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Article by dailystock_admin    (02-18-09 09:34 AM)

Welcome to the DailyStocks Discussion Forum on Nalco, a new holding of Berkshire Hathaway. This forum is intended for only serious investors who like to work with a group of investors who want to understand Buffett type of investments. We plan to close this forum to new investors after we reach 300 investors.If you have not signed up, please sign up soon.

The most interesting thing about Buffett's 13F disclosure released on February 17, 2009 is that Berkshire Hathaway bought 6% of Nalco. It is an entire new position. Nalco's stock price is 30 to 40 percent below Berkshire Hathaway's cost basis.

I have attempted to make this thread the repository of all things relevant to analyzing Nalco. Users can exchange thoughts about this investment idea.

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Company Overview During the past century, Nalco Company has grown from a fledgling water treatment business to the leading integrated water treatment and process improvement company in the world. We do this by focusing on our core markets of water treatment and process chemicals and on our corporate strengths - global presence, on-site expertise, and innovative products and services. Nalco's more than 11,000 employees work with more than 70,000 customers in 130 countries in industry, government and institutions to reduce water and energy consumption by solving and preventing problems, protecting the environment, decreasing costs, increasing productivity, improving profitability by reducing customer total costs of operation, and maintaining asset reliability. Our goal is to help ensure optimum and trouble-free operations in the customer's plant, mill, mine or municipality through the prevention of water and process-related problems and proactive process improvements. The Nalco representative is key to achieving these goals - as consultant, problem-solver, on-site expert and business partner. Nalco works to meet its customers' needs through our commitment to identifying, nurturing, protecting and growing new technologies. Through global research groups, Nalco develops key ideas, advancing them rapidly and efficiently through our product development process. We apply advanced scientific principles and techniques to develop practical solutions to challenges in a wide variety of industries and applications.

Company History: http://www.nalco.com/ASP/about_us/TIMELINE /pop-up.html
http://www.nalco.com/pdf/Nalco%20History%2 0B-184.pdf
Company Web Site: Nalco Web site
SEC Filings: Nalco SEC Filings

Trademarks owned by Nalco:
3D TRASARTM, ACTRENE®, ADOMITE®, AQUAMAXTM, BIO-MANAGE®, BRIGHT WATERTM, COKE-LESS®, EN/ACTTM, ENERCEPT®, ENERSPERSE®, Nalco ACT®, NALMET®, NEOSTARSM, NexGuard®, OdorTech®, PORTA-FEED®, PROSPECTM Treat Service, SCORPION® II, SMART SolutionsTM, STA•BR•EX®, SULFA-CHECK®, SurFloSM Certified, THERMOGAINSM, TRASAR®, Tri-ACT®, ULTIMER®, UltraTreat®, ULTRION®, VALUELINE®, VANTAGE®

I finished doing a quick reading of the 10K. Here are my thoughts:

At first glance, NALCO is an interesting play on water infrastructure. "Many water and sewage lines throughout the nation were installed decades ago and are in need of repair,” said EPA Regional Administrator Richard E. Greene. A documentary movie trailer about our water systems can be viewed on http://liquidassets.psu.edu/. This is most probably a Lou Simpson investment and not Warren Buffett because the market cap of 1.6 Billion is small.

They have strong competitive advantages. See below. They use conservative accounting. They use LIFO for inventory accounting in the U.S. Foreign countries mostly do not allow LIFO accounting. LIFO lowers taxable net income versus FIFO and understates the value of the inventory in the balance sheet in an inflationary environment. (A true capital allocator works to increase his net worth, not taxable income.) They have Net operating losses of 145 Million in the U.S. The debt level seems high. Total Debt to Total Asset is 64%, Total Debt to Common Equity is 819%. The book value is mostly intangibles and goodwill. The stock is not exactly cheap in this environment, trading at 6.5 times Enterprise Value to EBITDA. The investment thesis, my guess, is that it is a high-quality, conservative-accounting play on the growth of demand for water infrastructure services. It is exposed to China, Russia and India markets. In China, their business has had 25% compounded annual growth since 1999.

Does this mean Lou Simpson or Warren Buffett believe in Jimmy Rogers' macro thesis of waste water services in China and emerging markets? I think so. (In fact, Buffett told some students that the 19th Century belonged to the British. The 20th Century belonged to the U.S. And the 21st belongs to China. This is a quote I first heard from Jim Rogers.) But the growth opportunity for our water infrastructure in the U.S. is also just as enormous. In fact, just as Burlington Northern is a play or inflation of the replacement value of the railroad assets, I see Nalco as another way to play on the inflation of the replacement value of our highly critical water systems. They have dominant market positions and market shares in 3 business segments: Inudstrial and Institutional Services - 7.4 B, #1, 18% Market Share; Energy Services - 3.9 B, #1, 32% Market Share; Paper Services - 8.5 B, #3, 9% Market Share. In addition, they acquired this company called Mobotec USA, which extends their reach into rapidly growing energy use reduction and air emission control markets, with capability to reduce many critical pollutants, including greenhouse gases, nitrogen and sulfur oxides (NOx /SOx), mercury, hydrogen chloride and particulates. Interest in these applications continues to grow across many industry segments.

Competitive Advantages From the 10-K

Leading Market Positions. We are the #1 provider of water treatment services to industrial and institutional end markets. We are also a leading provider of integrated water treatment and process improvement services, maintaining the #1 position in the petroleum and petrochemical markets and a close #3 position in the pulp and paper market. We believe that our leading positions across our primary markets provide a competitive advantage in retaining existing business and competing for new business. Although our market position in pulp and paper was lowered by the 2004 acquisition of Raisio by Ciba, we believe the proximity of sales between the three market leaders allows us all to operate as market leaders.

Diverse Customers and Industries Served. We provide products and services to more than 60,000 customer locations across a broad range of industries and institutions. In 2004, no single customer accounted for more than 3% of our net sales. Our business is also diversified geographically. In 2004, 48% of total sales were in North America, 33% in Europe, Africa and the Middle East, 7% in Latin America and 12% in the Pacific region. We believe this diversification minimizes the potential impact of volatility from any one customer, industry or geographic area.

Global Reach. We have a direct sales and marketing presence in 130 countries across six continents. This enables us to provide a consistently high level of service to local, regional and multinational customers. We believe our global presence offers us a competitive advantage in meeting the global needs of our multinational customers, which are increasingly seeking single-source suppliers and positions us to extend our reach to higher growth markets. Our geographical diversity also mitigates the potential impact of volatility in any individual country or region. In 2004, we derived approximately $1,658 million, or 55% of our net sales, from our non-U.S. subsidiaries (excluding sales to our U.S. operations). World Class Sales Team. Through the expertise of our more than 5,500 sales engineers and service technicians, we provide our customers with relevant industry knowledge and experience in order to solve technically challenging and dynamic problems. Our team of experts has significant experience with more than 40% of our approximately 2,100-person North American sales team having more than ten years of service with our Company. We believe this contributes significantly to the number and strength of relationships with our customers. We also invest heavily in recruiting and continuously training our sales professionals. For example, new hires spend more than half of their first year on training. Sales and marketing expense was $818.5 million, $799.1 million, and $763.4 million for the years 2004, 2003, and 2002, respectively. In 2003, the total expense was comprised of $668.7 million for the period from January 1, 2003 through November 3, 2003 and $130.4 million for the period from November 4, 2003 through December 31, 2003. Of those amounts, approximately 90% represented the average cost of our sales and service force during these time periods.

Integrated Technology, Sales and Service. We combine on-site service, innovative technology and engineering excellence to create value for our customers. Our technical sales professionals identify problems and opportunities at the customer's plant and our research teams then work to develop effective solutions to these needs, often working jointly with our customers. Many of our customers specify our formulations into their processes and products. This approach has led to over 3,100 unique formulations, the development of more than 2,000 active patents worldwide and a high degree of customer loyalty.

