Nalco Results Hit Expectations


NAPERVILLE, Ill., Feb. 7, 2006 (PRIMEZONE) -- Nalco Holding Company (NYSE:NLC) sales increased 9.2 percent in 2005 to $3.3 billion and net income improved to $47.8 million from a year-ago net loss of $138.8 million. Sales were primarily driven in the year by higher prices aimed at offsetting continued raw material and energy cost increases. The 2004 net loss was the result of one-time charges.

Organic sales, excluding currency fluctuations and the impacts of a joint venture in Japan, grew 7.2 percent for the year. Real growth was up 2.2 percent as sales engineers focused in the year on increasing price. Nalco defines real growth as organic growth minus price increases designed to pass on higher purchased material and energy costs.

Diluted earnings per share were $0.33 in 2005 compared to the prior-year net loss of $1.42. Net income includes after-tax charges for the year of $22.9 million for business process optimization, reimbursed benefit plan contributions, and unusual charges such as costs involved in a secondary share offering in August.

Adjusted EBITDA, defined by the Company's debt covenants, increased 3 percent in the year to $603.0 million from $585.3 million. Adjusted EBITDA margins for the full year were 110 basis points lower than 2004, but fourth quarter margins were improved from the prior-year period. Nalco generated $119.6 million in Free Cash Flow for the year, which was used for debt reduction.

"Despite the difficult challenges of raw material cost increases and shortages, coupled with unusually disruptive hurricanes, we managed to grow sales and earnings while generating cash to pay down debt," said Chairman and Chief Executive Officer Dr. William H. Joyce. "Absorbing the number of challenges we faced while improving results and generating cash shows the strength of our service-oriented business."

Performance improvements did not come easily, Dr. Joyce noted. "The year put a tremendous strain on our employees, who worked harder than ever to keep supply disruptions and other challenges from impacting the services, products and expertise we provide to our customers," he said. "The financial results from this hard work fell short of our internal expectations. I am convinced, however, that the hard work of 2005 provides us with a strong platform on which to build much better Company performance in 2006 and beyond."

Cost savings played an important role in helping the Company improve Adjusted EBITDA. For the year, structural cost savings and work process redesign efforts generated $89 million in benefits, offsetting higher global compensation costs, investments in hiring sales engineers and service technicians, and other new costs.

In addition to negative hurricane-based earnings impacts of about $32 million, a very large raw material cost increase and the typical lag in obtaining price increases played an important role in the Company's performance gap versus its initial expectations.

Increases in energy and material costs totaled $166 million in 2005, versus our price increases for the year of $150 million. "Although we improved during the year, we clearly need more work to capture enough in price increases to at least match our higher costs from 2004, 2005 and what we expect in 2006," stated Dr. Joyce.

Segment Comments

Sales during 2005 grew organically by 10.6 percent in Energy Services, 5.9 percent in Industrial and Institutional Services, 4.6 percent in Paper Services and 11.9 percent in Nalco's Other segment, supported by very strong growth in India. Nominal sales in the Other segment increased 32.8 percent, gaining from an additional five months of sales consolidation from the June 2004 creation of the Katayama Nalco joint venture in Japan.

Obtaining price improvements has been particularly challenging in Paper Services. "Our Paper Services business faced a tough customer environment in 2005. Further, the competitive environment was much slower to respond to cost pressures than in our other segments," Dr. Joyce said. "Our Asia/Pacific paper business grew rapidly, but this growth was not enough to offset price weakness in our larger North American and European paper business units. Throughout our Paper business, we have developed offerings that are better able to drive customer value. We need to translate this improved customer value into our pricing."

Nalco's other businesses improved performance during the year.

"Cost moved well ahead of price early in the year in Energy Services, but we have made progress in recent quarters to close this gap. We are not yet where we need to be, but moving in the right direction behind strong leadership in both our Upstream exploration and production and Downstream refining and petrochemical processing businesses. We have strong, veteran industry leadership driving the Division," Dr. Joyce said. "The Industrial and Institutional Services business has done well on price through the year, but needs to also focus on real growth in 2006. Geographically, our Asia/Pacific business continues to grow at a much faster pace than the underlying market, with China and India being exceptionally strong markets for us."

