| Delaware                                                      |   | 87-0110150                       |
|---------------------------------------------------------------|--------|----------------------------------|
| (State or other jurisdiction ofIncorporation or organization) |   | (IRS EmployerIdentification No.) |

| 5430 LBJ Freeway, Suite 1700, Dallas, Texas |   | 75240-2697 |
|---------------------------------------------|--------|------------|
| (Address of principal executive offices)    |   | (Zip Code) |

| Registrant’s telephone number, including area code: |   | (972) 233-1700 |
|-----------------------------------------------------------|--------|----------------|

|  Title of each class |   | Name of each exchange on    which registered     |
|------------------------------------------|--------|------------------------------------------------------------------------------------------|
|                                     |   |                                                                                     |
| Common stock ($.01 par value per share)  |   | New York Stock Exchange                                                                  |

|   | * | The registrant has not yet been phased into the interactive data requirements. |
|--------|---|--------------------------------------------------------------------------------|

----

|   | · | 1979 – Contran acquires control of LLC; |
|--------|--------|-----------------------------------------------|

|   | · | 1981 - Contran acquires control of our other predecessor company; |
|--------|--------|-------------------------------------------------------------------|

|   | · | 1982 - Contran acquires control of Keystone Consolidated Industries, Inc., a predecessor to CompX; |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

|   | · | 1984 - Keystone spins-off an entity that includes what is to become CompX; this entity subsequently merges with LLC; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | 1986 - Contran acquires control of NL, which at the time owns 100% of Kronos and a 50% interest in Titanium Metals Corporation (“TIMET”); |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 1987 - LLC and another Contran controlled company merge to form Valhi, our current corporate structure; |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | · | 1988 - NL spins-off an entity that includes its investment in TIMET; |
|--------|--------|----------------------------------------------------------------------|

|   | · | 1995 - WCS begins start-up operations; |
|--------|--------|----------------------------------------|

|   | · | 1996 - TIMET completes an initial public offering; |
|--------|--------|----------------------------------------------------|

|   | · | 2003 – NL completes the spin-off of Kronos through the pro-rata distribution of Kronos shares to its shareholders including us; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 2004 through 2005 - NL distributes Kronos shares to its shareholders, including us, through quarterly dividends; |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

|   | · | 2007 – We distribute all of our TIMET common stock to our shareholders through a stock dividend; |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | 2008 – WCS receives a license for the disposal of byproduct material and begins construction of the byproduct facility infrastructure; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 2009 – WCS receives a license for the disposal of Class A, B and C low-level radioactive waste and completes construction of the byproduct facility; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 2010 – Kronos completes a secondary offering of its common stock lowering our ownership of Kronos to 80%; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|

|   | · | 2011 – WCS begins construction on its low-level and mixed low-level radioactive waste disposal facility. |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

----

|   | · | Future supply and demand for our products; |
|--------|--------|--------------------------------------------|

|   | · | The extent of the dependence of certain of our businesses on certain market sectors; |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | The cyclicality of certain of our businesses (such as Kronos’ titanium dioxide pigment (“TiO2”) operations); |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | Customer inventory levels (such as the extent to which Kronos’ customers may, from time to time, accelerate purchases of TiO2 in advance of anticipated price increases or defer purchases of TiO2in advance of anticipated price decreases; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Changes in raw material and other operating costs (such as energy costs); |
|--------|--------|---------------------------------------------------------------------------|

|   | · | Changes in the availability of raw materials (such as ore); |
|--------|--------|-------------------------------------------------------------|

|   | · | General global economic and political conditions (such as changes in the level of gross domestic product in various regions of the world and the impact of such changes on demand for, among other things, TiO2); |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Competitive products and prices, including increased competition from low-cost manufacturing sources (such as China); |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | Possible disruption of our business or increases in the cost of doing business resulting from terrorist activities or global conflicts; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Customer and competitor strategies; |
|--------|--------|-------------------------------------|

|   | · | The impact of pricing and production decisions; |
|--------|--------|-------------------------------------------------|

|   | · | Competitive technology positions; |
|--------|--------|-----------------------------------|

|   | · | Our ability to protect our intellectual property rights in our technology; |
|--------|--------|----------------------------------------------------------------------------|

|   | · | The introduction of trade barriers; |
|--------|--------|-------------------------------------|

|   | · | Restructuring transactions involving us and our affiliates; |
|--------|--------|-------------------------------------------------------------|

|   | · | Potential consolidation or solvency of our competitors; |
|--------|--------|---------------------------------------------------------|

|   | · | The ability of our subsidiaries to pay us dividends (such as Kronos’ suspension of its dividend in 2009 through the third quarter of 2010); |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Uncertainties associated with new product development; |
|--------|--------|--------------------------------------------------------|

|   | · | Fluctuations in currency exchange rates (such as changes in the exchange rate between the U.S. dollar and each of the euro, the Norwegian krone, the Canadian dollar and the New Taiwan dollar); |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Operating interruptions (including, but not limited to, labor disputes, leaks, natural disasters, fires, explosions, unscheduled or unplanned downtime and transportation interruptions); |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The timing and amounts of insurance recoveries; |
|--------|--------|-------------------------------------------------|

|   | · | Our ability to renew, amend, refinance or establish credit facilities; |
|--------|--------|------------------------------------------------------------------------|

|   | · | Our ability to maintain sufficient liquidity; |
|--------|--------|-----------------------------------------------|

|   | · | The ultimate outcome of income tax audits, tax settlement initiatives or other tax matters; |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | Our ultimate ability to utilize income tax attributes or changes in income tax rates related to such attributes, the benefit of which has been recognized under the more-likely-than-not recognition criteria (such as Kronos’ ability to utilize its German net operating loss carryforwards); |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Environmental matters (such as those requiring compliance with emission and discharge standards for existing and new facilities, or new developments regarding environmental remediation at sites related to our former operations); |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Government laws and regulations and possible changes therein (such as changes in government regulations which might impose various obligations on present and former manufacturers of lead pigment and lead-based paint, including NL, with respect to asserted health concerns associated with the use of such products); |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The ultimate resolution of pending litigation (such as NL's lead pigment litigation, environmental and other litigation, Kronos’ class action litigation and CompX’s patent litigation); |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Uncertainties associated with the development of new product features; |
|--------|--------|------------------------------------------------------------------------|

|   | · | Our ability to comply with covenants contained in our revolving bank credit facilities; |
|--------|--------|-----------------------------------------------------------------------------------------|

|   | · | Our ability to complete, obtain approval of and comply with the conditions of our licenses and permits (such as approval by the Texas Commission on Environmental Quality (“TCEQ”) of license conditions of WCS’s low-level radioactive waste disposal license); and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Possible future litigation. |
|--------|--------|-----------------------------|

----

| Chemicals  Kronos Worldwide, Inc.                  | Our chemicals segment is operated through our majority control of Kronos.  Kronos is a leading global producer and marketer of value-added titanium dioxide pigments (“TiO2”), a base industrial product used in a diverse range of customer applications and end-use markets, including coatings, plastics, paper, food, cosmetics, inks, textile fibers, rubber, pharmaceuticals, glass, ceramics and other industrial and consumer markets.                                                                                                                                  |
|--------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Component Products  CompX International Inc.  | We operate in the component products industry through our majority control of CompX.  CompX is a leading global manufacturer of security products, precision ball bearing slides and ergonomic computer support systems used in the office furniture, transportation, tool storage and a variety of other industries.  CompX also manufactures stainless steel exhaust systems, gauges and throttle controls for the performance boat industry.                                                                                                                                   |
|                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Waste Management  Waste Control Specialists LLC    | WCS is our subsidiary which operates a West Texas facility for the processing, treatment, storage and disposal of hazardous, toxic and certain types of low-level radioactive waste.  WCS obtained a byproduct disposal license in 2008 and began disposal operations at this facility in October 2009.  In January 2009 WCS received a low-level radioactive waste disposal license, which was signed in September 2009.  Construction of the low-level radioactive waste facility began in January 2011, and the facility is expected to be operational in late 2011. |
|                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

----

----

|                                                                                  |   | Years Ended December 31, |   |
|---------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                  |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                                                                                  |   |                     |   |   |   |   |   |   |   |
|              Europe  |   |                     | 19     | % |   |   | 19 | % |   |   | 22 | % |
|             North America |   |                     | 16     | % |   |   | 16 | % |   |   | 19 | % |

| Sales Volumes Percentagesby Geographic Region                                   |      | Sales Volumes Percentagesby End Use |
|---------------------------------------------------------------------------------|-----------|-------------------------------------|
|                                                                            |      |                                |   |   |
|           Europe              | 53%       |                                |              Coatings | 52% |
|            North America      | 33%       |                                |              Plastics | 35% |
|            Asia Pacific  | 10%       |                                |              Other |   8% |
|            Rest of World |   4% |                                |              Paper |   5% |

