.

On May 1, 2010, the President appointed retired U.S. Coast Guard Commandant Admiral Thad Allen to serve as the National Incident Commander in charge of the coordination of the response to the incident at the national level. The EPA directed numerous tests of all

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15. Contingencies and Litigation (continued)

the dispersants on the National Contingency Plan Product Schedule, including those provided by Nalco Company, “to ensure decisions about ongoing dispersant use in the Gulf of Mexico are grounded in the best available science.” We cooperated with this testing process and continued to supply COREXIT 9500, as requested by BP and government authorities. After review and testing of a number of dispersants, on June 30, 2010, and on August 2, 2010, the EPA released toxicity data for eight oil dispersants.

The use of dispersants by the responding parties was one tool used by the government and BP to avoid and reduce damage to the Gulf area from the spill. Since the spill occurred, the EPA and other federal agencies have closely monitored conditions in areas where dispersant has been applied. We have encouraged ongoing monitoring and review of COREXIT and other dispersants and have cooperated fully with the governmental review and approval process. However, in connection with its provision of COREXIT, Nalco Company has been named in several lawsuits as described below.

Putative Class Action Litigation

In June, July and August 2010, and in April 2011, Nalco Company was named, along with other unaffiliated defendants, in eight putative class action complaints filed in either the United States District Court for the Eastern District of Louisiana (Parker, et al. v. Nalco Company, et al., Civil Action No. 2:10-cv-01749-CJB-SS; Harris, et al. v. BP, plc, et al., Civil Action No. 2:10-cv-02078-CJB-SS; Irelan v. BP Products, Inc., et al., Civil Action No. 11-cv-00881; Adams v. Louisiana, et al., Civil Action No. 11-cv-01051), the United States District Court for the Southern District of Alabama, Southern Division (Lavigne, et al. v. BP PLC, et al., Civil Action No. 1:10-cv-00222-KD-C; Wright, et al. v. BP, plc, et al., Civil Action No. 1:10-cv-00397-B) or the United States District Court for the Northern District of Florida, Pensacola Division (Walsh, et al. v. BP, PLC, et al., Civil Action No. 3:10-cv-00143-RV-MD; Petitjean, et al. v. BP, plc, et al., Case No. 3:10-cv-00316-RS-EMT) on behalf of various potential classes of persons who live and work in or derive income from the Coastal Zone. The Parker, Lavigne and Walsh cases have since been voluntarily dismissed. Each of the remaining actions contains substantially similar allegations, generally alleging, among other things, negligence relating to the use of our COREXIT dispersant in connection with the Deepwater Horizon oil spill. The plaintiffs in each of these putative class action lawsuits are generally seeking awards of unspecified compensatory and punitive damages, and attorneys’ fees and costs.

Other Related Federal Claims

In July, August, September, October and December 2010, Nalco Company was also named, along with other unaffiliated defendants, in eight complaints filed by individuals in either the United States District Court for the Eastern District of Louisiana (Ezell v. BP, plc, et al., Case No. 2:10-cv-01920-KDE-JCW), the United States District Court for the Southern District of Alabama, Southern Division (Monroe v. BP, plc, et al., Case No. 1:10-cv-00472-M; Hill v. BP, plc, et al., Civil Action No. 1:10-cv-00471-CG-N; Hudley v. BP, plc, et al., Civil Action No. 10-cv-00532-N), the United States District Court for the Northern District of Florida, Tallahassee Division (Capt Ander, Inc. v. BP, plc, et al., Case No. 4:10-cv-00364-RH-WCS), the United States District Court for the Southern District of Mississippi, Southern Division (Trehern v. BP, plc, et al., Case No. 1:10-cv-00432-HSO-

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15. Contingencies and Litigation (continued)

JMR) or the United States District Court for the Southern District of Texas (Chatman v. BP Exploration & Production, Civil Action No. 10-cv-04329; Brooks v. Tidewater Marine LLC, et al., Civil Action No. 11-cv-00049).

In April 2011, Nalco Company was also named in Best v. British Petroleum plc, et al., Civil Action No. 11-cv-00772 (E.D. La.); Black v. BP Exploration & Production, Inc., et al. Civil Action No. 2:11-cv-867, (E.D. La.); Pearson v. BP Exploration & Production, Inc., Civil Action No. 2:11-cv-863, (E.D. La.); Alexander, et al. v. BP Exploration & Production, et al., Civil Action No. 11-cv-00951 (E.D. La.); and Coco v. BP Products North America, Inc., et al. (E.D. La.). The complaints generally allege, among other things, negligence and injury resulting from the use of our COREXIT dispersant in connection with the Deepwater Horizon oil spill. The complaints seek unspecified compensatory and punitive damages, and attorneys’ fees and costs. The Chatman case was voluntarily dismissed.

All of the above-referenced cases pending against Nalco Company have been administratively transferred for pre-trial purposes to a judge in the United States District Court for the Eastern District of Louisiana with other related cases under In Re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, Civil Action No. 10-md-02179 (E.D. La.) (“MDL 2179”). Pursuant to orders issued by Judge Barbier in MDL 2179, the claims have been consolidated in several master complaints, including one naming Nalco Company and others who responded to the Gulf Oil Spill (known as the “B3 Bundle”). Plaintiffs are required by Judge Barbier to prepare a list designating previously-filed lawsuits that assert claims within the B3 Bundle regardless of whether the lawsuit named each defendant named in the B3 Bundle master complaint. We have received a draft list from the plaintiffs’ steering committee. The draft list identifies fifteen cases in the B3 Bundle, some of which are putative class actions. Six cases previously filed against Nalco Company are not included in the B3 Bundle.

Pursuant to orders issued by Judge Barbier in MDL 2179, claimants wishing to assert causes of action subject to one or more of the master complaints may do so by filing a short-form joinder. A short-form joinder is deemed to be an intervention into one or more of the master complaints in MDL 2179. The deadline for filing short form joinders was April 20, 2011. Of the individuals who have filed short form joinders that intervene in the B3 Bundle, Nalco Company has no reason to believe that these individuals are different from those covered by the putative class actions described above. These plaintiffs who have intervened in the B3 Bundle seek to recover damages for alleged personal injuries, medical monitoring and/or property damage related to the oil spill clean-up efforts.