Fourth quarter results

Fourth quarter sales growth of 7.2 percent to $863.6 million included 6.8 percent price growth and 2.0 percent real growth, which were partially offset by negative currency impacts. Fourth quarter net income increased to $25.2 million from a year-ago loss of $16.5 million that was largely driven by costs related to Nalco's November 2004 Initial Public Offering. On a fully diluted basis, earnings per share were $0.17 versus the prior-year loss of $0.14.

Adjusted EBITDA increased 10.7 percent to $163.0 million from $147.3 million.

"Adjusted EBITDA increased at the double-digit pace we target, enough to get into the bottom end of the range we projected for the year after Hurricane Katrina. Our EBITDA margins in the quarter were 60 basis points ahead of the year-ago quarter," noted Dr. Joyce. In the fourth quarter, costs were about $43 million higher compared to the prior-year period and price increases were nearly $55 million. "Despite this, we are disappointed because we had hoped to do better," Dr. Joyce said.

Fourth quarter sales improved organically by 14.8 percent in Energy Services, 7.9 percent in Industrial and Institutional Services, 4.5 percent in Paper Services and 5.1 percent in the Other segment. Negative currency impacts in all four segments reduced nominal sales.

2006 Expectations

"We remain committed to our target of generating double-digit growth in Adjusted EBITDA," Dr. Joyce said, "and have set a gain of about 12 percent as our target for 2006. Corresponding earnings per share would approximate $0.65. This is after deducting approximately $11 million in after-tax impacts from anticipated profit-sharing payments that would be reimbursed to the Company. While we face continuing pressures in raw material costs, we are helped by the ongoing recovery of suppliers and customers who were affected by the hurricanes."

"Our plan anticipates enough price to cover continued year-on-year cost increases for purchased materials and freight of roughly $100 million -- which is the level we see for the first quarter of 2006. Our performance expectations would likely adjust if the actual cost increase is significantly different or includes substantial movement late in the year given our one quarter pricing lag," Dr. Joyce said.

Nalco projects 2006 sales growth to improve from 2005 levels by more than 7 percent, with price contributing more than half of this growth. Targeted real growth remains short of the Company's longer-term 5 percent base business growth target as efforts to obtain price are expected to continue to be our priority. Because of this, we expect to slowly return to trend-line growth. Alternate channels growth for the year is expected to be masked by planned declines in some low-margin portions of our Other segment business.

Free Cash Flow in 2006 is targeted at approximately $170 million, reflecting the increased profitability from 2005, but also the working capital impacts of higher costs. Cost savings and work process redesign gains are again targeted at $75 million in 2006, with some of these efforts expected to generate improved working capital performance going into 2007.

Nalco will discuss fourth quarter and full-year 2005 results in a Webcast to be held Wednesday, Feb. 8, at 10:00 a.m. ET. Information on the Webcast is available on our Web site www.nalco.com.

Nalco is the leading provider of integrated water treatment and process improvement services, chemicals and equipment programs for industrial and institutional applications. The company currently serves more than 60,000 customer locations representing a broad range of end markets. It has established a global presence with over 10,000 employees operating in 130 countries, supported by a comprehensive network of manufacturing facilities, sales offices and research centers. In 2005, Nalco achieved sales of more than $3.3 billion.

Several non-GAAP measures are discussed in today's press release. Management believes that discussion of these measures provides investors with additional insight into the ongoing operations of Nalco Holding Company. Non-GAAP measures are reconciled to the closest GAAP measure in schedules attached to this press release, which may also be found at www.nalco.com. Adjusted EBITDA is a non-GAAP measure used to determine compliance with the Company's debt covenants. Reconciliation to net income is included in Attachment 5. Free Cash Flow is reconciled on Attachment 6 to Cash from Operations as shown on Nalco's Cash Flow Statement, and is defined as Cash from Operations less Capital Expenditures and Minority Interest charges. Adjustments to net income are identified in Attachment 7. The adjustments represent those items included in Nalco's income statement that are either one-time in nature, support incremental cost reduction programs, or -- in the case of the profit-sharing reimbursements by our former owner -- are unusual when compared to other companies. Attachment 8 reconciles projected 2006 Free Cash Flow to Cash from Operations. In addition, Nalco discusses sales growth in terms of nominal (actual), organic (nominal less foreign currency and acquisition/divestiture/merger/joint venture impacts), and real (organic growth less that portion of the growth which consists of price increases that simply pass along higher purchased material and freight costs). The non-GAAP measures should not be viewed as alternatives to GAAP measures of performance. Furthermore, these measures may not be consistent with similar measures provided by other companies.