----

| ·   | We own and operate two ilmenite mines in Norway pursuant to a governmental concession with an unlimited term.  We commenced production from our second mine in 2009.  Ilmenite is a raw material used directly as a feedstock by some sulfate-process TiO2 plants.  We believe we have a significant competitive advantage because our mines supply our feedstock requirements for all of our European sulfate-process plants.  We also sell ilmenite ore to third-parties, some of whom are our competitors.  The mines have estimated ilmenite reserves that are expected to last at least 60 years. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We manufacture and sell iron-based chemicals, which are co-products and processed co-products of the sulfate and chloride process TiO2 pigment production.  These co-product chemicals are marketed through our Ecochem division and are primarily used as treatment and conditioning agents for industrial effluents and municipal wastewater as well as in the manufacture of iron pigments, cement and agricultural products. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We manufacture and sell titanium oxychloride and titanyl sulfate, which are side-stream specialty products from the production of TiO2.  Titanium oxychloride is used in specialty applications in the formulation of pearlescent pigments, production of electroceramic capacitors for cell phones and other electronic devices.  Titanyl sulfate productions are used in pearlescent pigments, natural gas pipe and other specialty applications. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Chloride Process.  The chloride process is a continuous process in which chlorine is used to extract rutile TiO2.  The chloride process typically has lower manufacturing costs than the sulfate process due to higher yield, less waste, lower energy requirements and lower labor costs.  This process has also gained market share over the sulfate process because of the relatively lower upfront capital investment in plant and equipment required.  The chloride process produces less waste than the sulfate process because much of the chlorine is recycled and feedstock bearing higher titanium content is used.  The chloride process produces an intermediate base pigment with a wide range of properties. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Sulfate Process.  The sulfate process is a batch process in which sulfuric acid is used to extract the TiO2 from ilmenite or titanium slag.  After separation from the impurities in the ore (mainly iron) the TiO2 is precipitated and calcined to form an intermediate base pigment ready for sale or can be upgraded through finishing treatment. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                        |                                                                                        |   | % of Capacity by TiO2 Manufacturing Process |   |
|-----------------------------|---------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|
| Facility                    | Description                                                                                 |   | Chloride                                    |   |   | Sulfate |   |
|                        |                                                                                        |   |                                        |   |   |   |   |
| Leverkusen, Germany (1)     | TiO2 production, chloride and sulfate process, co-products                                  |   |                                        | 41     | % |   |   | 26 | % |
|                        |                                                                                        |   |                                        |   |   |   |   |   |   |
| Nordenham, Germany          | TiO2 production, sulfate process, co-products                                               |   |                                        | -      |   |   |   | 40 |   |
|                        |                                                                                        |   |                                        |   |   |   |   |   |   |
| Langerbrugge, Belgium       | TiO2 production, chloride process, co-products, titanium chemicals products                 |   |                                        | 20     |   |   |   | - |   |
|                        |                                                                                        |   |                                        |   |   |   |   |   |   |
| Fredrikstad, Norway (2)     | TiO2 production, sulfate process, co-products                                               |   |                                        | -      |   |   |   | 20 |   |
|                        |                                                                                        |   |                                        |   |   |   |   |   |   |
| Varennes, Canada            | TiO2 production, chloride and sulfate process, slurry facility, titanium chemicals products |   |                                        | 20     |   |   |   | 14 |   |
|                        |                                                                                        |   |                                        |   |   |   |   |   |   |
| Lake Charles, Louisiana (3) | TiO2 production, chloride process                                                           |   |                                        | 19     |   |   |   | - |   |
|                        |                                                                                        |   |                                        |   |   |   |   |   |   |
| Total                       |                                                                                        |   |                                        | 100    | % |   |   | 100 | % |

|   | (1) | The Leverkusen facility is located within an extensive manufacturing complex owned by Bayer AG.  We own the Leverkusen facility, which represents about one-third of our current TiO2 production capacity, but we lease the land under the facility from Bayer under a long term agreement which expires in 2050.  Lease payments are periodically negotiated with Bayer for periods of at least two years at a time.  Bayer or its affiliates provides some raw materials including chlorine, auxiliary and operating materials, utilities and services necessary to operate the Leverkusen facility under separate supplies and services agreements. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | The Fredrikstad plant is located on public land and is leased until April 2013 with an option to extend the lease for an additional 50 years. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | We operate this facility in a 50/50 joint venture with Tioxide Americas Inc., a subsidiary of Huntsman Corporation.  See Note 7 to our Consolidated Financial Statements and “TiO2 Manufacturing Joint Venture.” |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| Production Process/Raw Material        |   | Raw Materials Procured or Mined |   |
|----------------------------------------|--------|---------------------------------|--------|
|                                   |   | (In thousands of metric tons)   |   |
|                                   |   |                            |   |
| Chloride process plants:               |   |                            |   |
| Purchased slag or natural rutile ore   |   |                            | 439    |   |
|                                   |   |                            |   |   |
| Sulfate process plants:                |   |                            |   |   |
| Ilmenite ore mined and used internally |   |                            | 328    |   |
| Purchased slag                         |   |                            | 31     |   |

----

| Worldwide Production Capacity – 2010                                                                                                                           |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                 |   |
|                           DuPont   | 23% |
|                           Cristal  | 14% |
|                           Kronos   | 10% |
|                           Huntsman |  9% |
|                           Tronox   |  7% |
|                           Other    | 37% |

----

----

| Europe            |   |   | 2,000  |   |
|-------------------|--------|--------|--------|--------|
| Canada            |   |   | 400    |   |
| United States (1) |   |   | 40     |   |
|              |   |   |   |   |
| Total             |   |   | 2,440  |   |

----

| ·   | disc tumbler locks which provide moderate security and generally represent the lowest cost lock to produce; |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| ·   | pin tumbler locking mechanisms which are more costly to produce and are used in applications requiring higher levels of security, including our TuBar® and our KeSet® and System 64 high security systems, which allow the user to change the keying on a single lock 64 times without removing the lock from its enclosure; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our innovative eLock electronic locks which provide stand alone or networked security and audit trail capability for drug storage and other valuables through the use of a proximity card, magnetic stripe or keypad credentials. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | our patented Integrated Slide Lock which allows a file cabinet manufacturer to reduce the possibility of multiple drawers being opened at the same time; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our patented adjustable Ball Lock which reduces the risk of heavily-filled drawers, such as auto mechanic toolboxes, from opening while in movement; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our Self-Closing Slide, which is designed to assist in closing a drawer and is used in applications such as bottom mount freezers; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------|

| ·   | articulating computer keyboard support arms (designed to attach to desks in the workplace and home office environments to alleviate possible user strains and stress and maximize usable workspace), along with our patented LeverLock keyboard arm, which is designed to make ergonomic adjustments to the keyboard arm easier; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | CPU storage devices which minimize adverse effects of dust and moisture on desktop computers; |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | flat panel computer monitor support systems designed to support one to eight screens which can be adjusted for tilt, swing and rotation to enable achievement of the correct ergonomic position; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | complementary ergonomic accessories, such as ergonomic wrist rest aids and mouse pad supports. |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | original equipment and aftermarket stainless steel exhaust headers, exhaust pipes, mufflers and other exhaust components; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------|

| ·   | high performance gauges such as GPS speedometers and tachometers; |
|--------------------|-------------------------------------------------------------------|

| ·   | controls, throttles, steering wheels and other billet accessories; and |
|--------------------|------------------------------------------------------------------------|

| ·   | dash panels, LED lighting, rigging and other accessories. |
|--------------------|-----------------------------------------------------------|