Nalco Company, the incident defendants and the other responder defendants have been named as third party defendants by Transocean Deepwater Drilling, Inc. and its affiliates (the “Transocean Entities”) (In re the Complaint and Petition of Triton Asset Leasing GmbH, et al, MDL No. 2179, Civil Action 10-2771). In April and May 2011, the Transocean Entities, Cameron International Corporation, Halliburton Energy Services, Inc., M-I L.L.C., Weatherford U.S., L.P. and Weatherford International, Inc. (collectively, the “Cross Claimants”) filed cross claims in MDL 2179 against Nalco Company and other unaffiliated cross defendants. The Cross Claimants generally allege, among other things, that if they are found liable for damages resulting from the Deepwater Horizon explosion, oil spill and/or spill response, they are entitled to indemnity or contribution from the cross defendants.

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15. Contingencies and Litigation (continued)

In April and June 2011, in support of its defense of the claims against it, Nalco Company filed counterclaims against the Cross Claimants. In its counterclaims, Nalco Company generally alleges that if it is found liable for damages resulting from the Deepwater Horizon explosion, oil spill and/or spill response, it is entitled to contribution or indemnity from the Cross Claimants.

Other Related State Court Actions

In March 2011, Nalco Company was named, along with other unaffiliated defendants, in an amended complaint filed by an individual in the Circuit Court of Harrison County, Mississippi, Second Judicial District (Franks v. Sea Tow of South Miss, Inc., et al., Cause No. A2402-10-228 (Circuit Court of Harrison County, Mississippi)). The amended complaint generally asserts, among other things, negligence and strict products liability claims relating to the plaintiff’s alleged exposure to chemical dispersants manufactured by Nalco Company. The plaintiff seeks unspecified compensatory damages, medical expenses, and attorneys’ fees and costs.

In October 2011, Nalco Company was named along with other unaffiliated defendants, in a complaint filed in Louisiana State Court, Toups, et al. v Nalco Company, et al., No. 59-121 (25^th Judicial District Court, Parish of Plaquemines, Louisiana). The complaint alleges that 26 boat operators and clean-up technicians suffered health-related problems as a result of using chemicals during the oil spill response efforts.

We believe the claims asserted against Nalco Company are without merit and intend to defend these lawsuits vigorously. We also believe that we have rights to contribution and/or indemnification (including legal expenses) from third parties. However, we cannot predict the outcome of these lawsuits, the involvement we might have in these matters in the future or the potential for future litigation.

Matters Related To The Merger Transaction With Ecolab Inc.

Following Ecolab Inc. (“Ecolab”) and Nalco Holding Company’s announcement of a planned merger transaction on July 20, 2011, a purported class action lawsuit was filed against Nalco, members of Nalco’s board of directors and Ecolab in the Circuit Court of the Eighteenth Judicial Circuit (DuPage County, State of Illinois): Jack Mozenter v. Nalco Holding Co., Ecolab, Inc., et al., No. 2011MR001043. Three additional purported class action lawsuits were also filed in the Circuit Court of the Eighteenth Judicial Circuit: Ziegler v. Nalco Holding Company, et al., No. 2011 L 861, Stasik v. Fyrwald, et al., No. 2011 CH 3745 and Construction Workers Pension Trust Fund – Lake County v. Nalco Holding Co., et al., No. 2011 L951. The four actions were consolidated by the Circuit Court on September 7, 2011. The lawsuits allege that the planned merger transaction is the result of an unfair and inadequate process, the consideration to be received by Nalco’s stockholders in the merger is inadequate and that the members of Nalco’s board of directors breached their fiduciary duties. The lawsuits were later amended to allege that the disclosures regarding the proposed merger as submitted by Nalco in a draft proxy statement for its shareholders were inadequate. (The lawsuits also allege that Ecolab aided and abetted the Nalco board of directors in the breach of their fiduciary duties to Nalco’s stockholders.) The lawsuits seek, among other things, injunctive relief enjoining Ecolab and Nalco from proceeding with the merger unless Nalco implements procedures to obtain the highest possible price for its stockholders, directing the Nalco board of directors to exercise its fiduciary duties to obtain a transaction in the best interests of Nalco’s stockholders and seeking additional disclosures in the proposed proxy statement. Nalco believes the allegations are meritless.

On October 24, 2011, the parties to the consolidated actions reached an agreement in principle regarding settlement of the consolidated actions. The defendants have entered into the settlement to eliminate the uncertainty, burden, risk, expense and distraction of the litigation. Under this settlement, the consolidated actions will be dismissed with prejudice on the merits and all defendants will be released from any and all claims relating to, among other things, the merger and any related disclosures. The settlement is subject to customary conditions, including consummation of the merger, completion of certain confirmatory discovery, class certification and final approval by the court.

In exchange for the releases provided in the settlement, Ecolab and Nalco have provided additional disclosure requested by plaintiffs in the consolidated action related to, among other things, the negotiations between Ecolab and Nalco that resulted in the execution of the merger agreement, the financial forecasts prepared by Ecolab and Nalco, the opinions provided by Ecolab’s and Nalco’s respective financial advisors in connection with the merger and the fees paid to those advisors by Ecolab and Nalco over the past two years.

The settlement will not affect any provision of the merger agreement or the form or amount of the consideration to be received by Nalco stockholders in the merger. The parties have agreed that the lead plaintiff may apply to the court for an award of attorneys’ fees and reimbursement of expenses, which, under certain circumstances, defendants have agreed not to oppose.

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16. Financial Instruments

We use derivative instruments to manage our foreign exchange exposures, and we have also used derivative instruments to manage our energy cost exposures. All derivative instruments are recognized in the consolidated balance sheets at fair value. Changes in the fair value of derivatives that are not hedges are recognized in earnings as they occur. If the derivative instruments are designated as hedges, depending on their nature, the effective portions of changes in their fair values are either offset in earnings against the changes in the fair values of the items being hedged, or reflected initially in accumulated other comprehensive income (“AOCI”) and subsequently recognized in earnings when the hedged items are recognized in earnings. The ineffective portions of changes in the fair values of derivative instruments designated as hedges are immediately recognized in earnings.

Counterparties to derivative financial instruments expose us to credit-related losses in the event of nonperformance, but we do not expect any counterparties to fail to meet their obligations given their high credit ratings. We also mitigate our risk of material losses by diversifying our selection of counterparties.