This news release includes forward-looking statements, reflecting current analysis and expectations based on what are believed to be reasonable assumptions. Forward-looking statements may involve known and unknown risks, uncertainties and other factors, which may cause the actual results to differ materially from those projected, stated or implied, depending on many factors, including, without limitation: ability to generate cash, ability to raise capital, ability to refinance, the result of the pursuit of strategic alternatives, ability to execute work process redesign and reduce costs, business climate, business performance, economic and competitive uncertainties, higher manufacturing costs, reduced level of customer orders, changes in strategies, risks in developing new products and technologies, environmental and safety regulations and clean-up costs, foreign exchange rates, the impact of changes in the value of pension fund assets and liabilities, changes in generally accepted accounting principles, adverse legal and regulatory developments, including increases in the number or financial exposures of claims, lawsuits, settlements or judgments, or the inability to eliminate or reduce such financial exposures by collecting indemnity payments from insurers, the impact of increased accruals and reserves for such exposures, weather-related factors, adverse changes in economic and political climates around the world, including terrorism and international hostilities, and other risk factors identified by the Company. Accordingly, there can be no assurance that the Company will meet future results, performance or achievements expressed or implied by such forward-looking statements. This paragraph is included to provide safe harbor for forward-looking statements, which are not generally required to be publicly revised as circumstances change, and which the Company does not intend to update.

The Nalco Company logo can be found at: http://www.primezone.com/newsroom/prs/?pkgid=1135



 Attachments

 1. Condensed Consolidated Balance Sheets (Unaudited)
 2. Condensed Consolidated Statements of Operations (Unaudited)
 3. Condensed Consolidated Statements of Cash Flows (Unaudited)
 4. Segment Information (Unaudited)
 5. EBITDA and Adjusted EBITDA (Unaudited)
 6. Free Cash Flow (Unaudited)
 7. Share Base and Earnings Per Share
 8. Free Cash Flow - 2006 Forecast


                     Nalco Holding Company and Subsidiaries
                     Condensed Consolidated Balance Sheets
                          (dollars in millions)


                                            (Unaudited)
                                            December 31, December 31,
                                               2005         2004
                                             ---------    ---------
 Assets
 Current assets:

  Cash and cash equivalents                  $    30.8    $    33.3
  Accounts receivable, less allowances of 
   $16.6 in 2005 and $21.1 in 2004               622.3        594.2
   Inventories:
    Finished products                            242.6        245.4
    Materials and work in process                 70.6         68.1
                                             ---------    ---------
                                                 313.2        313.5
   Prepaid expenses, taxes and other 
    current assets                                83.1         90.1
                                             ---------    ---------
 Total current assets                          1,049.4      1,031.1

 Property, plant, and equipment, net             755.3        847.3
 Intangible assets:
  Goodwill                                     2,196.7      2,368.3
  Other intangibles, net                       1,227.5      1,323.6
 Other assets                                    323.5        363.6
                                             ---------    ---------
 Total assets                                $ 5,552.4    $ 5,933.9
                                             =========    =========
 Liabilities and shareholders'
  equity
 Current liabilities:

  Accounts payable                           $   285.4    $   261.9
  Short-term debt                                 22.6         17.7
  Other current liabilities                      235.2        311.7
                                             ---------    ---------
 Total current liabilities                       543.2        591.3

 Other liabilities:
  Long-term debt                               3,244.2      3,424.8
  Deferred income taxes                          353.0        484.8
  Accrued pension benefits                       416.4        411.7
  Other liabilities                              278.9        296.8