----

| Security Products | Furniture Components |   | Marine Components |
|-------------------|----------------------|--------|-------------------|
| Mauldin, SC       | Kitchener, Ontario   |   | Neenah, WI        |
| Grayslake, IL     | Byron Center, MI     |   | Grayslake, IL     |
|              | Taipei, Taiwan       |   |              |

| ·   | coiled steel (used in the furniture components business unit for the manufacture of precision ball bearing slides and ergonomic computer support systems); |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | zinc and brass (used in the security products business unit for the manufacture of locking mechanisms); |
|--------------------|---------------------------------------------------------------------------------------------------------|

| ·   | stainless steel (used in the marine components business unit for the manufacture of exhaust headers and pipes and other components; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | plastic resins (used primarily in the furniture components business unit for injection molded plastics employed in the manufacturing of ergonomic computer support systems). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Furniture Components       |   | Security Products       |   | Marine Components        |
|--------------------------------------|--------|-------------------------------------------------------|--------|-------------------------------------------------------------|
| CompX Precision Slides®         |   | CompX Security Products®                         |   | Custom Marine®                                         |
| CompX Waterloo®                 |   | National Cabinet Lock®                           |   | Livorsi Marine®                                        |
| CompX ErgonomX®                 |   | Fort Lock®                                       |   | CMI Industrial Mufflers™                              |
| CompX DurISLide®                |   | Timberline®                                      |   | Custom Marine Stainless                                     |
| Dynaslide®                      |   | Chicago Lock®                                    |   |   Exhaust™                                  |
| Waterloo Furniture         |   | STOCK LOCKS®                                     |   | The #1 Choice in                                            |
|   Components Limited® |   | KeSet®                                           |   |   Performance Boating®                       |
|                                 |   | TuBar®                                           |   | Mega Rim™                                             |
|                                 |   | ACE II®                                          |   | Race Rim™                                             |
|                                 |   | CompX eLock®                                     |   | CompX Marine™                                         |
|                                 |   | Lockview® Software                               |   |                                                        |

----

| United States                       |   |   | 546    |   |
|-------------------------------------|--------|--------|--------|--------|
| Canada(1)                           |   |   | 208    |   |
| Taiwan                              |   |   | 74     |   |
|      Total |   |   | 828    |   |
|                                |   |   |   |   |

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|   | · | making it more difficult for us to satisfy our obligations with respect to our liabilities; |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | increasing our vulnerability to adverse general economic and industry conditions; |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | requiring that a portion of our cash flow from  operations be used for the payment of interest on our debt, reducing our ability to use our cash flow to fund working capital, capital expenditures, dividends on our common stock, acquisitions and general corporate requirements; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or general corporate requirements; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------|

|   | · | placing us at a competitive disadvantage relative to other less leveraged competitors. |
|--------|--------|----------------------------------------------------------------------------------------|

----

----

----

----

----

| ·   | complexity and differing interpretations of governmental regulations; |
|--------------------|-----------------------------------------------------------------------|

| ·   | number of PRPs and their ability or willingness to fund such allocation of costs; |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | financial capabilities of the PRPs and the allocation of costs among them; |
|--------------------|----------------------------------------------------------------------------|

| ·   | solvency of other PRPs; |
|--------------------|-------------------------|

| ·   | multiplicity of possible solutions; |
|--------------------|-------------------------------------|

| ·   | number of years of investigatory, remedial and monitoring activity required; and |
|--------------------|----------------------------------------------------------------------------------|

| ·   | number of years between former operations and notice of claims and lack of information and documents about the former operations. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------|

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| ITEM 5. | MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERSAND ISSUER PURCHASES OR EQUITY SECURITIES |
|---------|-------------------------------------------------------------------------------------------------------------|

|                                             |   |   High |   |   |   Low |   |   | Cashdividends paid |   |
|--------------------------------------------------|--------|------------------|--------|--------|-----------------|--------|--------|-------------------------|--------|
|                                             |   |             |   |   |            |   |   |                    |   |
| Year ended December 31, 2009 |   |             |   |   |            |   |   |                    |   |
|                                             |   |             |   |   |            |   |   |                    |   |
|   First Quarter                   |   | $                | 15.48  |   |            | $      | 7.83   |                    |   | $ | .10 |   |
|   Second Quarter                  |   |             | 11.71  |   |            |   | 7.07   |                    |   |   | .10 |   |
|   Third Quarter                   |   |             | 14.53  |   |            |   | 6.14   |                    |   |   | .10 |   |
|   Fourth Quarter                  |   |             | 14.99  |   |            |   | 9.01   |                    |   |   | .10 |   |
|                                             |   |             |   |   |            |   |   |                    |   |   |   |   |
| Year ended December 31, 2010 |   |             |   |   |            |   |   |                    |   |   |   |   |
|                                             |   |             |   |   |            |   |   |                    |   |   |   |   |
|   First Quarter                   |   | $                | 19.81  |   |            | $      | 14.42  |                    |   | $ | .10 |   |
|   Second Quarter                  |   |             | 32.20  |   |            |   | 12.34  |                    |   |   | .10 |   |
|   Third Quarter                   |   |             | 20.30  |   |            |   | 11.49  |                    |   |   | .10 |   |
|   Fourth Quarter                  |   |             | 24.96  |   |            |   | 19.04  |                    |   |   | .10 |   |
|                                             |   |             |   |   |            |   |   |                    |   |   |   |   |
| First Quarter 2011 through March 4               |   | $                | 24.27  |   |            | $      | 19.76  |                    |   | $ | .10 |   |

----

|                                       |   | December 31, |   |
|--------------------------------------------|--------|--------------|--------|
|                                       |   | 2005         |   |   | 2006 |   |   | 2007 |   |   | 2008 |   |   | 2009 |   |   | 2010 |   |
|                                       |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Valhi common stock                         |   | $            | 100    |   |   | $ | 143 |   |   | $ | 201 |   |   | $ | 138 |   |   | $ | 187 |   |   | $ | 303 |   |
| S&P 500 Composite Stock Price Index    |   |         | 100    |   |   |   | 116 |   |   |   | 122 |   |   |   | 77 |   |   |   | 97 |   |   |   | 112 |   |
| S&P 500 Industrial Conglomerates Index |   |         | 100    |   |   |   | 109 |   |   |   | 113 |   |   |   | 55 |   |   |   | 61 |   |   |   | 72 |   |

----

|             Period      |   |    Total number of shares purchased |           |   |   Averageprice paidper share, includingcommissions |   |   |   Total number of shares purchased as part of a publicly-announced  plan |   |   | Maximum number of shares that may yet be purchased under the publicly-announced plan at end of  period |   |
|--------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|----------------|--------|--------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                         |   |                                               |           |   |                                                         |   |   |                                                                                    |   |   |                                                                                                        |   |
| December 1, 2010  to December 31,  2010                              |   |                                               |   121,273 |   |                                                         | $      | 22.18  |                                                                                    |   |   |   -  0  -                                                                                    |   |   |   |   4,006,600 |   |