Net Investment Hedges

We use euro-denominated borrowings of Nalco Company, as a hedge of our net investment in subsidiary companies whose assets, liabilities, and operations are measured using the euro as their functional currency. Because of the high degree of effectiveness between the hedging instruments and the exposure being hedged, fluctuations in the value of the euro-denominated debt due to exchange rate changes are offset by changes in the net investment. Accordingly, changes in the value of the euro-denominated debt are recognized in foreign currency translation adjustments, a component of AOCI, to offset changes in the value of our net investment in subsidiary companies whose financial statements are measured using the euro as their functional currency.

The carrying value of euro-denominated debt designated as a net investment hedge was $269.7 million and $267.4 million at September 30, 2011 and December 31, 2010, respectively. Gains (losses) from the net investment hedge reported as a component of other comprehensive income in the foreign currency translation adjustment account were as follows:

24

16. Financial Instruments (continued)

(dollars in millions)	Three Months ended September 30, 2011		Three Months Ended September 30, 2010			Nine Months ended September 30, 2011			Nine Months ended September 30, 2010
Gain (loss) before tax	$	19.6	$	(28.3	)	$	(2.3	)	$	14.4
Income tax (benefit)		7.3		(10.6	)		(0.9	)		5.4
Net gain (loss)	$	12.3	$	(17.7	)	$	(1.4	)	$	9.0

We formally assess, on a quarterly basis, whether the euro-denominated debt is effective at offsetting changes in the value of the underlying exposure. No hedge ineffectiveness was recorded in earnings during the nine months ended September 30, 2011 and 2010.

Cash Flow Hedges

We have used derivative instruments such as foreign exchange forward contracts to hedge the variability of the cash flows from certain forecasted royalty payments due to changes in foreign exchange rates, and we have used commodity forward contracts to manage our exposure to fluctuations in the cost of natural gas used in our business. These instruments are designated as cash flow hedges, with changes in their fair values included in AOCI to the extent the hedges are effective. Amounts included in AOCI are reclassified into earnings in the same period during which the hedged transaction is recognized in earnings.

Changes in fair value representing hedge ineffectiveness are recognized in current earnings. No derivative instruments were designated as a cash flow hedge at September 30, 2011 and December 31, 2010, and no cash flow hedges were discontinued during the nine months ended September 30, 2011 and September 30, 2010.

Fair Value Hedges

For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in current earnings. No derivative instruments were designated as a fair value hedge at September 30, 2011 and December 31, 2010.

Derivatives Not Designated as Hedging Instruments

We use foreign currency contracts to offset the impact of exchange rate changes on recognized assets and liabilities denominated in non-functional currencies, including intercompany receivables and payables. The gains or losses on these contracts, as well as the offsetting losses or gains resulting from the impact of changes in exchange rates on recognized assets and liabilities denominated in non-functional currencies, are recognized in current earnings.

Derivative instruments are not held or issued for trading or speculative purposes.

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16. Financial Instruments (continued)

The notional amounts of derivative instruments outstanding as of September 30, 2011 and December 31, 2010 were as follows:

(dollars in millions)	September 30, 2011		December 31, 2010
Derivatives designated as hedges:
None	$	—	$	—
Total derivatives designated as hedges		—		—
Derivatives not designated as hedges:
Foreign exchange contracts		146.4		87.9
Total derivatives	$	146.4	$	87.9

The fair value and balance sheet presentation of derivative instruments as of September 30, 2011 and December 31, 2010 were as follows:

(dollars in millions)	Balance Sheet Location	September 30, 2011		December 31, 2010
Asset derivatives:
Derivatives not designated as hedges:
Foreign exchange contracts	Prepaid expenses, taxes and other current assets	$	1.1	$	1.1
		$	1.1	$	1.1
Liability derivatives:
Derivatives not designated as hedges:
Foreign exchange contracts	Other current liabilities	$	—	$	0.3
		$	—	$	0.3

For the nine months ended September 30, 2011 and 2010, we had no derivative instruments that qualified as cash flow hedges, so there was no impact on AOCI and earnings from such instruments.

For the three months and nine months ended September 30, 2011 and 2010, the impact on earnings from derivative instruments that were not designated as hedges was as follows:

(dollars in millions)	Location			Three Months ended September 30, 2011			Three Months ended September 30, 2010
Gain recognized in earnings:
Foreign exchange contracts		Other income	(expense), net	$	(0.4	)	$	2.3

(dollars in millions)	Location			Nine Months ended September 30, 2011		Nine Months ended September 30, 2010
Gain recognized in earnings:
Foreign exchange contracts		Other income	(expense), net	$	1.4	$	4.4

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17. Fair Value Measurements

Authoritative guidance issued by the FASB defines fair value as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels:

Level 1	–	Quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2	–	Observable inputs other than quoted prices in active markets.
Level 3	–	Unobservable inputs for which there is little or no market data available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

The fair value of financial assets and liabilities measured at fair value on a recurring basis was as follows:

(dollars in millions)	Balance September  30, 2011		Level 1		Level 2		Level 3
Assets:
Foreign exchange forward contracts	$	1.1	$	—	$	1.1	$	—
Money market funds held in rabbi trusts		2.0		2.0		—		—
	$	3.1	$	2.0	$	1.1	$	—
Liabilities:
Foreign exchange forward contracts	$	—	$	—	$	—	$	—
Contingent consideration		15.7		—		—		15.7
	$	15.7	$	—	$	—	$	15.7

(dollars in millions)	Balance December  31, 2010		Level 1		Level 2		Level 3
Assets:
Foreign exchange forward contracts	$	1.1	$	—	$	1.1	$	—
Money market funds held in rabbi trusts		12.5		12.5		—		—
	$	13.6	$	12.5	$	1.1	$	—
Liabilities:
Foreign exchange forward contracts	$	0.3	$	—	$	0.3	$	—
Contingent consideration		20.1		—		—		20.1
	$	20.4	$	—	$	0.3	$	20.1

Foreign exchange forward contracts are valued using quoted forward foreign exchange prices at the reporting date. Money market funds held in rabbi trusts are valued using quoted prices in active markets. Contingent consideration obligations are measured based on the probability-weighted present value of the consideration expected to be transferred.

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17. Fair Value Measurements (continued)

Changes in the fair value of contingent consideration obligations for the nine months ended September 30, 2011 were as follows:

(dollars in millions)	Nine Months ended September 30, 2011
Balance as of January 1, 2011	$	20.1
Liabilities recognized at acquisition date		1.1
(Gains) recognized in earnings		(0.5	)
Payments		(5.0	)
Balance as of September 30, 2011	$	15.7

The carrying values of cash and cash equivalents, trade accounts receivable, accounts payable and short-term debt approximate their fair values at September 30, 2011 and December 31, 2010, because of the short-term maturities and nature of these balances.