 Minority interest                                11.2         14.1
 Shareholders' equity                            705.5        710.4
                                             ---------    ---------
 Total liabilities and shareholders' equity  $ 5,552.4    $ 5,933.9
                                             =========    =========

                                    ATTACHMENT 1

                     Nalco Holding Company and Subsidiaries
                 Condensed Consolidated Statements of Operations
                                  (Unaudited)
                  (dollars in millions, except per share amounts)

                    Three Months Three Months     Year         Year
                       ended        ended        ended        ended
                    December 31, December 31, December 31, December 31,
                        2005         2004         2005         2004
                    -----------  -----------  -----------  -----------
 Net sales          $     863.6  $     805.4  $   3,312.4  $   3,033.3
 Operating costs 
  and expenses:
  Cost of product
   sold                   480.8        430.5      1,830.7      1,578.4
  Selling,
   administrative,
   and research
   expenses               256.8        269.1      1,031.2      1,039.2
  Amortization of
   intangible assets       20.2         23.3         81.6         96.3
  In-process
   research and
   development               --           --           --        122.3
  Business
   optimization 
   expenses                 4.3          1.7         25.6          1.7
                    -----------  -----------  -----------  -----------
 Total operating
  costs and expenses      762.1        724.6      2,969.1      2,837.9
                    -----------  -----------  -----------  -----------

 Operating earnings       101.5         80.8        343.3        195.4

 Other income
  (expense), net            6.7        (50.5)         3.1        (57.0)
 Interest income            2.2          2.5          8.4         10.2
 Interest expense         (65.3)       (63.1)      (258.0)      (250.8)
                    -----------  -----------  -----------  -----------

 Earnings (loss)
  before income taxes      45.1        (30.3)        96.8       (102.2)

 Income tax
  provision
  (benefit)                18.6        (16.0)        43.3         30.8

 Minority interests        (1.3)        (2.2)        (5.7)        (5.8)
                    -----------  -----------  -----------  -----------

 Net earnings 
  (loss)            $      25.2  $     (16.5) $      47.8  $    (138.8)
                    ===========  ===========  ===========  ===========

 Net earnings (loss)
  per share:

  Basic             $      0.18  $     (0.14) $      0.34  $     (1.42)
                    ===========  ===========  ===========  ===========
  Diluted           $      0.17  $     (0.14) $      0.33  $     (1.42)
                    ===========  ===========  ===========  ===========
 Weighted-average
  shares outstanding
  (millions):

  Basic                   141.8        118.9        141.7         97.7
                    ===========  ===========  ===========  ===========
  Diluted                 146.6        118.9        146.6         97.7
                    ===========  ===========  ===========  ===========


                                ATTACHMENT 2

                         Nalco Holding Company and Subsidiaries
                  Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)
                              (dollars in millions)

                                             Year         Year
                                            ended        ended
                                         December 31, December 31, 
                                             2005         2004
                                         -----------  -----------
 Operating activities

 Net earnings (loss)                     $      47.8  $    (138.8)
 Adjustments to reconcile net earnings
  (loss) to net cash
  provided by operating activities:
   Depreciation                                133.3        114.3
   Amortization                                 81.6         96.3
   In-process research and development            --        122.3
   Amortization of deferred financing
    costs and accretion of senior
    discount notes                              40.2         49.1
   Other, net                                    7.7         21.1
   Changes in operating assets and
    liabilities                               (110.7)       (26.8)
                                         -----------  -----------
 Net cash provided by operating
  activities                                   199.9        237.5
                                         -----------  -----------

 Investing activities

 Purchase price adjustment on
  acquisition of Ondeo Nalco Group              (3.2)        25.3
 Additions to property, plant, and
  equipment, net                               (74.6)       (91.8)
 Other investing activities                      1.9         (5.7)
                                         -----------  -----------
 Net cash used for investing
  activities                                   (75.9)       (72.2)
                                         -----------  -----------
 Financing activities