----

| ITEM 6. | SELECTED FINANCIAL DATA |
|---------|-------------------------|

|                                                                                                          |   | Years ended December 31,             |        |
|---------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|-------------|
|                                                                                                          |   | 2006                                 |        |   | 2007 |   |   | 2008 |   |   | 2009 |   |   | 2010 |   |
|                                                                                                          |   | (In millions, except per share data) |        |
|                                                                                                          |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |
| STATEMENTS OF OPERATIONS DATA:                                                                                |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net sales:                                                                                   |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |
|     Chemicals                                                                             |   | $                                    | 1,279.5     |   |   | $ | 1,310.3 |   |   | $ | 1,316.9 |   |   | $ | 1,142.0 |   |   | $ | 1,449.7 |   |
|     Component products                                                               |   |                                 | 190.1       |   |   |   | 177.7 |   |   |   | 165.5 |   |   |   | 116.1 |   |   |   | 135.3 |   |
|     Waste management                                                                 |   |                                 | 11.8        |   |   |   | 4.2 |   |   |   | 2.9 |   |   |   | 14.0 |   |   |   | 7.7 |   |
|                                                                                                          |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total net sales                                                           |   | $                                    | 1,481.4     |   |   | $ | 1,492.2 |   |   | $ | 1,485.3 |   |   | $ | 1,272.1 |   |   | $ | 1,592.7 |   |
|                                                                                                          |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Operating income (loss):                                                                     |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Chemicals                                                                        |   | $                                    | 138.1       |   |   | $ | 88.6 |   |   | $ | 52.0 |   |   | $ | (10.6 | ) |   | $ | 183.2 |   |
|     Component products                                                               |   |                                 | 20.6        |   |   |   | 16.0 |   |   |   | 5.5 |   |   |   | (4.0 | ) |   |   | 9.4 |   |
|     Waste management                                                                 |   |                                 | (9.5        | ) |   |   | (14.1 | ) |   |   | (21.5 | ) |   |   | (27.0 | ) |   |   | (30.8 | ) |
|                                                                                                          |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total operating income (loss)                                             |   | $                                    | 149.2       |   |   | $ |  90.5 |   |   | $ |  36.0 |   |   | $ | (41.6 | ) |   | $ | 161.8 |   |
|                                                                                                          |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                          |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Equity in earnings of TIMET                                                   |   | $                                    | 101.1       |   |   | $ |  26.9 |   |   | $ |  - |   |   | $ |  - |   |   | $ |  - |   |
|                                                                                                          |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Net income (loss)                                                                     |   | $                                    | 153.7       |   |   | $ | (49.2 | ) |   | $ | 4.9 |   |   | $ | (38.1 | ) |   | $ | 63.8 |   |
|                                                                                                          |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Net income(loss) attributable     to Valhi stockholders |   | $                                    | 141.7       |   |   | $ | (45.7 | ) |   | $ | (.8 | ) |   | $ | (34.2 | ) |   | $ | 50.3 |   |
|                                                                                                          |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| DILUTED EARNINGS PER SHARE DATA:                                                          |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net income (loss)attributable to    Valhi stockholders              |   | $                                    | 1.20        |   |   | $ | (.40 | ) |   | $ | (.01 | ) |   | $ | (.30 | ) |   | $ | .42 |   |
|                                                                                                          |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Cash dividends                                                                               |   | $                                    | .40         |   |   | $ | .40 |   |   | $ | .40 |   |   | $ | .40 |   |   | $ | .40 |   |
|                                                                                                          |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Weighted average common shares   Outstanding                        |   |                                 |  116.5 |   |   |   |  114.7 |   |   |   |  114.4 |   |   |   |  114.3 |   |   |   |  114.3 |   |
|                                                                                                          |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| STATEMENTS OF CASH FLOW DATA:                                                             |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Cash provided by (used in):                                                             |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Operating activities                                                             |   | $                                    | 86.3        |   |   | $ | 63.5 |   |   | $ | (24.0 | ) |   | $ |  76.0 |   |   | $ | 122.1 |   |
|     Investing activities                                                             |   |                                 | (89.5       | ) |   |   | (65.4 | ) |   |   | (60.0 | ) |   |   | (44.5 | ) |   |   | (93.0 | ) |
|     Financing activities                                                             |   |                                 | (87.6       | ) |   |   | (56.1 | ) |   |   | (12.9 | ) |   |   |  (4.7 | ) |   |   |  228.6 |   |
|                                                                                                          |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE SHEET DATA (at year end):                                                    |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Total assets (1)                                                                             |   | $                                    | 2,804.7     |   |   | $ | 2,603.0 |   |   | $ | 2,389.4 |   |   | $ | 2,410.3 |   |   | $ | 2,714.3 |   |
|   Long-term debt                                                                               |   |                                 | 785.3       |   |   |   | 889.8 |   |   |   | 911.0 |   |   |   | 988.4 |   |   |   | 922.9 |   |
|   Valhi stockholders’ equity (1)(2)                                                      |   |                                 | 866.8       |   |   |   | 618.4 |   |   |   | 468.8 |   |   |   | 428.7 |   |   |   | 541.8 |   |
|   Total equity (1)(2)                                                                          |   |                                 | 990.5       |   |   |   | 708.9 |   |   |   | 542.1 |   |   |   | 498.4 |   |   |   | 818.2 |   |

|  (1) | We adopted the asset and liability recognition provisions of Accounting Standard Codification (“ASC”) Topic 715 as of December 31, 2006 and the measurement date provisions of the Topic as of December 31, 2007.  See Note 11 to our Consolidated Financial Statements. |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | We adopted the uncertain tax position provisions of ASC Topic 740 as of January 1, 2007.  See Note 12 to our Consolidated Financial Statements. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|---------|---------------------------------------------------------------------------------------------|

|   | · | Chemicals – Our chemicals segment is operated through our majority control of Kronos.  Kronos is leading global producer and marketer of value-added titanium dioxide pigments (“TiO2”), a base industrial product used in a diverse range of customer applications and end-use markets, including coatings, plastics, paper, food, cosmetics, inks, textile fibers, rubber, pharmaceuticals, glass, ceramics and other industrial and consumer markets. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Component Products – We operate in the component products industry through our majority control of CompX.  CompX is a leading global manufacturer of security products, precision ball bearing slides and ergonomic computer support systems used in the office furniture, transportation, tool storage and a variety of other industries.  CompX also manufactures stainless steel exhaust systems, gauges and throttle controls for the performance boat industry. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Waste Management – WCS is our subsidiary which operates a West Texas facility for the processing, treatment, storage and disposal of hazardous, toxic and certain types of low-level radioactive waste.  WCS obtained a byproduct disposal license in 2008 and began disposal operations at this facility in October 2009.  In January 2009 WCS received a low-level radioactive waste disposal license, which was signed in September 2009.  Construction of the low-level radioactive waste facility began in January 2011, and the facility is expected to be operational in late 2011. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | operating income from our Chemicals and Component Products Segments in 2010 as compared to operating losses in 2009; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | a non-cash deferred income tax benefit recognized in the first quarter of 2010; |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | litigation settlement and contract termination expense in 2010; |
|--------|--------|-----------------------------------------------------------------|

|   | · | lower litigation settlement gains in 2010; |
|--------|--------|--------------------------------------------|

|   | · | an income tax charge related to the reserve to uncertain tax positions in 2010 compared to a benefit in 2009; |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

|   | · | higher insurance recoveries in 2010; and |
|--------|--------|------------------------------------------|

|   | · | a non-cash deferred income tax benefit of $.21 per diluted share recognized by Kronos related to a European Court ruling that resulted in the favorable resolution of certain German income tax issues; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | insurance recoveries of $.09 per diluted share; |
|--------|--------|-------------------------------------------------|

|   | · | a litigation settlement gain of $.03 per diluted share; |
|--------|--------|---------------------------------------------------------|

|   | · | a charge of $.04 per diluted share related to a net increase in our reserve for uncertain tax positions; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

|   | · | a charge of $.16 per diluted share related to a litigation settlement and contract termination. |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | a gain of $.07 per diluted share as a result of a litigation settlement; |
|--------|--------|--------------------------------------------------------------------------|

|   | · | a gain of $.04 per diluted share gain from the sale of a business; |
|--------|--------|--------------------------------------------------------------------|

|   | · | a gain of $.05 per diluted share as a result of the second close of a litigation settlement; |
|--------|--------|----------------------------------------------------------------------------------------------|

|   | · | income of $.02 per diluted share related to certain insurance recoveries we recognized; and |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | income of $.11 per diluted share, related to a net decrease in our reserve for uncertain tax positions. |
|--------|--------|---------------------------------------------------------------------------------------------------------|

----

|   | · | operating income from our Chemicals and Component Products Segments in 2010 as compared to operating losses in 2009; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | a non-cash deferred income tax benefit recognized in the first quarter of 2010; |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | litigation settlement and contract termination expense in 2010; |
|--------|--------|-----------------------------------------------------------------|

|   | · | lower litigation settlement gains in 2010; |
|--------|--------|--------------------------------------------|

|   | · | an income tax charge related to the reserve to uncertain tax positions in 2010 compared to a benefit in 2009; |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

|   | · | higher insurance recoveries in 2010; and |
|--------|--------|------------------------------------------|

|   | · | a non-cash deferred income tax benefit of $.21 per diluted share recognized by Kronos related to a European Court ruling that resulted in the favorable resolution of certain German income tax issues; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | insurance recoveries of $.09 per diluted share; |
|--------|--------|-------------------------------------------------|

|   | · | a litigation settlement gain of $.03 per diluted share; |
|--------|--------|---------------------------------------------------------|

|   | · | a charge of $.04 per diluted share related to a net increase in our reserve for uncertain tax positions; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

|   | · | a charge of $.16 per diluted share related to a litigation settlement and contract termination. |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | a gain of $.07 per diluted share as a result of a litigation settlement; |
|--------|--------|--------------------------------------------------------------------------|

|   | · | a gain of $.04 per diluted share gain from the sale of a business; |
|--------|--------|--------------------------------------------------------------------|

|   | · | a gain of $.05 per diluted share as a result of the second close of a litigation settlement; |
|--------|--------|----------------------------------------------------------------------------------------------|

|   | · | income of $.02 per diluted share related to certain insurance recoveries we recognized; and |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | income of $.11 per diluted share, related to a net decrease in our reserve for uncertain tax positions. |
|--------|--------|---------------------------------------------------------------------------------------------------------|