The estimated fair value of long-term debt at September 30, 2011 and December 31, 2010 was $2,813.2 million and $2,864.9 million, respectively, and the related carrying value was $2,644.5 million and $2,782.0 million, respectively. The fair value of our fixed-rate borrowings was estimated based on their quoted market prices. The carrying value of amounts outstanding under our senior secured credit facilities is considered to approximate fair value because interest accrues at rates that fluctuate with interest rate trends. The carrying value of other long-term debt outstanding also approximates fair value due to the variable nature of their interest rates.

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EX-99.7

Exhibit 99.7

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The unaudited pro forma condensed combined balance sheet combines the historical consolidated balance sheets of Ecolab Inc., which we refer to as Ecolab, and Nalco Holding Company, which we refer to as Nalco, giving effect to the merger of Ecolab and Nalco, which we refer to as the merger, and the financing transactions described below as if they had been consummated on September 30, 2011. The unaudited pro forma condensed combined statements of income for the nine months ended September 30, 2011 and for the year ended December 31, 2010 combine the historical consolidated statements of income of Ecolab and historical consolidated statements of operations of Nalco, giving effect to the merger and the financing transactions described below as if they had been consummated on January 1, 2010, the beginning of the earliest period presented. The historical consolidated financial statements of Nalco have been adjusted by condensing certain line items in order to conform with Ecolab’s financial statement presentation.

The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting with Ecolab considered the acquirer of Nalco. Accordingly, consideration given by Ecolab to complete the merger with Nalco will be allocated to assets and liabilities of Nalco based upon their estimated fair values as of the date of completion of the merger. As of the date hereof, Ecolab has not completed the detailed valuation studies necessary to arrive at the required estimates of the fair value of the Nalco assets acquired and the liabilities assumed and the related allocations of purchase price, nor has it identified all adjustments necessary to conform Nalco’s accounting policies to Ecolab’s accounting policies. A final determination of the fair value of Nalco’s assets and liabilities will be based on the actual net tangible and intangible assets and liabilities of Nalco as of the date of completion of the merger. Accordingly, the unaudited pro forma purchase price adjustments are preliminary and are subject to further adjustments as additional information becomes available and as additional analyses are performed. The preliminary unaudited pro forma purchase price adjustments have been made solely for the purpose of providing the unaudited pro forma condensed combined financial statements presented below. Ecolab estimated the fair value of Nalco’s assets and liabilities based on preliminary valuation studies, due diligence and information presented in public filings. Final valuations are expected to be completed in the fourth quarter of 2011. Increases or decreases in the fair value of relevant balance sheet amounts will result in adjustments to the balance sheet and/or statements of income. There can be no assurance that such finalization will not result in material changes.

These unaudited pro forma condensed combined financial statements have been developed from and should be read in conjunction with Ecolab’s consolidated financial statements and related notes included in Ecolab’s Annual Report on Form 10-K for the year ended December 31, 2010 and Quarterly Report on Form 10-Q for the period ended September 30, 2011, and Nalco’s consolidated financial statements and related notes included as Exhibits 99.5 and 99.6 to Ecolab’s Current Report on Form 8-K with respect to which these unaudited pro forma condensed combined financial statements are included as an exhibit. The unaudited pro forma condensed combined financial statements are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or the consolidated financial position of Ecolab would have been had the merger occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position.

Ecolab expects to incur significant costs associated with integrating the operations of Ecolab and Nalco. The unaudited pro forma condensed combined financial statements do not reflect the costs of any integration activities or benefits that may result from realization of future cost savings from operating efficiencies or revenue synergies expected to result from the merger. In addition, the unaudited pro forma condensed combined financial statements do not include one-time costs directly attributable to the transaction, employee retention costs or professional fees incurred by Nalco or Ecolab pursuant to provisions contained in the merger agreement, as those costs are not considered part of the purchase price.

1

Unaudited Pro Forma Condensed Combined Statement of Income

For The Twelve Months Ended December 31, 2010

	Ecolab		Nalco		Pro Forma Adjustments			Pro Forma Combined
	(in millions, except per share data)
Net Sales	$	6,089.7	$	4,250.5	$	—		$	10,340.2
Operating Expenses
Cost of Sales	3,013.8		2,336.7		(9.5		)(a)	5,341.0
Selling, general and administrative expenses	2,261.6		1,328.6		165.3		(a)	3,755.5
Special gains and charges	7.5		7.5		—			15.0
Total operating expenses	5,282.9		3,672.8		155.8			9,111.5
Operating Income	806.8		577.7		(155.8		)	1,228.7
Other expense, net	—		45.1		—			45.1
Interest expense, net	59.1		227.6		(55.5		)(c)	231.2
Income before income taxes	747.7		305.0		(100.3		)	952.4
Provision for income taxes	216.6		103.3		(32.0		)(d)	287.9
Net income including noncontrolling interest	531.1		201.7		(68.3		)	664.5
Less: Net income attributable to noncontrolling interest	0.8		5.5		—			6.3
Net income	$	530.3	$	196.2	$	(68.3	)	$	658.2
Earnings attributable to Ecolab per common share
Basic	$	2.27	$	1.42				$	2.18
Diluted	$	2.23	$	1.41				$	2.14
Weighted-average common shares outstanding
Basic	233.4		138.3		(70.0		)(e)	301.7
Diluted	237.6		139.4		(68.3		)(e)	308.7

The accompanying notes are an integral part of these unaudited pro forma condensed combined  financial statements.