 Changes in short-term debt, net                 2.9        (34.8)
 Proceeds from long-term debt                   24.3        719.7
 Repayments of long-term debt                 (145.8)      (639.3)
 Redemption premium on early
  extinguishment of debt                          --        (14.6)
 Capital contributions                            --          9.3
 Capital distributions                            --       (991.5)
 Proceeds from offering of common
  stock, net                                      --        720.5
 Other                                          (7.3)        (2.1)
                                         -----------  -----------
 Net cash used for financing
  activities                                  (125.9)      (232.8)
 Effect of exchange rate changes on
  cash and cash equivalents                     (0.6)         0.8
                                         -----------  -----------
 Decrease in cash and cash equivalents          (2.5)       (66.7)
 Cash and cash equivalents at
  beginning of period                           33.3        100.0
                                         -----------  -----------
 Cash and cash equivalents at end of
  period                                 $      30.8  $      33.3
                                         ===========  ===========


                                  ATTACHMENT 3

                       Nalco Holding Company and Subsidiaries
                                Segment Information
                                     (Unaudited)
                               (dollars in millions)

     Net sales by reportable segment were as follows:

                Three Months  Three Months     Year          Year
                    ended        ended         ended         ended
                December 31,  December 31,  December 31,  December 31,
                    2005          2004          2005          2004
                ------------  ------------  ------------  ------------
 Industrial and 
  Institutional   
  Services      $      387.0  $      363.7  $    1,493.6  $    1,396.1
 Energy Services       243.7         213.6         897.1         806.6
 Paper Services        178.2         173.0         699.0         662.9
 Other                  54.7          55.1         222.7         167.7
                ------------  ------------  ------------  ------------
 Net sales      $      863.6  $      805.4  $    3,312.4  $    3,033.3
                ============  ============  ============  ============

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


                Three Months  Three Months     Year          Year
                    ended        ended         ended         ended
                December 31,  December 31,  December 31,  December 31,
                    2005          2004          2005          2004
                ------------  ------------  ------------  ------------
 Segment direct 
  contribution:
  Industrial and 
   Institutional 
   Services     $       97.1  $       94.8  $      364.3  $      353.5
  Energy Services       52.3          43.1         191.0         173.5
  Paper Services        34.4          40.3         136.0         155.8
  Other (a)            (18.0)        (21.8)        (66.5)        (78.1)
                ------------  ------------  ------------  ------------
 Total segment 
  direct 
  contribution         165.8         156.4         624.8         604.7

 Expenses not 
  allocated to 
  segments:
  Administrative 
   expenses             39.8          50.6         174.3         189.0
  Amortization 
   of intangible 
   assets               20.2          23.3          81.6          96.3
  In-process 
   research and 
   development            --            --            --         122.3
  Business 
   optimization 
   expenses              4.3           1.7          25.6           1.7
                ------------  ------------  ------------  ------------
 Operating 
  earnings 
  (loss)               101.5          80.8         343.3         195.4
 Other income 
  (expense), net         6.7         (50.5)          3.1         (57.0)
 Interest income         2.2           2.5           8.4          10.2
 Interest 
  expense              (65.3)        (63.1)       (258.0)       (250.8)
                ------------  ------------  ------------  ------------
 Earnings (loss) 
  before income 
  taxes         $       45.1  $      (30.3) $       96.8  $     (102.2)
                ============  ============  ============  ============

    (a) Reflects costs not allocated to segments, but deducted in 
        arriving at direct contribution.  Year-over-year variations
        primarily result of:

        -- Charges to cost of product sold of $14.6 million in the 
           year ended December 31, 2004, related to step up of 
           inventory values in purchase accounting, not repeated in 
           2005.
        -- Higher unfavorable supply chain variances of $21.2 million 
           for the year ended December 31, 2005 vs. 2004, mostly
           attributable to purchase price and manufacturing volume 
           variances, of which an estimated $12.1 million resulted 
           from Gulf hurricanes.
        -- $13.0 million favorable change in value of capitalized 
           variances at foreign locations (FIFO methodology) for the 
           year ended December 31, 2005 vs. 2004.