----

|   | · | operating losses at our Chemicals and Component Products Segments and a larger operating loss at our Waste Management Segments in 2009; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | lower gain from a litigation settlement in 2009; |
|--------|--------|--------------------------------------------------|

|   | · | a gain from a sale of a business in 2009; |
|--------|--------|-------------------------------------------|

|   | · | an asset held for sale write-down recognized by our Component Products Segment in 2009; |
|--------|--------|-----------------------------------------------------------------------------------------|

|   | · | an income tax benefit recognized in 2009 due to a net decrease in our reserve for uncertain tax positions; |
|--------|--------|------------------------------------------------------------------------------------------------------------|

|   | · | a goodwill impairment recognized by our Component Products Segment in 2008; and |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | interest income related to an escrow fund recognized by NL in 2008. |
|--------|--------|---------------------------------------------------------------------|

|   | · | a gain of $.07 per diluted share as a result of a litigation settlement; |
|--------|--------|--------------------------------------------------------------------------|

|   | · | a gain of $.04 per diluted share gain from the sale of a business; |
|--------|--------|--------------------------------------------------------------------|

|   | · | a gain of $.05 per diluted share as a result of the second close of a litigation settlement; |
|--------|--------|----------------------------------------------------------------------------------------------|

|   | · | income of $.02 per diluted share related to certain insurance recoveries we recognized; and |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | income of $.11 per diluted share, related to a net decrease in our reserve for uncertain tax positions. |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | · | income of $.23 per diluted share related to a litigation settlement gain received by NL; |
|--------|--------|------------------------------------------------------------------------------------------|

|   | · | income of $.04 per diluted share related to the adjustment of certain German income tax attributes within our Chemicals Segment; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | · | income of $.04 per diluted share related to certain insurance recoveries we recognized; |
|--------|--------|-----------------------------------------------------------------------------------------|

|   | · | interest income of $.02 per diluted share related to certain escrow funds held for the benefit of NL; |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | a charge of $.06 per diluted share related to a goodwill impairment recognized on the Marine Components reporting unit of our Component Products Segment; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a charge of $.05 per diluted share due to a net increase in our reserve for uncertain tax positions. |
|--------|--------|------------------------------------------------------------------------------------------------------|

----

|   | · | higher expected operating income from our Chemicals Segment as the expected increase in operating income will more than offset the effect of the 15% reduction in our aggregate ownership percentage of Kronos as a result of Kronos’ secondary offering of its common stock completed during the fourth quarter of 2010; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | higher expected operating income from our Component Products Segment due to higher sales and lower legal expenses; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | · | litigation settlement and contract termination expense  recorded in 2010; and |
|--------|--------|-----------------------------------------------------------------------------------------|

|   | · | higher operating losses at WCS as we expect more expenses associated with the limited operations of our byproduct disposal facility which commenced operations in the fourth quarter of 2009 and the construction of the LLRW facility which is expected to be operational in late 2011. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Marketable securities - We own investments in certain companies that we account for as marketable securities carried at fair value or that we account for under the equity method.  For these investments, we evaluate the fair value at each balance sheet date.  We use quoted market prices, Level 1 inputs as defined in Accounting Standards Codification (“ASC”) 820-10-35, Fair Value Measurements and Disclosures, to determine fair value for certain of our marketable debt securities and publicly traded investees.  For other of our marketable debt securities, the fair value is generally determined using Level 2 inputs as defined in the ASC because although these securities are traded in many cases the market is not active and the year-end valuation is based on the last trade of the year which may be several days prior to December 31.  We use Level 3 inputs to determine fair value of our investment in Amalgamated Sugar Company LLC. See Note 14 to our Consolidated Financial Statements.   We record an impairment charge when we believe an investment has experienced an other than temporary decline in fair value below its cost basis (for marketable securities) or below its carrying value (for equity method investees). Further adverse changes in market conditions or poor operating results of underlying investments could result in losses or our inability to recover the carrying value of the investments that may not be reflected in an investment’s current carrying value, thereby possibly requiring us to recognize an impairment charge in the future. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Goodwill – Our goodwill totaled $397.4 million at December 31, 2010 resulting primarily from our various step acquisitions of Kronos and NL (which occurred before the implementation of the new accounting standards related to noncontrolling interest, see Note 8 to our Consolidated Financial Statements) and to a lesser extent CompX’s purchase of various businesses.  In accordance with the applicable accounting standards for goodwill, we do not amortize goodwill. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Long-lived assets – We assess property, equipment and capitalized permit costs for impairment only when circumstances as specified in ASC 360-10-35, Property, Plant, and Equipment, indicate an impairment may exist.  During 2010, as a result of continued operating losses, certain long-lived assets of our Waste Management Segment were evaluated for impairment as of December 31, 2010.  WCS has had limited operations as it seeks regulatory approval for several licenses it needs for full scale operations.  WCS obtained a byproduct disposal license in 2008 and began disposal operations in October 2009.  In January 2009 WCS received a low-level radioactive waste disposal permit, and construction of the low-level radioactive waste facility began in January 2011 and is expected to be operational in late 2011. We estimate it will cost approximately $70 million to construct this facility which will be incurred over the construction period in 2011.  Our impairment analysis is based on estimated future undiscounted cash flows of WCS’ operations, and this analysis indicated no impairment was present at December 31, 2010 and that the carrying value of WCS is recoverable as the aggregate future undiscounted cash flow estimate exceeded the carrying value of WCS’ net assets by at least two times.  Considerable management judgment is necessary to evaluate the impact of operating changes and to estimate future cash flows.  Assumptions used in our impairment evaluations, such as when we will receive final regulatory licenses, the cost and timing of construction, forecasted growth rates and our cost of capital, are consistent with our internal projections and operating plans. However, if our future cash flows from operations less capital expenditures were to drop significantly below our current expectations (approximately 75%), it is reasonably likely we would conclude an impairment was present.  At December 31, 2010 the carrying value of WCS’ assets was $166.4 million. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Benefit plans - We provide a range of benefits including various defined benefit pension and other postretirement benefits (“OPEB”) for our employees.  We record annual amounts related to these plans based upon calculations required by GAAP, which make use of various actuarial assumptions, such as: discount rates, expected rates of returns on plan assets, compensation increases, employee turnover rates, mortality rates and expected health care trend rates.  We review our actuarial assumptions annually and make modifications to the assumptions based on current rates and trends when we believe appropriate.  As required by GAAP, modifications to the assumptions are generally recorded and amortized over future periods.  Different assumptions could result in the recognition of materially different expense amounts over different periods of times and materially different asset and liability amounts in our Consolidated Financial Statements.  These assumptions are more fully described below under “—Assumptions on Defined Benefit Pension Plans and OPEB Plans.” |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Income taxes – We recognize deferred taxes for future tax effects of temporary differences between financial and income tax reporting.  We record a valuation allowance to reduce our deferred income tax assets to the amount that is believed to be realized under the more-likely-than-not recognition criteria.  While we have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance, it is possible that in the future we may change our estimate of the amount of the deferred income tax assets that would more-likely-than-not be realized in the future, resulting in an adjustment to the deferred income tax asset valuation allowance that would either increase or decrease, as applicable, reported net income in the period such change in estimate was made.  For example, we have substantial net operating loss carryforwards in Germany (the equivalent of $952 million for German corporate purposes and $349 million for German trade tax purposes at December 31, 2010).  At December 31, 2010, we have concluded that no deferred income tax asset valuation allowance is required to be recognized with respect to such carryforwards, principally because (i) such carryforwards have an indefinite carryforward period, (ii) we have utilized a portion of such carryforwards during the most recent three-year period and (iii) we currently expect to utilize the remainder of such carryforwards over the long term.  However, prior to the complete utilization of such carryforwards, if we were to generate losses in our German operations for an extended period of time, it is possible that we might conclude the benefit of such carryforwards would no longer meet the more-likely-than-not recognition criteria, at which point we would be required to recognize a valuation allowance against some or all of the then-remaining tax benefit associated with the carryforwards. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Litigation and environmental liabilities - We are involved in numerous legal and environmental actions in part due to NL’s former involvement in the manufacture of lead-based products.  In accordance with applicable GAAP for accounting for contingencies, we record accruals for these liabilities when estimated future expenditures associated with such contingencies become probable, and we can reasonably estimate the amounts of such future expenditures.  However, new information may become available to us, or circumstances (such as applicable laws and regulations) may change, thereby resulting in an increase or decrease in the amount we are required to accrue for such matters (and therefore a decrease or increase in our reported net income in the period of such change). At December 31, 2010 we have recorded total accrued environmental liabilities of $42.3 million. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Chemicals – impairment of equity method investments, goodwill and other long-lived assets, defined benefit pension and OPEB plans, loss accruals and income taxes. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Component Products – impairment of goodwill and long-lived assets, loss accruals and income taxes. |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | · | Waste Management – impairment of long-lived assets and loss accruals. |
|--------|--------|-----------------------------------------------------------------------------|

| ·   | Our TiO2 sales and production volumes, |
|--------------------|----------------------------------------|

| ·   | TiO2 selling prices, |
|--------------------|----------------------|

| ·   | Currency exchange rates (particularly the exchange rate for the U.S. dollar relative to the euro, Norwegian krone and the Canadian dollar) and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Manufacturing costs, particularly raw materials, maintenance and energy-related expenses. |
|--------------------|-------------------------------------------------------------------------------------------|