Stable and Significant Cash Flow Generation. We have produced consistent cash flows and maintained high margins over a sustained period of time. We attribute this to (1) the diversity of our revenues, (2) the service nature of our business, (3) the high value we offer our customers, (4) the strength of our customer relationships, (5) our limited dependency on any single raw material and (6) our low capital expenditures relative to our net sales.

Premier Management Team. Our senior management team consists of professionals with significant experience within our Company and the water treatment and industrial process improvement industry. In connection with the Acquisition, Dr. William H. Joyce, former Chairman nd Chief Executive Officer of Hercules Incorporated, became our Chairman and Chief Executive Officer, and Bradley J. Bell, former Chief Financial Officer of Rohm and Haas Company, became our Chief Financial Officer. Dr. Joyce and Mr. Bell bring additional leadership and industry experience to our management team. Our seven Executive Officers have an average of over 11 years of service with our Company and over 27 years of industry experience. Moreover, our Executive Officers are supported by business managers who have extensive experience within their respective operating divisions. Our top Executive Officers and other members of management have invested through our ultimate parent company, Nalco LLC, an aggregate of $19.3 million in our Company.

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Username Comments
munger 
newbie
Posts: 35

Loc: Santa Barbara, CA
Reg: 02-16-09

02-18-09 03:12 PM - Post#2077    
    In response to dailystock_admin

“We’re doing some exciting things to go after growth opportunities, and it’s a great feeling for me and my team to have one of the savviest investors in the world give us a vote of confidence,” said Nalco Chief Executive Officer J. Erik Fyrwald in a telephone interview today. “There’s a little more energy in our step today.”

From Bloomberg
http://www.bloomberg.com/apps/news?pid=newsarc hive...

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ben 
newbie
Posts: 11

Reg: 02-22-09

02-18-09 08:26 PM - Post#2085    
    In response to munger

The historical ROE of the business is not exciting.

2008 -45.34
2007 12.84
2006 12.39
2005 6.75
2004 -15.60
2003 -7.66

The net income margin:
2008 -8.13
2007 3.30
2006 2.75
2005 1.44
2004 -4.58
2003 -6.59
2002 4.86
2001 -3.21

Sales Growth
2008 7.7
2007 8.6
2006 8.8
2005 9.2
2004 9.6
2003 4.6
2002 .94

Trailing EBITDA is more stable
2008 759M
2007 721
2006 715
2005 669
2004 597
2003 558
2002 454
2001 264

It would be nice to see what maintenance capex for the business is.

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dailystock_admin 
Administrator
Posts: 249

Reg: 09-24-07

02-19-09 06:42 PM - Post#2112    
    In response to netnet

Nalco Executives to Address Upcoming Investor Conferences in New York and California
NAPERVILLE, Ill., Feb 11, 2009 (GlobeNewswire via COMTEX) -- Nalco Company (NYSE:NLC), the global leader in water, energy, air and process technologies and services that deliver savings for customers and improve the environment, announced today that senior executives will address investors and analysts at conferences in February and March.

Steve Taylor, Executive Vice President and President, Energy Services, will speak as part of the Energy Track at the Roth Capital Partners 21st Annual OC Growth Stock Conference at the Ritz Carlton in Dana Point, Calif., on Feb. 17 at 11 a.m. PT.

Chairman, President and Chief Executive Officer J. Erik Fyrwald will speak at the Jeffries and Company Global Clean Technology Conference in New York on March 17. The exact time of the presentation will be available on our Web site as the date approaches.

The presentations will be available via Webcast on the Investor Relations portion of the Company's Web site at www.nalco.com/investors. Participants are advised to log on to the events 5 to 10 minutes before the scheduled start time. A replay of the Webcasts will be available approximately one hour after the presentation concludes.

About Nalco

Nalco is the world's leading water treatment and process improvement company, delivering significant environmental, social and economic performance benefits to our customers. We help our customers reduce energy, water and other natural resource consumption, enhance air quality, minimize environmental releases and improve productivity and end products while boosting the bottom line. Together our comprehensive solutions contribute to the sustainable development of customer operations. Nalco is a member of the Dow Jones Sustainability World Index. More than 11,500 Nalco employees operate in 130 countries supported by a comprehensive network of manufacturing facilities, sales offices and research centers to serve a broad range of end markets. In 2008, Nalco achieved sales of more than $4.2 billion. For more information visit www.nalco.com.

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Nalco Company
Nalco Company
Media Contact:
Charlie Pajor
630 305 1556
cpajor@nalco.com
Investor Contact:
Mike Bushman
630 305 1025
mbushman@nalco.com
www.nalco.com
1601 West Diehl Road
Naperville, IL 60563-1198






Copyright © 2003-2009 Nalco Company. All rights reserved. Please read our Legal Information.

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dailystock_admin 
Administrator
Posts: 249

Reg: 09-24-07

02-19-09 06:54 PM - Post#2113    
    In response to dailystock_admin

C O R P O R A T E P A R T I C I P A N T S

Mike Bushman
Nalco Holding Company - VP of Communications and IR
Erik Fyrwald
Nalco Holding Company - Chairman, President and CEO
Brad Bell
Nalco Holding Company - EVP, CFO and Treasurer
C O N F E R E N C E C A L L P A R T I C I P A N T S
Jeff Zekauskas
JPMorgan - Analyst
P.J. Juvekar
Citigroup - Analyst
Jason Miner
Deutsche Bank - Analyst
Laurence Alexander
Jefferies & Company - Analyst
Chris Shaw
UBS - Analyst
Mark Gulley
Soleil Securities - Analyst
Richard Eastman
Robert W. Baird & Company, Inc. - Analyst
Mike Harrison
First Analysis Securities - Analyst
Brian Drab
William Blair & Company - Analyst
Amy Zhang
Goldman Sachs - Analyst
Mike Judd
Greenwich Consultants - Analyst
Michael Boam
BlueBay Asset Management - Analyst

P R E S E N T A T I O N

Operator
Good day, everyone, and welcome to the fourth quarter 2008 earnings call hosted by Nalco Holding Company. This call is being
recorded.
At this time, I would like to turn the call over to the Division Vice President for Communications and Investor Relations of Nalco,

Mr. Mike Bushman. Please go ahead, sir.

Mike Bushman - Nalco Holding Company - VP of Communications and IR
Thank you. Good morning, and thank you for joining us for our conference call to discuss full year and fourth quarter 2008
results. Joining us today are Chairman, President, and CEO, Erik Fyrwald, and Executive Vice President and CFO, Brad Bell.
Some of the information discussed today constitutes forward-looking statements that are subject to certain risks and uncertainties.
Our statement describing the risks associated with forward-looking information is found on our website and on our press release,
which may also be found at www.Nalco.com. Further background on our risk is available in our 10-K.
The information discussed today will include data that does not conform to Generally Accepted Accounting Principles.
Management believes the presentation of non-GAAP measures, such as adjusted EBITDA, free cash flow and adjusted earnings,
provides investors with additional insight into the ongoing performance of our operations.
Accompanying schedules for reconciliation of such non-GAAP measures to the closest GAAP equivalent have been provided
as attachments to our earnings release. After comments from Mr. Fyrwald and Mr. Bell, we will open the call up to questions. In
order to allow for as many participants as possible to ask questions, we will restrict participants to one question with a clarification follow-up, if necessary. We will then ask that participants re-queue in order to ask additional questions.
We'll start with Mr. Fyrwald.

Erik Fyrwald - Nalco Holding Company - Chairman, President and CEO
Thanks, Mike. The past year was one of the most volatile I have seen in my business career, with economies quickly moving
from rapid acceleration to very deep and concerning global decline -- a decline where we do not even know where the bottom
is. In this context, I believe Nalco again proved the relative stability of our business model, as we quickly adapted to changing
market conditions and maintained solid results.

Against the top priorities we established nearly a year ago, Nalco delivered strong performance in 2008. Energy Services grew
sharply; results in Europe improved meaningfully; our water business grew nicely, thanks to improving 3D TRASAR technology
penetration and cooling power systems; our BRIC-plus focus achieved better than 20% nominal sales growth in those target
countries. Even on the price capture front, where we fell short for our full year goal, we did improve results as the year went
along, and more than covered cost increases in the fourth quarter.