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Unaudited Pro Forma Condensed Combined

Statement of Income

For The Nine Months Ended September 30, 2011

	Ecolab		Nalco			Pro Forma Adjustments			Pro Forma Combined
	(in millions, except per share data)
Net Sales	$	4,953.2	$	3,488.0		$	—		$	8,441.2
Operating Expenses
Cost of Sales	2,509.1		2,041.2			(24.5		)(a)	4,525.8
Selling, general and administrative expenses	1,786.5		1,036.4			136.3		(a)	2,950.2
	—		—			(9.0		)(b)	—
Special gains and charges	68.0		(131.1		)	—			(63.1		)
Total operating expenses	4,363.6		2,946.5			102.8			7,412.9
Operating Income	589.6		541.5			(102.8		)	1,028.3
Other expense, net	—		11.8			—			11.8
Interest expense, net	39.8		141.8			(7.3		)(c)	174.3
Income before income taxes	549.8		387.9			(95.5		)	842.2
Provision for income taxes	175.3		129.5			(31.6		)(d)	273.2
Net income including noncontrolling interest	374.5		258.4			(63.9		)	569.0
Less: Net income attributable to noncontrolling interest	0.7		5.9			—			6.6
Net income	$	373.8	$	252.5		$	(63.9	)	$	562.4
Earnings attributable to Ecolab per common share
Basic	$	1.61	$	1.82					$	1.87
Diluted	$	1.58	$	1.80					$	1.84
Weighted-average common shares outstanding
Basic	231.8		138.8			(70.5		)(e)	300.1
Diluted	236.2		140.1			(69.0		)(e)	307.3

The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements

3

Unaudited Pro Forma Condensed Combined

Balance Sheet

As of September 30, 2011

	Ecolab			Nalco			Pro Forma Adjustments			Pro Forma Combined
	(in millions)
Assets
Current Assets
Cash and cash equivalents	$	207.3		$	120.8		$	173.8	(f)	$	501.9
Accounts receivable, net	1,143.1			900.8			—			2,043.9
Inventories	504.9			425.1			161.0		(g)	1,091.0
Deferred income taxes	86.5			54.5			1.3		(o)	142.3
Prepaid and other current assets	149.2			161.0			—			310.2
Total Current Assets	2,091.0			1,662.2			336.1			4,089.3
Property, plant and equipment, net	1,218.2			752.1			252.7		(h)	2,223.0
Goodwill	1,504.0			1,771.5			2,421.0		(i)	5,696.5
Other intangible assets, net	418.8			993.2			2,836.8		(j)	4,248.8
Other assets	273.6			200.5			(35.2		)(k)	438.9
	—			—			—			—
Total Assets	$	5,505.6		$	5,379.5		$	5,811.4		$	16,696.5
Liabilities and Stockholders’ Equity
Current Liabilities:
Short-term debt	$	336.8		$	115.2		$	569.0	(l)	$	1,021.0
Accounts payable	413.4			378.8			(6.5		)(p)	785.7
Accrued expenses and other current liabilities	867.5			425.5			(113.9		)(m)	1,179.1
Total Current Liabilities	1,617.7			919.5			448.6			2,985.8
Long-term debt	700.2			2,644.5			186.6		(l)	4,900.2
	—			—			1,368.9		(l)	—
Other liabilities	716.8			875.5			42.0		(n)	2,726.5
	—			—			1,092.2		(o)	—
Total Liabilities	3,034.7			4,439.5			3,138.3			10,612.5
Equity
Common stock	335.1			1.4			66.9		(p)	403.4
Additional paid-in capital	1,404.8			813.1			2,792.4		(p)	5,010.3
Retained earnings	3,531.2			192.3			(282.5		)(p)	3,441.0
Accumulated other comprehensive (loss) income	(160.7		)	115.0			(115.0		)(p)	(160.7		)
Treasury stock	(2,643.4		)	(211.3		)	211.3		(p)	(2,643.4		)
Total Stockholders’ Equity	2,467.0			910.5			2,673.1			6,050.6
Noncontrolling interest	3.9			29.5			—			33.4
Total Equity	2,470.9			940.0			2,673.1			6,084.0
Total Liabilities and Equity	$	5,505.6		$	5,379.5		$	5,811.4		$	16,696.5

The accompanying notes are an integral part of these unaudited pro forma condensed combined

financial statements.

4

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

Note 1. Description of the Transaction

Ecolab and Nalco entered into an Agreement and Plan of Merger dated as of July 19, 2011, which we refer to as the merger agreement, pursuant to which Nalco agreed to merge with and into a wholly-owned subsidiary of Ecolab. The merger was completed on December 1, 2011. Upon completion of the merger, the separate existence of Nalco ceased and Ecolab became the parent company of the Ecolab subsidiary surviving the merger and Nalco’s subsidiaries.

At the effective time of the merger, each share of Nalco common stock issued and outstanding immediately prior to the effective time, other than shares owned by Ecolab, Nalco or any of their respective wholly-owned subsidiaries and shares in respect of which appraisal rights had been properly exercised and not withdrawn, was converted into the right to receive, at the election of the stockholder, subject to certain proration and reallocation procedures described below, either 0.7005 shares of Ecolab common stock or $38.80 in cash, without interest. Nalco stockholders will not receive any fractional shares of Ecolab common stock in the merger. Instead, they will receive a cash payment in lieu of any fractional shares of Ecolab common stock they otherwise would have received in the merger.

Under the merger agreement, approximately 70% of issued and outstanding shares of Nalco common stock immediately prior to the effective time were converted into the right to receive Ecolab common stock and approximately 30% of issued and outstanding shares of Nalco common stock immediately prior to the effective time were converted into the right to receive cash. In order to achieve this 70%/30% stock-cash mix of consideration, the merger agreement provides for pro-rata adjustments to and reallocation of the stock and cash elections made by Nalco stockholders, as well as the allocation of Nalco shares owned by stockholders who fail to make an election. The deadline for Nalco stockholders to make their stock-cash election pursuant to the merger agreement is 5:00 p.m., New York City time, on December 7, 2011.

Depending on the elections made by other Nalco stockholders, Nalco stockholders who elect to receive Ecolab common stock for all of their shares in the merger may receive a portion of their consideration in cash, and Nalco stockholders who elect to receive cash for all of their shares in the merger may receive a portion of their consideration in Ecolab common stock. Nalco stockholders who elect to receive a combination of Ecolab common stock and cash for their shares in the merger may receive Ecolab common stock and cash in a proportion different from that which they elected. The merger agreement also provides for the allocation of shares owned by Nalco stockholders who fail to make an election.

Immediately prior to the completion of the merger, each restricted stock unit held by a non-employee director of Nalco fully vested and was converted into the right to receive either 0.7005 shares of Ecolab common stock or $38.80 in cash, without interest. Each time-vesting restricted stock unit held by certain officers of Nalco fully vested and was settled for shares of Nalco common stock immediately prior to the completion of the merger pursuant to their change of control agreements with Nalco.