----

|                                                                                          |   | Years ended December 31, |    |   | % Change |   |
|-----------------------------------------------------------------------------------------------|--------|--------------------------|---------|--------|----------|--------|
|                                                                                          |   | 2008                     |    |   | 2009     |   |   | 2010 |   |   |   | 2008-09 |   |   |   | 2009-10 |   |
|                                                                                          |   | (Dollars in millions)    |    |   |     |   |   |   |   |   |   |
|                                                                                          |   |                     |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                                                                                |   | $                        | 1,316.9 |   |     | $      | 1,142.0 |   |   | $ | 1,449.7 |   |   |   | (13 | )% |   |   | 27 | % |
| Cost of sales                                                                       |   |                     | 1,098.7 |   |     |   | 1,014.0 |   |   |   | 1,106.7 |   |   |   | (8 | )% |   |   | 9 | % |
|                                                                                          |   |                     |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross margin                                                                             |   | $                        | 218.2   |   |     | $      | 128.0 |   |   | $ | 343.0 |   |   |   | (41 | )% |   |   | 168 | % |
|                                                                                          |   |                     |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss)                                                                  |   | $                        | 52.0    |   |     | $      | (10.6 | ) |   | $ | 183.2 |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |                     |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent of net sales:                                                          |   |                     |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Cost of  sales                                                          |   |                     | 83      | %      |     |   | 89 | % |   |   | 76 | % |   |   |   |   |   |   |   |   |
|   Gross margin                                                                 |   |                     | 17      | %      |     |   | 11 | % |   |   | 24 | % |   |   |   |   |   |   |   |   |
|   Operating income (loss)                                                      |   |                     | 4       | %      |     |   | (1 | )% |   |   | 13 | % |   |   |   |   |   |   |   |   |
|                                                                                          |   |                     |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TiO2 operating statistics:                                                          |   |                     |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Sales volumes*                                                               |   |                     | 478     |   |     |   | 445 |   |   |   | 528 |   |   |   | (7 | )% |   |   | 19 | % |
|   Production volumes*                                                          |   |                     | 514     |   |     |   | 402 |   |   |   | 524 |   |   |   | (22 | )% |   |   | 30 | % |
|   Production rate as    percent of capacity |   |                     | 97      | %      |     |   | 76 | % |   |   | 99 | % |   |   |   |   |   |   |   |   |
|                                                                                          |   |                     |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent change in TiO2 net sales:                                    |   |                     |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   TiO2 product pricing                                                    |   |                     |    |   |     |   |   |   |   |   |   |   |   |   | (1 | )% |   |   | 11 | % |
|   TiO2 sales volumes                                                      |   |                     |    |   |     |   |   |   |   |   |   |   |   |   | (7 | ) |   |   | 19 |   |
|   TiO2 product mix                                                        |   |                     |    |   |     |   |   |   |   |   |   |   |   |   | (2 | ) |   |   | - |   |
| Changes in currency exchange rates                                                            |   |                     |    |   |     |   |   |   |   |   |   | (3 | ) |   |   | (3 | ) |
|                                                                                          |   |                     |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                                                         |   |                     |    |   |     |   |   |   |   |   |   | (13 | )% |   |   | 27 | % |
|                                                                                          |   |                     |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

----

|                         |   | Impact of changes in foreign currency – 2009 vs. 2010 (in millions) |     |
|------------------------------|--------|---------------------------------------------------------------------------|----------|
|                         |   | Transaction gains/(losses) recognized                                     |     |   | Translation gain/loss-impact of rate |   |   | Total currency impact |   |
|                         |   | 2009                                                                      |     |   | 2010 |   |   | Change |   |   | changes |   |   | 2009 vs. 2010 |   |
|                         |   |                                                                      |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Impact on:                   |   |                                                                      |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                    |   | $                                                                         | -        |   |   | $ | - |   |   | $ | - |   |   | $ | (36 | ) |   | $ | (36 | ) |
| Operating income (loss) |   |                                                                      |  10 |   |   |   |  8 |   |   |   | (2 | ) |   |   | (25 | ) |   |   | (27 | ) |
|                         |   |                                                                      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                         |   | Impact of changes in foreign currency – 2008 vs. 2009 (in millions) |    |
|------------------------------|--------|---------------------------------------------------------------------------|---------|
|                         |   |  Transaction gains/(losses) recognized                               |    |   | Translationgain/loss-Impact of rate |   |   | Total currencyImpact |   |
|                         |   | 2008                                                                      |    |   | 2009 |   |   | Change |   |   | changes |   |   | 2008 vs. 2009 |   |
|                         |   |                                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |
|                         |   |                                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Impact on:                   |   |                                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                    |   | $                                                                         | -       |   |   | $ | - |   |   | $ | - |   |   | $ | (35 | ) |   | $ | (35 | ) |
| Operating income (loss) |   |                                                                      |  1 |   |   |   |  10 |   |   |   | 9 |   |   |   | 31 |   |   |   | 40 |   |

----

|                                |   | Years ended December 31, |   |   | % Change |   |
|-------------------------------------|--------|--------------------------|--------|--------|----------|--------|
|                                |   | 2008                     |   |   | 2009     |   |   | 2010 |   |   |   | 2008-09 |   |   |   | 2009-10 |   |
|                                |   | (Dollars in millions)    |   |   |     |   |   |   |   |   |   |
|                                |   |                     |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                           |   | $                        | 165.5  |   |     | $      | 116.1 |   |   | $ | 135.3 |   |   |   | (30 | )% |   |   | 17 | % |
| Cost of sales                       |   |                     | 125.7  |   |     |   |  92.3 |   |   |   |  99.3 |   |   |   | (27 | )% |   |   | 8 | % |
|                                |   |                     |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross margin                        |   | $                        | 39.8   |   |     | $      | 23.8 |   |   | $ | 36.0 |   |   |   | (40 | )% |   |   | 51 | % |
|                                |   |                     |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss)             |   | $                        | 5.5    |   |     | $      | (4.0 | ) |   | $ | 9.4 |   |   |   |   |   |   |   |   |   |
|                                |   |                     |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent of net sales:               |   |                     |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Cost of sales           |   |                     | 76     | %      |     |   | 80 | % |   |   | 73 | % |   |   |   |   |   |   |   |   |
|   Gross margin            |   |                     | 24     | %      |     |   | 20 | % |   |   | 27 | % |   |   |   |   |   |   |   |   |
|   Operating income (loss) |   |                     | 3      | %      |     |   | (3 | )% |   |   | 7 | % |   |   |   |   |   |   |   |   |