Critical achievements in 2008 included -- one, we drove 7.8% organic sales growth, matching our best result of the decade, with
double digit growth in the Americas; 6.3% growth in Asia-Pacific; and 1.7% organic growth in Europe. Second-half performance
meaningfully improved versus first half results, behind traction on pricing, technology, and service growth programs.
Earnings per share improved 29.2% to $1.24 per share, excluding the gain from the sale of FTG, restructuring expenses, and a
goodwill impairment charge for Paper Services. Adjusted EBITDA increased 3.7% from the 2007 base that excludes synfuel
results. This gain came despite increases in direct material and freight costs of $170 million that were not quite fully offset by
$159 million in price capture for the year. We did dramatically improve price capture in the second half of the year.
Free cash flow of $142 million was below target. Disappointingly, we increased inventory cash use by about $90 million. We
also contributed an optional $30 million to our pension fund following a third quarter divestiture. We exceeded our $75 million
productivity cost savings target for the year. And when we look to Europe, David Johnson and his entire European leadership
team delivered positive organic growth in the region after four years of decline.

We also continued to invest aggressively in Energy Services growth, leading to an 18% organic growth. Steve Taylor's team
closed 65% of all new CapEx business in oilfield services and better than 50% in downstream with 75% achievement in our target Middle East market. We are also bringing some great new technology to the market this year to help support ongoing
growth in Energy Services.

Investments in Nalco Mobotec allowed this business to grow to $43 million from $24 million in the 12 months prior to our
December 2007 acquisition. We closed new pipeline business of nearly $60 million that will help support additional, very strong
growth in 2009. We are excited about both the near-term and the long-term potential of this business, as we deliver against
current projects in Eastern Europe, China, and North America.

We also took actions to get ahead of deteriorating economic conditions. We managed our restructuring project to take out
significant costs, while minimizing employee distraction, and quickly refocusing everybody on 2009.
While delivering very strong success in 2008, we are not yet operating at peak levels, having particularly not met our expectations
on inventory management and resulting free cash flow. While generally pleased with what we accomplished in the fourth
quarter, we clearly have to get better at things like working capital management.

In January, we put supply chain management directly under the control of our business leaders to ensure that our supply chain
and business operation decisions are fully connected. We also have brought into Nalco the right capability to establish a
world-class sales and operation planning process, which is fundamental to being able to meet customer delivery service level
needs and, at the same time, consistently operate at lower inventory levels. With this in place, we can now move forward to
drive down inventories in 2009 in a sustainable way.

We also have combined the Paper and I&IS divisions into a new Water and Process Services division to further drive operating
efficiencies. These changes will deliver results starting in 2009. Brad will cover working capital and free cash flow in more detail
on his remarks, and before I talk about what we see at this point for 2009, let me turn it over to Brad to talk in more detail about
2008's performance. Brad?

Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer

Thanks, Erik. As you've seen, our earnings per share adjusted for a goodwill impairment charge, business restructuring charges,
and a divestiture gain, grew 29.2% for the year to $1.24 from the year-earlier comparably computed $0.96.
A fourth quarter $544 million non-cash goodwill impairment charge drove reported results to a net loss of $343 million or $2.44
per share. This impairment charge eliminates from the Company's balance sheet all goodwill allocated to our Paper Services
business at the time of Nalco's 2003 leveraged buyout.

I want to make clear that the impairment charge is a non-cash event for Nalco. The reduction in Nalco's share price and the
sharp deterioration in Paper Industry production in the fourth quarter played a critical role in driving the impairment amount
and timing.

On that same adjusted basis, fourth quarter EPS was up 50% to $0.36 from the prior-year period results of $0.24. I would note
that attachments set into our earnings release contains more detail on our adjusted EPS calculation. As Erik said, this is strong
performance, particularly in the context of the economic environment, but should not be taken to mean we are immune from
the effects of an accelerating number of plant shutdowns in the markets we serve, as the year drew to a close and as we enter
2009.

Let me do a quick run-through of key financial highlights for the year and for the fourth quarter, starting with the revenues.
Energy Services grew sales 17.5% organically for the year with 23.4% in the fourth quarter, as upstream sales strengthened at
year-end, despite the steep oil price decline. Our oil production business is well-balanced. We have focused sales activity for sometime on new oil rather than on mature oilfields that are most likely to be the first two closed if low oil prices continue. This
does not mean we're not affected by oil prices, but that we have a very solid base of recurring business.
Industrial and Institutional Services -- which we will start calling Water Services in future segment reporting -- grew 5% organically
on the topline for the year, slowing to 2.8% in the fourth quarter. Growth dropped off in that quarter in the manufacturing and
chemical industries in particular, with our power and primary metals water treatment businesses continuing to be the strongest
organic growth performance in the segment.

Paper Services started the year off struggling, and ended in significant difficulty with a 2.3% organic decline for the year,
accelerating to a 9.4% organic fall in the fourth quarter as conditions in the industry deteriorated rapidly. Other segment sales
grew slightly, mainly as the result of year-over-year changes in revenue recognition adjustments.

Recently, North America organic revenues were up 11% for the year with 13% in the fourth quarter. Latin America grew 13%
for the year and 11% in the quarter. Asia-Pacific organic growth of 6.3% for the year was just 2.5% in the fourth quarter, as global
economic impact was felt first and strongest in Asia. In Europe, growth rates were much better in the second half of the year,
as 1.7% organic growth for the year was supported by 3.6% organic growth in the fourth quarter.

Margin performance in Energy Services and I&IS was hampered by continued cost escalation for the year that ended with
product and trade costs being $170 million above prior-year levels. These cost increases contributed to clearly disappointing
margins in Paper Services, down to 12% for the year and just 10.5% in the final quarter.

While disappointing compared to the 20.5% DC margin in our two largest segments, this is still better performance than we
believe achieved by most in the paper industry. Margin details are available in our sales and earnings release.
Turning to cost savings, we surpassed our standing $75 million target with productivity gains of $94 million, of which $35 million
was captured in the fourth quarter. I should note that those savings include the 2008 portion of the $40 million in restructuring
benefits we discussed when we recently completed our reorganization efforts. Because of our disciplined approach to calculating
productivity gains, some savings captured financially in earlier periods are only quantified and reviewed at the end of the year.
Moving to cash flow, the most disappointing aspect of our performance in 2008 was working capital management and particularly,
inventory controls. For the full year, we generated $142 million in free cash flow after an inventory build of $90 million. Over
$70 million was the impact of a 12-day deterioration in day's investment in inventory.

Fourth quarter changes in day sales and days payables outstanding, driven by customer pressures in the case of the former,
and reductions to raw material purchases in the case of the latter, had a total impact of $50 million of cash consumption in the
fourth quarter, holding us short of our anticipated fourth quarter free cash flow target.

The change to an integrated business management approach in 2009, in which the Energy Services and the Water and Processed
Services leaders have direct supply chain and functional management responsibilities, will drive far better alignment and focus
on working capital management than our previous approach utilizing a centralized staff. Under the new organization, business
leaders will be directly accountable for these aspects of their business operations. Plans and actions are underway to ensure
that we achieve sizable inventory reductions in 2009.

A second area of cash consumption in 2008 was pension funding, with $89 million of pension and OPEB funding versus $51
million in book expense. Included in that funding was $66 million to our US-defined benefit plan, recognizing the optional $30
million put into the program after the third quarter sale of our FTG business. Given market returns, we expect our pension and
OPEB funding to be closer to $115 million in 2009, with expenses falling to about $35 million, as we do not repeat a $10.6 million
pension settlement charge taken in the fourth quarter. This charge was required due to the higher-than-normal level of lump
sum pension settlements in 2008.

In 2009, capital expenditures are presently projected to be in the $120 million to $125 million neighborhood, but we may see
reductions, and will certainly see prioritization on the highest return investments, as the division leaders assume greater
accountability for CapEx decisions. Taken together, and in the absence of any tremendous further weakening in the economy,
we fully expect free cash flow in 2009 to exceed that achieved in 2008, with delevering among our key priorities. That cash flow,
in what appears to be an improving set of conditions in high yield debt markets, should provide great opportunity for addressing
the debt we have maturing over the next couple of years.