Except for the restricted stock unit awards described in the preceding paragraph, Nalco stock options, restricted stock units and performance stock units granted under Nalco’s equity compensation plans or pursuant to any individual equity compensation award agreement, whether vested or unvested, that were outstanding immediately prior to the completion of the merger were automatically converted into an Ecolab stock option, restricted stock unit and performance stock unit, as applicable, on the same or substantially similar terms and conditions as were applicable to such Nalco stock option, restricted stock unit and performance stock unit immediately prior to the merger. Nalco stock options, restricted stock units and performance stock units were converted to Ecolab stock options, restricted stock units or performance stock units based on a stock award exchange ratio calculated in accordance with the merger agreement.

Note 2. Basis of Pro Forma Presentation

The unaudited pro forma condensed combined statements of income for the year ended December 31, 2010 and the nine-months ended September 30, 2011 give effect to the merger and the financing transactions described below as if they had been completed on January 1, 2010. The unaudited pro forma condensed combined balance sheet as of September 30, 2011 gives effect to the merger and the financing transactions described below as if they had been completed on September 30, 2011.

The unaudited pro forma condensed combined financial statements have been derived from the historical consolidated financial statements of Ecolab and Nalco. Certain financial statement line items included in Nalco’s historical presentation have been condensed to conform to corresponding financial statement line items included in Ecolab’s historical presentation. This includes the amortization of intangible assets which has been condensed into selling, general and administrative expenses, and restructuring expense, gain on divestitures, and impairment of goodwill which have been

5

condensed into special gains and charges. The classification of these items have no impact on the historical operating income, net income, total assets, total liabilities or stockholders’ equity reported by Ecolab or Nalco. Nalco sold its personal care products business and marine chemical business in January 2011 and February 2011, respectively. The marine chemicals and personal care products businesses contributed approximately $70 million and $25 million to net sales and income before income taxes, respectively, for the year ended December 31, 2010.

Additionally, based on Ecolab’s review of Nalco’s summary of significant accounting policies disclosed in Nalco’s financial statements and preliminary discussions with Nalco management, the nature and amount of any adjustments to the historical financial statements of Nalco to conform its accounting policies to those of Ecolab are not expected to be material. Further review of Nalco’s accounting policies and financial statements may result in revisions to Nalco’s policies and classifications to conform to Ecolab.

Assumptions and estimates underlying the unaudited pro forma adjustments are described in these notes, which should be read in conjunction with the unaudited pro forma condensed combined financial statements. These estimates are subject to change pending further review of the assets acquired and liabilities assumed.

The merger is reflected in the unaudited pro forma condensed combined financial statements as an acquisition of Nalco by Ecolab in accordance with Accounting Standards Codification Topic 805, “Business Combinations,” using the acquisition method of accounting. Under these accounting standards, the total estimated purchase price is calculated as described in Note 3 to the unaudited pro forma condensed combined financial statements, and the assets acquired and the liabilities assumed have been measured at estimated fair value. For the purpose of measuring the estimated fair value of the assets acquired and liabilities assumed, Ecolab has applied the accounting guidance for fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The fair value measurements utilize estimates based on key assumptions of the merger, including historical and current market data.

Estimated transaction costs, including estimated make-whole payments in connection with the repayment or redemption of certain Nalco debt obligations, have been excluded from the unaudited pro forma condensed combined statements of income as they reflect charges directly related to the merger which do not have an ongoing impact. However, the anticipated transaction costs are reflected in the unaudited pro forma condensed combined balance sheet as a decrease to both cash and to retained earnings.

The unaudited pro forma condensed combined financial statements do not reflect any cost savings (or associated costs to achieve such savings) from operating efficiencies, synergies or other restructuring that could result from the merger. Further, the unaudited pro forma condensed combined financial statements do not reflect the effect of any future regulatory actions that may impact the unaudited pro forma condensed combined financial statements.

Note 3. Estimate of Consideration Expected to be Transferred

The following is a preliminary estimate of the merger consideration to be transferred to effect the merger:

	Common Stock (par value $1.00 per share)		Additional Paid-in Capital		Total
	(in millions, except per share data)
Issuance of Ecolab common stock to Nalco stockholders	$	68.3	$	3,529.7	$	3,598.0
Replacement equity awards			75.8		75.8
Cash consideration					1,622.5
Total consideration					$	5,296.3

The foregoing is based on Ecolab’s closing share price of $52.68 as of November 23, 2011. Using this closing share price, the value of the merger consideration was approximately $5,296.3 million, consisting of $1,622.5 million of cash, the issuance of 68.3 million shares of Ecolab common stock, and $75.8 million of replacement equity awards. The replacement equity awards represented the fair value of such awards attributable to service prior to September 30, 2011 using the current stock price to determine conversion and a Black Scholes valuation model to determine the fair value of stock options.

6

The allocation of the preliminary purchase price to the fair values of assets acquired and liabilities assumed includes unaudited pro forma adjustments to reflect the fair values of Nalco’s assets and liabilities. The allocation of the preliminary purchase price is as follows (in millions):

Current assets	$	1,824.5
Property, plant and equipment	1,004.8
Goodwill	4,192.5
Other intangibles	3,830.0
Other assets	135.7
Total assets	10,987.5
Current liabilities	(820.9		)
Long-term debt	(2,831.1		)
Other liabilities	(2,009.7		)
Non-controlling interest	(29.5		)
Total liabilities and equity	(5,691.2		)
Estimated purchase price	$	5,296.3

Note 4. Adjustments to Unaudited Pro Forma Condensed Combined Financial Statements

The unaudited pro forma adjustments included in the unaudited pro forma condensed combined financial statements are as follows:

Adjustments to Unaudited Pro Forma Condensed Combined Statements of Income

(a)  Depreciation and amortization.  The adjustment to depreciation and amortization expense recorded in cost of goods sold, or COGS, and selling, general and administrative, or SG&A, expenses is a result of the fair market value adjustments to assets acquired and the estimated remaining useful lives. The estimated fair value of depreciable property, plant and equipment, or PP&E, of approximately $821.5 million and of amortizable intangible assets of $2,630.0 million is expected to be amortized on a straight-line basis over estimated useful lives that will generally range from 6 to 26 years, subject to the completion of the purchase price allocation. The weighted-average useful life of depreciable property, plant and equipment is 13 years and of amortizable intangibles is 13 years. See Note 4(j) for the detail of the intangible assets acquired in the preliminary purchase price allocation. The purchase price allocation to tangible and intangible assets and the impact on depreciation and amortization is as follows (in millions):