----

| ·   | a $12.2 million improvement in gross margin in 2010 due to higher sales and continued control of fixed manufacturing costs resulting in an increase in utilization of production capacity and improved coverage of fixed manufacturing costs; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the positive impact of $2.2 million in lower litigation expense in 2010; |
|--------------------|--------------------------------------------------------------------------|

| ·   | a write-down on assets held for sale of approximately $.5 million (see Note 7 to the Consolidated Financial Statements); and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------|

| ·   | the negative $1.8 million impact of relative changes in foreign currency exchange rates in 2010. |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | a negative impact of approximately $21.2 million relating to lower order rates from many of our customers resulting from unfavorable economic conditions in North America in 2009; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | approximately $4.6 million of patent litigation expenses in 2009 relating to the furniture components business unit; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

| ·   | a write-down on assets held for sale of approximately $.7 million (see Note 7 to the Consolidated Financial Statements). |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

| ·   | a $3.8 million reduction in fixed manufacturing expenses in 2009 (excluding depreciation) in response to the lower sales volume; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

| ·   | a $1.7 million reduction in lower operating costs and expenses in 2009 in response to lower sales volumes; and |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | $900,000 in lower depreciation expense in 2009 due to a reduction in capital expenditures for shorter lived assets over the last several years in response to lower sales. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                         |   | Impact of changes in foreign currency – 2009 vs. 2010 (in millions) |   |
|------------------------------|--------|---------------------------------------------------------------------------|--------|
|                         |   |                                                                      |   |   | Translation gain/loss-impact of rate |   |   | Total currency impact |   |
|                         |   | Transaction gains/(losses) recognized                                     |   |
|                         |   | 2009                                                                      |   |   | 2010 |   |   | Change |   |   | changes |   |   | 2009 vs. 2010 |   |
|                         |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Impact on:                   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                    |   | $                                                                         | -      |   |   | $ | - |   |   | $ | - |   |   | $ | 1.0 |   |   | $ | 1.0 |   |
| Operating income (loss) |   |                                                                      | (.2    | ) |   |   | (.3 | ) |   |   | (.1 | ) |   |   | (1.6 | ) |   |   | (1.7 | ) |
|                         |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                         |   | Impact of changes in foreign currency – 2008 vs. 2009 (in millions) |   |
|------------------------------|--------|---------------------------------------------------------------------------|--------|
|                         |   | Transaction gains/(losses) recognized                                     |   |   | Translation gain/loss-impact of rate |   |   | Totalcurrencyimpact |   |
|                         |   | 2008                                                                      |   |   | 2009 |   |   | Change |   |   | changes |   |   | 2008 vs. 2009 |   |
|                         |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Impact on:                   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                    |   | $                                                                         | -      |   |   | $ | - |   |   | $ | - |   |   | $ | (.8 | ) |   | $ | (.8 | ) |
| Operating income (loss) |   |                                                                      | .7     |   |   |   | (.2 | ) |   |   | (.9 | ) |   |   | .9 |   |   |   | - |   |
|                         |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|           |   | Years ended December 31, |   |
|----------------|--------|--------------------------|--------|
|           |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|           |   | (In millions)            |   |
|           |   |                     |   |   |   |   |   |   |   |
| Net sales      |   | $                        | 2.9    |   |   | $ | 14.0 |   |   | $ | 7.7 |   |
| Cost of sales  |   |                     | 14.7   |   |   |   | 29.4 |   |   |   | 23.9 |   |
|           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Gross margin   |   | $                        | (11.8  | ) |   | $ | (15.4 | ) |   | $ | (16.2 | ) |
|           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Operating loss |   | $                        | (21.5  | ) |   | $ | (27.0 | ) |   | $ | (30.8 | ) |

----

----

| ·   | litigation and related costs at NL of $8.8 million in 2010 compared to $12.4 million in 2009 and |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | environmental expense of $.4 million in 2010 compared to $5.4 million in 2009. |
|--------------------|--------------------------------------------------------------------------------|

| ·   | Litigation and related costs of $12.4 million in 2009 compared to $14.6 million in 2008 at NL and |
|--------------------|---------------------------------------------------------------------------------------------------|

| ·   | Environmental expenses of $5.4 million in 2009, compared to $6.5 million in 2008. |
|--------------------|-----------------------------------------------------------------------------------|

----

| ·   | a charge of $5.2 million related to an increase in the reserve for uncertain tax positions; |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | a $35.2 million non-cash income tax benefit related to a European Court ruling in the first quarter of 2010 that resulted in a favorable resolution of certain income tax issues in Germany and an increase in the amount of our German corporate and trade tax net operating loss carryforwards; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an aggregate $1.9 million provision for deferred income taxes on the pre-2005 undistributed earnings of our Taiwanese subsidiary recognized in the first quarter of 2010. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | a $7.2 million non-cash deferred income tax benefit related to a European Court ruling that resulted in the favorable resolution of certain income tax issues in Germany; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a charge of $5.6 million due to an increase in our reserves for uncertain tax positions. |
|--------|--------|------------------------------------------------------------------------------------------|

----

| ·   | The component of our defined benefit pension cost related to the expected return on plan assets was lower for 2009 as compared to 2008 due to the fair value of plan assets being lower at the beginning of 2009 as compared to the beginning of 2008; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The component of our defined benefit pension cost related to the amortization of unrecognized net actuarial losses was higher for 2009 as compared to 2009 primarily due to the aggregate $81.6 million actuarial loss we recognized during 2008 related to the aggregate projected benefit obligation of all of our defined benefit pension plans.  The actuarial gain was primarily due to lower than the assumed return on plan assets in 2008 and began to be amortized into our periodic pension expense in 2009. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                 |   | Discount rates used for:                            |   |
|----------------------|--------|-----------------------------------------------------|--------|
|                 |   | Obligations atDecember 31, 2008 and expense in 2009 |   |   | Obligations atDecember 31, 2009 and expense in 2010 |   |   | Obligations atDecember 31, 2010 and expense in 2011 |   |
|                 |   |                                                |   |   |   |   |   |   |   |
| Kronos and NL plans: |   |                                                |   |   |   |   |   |
|   Germany  |   |                                                | 5.8    | % |   |   | 5.5 | % |   |   | 5.2 | % |
|   Canada   |   |                                                | 6.5    |   |   |   | 6.0 |   |   |   | 5.2 | % |
|   Norway   |   |                                                | 5.8    |   |   |   | 5.3 |   |   |   | 4.8 | % |
|   U.S.     |   |                                                | 6.1    |   |   |   | 5.7 |   |   |   | 5.1 | % |

----

| ·   | Substantially all of the Kronos and NL plan assets in the U.S. were invested in The Combined Master Retirement Trust (“CMRT”), a collective investment trust sponsored by Contran to permit the collective investment by certain master trusts that fund certain employee benefits plans sponsored by Contran and certain of its affiliates.  Harold C. Simmons is the sole trustee of the CMRT and is a member of the CMRT investment committee.  The CMRT’s long-term investment objective is to provide a rate of return exceeding a composite of broad market equity and fixed income indices (including the S&P 500 and certain Russell indices), while utilizing both third-party investment managers as well as investments directed by Mr. Simmons.  The CMRT also holds TIMET common stock in its investment portfolio; however through December 31, 2009 we invested in a portion of the CMRT which does not include the TIMET holdings.  Beginning in 2010, we now invest in the portion of the CMRT that holds TIMET stock.  During the history of the CMRT from its inception in 1988 through December 31, 2010, the average annual rate of return (excluding the CMRT’s investment in TIMET common stock) has been 12%, while the CMRT’s annual rate of return including TIMET stock has been 15%. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In Germany, the composition of our plan assets is established to satisfy the requirements of the German insurance commissioner. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

| ·   | In Canada, we currently have a plan asset target allocation of 55% to equity securities, 45% to fixed income securities and the remainder primarily to cash and liquid investments.  We expect the long-term rate of return for such investments to average approximately 125 basis points above the applicable equity or fixed income index. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In Norway, we currently have a plan asset target allocation of 14% to equity securities, 72% to fixed income securities, and the remainder primarily to cash and liquid investments.  The expected long-term rate of return for such investments is approximately 9.0%, 5.0%, and 4.0%, respectively. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                            |   | December 31, 2009 |   |
|-------------------------------------------------|--------|-------------------|--------|
|                                            |   | CMRT              |   |   | Germany |   |   | Canada |   |   | Norway |   |
|                                            |   |              |   |   |   |   |   |   |   |   |   |   |
| Equity securities and limited partnerships |   |              | 68     | % |   |   | 18 | % |   |   | 58 | % |   |   | 13 | % |
| Fixed income securities                         |   |              | 31     |   |   |   | 61 |   |   |   | 40 |   |   |   | 80 |   |
| Real estate                                     |   |              | 1      |   |   |   | 12 |   |   |   | - |   |   |   | - |   |
| Cash, cash equivalents and other                |   |              | -      |   |   |   | 9 |   |   |   | 2 |   |   |   | 7 |   |
|                                            |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                   |   |              | 100    | % |   |   | 100 | % |   |   | 100 | % |   |   | 100 | % |

|                                            |   | December 31, 2010 |   |
|-------------------------------------------------|--------|-------------------|--------|
|                                            |   | CMRT              |   |   | Germany |   |   | Canada |   |   | Norway |   |
|                                            |   |              |   |   |   |   |   |   |   |   |   |   |
| Equity securities and limited partnerships |   |              | 83     | % |   |   | 17 | % |   |   | 59 | % |   |   | 17 | % |
| Fixed income securities                         |   |              | 16     |   |   |   | 61 |   |   |   | 39 |   |   |   | 68 |   |
| Real estate                                     |   |              | -      |   |   |   | 11 |   |   |   | - |   |   |   | 2 |   |
| Cash, cash equivalents and other                |   |              | 1      |   |   |   | 11 |   |   |   | 2 |   |   |   | 13 |   |
|                                            |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                   |   |              | 100    | % |   |   | 100 | % |   |   | 100 | % |   |   | 100 | % |