To close, and just one last reminder, beginning in 2009, we will no longer be reporting EBITDA adjusted for the full roster of
items defined in the credit agreements that were taken on when we did our LBO in 2003. Instead, we would limit any potential
adjustments to those more widely accepted for EPS -- namely, major restructuring; gain loss on divestiture; and of course,
goodwill impairment, which we certainly do not expect to repeat. On that basis, what we reported as adjusted EBITDA of $732
million in 2008, would instead have been a simple $700 million.

With that, let me turn it back to Erik for some comments on 2009.

Erik Fyrwald - Nalco Holding Company - Chairman, President and CEO

Thanks, Brad. As we consider 2009, due to the rapid negative changes we are all seeing in external conditions, we cannot at
this time provide you with an outlook that would be meaningful. But what we can try to do is describe the challenges and the
actions we are taking to deliver the best performance we can in 2009, given the economic conditions.
Regardless -- regarding the challenges, it is going to be a very difficult year, with likely strong headwinds from currency, continued
steep decline in paper markets, and accelerating pace of extended shutdowns and permanent closures among customers in
various industries -- and believe me, all industries are being impacted by this financial crisis.
I realize that many of you will be frustrated by our decision not to provide more detailed guidance at this time, but let me take
some time to talk about what actions we are taking to drive performance.
In 2008, we delivered well against our six priorities. In 2009, we have shifted to focus on five priorities clearly aligned with today's economic realities. Our top priority is, as it will be every year, safety; but given the economy, our next top priority has shifted, and we are more clearly focused on delivering a step change in productivity.

I previously announced our commitment to achieve $100 million in cost savings gains in 2009. I'd just like to let you know that
our internal goals are higher than that. We have opted to not have any merit increase this year -- and we've communicated that
to our employees -- and are instead providing all employees with the opportunity to earn productivity success payments --
essentially, a broad employee bonus plan tied directly to cost savings for the entire Company.

The minimum threshold for these payments is not reached until we deliver $85 million in savings, but to receive a bonus similar
to the amount that might have been earned in a more normal merit increase year, we will need to deliver $150 million in savings.
Now normally, compensation costs have provided a sizeable offset to our cost savings gains. With this program, payments will
only be made after we achieve the productivity benefits, so the program will be substantially more than self-funding, and I
believe is helping us create a culture of growth that is strongly supported by productivity.

Our next priority is to pursue profitable growth, but with more focus than in early 2008. We will target resource increases to
geographies, market segments, technologies, and customers that can have high growth even during the crisis. And we can do
this through technologies such as 3D TRASAR; Nalco Mobotec's offering, the new low-dose hydrate inhibitors in energy; through
geographies that include China, India, the Middle East; and through industries such as new oil production, food and beverage,
and power. We will also focus more on increasing share with strong, solid growth customers across segments.

We also must minimize the threat of bad debt reducing our performance. And to this end, we increased our bad debt reserves
in the fourth quarter 2008, and are working with our customers every day to make sure payments are current, to reduce terms
where possible, and focusing growth efforts where we believe there is less risk. And we are aligning sales incentives with our
goal of ensuring payments. And all investments to support the growth that I just talked about will come from aggressive
redeployments from low or negative growth segments.

Another top priority, as Brad has alluded to, is increasing our cash flow. In 2008, we did not have the base capability to manage
inventory well without hurting delivery service levels to customers and therefore, harming growth. We did a poor job of managing
this key element of working capital last year.

Now in mid-January, with the reorganization and restructuring, we provided direct supply chain accountability to the Water
and Processed Services and Energy Services division leadership, along with our regional leaders in Europe and Asia, to make
sure supply chain practices are clearly aligned with business direction. We also brought in, as I've said, very capable S&OP
leadership and flanged it up directly with strong Nalco leaders that know our business.

With this emphasis in capability, we will make significant progress in 2009 reducing inventories regardless of how bad economic
conditions get. I've been through efforts like this before; we will be successful.

Finally, our fifth priority is strengthening our future through a variety of enhancements to our service offering, driving our
technology pipeline to the market, and strengthening and taking more advantage of the Nalco brand. With a strong focus on
productivity, targeted growth, and cash flow improvements, I am confident we can succeed in our priority areas in 2009, just
like we did in 2008. We have developed a more comprehensive set of leading, in-process, and financial indicators to ensure that
we remain on track against our goals, and will know more quickly where we need to focus attention and where we need to
make shifts.

After nearly a year at Nalco, I am more excited than I was when I started, with the opportunity we have in our growth markets
and to improve our position in these markets. We are on a better track and have the right business leadership team in place to
drive success.

In 2009, we, like everybody else, face huge economic difficulties and uncertainties, but we're committed to improving our
market position and key capabilities to deliver what we can in 2009 in a way that also strengthens us for 2010 and beyond, and
out-performs competition. Operator?

Mike Bushman - Nalco Holding Company - VP of Communications and IR

We can take questions at this time.

Q U E S T I O N S A N D A N S W E R S
Operator
Yes, sir. (Operator Instructions). Jeff Zekauskas, JPMorgan.
Jeff Zekauskas - JPMorgan - Analyst
Your goal for 2009 is $100 million in cost savings. What's your run rate in cost savings as you closed 2008?

Erik Fyrwald - Nalco Holding Company - Chairman, President and CEO
Well, we hit $94 million in cost savings for the year of 2008. Our public commitment had been $75 million per year, so we did
see acceleration toward the end of the year. Our public commitment, made several months ago for 2009, was $100 million. And
as I've described it, we have internal goals that are higher, and we have this new compensation program to incent all employees
to drive cost productivity. And that will pay out at a level equivalent to roughly what a merit increase would have been, if we
hit $150 million in savings.

Jeff Zekauskas - JPMorgan - Analyst
Okay, great. Thank you. And my follow-up is, can you describe your level of business in October and November and December,
and compare the three months, the last three months, of 2008?

Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer
Sure, Jeff. This is Brad. Normally, we've got some month-to-month aberrations; we would in any quarter. I think what became
clear to us -- maybe with Energy Services a bit of the exception -- is as the quarter intensified, as the quarter wore on, the
economic malaise certainly intensified. And then you were reading the same headlines we were, that customers across many
of our segments were quicker to shut facilities, quicker to lay off staffs. That is still going on.
And there's no question but that we entered the first quarter of 2009 with a weaker set of market spaces than we entered the
fourth quarter of 2008. I think that's why, as Erik took you through our initiatives, the whole focus for us in 2009, just to make
sure that the house in Nalco is properly running and running extremely well.
And so whatever economy comes forth, we'll control the pieces we can control and optimize our performance in that environment.
But if you -- if you're watching the markets, if you're reading the headlines, you have a sense of how our industry space was
behaving over the course of the quarter.

Jeff Zekauskas - JPMorgan - Analyst
Okay, thank you very -- (multiple speakers) go ahead.

Erik Fyrwald - Nalco Holding Company - Chairman, President and CEO
I would just add that -- and Brad alluded to it -- that the Energy Services segment did continue strong through the quarter.

Jeff Zekauskas - JPMorgan - Analyst
Okay, thank you very much.

Operator
P.J. Juvekar - Citigroup - Analyst
You've done a good job in energy. The business held up well with organic growth up 17%. My question is that -- does this
business lag oil prices? Oil was high in mid-'08. This business is seeing growth now. With the rig count falling to -- it's fallen
significantly. Do you think that organic growth of 70% will continue at $40 oil price?
Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer
No, I don't think that organic growth of 17% will continue. I do think that we will continue to see significant growth in Energy
Services in 2009. And let me try to explain why. We will be pressured in our Adomite business with the reduced rig count,
especially in natural gas, which we expect to continue. That makes up about 11% of our Energy Services business. We will see
pressure in that area, which we haven't seen in 2008.
I also believe that the petrochemical side -- we have the large petrochemical that's tied to refining in the Energy Services business.
That will also see a significant decline in 2009, as you've heard about what's happening with petrochemical -- the industry.
On the other hand, we are seeing continued growth in Middle East CapEx that we're winning; Thailand, Australia, Indonesia,
Malaysia, India, West Africa, and Canada, as CapEx that was previously on track finalizes, starts up and we gain business, and
those facilities charge ahead. So I believe net of all that, we will still see significant growth in Energy Services in 2009. It will not be on the same level as 2008.