											Pro Forma Depreciation and Amortization Expense
	Ecolab		Nalco		Pro Forma Adjustment			Pro Forma Combined		Useful Lives	Year Ended December 31, 2010		Nine Months Ended September 30, 2011
Property, plant & equipment
Land	$	36.1	$	76.3	$	9.7		$	122.1	N/A	$	—	$	—
Buildings	137.0		170.5		91.0			398.5		26 years	20.5		39.1
Construction in process	71.8		96.9		0.4			169.1		N/A	—		—
Personal property	973.3		408.4		151.6			1,533.3		7 years	375.9		273.7
Total property, plant & equipment	$	1,218.2	$	752.1	$	252.7		$	2,223.0		$	396.4	$	312.8
Goodwill and other intangibles
Goodwill	$	1,504.0	$	1,771.5	$	2,421.0		$	5,696.5	N/A	$	—	$	—
Patents and developed technology	98.1		40.6		499.4			638.1		6 - 9 years	94.7		72.6
Customer relationships	245.2		117.8		1,792.2			2,155.2		15 years	148.9		117.8
Other trade names	75.5		834.8		(654.8		)	255.5		8 years	29.2		22.7
Other indefinite life intangibles	—		—		1,200.0			1,200.0		N/A	—		—
Total goodwill and other intangibles	$	1,922.8	$	2,764.7	$	5,257.8		$	9,945.3		$	272.8	$	213.1

7

The calculation of pro forma adjusted depreciation and amortization is as follows (in millions):

	Year Ended December 31, 2010			Nine Months Ended September 30, 2011
Pro forma depreciation expense (PP&E)	$	396.4		$	312.8
Minus historical depreciation expense (PP&E)	(429.5		)	(345.5		)
Pro forma adjustment	$	(33.1	)	$	(32.7	)
Pro forma amortization expense (intangibles)	$	272.8		$	213.1
Minus historical amortization expense (intangibles)	(83.9		)	(68.6		)
Pro forma adjustment	$	188.9		$	144.5
Total pro forma depreciation and amortization adjustment	$	155.8		$	111.8

The depreciation and amortization expense adjustment is broken down between COGS and SG&A expenses as follows (in millions):

	Year Ended December 31, 2010			Nine Months Ended September 30, 2011
New COGS depreciation	$	67.4		50.6
Eliminate historic COGS depreciation	(76.9		)	(75.1		)
Total COGS depreciation adjustment	$	(9.5	)	$	(24.5	)
New SG&A depreciation	$	22.6		$	17.0
Eliminate historic SG&A depreciation	(46.2		)	(25.2		)
Adjustment to SG&A depreciation	(23.6		)	(8.2		)
New SG&A amortization	232.1			174.0
Eliminate historic SG&A amortization	(43.2		)	(29.5		)
Adjustment to SG&A amortization	188.9			144.5
Total SG&A depreciation & amortization adjustment	$	165.3		$	136.3

In 2011, Nalco identified certain costs that it had previously classified as SG&A expenses that it believes are more appropriately classified in COGS. Included in the costs Nalco identified was depreciation expense on certain manufacturing assets that totaled $20.1 million in fiscal year 2010, and which is included in historical SG&A depreciation for fiscal year 2010. Depreciation expense on these manufacturing assets for the nine months ended September 30, 2011 is included in historical COGS depreciation.

(b)  Elimination of transaction fees.  Total Ecolab transaction fees related to the merger have been estimated to be $68.5 million, of which $4.4 million have been accrued within accounts payable as of September 30, 2011 and expensed through SG&A expenses within the consolidated statement of income for the nine-months ended September 30, 2011. No transaction fees have been expensed within the consolidated statement of income for the twelve-months ended December 31, 2010. The portion of the fees that are expensed have been removed within the unaudited pro forma adjustments to SG&A expenses as these fees relate directly to the transaction and do not have an ongoing impact. Total Nalco fees related to the merger have been estimated to be $38.0 million, of which $4.6 million has been expensed and $2.1 million remains accrued as of September 30, 2011.

(c)  Interest expense.  The net adjustment amount reflects a reduction in interest expense based on the assumption of a refinancing of all existing Nalco debt and the incurrence by Ecolab of additional indebtedness in order to pay the cash portion of the merger consideration. See Note 4(l) for additional details on estimated long-term debt activity. Pro forma interest expense assumes total new debt of $4,800.0 million with a weighted average interest rate of 3.3% and includes amortization of $29.6 million of new deferred financing costs. The weighted average interest rate was calculated based on anticipated debt issuances at the benchmark interest rates and credit spreads at the expected combined company credit rating as of November 23, 2011. Management considered the impact of a potential credit rating downgrade in determining the appropriate credit spreads and resulting weighted average interest rate. The unaudited pro forma interest expense incorporates estimates for debt bearing variable rates as well as the amortization of financing costs and securitization fees. A 1/8th of 1%

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change in the assumed variable interest rate related to the financing would change annual unaudited pro forma interest expense by approximately $6.0 million. Estimated interest expense is subject to fluctuation based on market rates until financing occurs. The estimated new debt and corresponding weighted average interest rate of 3.3% do not take into account the $1.0 billion share repurchase program announced by Ecolab on September 6, 2011 and expected to be completed by the end 2012. The share repurchase is expected to be funded by operating cash flow and additional debt. Ecolab’s decision to repay existing Nalco debt and its ultimate financing strategy will be subject to various factors, including market conditions and interest rates.

The interest expense related to the new debt incurred as a result of the merger assumes the following balances (in millions):

	Amount
Commercial paper	$	600.0
7 year notes	250.0
12 year notes	250.0
Other long term notes (varying terms)	3,700.0
Total	$	4,800.0

(d)  Income tax expense.  Nalco’s 2010 and third quarter 2011 global tax rates of 33.9% and 33.4%, respectively, have been applied to the unaudited pro forma adjustments related to operating expenses for 2010 and third quarter 2011. Nalco’s 2010 and third quarter 2011 combined U.S. federal and state statutory tax rates of 37.5% have been applied to the unaudited pro forma adjustments related to interest expense for 2010 and third quarter 2011, respectively.

(e)  Shares outstanding.  Reflects the elimination of Nalco’s common stock and the issuance of approximately 68.3 million common shares of Ecolab common stock.