                               ATTACHMENT 4

                        Nalco Holding Company and Subsidiaries
                        EBITDA and Adjusted EBITDA (Unaudited)
                                (dollars in millions)

               Three Months  Three Months       Year          Year
                   ended         ended         ended         ended
                December 31,  December 31,  December 31,  December 31,   
                   2005          2004          2005          2004
               ------------  ------------  ------------  ------------
 Net earnings
  (loss)       $       25.2  $      (16.5) $       47.8  $     (138.8)
 Income tax
  provision
  (benefit)            18.6         (16.0)         43.3          30.8
 Interest
  expense, net
  of interest
  income               63.1          60.6         249.6         240.6
 Depreciation          33.3          33.6         133.3         114.3
 Amortization          20.2          23.3          81.6          96.3
               ------------  ------------  ------------  ------------
 EBITDA               160.4          85.0         555.6         343.2

 In-process
  research and
  development            --            --            --         122.3
 Write-off of
  inventory
  step-up                --           0.1            --          14.6
 Business
  optimization
  expenses              4.3           1.7          25.6           1.7
 Asset
  write-offs           (2.1)          1.1           2.8           1.1
 Profit
  sharing
  expense
  funded by
  Suez                  0.6           2.1           5.5          20.7
 Sponsor
  monitoring
  fees                   --           2.8            --          11.2
 Franchise
  taxes                (0.5)         (0.1)          1.4           2.2
 Non-cash rent
  expense              (1.8)         (1.8)          1.6           1.6
 Non-wholly
  owned
  entities              0.6           3.7           2.2           7.0
 Loss (gain)
  on sale, net
  of expenses           0.4          (0.1)          4.1           0.2
 Pension
  settlements/
  curtailments          0.5            --           0.5            --
 Early
  extinguishment
  of debt                --          13.7            --          13.7
 Other unusual
  charges               0.6          39.1           3.7          45.8
               ------------  ------------  ------------  ------------
 Adjusted
  EBITDA       $      163.0  $      147.3  $      603.0  $      585.3
               ============  ============  ============  ============


                                   ATTACHMENT 5


                        Nalco Holding Company and Subsidiaries
                                  Free Cash Flow
                                   (Unaudited)
                              (dollars in millions)


                Three Months  Three Months      Year          Year
                   ended         ended         ended         ended
                December 31,  December 31,  December 31,  December 31,
                    2005          2004          2005          2004
                ------------  ------------  ------------  ------------
 Net cash 
  provided by 
  (used for) 
   operating    
   activities   $       27.8  $      (18.6) $      199.9  $      237.5
 Minority 
  interests             (1.3)         (2.2)         (5.7)         (5.8)
 Additions to 
  property, 
  plant, and 
  equipment, 
  net                  (29.3)        (34.1)        (74.6)        (91.8)
                ------------  ------------  ------------  ------------
 Free cash 
  flow          $       (2.8) $      (54.9) $      119.6  $      139.9
                ============  ============  ============  ============


                                ATTACHMENT 6

                             Nalco Holding Company and Subsidiaries
                              Earnings Per Share and Share Base
                                        (Unaudited)
                          (dollars in millions, except per share data)


                                Three Months          Three Months
                                    ended                 ended
                              December 31, 2005     December 31, 2004
                            --------------------  --------------------
                                          Per                   Per
                             Actual     Share(b)   Actual     Share(b)
                            ---------  ---------  ---------  ---------
 Net earnings (loss)         $ 25.2     $ 0.17     $ (16.5)  $  (0.14)
                            =========  =========  =========  =========
 Net earnings (loss) 
  was reduced
  (increased) by the 
  following items
  (after tax):

  In-process 
   research and 
   development    IPR&D     $      --  $      --  $      --  $      --
  Write-off of 
   inventory 
   step-up         COGS            --         --        0.1         --
  Business 
   optimization 
   expenses     Bus Opt Exp       2.8       0.02        1.1       0.01
  Profit 
   sharing 
   expense 
   funded by 
   Suez          COGS/SGA         0.4         --        1.3       0.01
  Sponsor 
   monitoring 
   fees            OIOE            --         --        1.7       0.01
  Early 
   extinguishment 
   of debt         OIOE            --         --        8.7       0.07
  Other unusual 
   charges     COGS/SGA/OIOE      0.4         --       24.2       0.20
                            ---------             ---------   
                            $     3.6             $    37.1
                            =========             =========