P.J. Juvekar - Citigroup - Analyst
Okay, great. That's clear. And second question for Brad. First of all, Brad, congratulations on getting rid of adjusted EBITDA.
Brad, you have significant term loan and bonds maturing in 2010 and 2011. What do you plan to do there and what's the game
plan in refinancing that?

Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer
Well, just to kind of set the stage on maturities, we do have our revolving credit facility that matures in November of 2009, the
current year, that's presently a $250 million facility. We have never used anything close to that full capacity. We've been out of
it in each of the last two quarter-ends. We'll certainly be addressing that here sooner than we otherwise would in this current
market space.

And with that, probably term loan B, which is about $887 million, maturing in November of 2010. I'm very encouraged by the
improvement in the high yield markets, even since the beginning of this year. If you look at the amount of new activity, we are
being told from a number of sources that we have access to that market space, that our paper, like at where we trade, we're
very much at the high end of Double D land and even into levels that are interesting. So we have access.
We're in regular contact with our Board on this. I mean, obviously, the difference is that new money is very expensive. LIBOR
plus 175 in the current term loan B is kind of less than a 4% kind of a number. And new five-year money or so is going to be
north of 10%.

So, we will be addressing that. We're to take some of that off the table. I talked in my remarks about free cash flow aimed at
delevering in the kind of environment we're in, but we haven't distilled that yet into precise amounts, et cetera. But I am greatly
encouraged by -- I don't think it's a window we're seeing; I think for the better names, there will be access, and I think, from all
sources, that we are included in that group.

P.J. Juvekar - Citigroup - Analyst
Great. Thank you. Sooner the better.

Erik Fyrwald - Nalco Holding Company - Chairman, President and CEO
We've also had a lot of banks lining up at Brad's door.

Operator
Jason Miner, Deutsche Bank.

Jason Miner - Deutsche Bank - Analyst
My first question is on Paper Services. I'm just wondering, I guess, first, if there's any share shift going on?
And secondly, I know in the past, we've discussed the strategic thinking for that. Is this realignment the end for that or are there
other options still under consideration? Sorry, that's two, but with your permission, I'll pretend that's one question.
Erik Fyrwald - Nalco Holding Company - Chairman, President and CEO
Yes. So, on the Paper Services share, our belief -- we haven't seen everybody's numbers yet, but our belief is that our share has
been flat through this. We're not trying to gain share in all of this. We're trying to do the best we can on margins, add value, get
the prices up and get our costs down.

In terms of strategy, what I have said and what our commitment has been is to run this business the best we can. But given the
circumstances, it limits what strategic options we have right now. But I would say that we're still open to it. There are opportunities that make sense, to improve the industry structure that add value to Nalco, we're open to them. But right now, our focus is on running the business as best we can.

Jason Miner - Deutsche Bank - Analyst

Thank you. That's helpful. And then my second, if you'll indulge me here, on the productivity. How are these -- how should we
think about the fixed versus the variable portion? I.e., if we faced enough demand pressure that volumes were down a lot, and
those were largely variable, would we be even more challenged to reach the targeted savings?
Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer

To some degree, but the way we measure productivity, it's a structural take-out from our fixed base. Now, obviously, your
chances for productivity are leveraged somewhat as output is growing, because the savings you put into place contribute more
per unit, if you will.

That's not -- I don't see that as a big obstacle for us. And if anything, the idea that we're not going to repeat the same organic
growth we enjoyed in 2008 makes this whole push on productivity all the more important to getting to the earnings and cash
flow goals we have.

Erik Fyrwald - Nalco Holding Company - Chairman, President and CEO
And we've got strict criteria on financial validation of the savings, that they're real savings. And so we're going to make sure
that they really are there.

Jason Miner - Deutsche Bank - Analyst
And those reset each year, right? So if we pay out the bonus to get, say, $150 million this year, we keep the $150 million and
reset the bar --?

Erik Fyrwald - Nalco Holding Company - Chairman, President and CEO
Correct. Absolutely.

Jason Miner - Deutsche Bank - Analyst
Very helpful. Thank you.

Operator
Laurence Alexander, Jefferies.
Laurence Alexander - Jefferies & Company - Analyst
I guess, two questions. First, given how bleak your tone was on 2009, are you looking at other ways to accelerate deleveraging
or any asset sales? I mean, are you comfortable with the prospect of a sharp jump in your interest rate at current leverage ratios?
Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer
This is Brad. Again, I think we signaled in here that we have good reason to believe that free cash flow in 2009 will be better
than the free cash flow in 2008. If you just think about not having an inventory build on the order of magnitude we have, you
put significant money back into free cash and you think about actually reducing inventory in the 2009 timeframe, as we have
already begun.

You could even have a decline in cash from earnings and still do better in a free cash flow standpoint. So we have not started
talking about asset sales. Again, we have always believed that this portfolio carries the capital structure quite well.
So, no, is kind of the answer to that question. And we've seen the yields available to us in the high yield market improve
considerably, just even in the past month. So we're kind of watching markets. I'm not anxious to jump into a 7% higher interest
rate environment.

You're not going to see a wholesale refinancing of the whole balance sheet, but I think we'll target maturities or pieces of
maturities in the 2010 timeframe that will make anything coming down the road all that much more digestible, with free cash
over the next couple of years.

Laurence Alexander - Jefferies & Company - Analyst
And secondly, on the direct contribution line, the other segment and the administrative costs -- can you address the improvement
in both of those lines and how much of that was due to the one-time adjustment to accounting for incentive comp or any items
like that?

Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer
I can. If you look at -- you're on Attachment 4, the other segment includes a fair number of things that we just consistently keep
out of the division results under the historic organization structure -- things like the centralized supply chain; things like the
operational support from DH&S, et cetera. So, there's a lot of moving pieces in here.
In 2007, that final period, that 22.1 number was a high number for us. And one of the things we did not repeat this year was a
provision for credit memos against all of the inaccurate invoice memos that we created on the heels of NBT. If you remember,
our implementation issues in 2007. We've got our invoicing processes much better. The level of nonconformances are much
lower and we did not repeat that kind of a charge.
If you look down to the administrative expenses, you might remember that in the fourth quarter of last year, we had a sizeable
$12 million departure provision, if I can call it that, for our former CEO, that we did not repeat this year. And the other reduction
is -- we missed our cash flow target. We missed our cash flow target to a major degree. And that shows up with a pronounced
reduction to our incentive payments here.
So as nice as we think we did on the earnings side of things, we fell short of the stated objective, and our bonuses will be a
fraction of what they were last year.
Operator

Chris Shaw, UBS.
Chris Shaw - UBS - Analyst
Just around the sort of strength in the energy business -- just trying to understand, is some of the new business you're getting
in the Middle East and Asia, is that -- is there some, like, upfront loading that happens? Or is that sort of the level of sales you
expect from those kind of customers throughout 2009 as well?

Erik Fyrwald - Nalco Holding Company - Chairman, President and CEO
That's what we expect throughout 2009. It's new capacity coming onstream. There is some upfront outloading but not a
significant amount. It's more ongoing run rate that we expect to continue.

Chris Shaw - UBS - Analyst
Okay. And then on -- I guess maybe for Brad more on the working capital, but -- I mean, how much work -- I mean, you want to
draw down inventories, but how much benefit is just strictly from the reduction in maybe the cost of inventory, the cost of raw
materials, do you think you can get in 2009? Or maybe even what sort of the impact of that was in 2008?

Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer
Well, it was certainly in the $90 million build of inventory over the course of 2008. As we said, about $70 million of that build
was simply a deterioration in days. So I think we'll certainly not have that again. We've got some plans in place under the new
divisional leadership to reduce inventories. And we've got a variety of perspectives that we're looking at for what could be the
raw material environment in 2009.

We're not going to give specific guidance on working capital, but look to the fact that inventory will be a source of cash flow --
inventory reduction will be a source of cash flow in 2009.

Chris Shaw - UBS - Analyst
In 2008, only $20 million was from, say, inflation?
Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer
Inflation and supporting growth, yes.

Operator
Mark Gulley, Soleil Securities.
Mark Gulley - Soleil Securities - Analyst
Erik, getting the balance between growth and productivity has been tricky, both for your predecessor as well as for you. I'm
impressed by the aggressiveness of your productivity measures. But is there a risk that you might give up growth, as bedeviled
your predecessor?

Erik Fyrwald - Nalco Holding Company - Chairman, President and CEO
We are doing this in a way that does not detract from growth. We're getting a broad engagement from our employees to drive
productivity, but a clear boundary condition is that what we do there has got to be focused, projectized, and done in a way that
does not detract from our growth.
I talked about earlier, the question around energy, where the growth opportunities are in energy and why we'll be growing
energy. Let me do the same thing for the Water and Process side, because I think it's important to note that we are continuing
to invest in and drive growth.
There will be negatives to growth in 2009. Paper will continue to be challenged. We talked about manufacturing -- chemicals,
steel, aluminum will be challenged. Some markets -- Russia, Western Europe, US GDP -- it will be challenges. Bankruptcies at
some customers will be challenges. But at the same time, there are still going to be growth opportunities in Water and Process
Services that we are aggressively going after.
3D TRASAR -- we had good progress on cooling tower water penetration in '08. We're going to keep driving that hard. And
we're launching boiler 3D TRASAR this quarter.
In the Power segment, we saw growth in 2008. We think we can continue to grow that segment in 2009.
Mobotec -- we went from $24 million to $43 million. We're going to have another very large growth year in Mobotec in 2009.
The Food and Beverage segment, we can grow. Certain geographies we're continuing to add resources to drive growth,
redeploying from others -- India, Brazil, China. We're still driving growth investment because we believe it can pay off in 2009
and beyond.
So I don't want to give the sense that we're going on defense for growth. We're going on offense for growth, but adding to that
a more aggressive productivity approach that I think is going to be energy-creating, not energy-destroying.
Mark Gulley - Soleil Securities - Analyst
That's very helpful. Thank you. As my follow-up, how shall I interpret the fact that CapEx is more or less flat this year? I know it's
down maybe $10 million, [$15 million], but still a pretty solid CapEx number. How does that speak to your outlook for 2009?
Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer
A fair amount of our CapEx is equipment at customer sites. And with the kind of growth we've been having, we've continued
to have these equipment installations. They are not individually large, but we are successful in the field. And it's business we
want to support, because it gives us that annuity stream, if I can call it that, of the whole chemical offering.
We've got some new geographies that we've penetrated over the course of the year. Nanjing is now behind us, in terms of that
being fully built out and currently under production and going.
So I think that if we are down a bit in CapEx, that's appropriate, given the environment we have an outlook on right now and
shouldn't surprise. It's not a tightening the belt because we're out of growth prospects. It's -- we had kind of a bubble going
through here with the Nanjing plant build -- first one we've done in years.

Mark Gulley - Soleil Securities - Analyst
Thanks, Brad.
Operator

Richard Eastman, Robert Baird.
Richard Eastman - Robert W. Baird & Company, Inc. - Analyst
I just had a question regarding the net price capture in the fourth quarter. As we roll into the new year, how should we think
about that $15 million or $16 million positive price capture on an annualized basis in '09? Because we've got the raw material
prices still presumably trending down; it would seem obvious that we have some price -- maybe givebacks or discounts in
energy and perhaps paper. But how -- can we annualize the $15 million or $16 million of price capture for '09?
Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer
No. No, just as it has taken us historically about a one quarter lag to get prices up in response to costs. We have hung on to
something like that or actually something a little more than that on the way down. You can kind of see that in Nalco's history
over years.

I guess what's different this time is just a precipitous drop -- when oil goes to $147 and then falls to $47, and the raw material
drop is being led by extreme economic weakness, you've got to imagine there's a fair amount of clamoring for price reductions
in parts of the customer base. And we're just having to remind folks that we swallowed hard on the way up and there's a [period
each] of the negotiations that we'll look at things on the way down.
It's kind of hard to predict. We would prefer a far more stable raw material environment to be sure, because we can react to
that. But I would stop short of annualizing a favorable gap and assuming that we can hold that for a full 12 months.
Erik Fyrwald - Nalco Holding Company - Chairman, President and CEO
But a couple of other things that we're doing is that we are training our salespeople and really supporting them to demonstrate,
to deliver value, reduce customer costs, and demonstrate that ability to reduce their total cost. and the cost of our product in
that total savings is not that important relative to what we can do, compared to competition and saving cost.
So we've got a hard effort on to sell value, to save our customers' cost, separate from the price question, and hold onto the
pricing as best we can. At the same time, although raw material costs have been falling and are starting to flow through, we're
also looking at different scenarios and saying, what if they start going back up? How do we be prepared for that?
So we worked hard on price in 2008. We haven't let up on working price for 2009.

Richard Eastman - Robert W. Baird & Company, Inc. - Analyst
Okay. And then just the last question. Brad, when you look out to '09 at the current FX rate or US dollar rate, what kind of
assumption are you using for currency? And then just as a follow-up to that, what did currency do to the EPS line in the fourth
quarter of this year?

Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer
Currency in the fourth quarter of '08 was a major headwind for us. We saw a sharp reversal there -- in currency rates.
Now, if you look at Nalco's portfolio, this is not a make-it-here-and-export-i t kind of a business. We operate around the world;
half our business is outside the United States. By and large, we produce local for local. Our delivery costs, the sales engineers
on the ground are local for local.

So our currency exposure is really the net profits in each country. And we don't get involved in trying to manage translation
results, but we do selectively hedge cash that we anticipate repatriating back to the US. And a fair amount of structural hedge
is in place with the euro-denominated portion of our debt structure. So, we have a good natural balance across the portfolio.
As far as business planning and what rates we use, we simply use the mid-year forward rates for our key currency cross-pairs,
and don't try and come up with our own independent forecast for that.

Richard Eastman - Robert W. Baird & Company, Inc. - Analyst
Okay. But did the -- I guess the question would be, in the fourth quarter with the currency -- I mean, it was a negative sales
translation impact of about $77 million. Did it negatively impact EBIT by -- was there a 15% conversion on that or --?
Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer
You'd put a period after EBIT. It negatively impacted EBIT.

Richard Eastman - Robert W. Baird & Company, Inc. - Analyst
Okay. All right, thank you.

Operator
Mike Harrison, First Analysis.

Mike Harrison - First Analysis Securities - Analyst
I was wondering if you could quantify the impact of customer shutdowns on organic growth in the I&IS business, and talk about
whether you expect that impact to be worse or not as bad in Q1?
Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer
Well, we talked about the change in growth rates -- I&IS all up was a 5% grower for the year, and that was only half that rate in
the fourth quarter. And as I said in my remarks, we entered 2009 in a weaker place. I mean, the year -- that fourth quarter was
a deterioration. It deteriorated over the course of the quarter. That hasn't let up coming into the year. And now you're kind of
asking me for an economic forecast for '09, and that's, as Erik spoke, that's where we kind of feel ill-qualified.
We've got Nalco working the way it should. It's going to be a case of how healthy our end market spaces are. And we're thankful
that we serve such a myriad of customers, across industries, across geographies, that no one sector could really reach out and
hit us hard. But I don't have a feel. I mean, I can't tell where the bottom of this is, to kind of paraphrase Erik's remarks.
Mike Harrison - First Analysis Securities - Analyst
All right. And then I apologize if I missed this, but did you talk about how the EOR business performed during the fourth quarter?
And can you talk about how that -- where your expectations are for '09?
Erik Fyrwald - Nalco Holding Company - Chairman, President and CEO
Sure. The EOR business in the fourth quarter and as we look to '09, we don't see the large growth opportunity near-term that
we had hoped for a year ago. But we do see solid interest from customers. We're having a lot of discussions. We'll see relatively
similar revenue levels in 2009 as we saw in 2008, maybe a little ahead, but we won't see the big lift yet.
But we are in with a lot of oil companies, explaining it, talking to them about it, looking at the data from tests that have been
run or are being run, and getting set up for, hopefully, what we believe, as oil prices come back up, a continued, really big
growth opportunity -- just delayed a period of time.