The unaudited pro forma weighted average number of basic shares outstanding is calculated for each period presented by adding Ecolab’s weighted average number of basic shares outstanding for that period and the number of Ecolab shares issued to Nalco stockholders as a result of the merger. The unaudited pro forma weighted average number of diluted shares outstanding is calculated by adding Ecolab’s weighted average number of diluted shares outstanding for that period and the number of Ecolab shares issued pursuant to the merger as well as 2.8 million shares related to the assumption by Ecolab of Nalco stock options and other equity-based compensation awards.

Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet

(f)  Cash.  The adjustment amount represents a net increase of cash on hand in the amount of $173.8 million. This includes an increase to cash related to new debt of $4,800.0 million and a decrease in cash related to payment of the cash merger consideration of $1,622.5 million, the repayment of existing Nalco debt at fair value of $2,862.1 million and certain estimated transaction related expenses, including $6.4 million of make-whole payments in connection with the repayment or redemption of certain Nalco debt obligations, $29.6 million of financing fees, $104.0 million of transaction fees and $1.6 million of other change in control payments.

(g)  Inventories.  Represents the unaudited pro forma adjustment to reflect the preliminary fair value of Nalco’s inventories balance at current market prices of approximately $586.1 million, subject to the completion of the purchase price allocation.

(h)  Property, plant and equipment.  Represents the unaudited pro forma adjustment of Nalco’s property, plant and equipment to its preliminarily estimated fair market value as of September 30, 2011 of $1,004.8 million, subject to the completion of the purchase price allocation.

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(i)  Goodwill.  Reflects the preliminary estimate of the excess of the purchase price paid over the fair value of Nalco’s identifiable assets acquired and liabilities assumed and is not amortized. The estimated purchase price of the transaction, based on the closing price of Ecolab’s common stock on November 23, 2011, and the excess purchase price over the fair value of the identifiable net assets acquired is calculated as follows (in millions):

Preliminary purchase price	$	5,296.3
Less: fair value of net assets acquired	(1,103.8		)
Total new goodwill	4,192.5
Less: Nalco existing goodwill	(1,771.5		)
Pro forma goodwill adjustment	$	2,421.0

(j)  Other intangible assets.  Represents the unaudited pro forma adjustment to reflect the preliminary estimated fair value of Nalco’s intangibles of approximately $3,830.0 million which is an increase of $2,836.8 million over Nalco’s book value of intangibles prior to the merger. The intangibles primarily consist of patents and developed technology of $540.0 million, customer relationships of $1,910.0 million and trade names aggregating to approximately $1,380.0 million, subject to the completion of the purchase price allocation. The Nalco trade name has been allocated approximately $1,200.0 million based on the preliminary purchase price allocation and is expected to be an indefinite-lived intangible.

(k)  Other assets.  Represents the elimination of $64.8 million of deferred financing costs associated with existing Nalco debt being refinanced, and the inclusion of an estimated $29.6 million of financing costs expected to be incurred with respect to the new debt.

(l)  Debt.  Represents the elimination of $2,862.1 million of outstanding Nalco debt, which includes a fair value adjustment of debt in the amount of $186.6 million, and the inclusion of an estimated $4,800.0 million of new debt, which includes Ecolab’s $250 million aggregate principal amount of 3.69% Notes due 2018 and $250 million aggregate principal amount of 4.32% Notes due 2023, used primarily to repay the Nalco debt and fund transaction-related costs, including the cash portion of the merger consideration, related transaction expenses, fees incurred related to the new bank financing and certain employee compensation payments required at closing. The Nalco debt is publicly traded, and therefore quoted prices for the debt are readily available. Given this, the fair value of the debt as of November 23, 2011 was used in the preparation of the unaudited pro forma condensed combined financial statements. The fair value of the debt to be retired at September 30, 2011 was $2,862.1 million. The debt adjustments were classified between short-term and long-term as follows (in millions):

	Nalco Debt Retired at Fair Value			New Debt		Debt Adjustment
Short-term debt	$	(31.0	)	$	600.0	$	569.0
Long-term debt	(2,831.1		)	4,200.0		1,368.9
Total	$	(2,862.1	)	$	4,800.0	$	1,937.9

Included within the debt balances for Nalco are $26.6 million of outstanding checks and $57.6 million of notes payable to bank which were not eliminated as a result of the merger.

(m)  Income taxes payable.  Represents the adjustment to income taxes payable corresponding to fair value debt adjustments and deferred financing costs of $70.0 million and $24.3 million, respectively, transaction fees of $12.3 million, change in control and other equity-based awards payments of $4.9 million, and other transaction related items of $2.4 million. Adjustments to income taxes payable are based on Nalco’s statutory U.S. federal and state tax rate of 37.5%.

(n)  Other liability.  Represents the adjustment of $42.0 million to increase the Nalco pension and other post-retirement benefit liabilities to their funded status of $551.1 million as of the September 30, 2011 unaudited pro forma condensed combined balance sheet date utilizing the current fair value of plan assets and applicable discount rates.

(o)  Deferred income taxes.  Deferred taxes arising from the estimated fair value adjustments for acquired inventory, property, plant, and equipment, patents and developed technology, customer relationships, and trade names and other intangibles, as well as the settlement of restricted stock units that were converted to Nalco common stock prior to the merger, are primarily based on Nalco’s estimated global tax rate of 33.6%.

(p)  Stockholders’ equity.  The unaudited pro forma condensed combined balance sheet reflects the elimination of Nalco’s historical equity balances and the recognition of approximately 68.3 million Ecolab common stock issued ($68.3 million of common stock at $1.00 par value and $3,529.7 million of additional paid-in capital). Amounts in additional

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paid-in capital also include $75.8 million to reflect the portion of the purchase price related to the total estimated fair value of stock compensation awards outstanding as of September 30, 2011, excluding the value associated with employee service yet to be rendered.

Additionally, retained earnings were further reduced by $90.2 million for estimated transaction costs, net of tax effects, including make-whole payments of $4.0 million, transaction fees of $85.2 million, which is net of previously accrued transaction fees of $6.5 million, and other change in control payments of $1.0 million. These estimated transaction costs have been excluded from the unaudited pro forma condensed combined income statement as they reflect charges directly related to the merger that do not have an ongoing impact. The gross amounts and related net tax effects are as follows (in millions):

	Make-whole Payments			Transaction Fees			Other Change in Control Payments			Total
Gross expense	$	(6.4	)	$	(97.5	)	$	(1.6	)	$	(105.5	)
Tax effect	2.4			12.3			0.6			15.3
Net adjustment	$	(4.0	)	$	(85.2	)	$	(1.0	)	$	(90.2	)

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