 Memo Only 
 -------------------
 Net earnings (loss)        
  was reduced               
  (increased) by the        
  following items           
  (before tax):              
                            
  In-process                
   research and             
   development    IPR&D     $      --  $      --  $      --  $      --
  Write-off of              
   inventory                
   step-up         COGS            --         --        0.1         --
  Business                  
   optimization             
   expenses     Bus Opt Exp       4.3       0.03        1.7       0.01
  Profit                    
   sharing                  
   expense                  
   funded by                
   Suez          COGS/SGA         0.6         --        2.1       0.02
  Sponsor                   
   monitoring               
   fees            OIOE            --         --        2.8       0.02
  Early                     
   extinguishment           
   of debt         OIOE            --         --       13.7       0.12
  Other unusual             
   charges     COGS/SGA/OIOE      0.6         --       39.1       0.33
                            ---------             ---------  
                            $     5.5             $    59.5
                            =========             =========

 Weighted-average 
  of shares 
  outstanding      
   (millions):                                
   Basic                        141.8                            118.9
   Diluted                      146.6                            118.9


 (b) Diluted

                                  ATTACHMENT 7A

                            
                           Nalco Holding Company and Subsidiaries
                             Earnings Per Share and Share Base
                                      (Unaudited)
                        (dollars in millions, except per share data)


                                  Year ended           Year ended
                              December 31, 2005     December 31, 2004
                            --------------------  --------------------
                                          Per                   Per
                             Actual     Share(b)   Actual     Share(b)
                            ---------  ---------  ---------  ---------
 Net earnings (loss)         $ 47.8     $ 0.33    $ (138.8)  $  (1.42)
                            =========  =========  =========  =========
 Net earnings (loss) was 
  reduced (increased) 
  by the following items
  (after tax):
  In-process
   research and
   development    IPR&D     $      --  $      --  $   122.3  $    1.25
  Write-off of
   inventory
   step-up         COGS            --         --       10.2       0.10
  Business
   optimization
   expenses     Bus Opt Exp      17.1       0.12        1.1       0.01
  Profit
   sharing
   expense
   funded by
   Suez          COGS/SGA         3.4       0.02       12.9       0.13
  Sponsor
   monitoring
   fees            OIOE            --         --        7.0       0.07
  Early
   extinguishment
   of debt         OIOE            --         --        8.7       0.09
  Other unusual
   charges     COGS/SGA/OIOE      2.4       0.02       28.5       0.29
                            ---------             ---------
                            $    22.9             $   190.7
                            =========             =========

 Memo Only
 -------------------
 Net earnings (loss) was 
  reduced (increased) 
  by the following items
  (before tax):
  In-process
   research and
   development    IPR&D     $      --  $      --  $   122.3  $    1.25
  Write-off of
   inventory
   step-up         COGS            --         --       14.6       0.15
  Business
   optimization
   expenses     Bus Opt Exp      25.6       0.17        1.7       0.02
  Profit
   sharing
   expense
   funded by
   Suez          COGS/SGA         5.5       0.04       20.7       0.21
  Sponsor
   monitoring
   fees            OIOE            --         --       11.2       0.11
  Early
   extinguishment
   of debt         OIOE            --         --       13.7       0.14
  Other unusual
   charges     COGS/SGA/OIOE      3.7       0.03       45.8       0.47
                            ---------             ---------
                            $    34.8             $   230.0
                            =========             =========

 Weighted-average
  of shares
  outstanding
   (millions):
   Basic                                   141.7                  97.7
   Diluted                                 146.6                  97.7


 (b) Diluted

                                  ATTACHMENT 7B

                   Nalco Holding Company and Subsidiaries
                      Free Cash Flow -- 2006 Forecast
                           (dollars in millions)


                                                         Year ended
                                                        December 31, 
                                                           2006
                                                       -------------
                                                         
 Net cash provided by operating activities             $       282.0
 Minority interests                                             (9.0)
 Additions to property, plant, and equipment, net             (103.0)
                                                       -------------
 Free cash flow                                        $       170.0
                                                       ==============


                             ATTACHMENT 8


            

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