Mike Harrison - First Analysis Securities - Analyst
All right. Thanks very much.

Operator
Brian Drab, William Blair.

Brian Drab - William Blair & Company - Analyst

First question on raw material prices. The price of oil is up, the average price in '08 versus '07 up about 40%. If you took the price
today and just assume that's the average in '09, you'd be down 60%. Can you help us, just by giving some sort of ballpark amount
in absolute dollars that you think raw material costs could be down in '09 versus '08, given -- with the move this year, they were
up $170 million, I'd imagine it might be down something in line with that or more?
Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer
This is Brad. Raw material costs will certainly be down. And one key ingredient in there is oil price. There's not a neat formulaic
answer in terms of what a barrel of oil costs at the well head and what that does directly to Nalco's raws. And I say that because
we buy our raws so far down the stream, that it depends upon what people upstream of us are doing, in terms of inventory
adjustment, plant utilization, et cetera.

I'm not clairvoyant enough to give you a good read on oil prices. I mean, the futures would suggest we'll be back at a $70 kind
of oil price by the end of the year. We're running some scenarios ourselves in terms of what we would do in response at different
levels of raws. But I think we're getting into an area of 2009 guidance where we're just not prepared to go.

Brian Drab - William Blair & Company - Analyst

Okay, thanks. And my second question, regarding the paper segment. I know you previously mentioned that you'd have some
sort of statement regarding the segment and possible strategic alternative in the second quarter. I would imagine, given the
market environment, that it might be tough to pursue some of those strategic alternatives. Do you have any update on the
progress or that situation?

Erik Fyrwald - Nalco Holding Company - Chairman, President and CEO

That's an accurate and good characterization of it. The near-term strategic move for us is to run at lower costs. We took out a
substantial amount of costs in 2008. We're making sure that our resourcing reflects that the opportunity of the business in 2009.
And we're going to run it the best we can.
I don't think any significant strategic options other than that makes sense right now. As things change and get better, hopefully,
at some point, we'll re-look and have a chance to talk about strategic opportunities. But right now, we've got our heads down
and are running the businesses the best we can.

Operator

Bob Koort, Goldman Sachs.

Amy Zhang - Goldman Sachs - Analyst

This is Amy Zhang sitting in for Bob. I have two questions. The first one, regarding I&IS's position, despite the slowing topline
growth for the quarter, the fact that the margins show a pretty nice expansion, I'm wondering, what were the drivers there?
And then what's your margin expectation for that business in '09?
Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer
Amy, I just said I can't give you a margin projection for 2009, but very clearly, I&IS benefited from pricing actions taken throughout
the year, that really accelerated going into the fourth quarter. We had positive price relative to cost across the Company. The
I&IS was no exception in that number. So a good part of what their organic growth was, was price recovery.

Amy Zhang - Goldman Sachs - Analyst
Got you. And then the second question is -- f over the past several years, you are reinvested almost all of your saving productivity
again, and I'm wondering what's the strategy in '09? In a weakening global demand environment, are you into still your
reinvestment rate? And so -- I mean, we can see some more benefits from the savings on your margins?
Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer
I would expect you're right. You will see more of the productivity fall to the bottom line. Remember that, as we invest for growth,
it's less in the form of capital spending. It's more in the form of new engineers being hired and hired well in advance of the time
they become fully productive in the field.
So, that will be a lesser number in 2009, to be sure. But I'll remind you, to go back to Erik's remarks about us continuing to be
aggressively growing but very focused in those growth efforts. So we should see more of that staying in the Company, if you
will.

Erik Fyrwald - Nalco Holding Company - Chairman, President and CEO
And more of the growth investment will be redeployment from lower growth areas and not new investment. So, the answer
to your question is yes, as Brad said, more of the productivity will fall to the bottom line in 2009.

Amy Zhang - Goldman Sachs - Analyst
Thank you.

Mike Bushman - Nalco Holding Company - VP of Communications and IR
We're coming up on 10:00, so let's just take one more question.

Operator

And we'll take our last question from Mike Judd, with Greenwich Consultants.

Mike Judd - Greenwich Consultants - Analyst

My question has been answered, thanks.

Operator

Michael Boam, BlueBay Asset Management.

Michael Boam - BlueBay Asset Management - Analyst
Three very quick questions, please. The first, can you give me your CapEx guidance for 2009?

Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer
Yes, right now as we look at it, I cited about $120 million to $125 million range, but we look at that real time against what's
going on in the economy, too.

Michael Boam - BlueBay Asset Management - Analyst
Okay. And then can you tell me, in terms of your floating rate debt, is that all actually floating at the minute? So actually you're
paying LIBOR of -- what is it, 1.75%? Or did you swap some of it for fixed? And if you did swap it for fixed, when does it free up
to roll?

Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer
We do not have any swaps in place, but we are pricing that across various tenors of the LIBOR, but the floating rate is floating
rate.

Michael Boam - BlueBay Asset Management - Analyst
Okay. On that basis, given where we are today, what would you expect your cash interest to be in 2009, roughly?

Brad Bell - Nalco Holding Company - EVP, CFO and Treasurer
I think you can look at 2008 proxy. We have about $20 million more because the 9% pick note goes cash-pay this year. And
there will be one payment in the calendar year against that -- reduced by whatever debt reduction we come up with from free
cash flow and/or refinancing plans, which we discussed earlier in the call.

Michael Boam - BlueBay Asset Management - Analyst
Yes, I got it. Okay, thank you very much.

Operator
That does conclude today's question-and-answer session. I'd like to turn the call back over to Mr. Fyrwald for any closing remarks.
Erik Fyrwald - Nalco Holding Company - Chairman, President and CEO
I just want to thank everybody for joining the call this morning. 2009 -- 2008 was a challenging year, but I think we made some
real progress both in delivering for the year and also strengthening this Company for 2009.
As we said, we see a lot of challenging external headwinds in 2009. I think we are being realistic and understanding those and
reacting to them. But what I can assure you is that we're going to do all we can to perform the best we can, both in terms of
driving growth, the right growth opportunities, and stepping up and aggressively driving productivity efforts. And we're going
to do the best we can for 2009. Thank you very much.

Operator
That does conclude today's Nalco conference call. We thank you for your participation and have a wonderful day.





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dailystock_admin 
Administrator
Posts: 249

Reg: 09-24-07

02-19-09 07:07 PM - Post#2116    
    In response to dailystock_admin

Audio Presentation at Roth Capital on Feb. 17, 2009

http://phx.corporate-ir.net/phoenix.zhtml?p=irol-e...

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dailystock_admin 
Administrator
Posts: 249

Reg: 09-24-07

02-19-09 07:24 PM - Post#2118    
    In response to dailystock_admin

I have attached a detailed Financial Fact Book about Nalco. It includes financial breakdown of each operating segment. Very detailed.

http://www.scribd.com/word/download_preview /132596...

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munger 
newbie
Posts: 35

Loc: Santa Barbara, CA
Reg: 02-16-09

02-20-09 10:51 AM - Post#2152    
    In response to dailystock_admin

Lou Simpson has made mistakes before, but the more and more I look at this company, the more I like it.
Clearly, Nalco has a strong moat built through many years of history of being in business, customer relationships, trademarks, valuable patents.

It certainly would be nice to see how valuable those trademarks and intangibles are.

And yes, the play on China and India is going to be huge.

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dailystock_admin 
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Posts: 249

Reg: 09-24-07

02-20-09 02:28 PM - Post#2156    
    In response to munger

James Montier's presentation at the CIMA conference 2009

http://www.dailystocks.com/forum/showtopic.php?tid...

Did anybody go to the conference? Wonder what Einhorn said.

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munger 
newbie
Posts: 35

Loc: Santa Barbara, CA
Reg: 02-16-09

02-20-09 08:25 PM - Post#2166    
    In response to dailystock_admin

Why Nalco is in a Sweet Spot

Background

Freshwater scarcity is a trend that, while the focus of study by many international
agencies and think tanks, is vastly under-appreciated in the investment community. The
amount of water in the world is finite. The number of us is growing fast and our water
use is growing even faster. A third of the world's population lives in water-stressed
countries now. By 2025, this is expected to rise to two-thirds. Water scarcity is now the
single greatest threat to human health, the environment, and the global food supply.

Key Market Statistics:
-The EPA and other respected sources estimate that over $1 trillion will be spent
over the next 20 years to replace the aging water and wastewater infrastructure in
the U.S.
-Only 20% of the world’s population currently enjoys running water.
- The typical American lunch requires 1500 gallons of fresh water to produce.
- 1.1 billion people lack access to clean water and 2.4 billion lack access to proper
sanitation.
-By the middle of this century, no fewer than seven billion people in 60 countries
may be faced with water scarcity.

-The UN-backed World Commission on Water estimates that over $180 billion a
year is needed to tackle water scarcity worldwide.
Investment Opportunities:
-Pipelines
-Drillers
-Water and Wastewater Treatment
-Transport
-Agriculture/Irrigation


-Infrastructure repair & replacement:

Look for companies that produce the most widely needed component in the replacement of millions of miles of water and wastewater infrastructure –
pipes.

Drillers
Look to participate in the need for new sources of freshwater by investing in companies that drill water wells.



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ben 
newbie
Posts: 11

Reg: 02-22-09

03-11-09 11:14 PM - Post#2447    
    In response to munger

"Warren Buffett's Berkshire Hathaway revealed a new position in Nalco Holding (NLC), a stock that is my favorite pure play on water filtration," says Chris Mayer in Daily Wealth.

"With a $1.6 billion market cap, Nalco is a small-cap stock, but it's actually one of the world's largest water-treatment companies. Customers use Nalco's products and services to prevent corrosion, contamination, and the buildup of harmful deposits.

"Buffett picked up 8.7 million shares. That makes Berkshire the second-largest shareholder in the company, with a little more than 6% of the shares.It's easy to see what Buffett likes.

"Nalco generates a steady stream of free cash flow – $142 million in its fiscal year ended September 30. Today, the market cap is about $1.6 billion. So you're getting nearly a 10% free cash flow yield. Put another way, you're only paying about 10 times free cash flow. Not earnings, but cash flow.

"On the downside, Nalco has a leveraged balance sheet with $3.1 billion in net debt. However, its business model ensures steady cash inflows from service contracts, which is less of a risk than it might seem.

"Also, the first significant maturities don't come until November of 2010 – plenty of time for the credit markets to return to some friendlier state. In any event, the debt was not enough of a risk to put Buffett off the scent.

"There is also a nice backdrop to the Nalco thesis. Water is a scarce commodity. Two-thirds of the world's population face water shortages by 2025, according to the United Nations. And according to the U.S. Government Accountability Office, about 36 states face water shortages by 2013.

"These issues may not seem so pressing to you, since every time you turn on the tap, the water flows. But it is an important issue for industrial users of water all over the world.

"Nalco is right in the heart of this issue. Nalco's customers are industrial users. Nalco's services improve water efficiency. The company also offers services to reduce air pollution, treat industrial wastewater, and more. In this, Nalco is the global leader, with a 17% global market share. It's bigger than GE in water.

"As a long-term investment, Nalco is among the more compelling ideas out there. In fact, the entire water spectrum looks attractive as a long-term investment theme. It's going to be an issue we're going to deal with for years, Warren Buffett's purchase of Nalco is further confirmation of the idea."

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dailystock_admin 
Administrator
Posts: 249

Reg: 09-24-07

03-13-09 10:39 PM - Post#2479    
    In response to ben

Detailed HIstorical Overview of Nalco the company. Nalco History B-184

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Edited by dailystock_admin on 03-13-09 10:40 PM. Reason for edit: No reason given.

 
dailystock_admin 
Administrator
Posts: 249

Reg: 09-24-07

03-17-09 09:25 AM - Post#2528    
    In response to dailystock_admin

Nalco Announces Latest Water and Energy Innovation, 3D TRASAR Boiler Automation Technology
NAPERVILLE, Ill., March 17, 2009 (GLOBE NEWSWIRE) -- Nalco Company (NYSE:NLC), providing essential expertise for water, energy and air, today introduced the next generation in boiler system control and treatment. Nalco Chairman, President and Chief Executive Officer J. Erik Fyrwald announced the launch of 3D TRASAR(r) Boiler Technology during a presentation at the 7th Global Clean Technology Conference, hosted by Jefferies and Company, in New York.

3D TRASAR Boiler Technology detects system variability, then determines and delivers the appropriate automated response before problems occur. It delivers measurable results that are not attainable with other offerings, allowing Nalco sales engineers to establish boiler-specific best practices for customers.

"In today's economy, helping customers to significantly reduce their total costs of operations gets attention," says Fyrwald. "Poor boiler water treatment results in scale and corrosion that can damage a steam system and interfere with efficient heat transfer, requiring more rapid replacement of expensive equipment, causing system downtime and substantial wasted energy. 3D TRASAR Boiler Automation couples our most advanced boiler water treatment chemistry with patented monitoring and control technology that is unmatched in our industry."

Boiler systems and the steam they create are the lifeblood of many production processes such as tire manufacturing, food and beverage processing, airplane assembly and papermaking, so ensuring reliable steam production is a necessity for maintaining production. Operating boiler systems more efficiently also saves water and energy (plus their associated costs), while preserving and extending the life of costly equipment.

Extensive program trials in a variety of industries have demonstrated myriad value from 3D TRASAR Boiler Technology for customers:


* A major university in the Midwestern United States improved its
boiler operations, reducing energy use and avoiding 113 tons of
greenhouse gas emissions annually. In addition it saved more than
2 million gallons of fresh water per year and reduced chemical
exposure for its employees.
* At a power plant, steam system maintenance outages were able to be
scheduled when replacement power costs were low and the restart
process was shortened from days to hours, saving the customer
$700,000 per planned outage.
* A paper mill avoided $430,000 per day in lost production by
minimizing boiler outages.
Variations in the water used and in the steam load requirements for a boiler system make the overfeeding or underfeeding of water treatment chemistry commonplace under manual competitive alternatives. Sampling of system conditions had never been real-time because of the high temperatures involved (samples must cool before testing) and pressure and other conditions can't be replicated outside the boiler system itself.

Nalco's revolutionary 3D TRASAR Boiler Technology combines advanced sensors, chemistry, software and control equipment, to provide the opportunity to understand exact conditions in the boiler and steam system when they are occurring and adjust treatment to prevent problems and optimize operations.

Nalco's 3D TRASAR Boiler Automation is the latest expansion of this innovative, award-winning system. The cooling water version of 3D TRASAR technology, which saved customers globally 63 billion gallons of water in 2008, was recognized with a United States Presidential Green Chemistry Challenge Award.

About Nalco

Nalco is the world's leading water treatment and process improvement company, delivering significant environmental, social and economic performance benefits to our customers. We help our customers reduce energy, water and other natural resource consumption, enhance air quality, minimize environmental releases and improve productivity and end products while boosting the bottom line. Together our comprehensive solutions contribute to the sustainable development of customer operations. Nalco is a member of the Dow Jones Sustainability World Index. More than 11,500 Nalco employees operate in 130 countries supported by a comprehensive network of manufacturing facilities, sales offices and research centers to serve a broad range of end markets. In 2008, Nalco achieved sales of more than $4.2 billion.

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