----

|                 |   | 2008   |   |   | 2009   |   |   | 2010   |   |
|----------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                 |   |   |   |   |   |   |   |   |   |
| Kronos and NL plans: |   |   |   |   |   |   |   |   |   |
|   Germany  |   |   | 5.3    | %      |   |   | 5.3    | %      |   |   | 5.0 | % |
|   Canada   |   |   | 6.3    |   |   |   | 6.0    |   |   |   | 6.0 |   |
|   Norway   |   |   | 6.1    |   |   |   | 5.8    |   |   |   | 5.0 |   |
|   U.S.     |   |   | 10.0   |   |   |   | 10.0   |   |   |   | 10.0 |   |
| Medite plan          |   |   | 10.0   |   |   |   | 10.0   |   |   |   | - |   |

----

----

----

|   | · | higher consolidated operating income in 2010 of $203.4 million due to operating income at Kronos and CompX in 2010 compared to operating losses at all of our segments in 2009; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | lower cash paid for taxes of $12.6 million in 2010 due to our lower earnings in 2009 and the timing of related refunds; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | · | proceeds from a litigation settlement of $11.8 million received in January 2009; |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | payments of $19.0 million in 2010 in relation to a litigation settlement expense; |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | proceeds of $4.0 million from a litigation settlement received in July 2010; and |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | changes in receivables, inventories, payables and accrued liabilities in 2010 resulting in $28.5 million of net cash used, a decline of $111.4 million compared to 2009, primarily due to increased sales and production volumes. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | lower consolidated operating income in 2009 of $77.6 million, due to the operating losses at all of our segments in 2009; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | · | lower general corporate dividend and interest income in 2009 of $5.6 million principally due to $4.3 million of interest received from certain escrow funds of NL in 2008; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | lower net distributions from our TiO2 joint venture in 2009 of $2.3 million; |
|--------|--------|------------------------------------------------------------------------------|

|   | · | Changes in receivables, inventories, payables and accrued liabilities in 2009 provided $115.1 million of net cash, an improvement of $168.6 million compared to 2008, primarily due to decreases in Kronos’ inventory levels; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | proceeds from a litigation settlement of $11.8 million received in January 2009; |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | lower cash paid for income taxes in 2009 of $8.8 million primarily due to lower income in 2009; and |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | lower cash paid for interest, net of amount capitalized, in 2009 of $1.9 million primarily due to favorable changes in currency exchange rates and lower average interest rates. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Kronos’ average days sales outstanding (“DSO”) decreased from December 31, 2009 to December 31, 2010 due to the timing of collections on receivable balances; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Kronos’ average days sales in inventory (“DSI”) decreased from December 31, 2009 to December 31, 2010 as our TiO2 sales volumes in 2010 exceeded our production volumes; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |     · | CompX’s average DSO increased from December 31, 2009 to December 31, 2010 as a result of accounts receivable returning to a more normal relationship to sales in 2010 due to the improvement in the overall economic environment; and |
|--------|---------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |     · | CompX’s average DSI increased from December 31, 2009 to December 31, 2010 as a result of an increase in inventory in response to the increase in customer demand in 2010. |
|--------|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                | December 31,                                   |   | December 31,                                   |   | December 31,                                   |
|-------------------------------------|------------------------------------------------|--------|------------------------------------------------|--------|------------------------------------------------|
|                                |     2008    |   |     2009    |   |     2010    |
|                                |                                           |   |                                           |   |                                           |
| Kronos:                             |                                           |   |                                           |   |                                           |
|   Days sales outstanding  |  64 days                                  |   | 56 days                                        |   | 55 days                                        |
|   Days sales in inventory | 113 days                                       |   | 58 days                                        |   | 52 days                                        |
|                                |                                           |   |                                           |   |                                           |
| CompX:                              |                                           |   |                                           |   |                                           |
|   Days sales outstanding  | 41 days                                        |   | 37 days                                        |   | 41 days                                        |
|   Days sales in inventory | 70 days                                        |   | 64 days                                        |   | 70 days                                        |

|                                             |   | Years ended December 31, |   |
|--------------------------------------------------|--------|--------------------------|--------|
|                                             |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                                             |   | (In millions)            |   |
|                                             |   |                     |   |   |   |   |   |   |   |
| Cash provided by (used in) operating activities: |   |                     |   |   |   |   |   |   |   |
|   Kronos                               |   | $                        | 2.7    |   |   | $ | 86.3 |   |   | $ | 126.0 |   |
|   NL Parent exclusive of subsidiaries  |   |                     | (11.5  | ) |   |   | (10.4 | ) |   |   | (4.1 | ) |
|   CompX                                |   |                     | 15.7   |   |   |   | 15.3 |   |   |   | 13.0 |   |
|   Waste Control Specialists            |   |                     | (9.9   | ) |   |   | (11.7 | ) |   |   | (22.0 | ) |
|   Tremont                              |   |                     | (.7    | ) |   |   | 7.6 |   |   |   | (.6 | ) |
|   Valhi exclusive of subsidiaries      |   |                     | 54.6   |   |   |   | 24.8 |   |   |   | 48.8 |   |
|   Other                                |   |                     | (1.6   | ) |   |   | .6 |   |   |   | (.2 | ) |
|   Eliminations                         |   |                     | (73.8  | ) |   |   | (36.5 | ) |   |   | (38.7 | ) |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
|       Total        |   | $                        | (24.5  | ) |   | $ | 76.0 |   |   | $ | 122.2 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |

----

|   | · | purchased marketable securities of $55.0 million including 2.7 million shares of TIMET common stock purchased by Kronos in the fourth quarter of 2010 of which $2.9 million in trades was settled in early 2011; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | sold marketable securities for proceeds of $7.6 million; and |
|--------|--------|--------------------------------------------------------------|

|   | · | reduced restricted cash and restricted marketable securities by a total of $5.2 million due to the release of funds to us from escrow related to a litigation settlement and due to the reduction of one of our letters of credit. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | purchased marketable securities of $5.4 million; and |
|--------|--------|------------------------------------------------------|

|   | · | sold marketable securities for $9.5 million. |
|--------|--------|----------------------------------------------|

|   | · | CompX purchased common stock through its stock repurchase program for $1.0 million; |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | NL purchased $.8 million of Kronos common stock; |
|--------|--------|--------------------------------------------------|

|   | · | we purchased other marketable securities of $6.1 million; and |
|--------|--------|---------------------------------------------------------------|

|   | · | we sold other marketable securities for proceeds of $7.9 million. |
|--------|--------|-------------------------------------------------------------------|

| ·   | repaid net euro 9 million ($8.5 million when borrowed/repaid) under Kronos’ European bank credit facility; |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | repaid a net $16.7 million under Kronos’ U.S. bank credit facility; |
|--------------------|---------------------------------------------------------------------------|

| ·   | had net borrowings of $3.0 million under CompX’s revolving credit facility; |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | has borrowings of $18.0 million as NL issued a promissory note; |
|--------------------|-----------------------------------------------------------------|

| ·   | had net borrowings of $15.4 million under two promissory notes issued by WCS; |
|--------------------|-------------------------------------------------------------------------------|

| ·   | incurred $72.0 million in borrowings under WCS’ financing capital lease; and |
|--------------------|------------------------------------------------------------------------------------|

| ·   | had net payments of $54.9 million under our Contran credit facility and repaid our $30 million note with Contran. |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

----

|   | · | made net payments of $31.5 million under Kronos’ European bank credit facility; |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | borrowed a net $3.0 million under Kronos’ U.S. bank credit facility; |
|--------|--------|----------------------------------------------------------------------------|

|   | · | borrowed a net $54.9 million under our new Contran credit facility; |
|--------|--------|---------------------------------------------------------------------|

|   | · | we borrowed an aggregate of $30 million principal amount through unsecured demand promissory notes payable to Contran ; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | · | NL purchased $.1 million of Kronos common stock; and |
|--------|--------|------------------------------------------------------|

|   | · | CompX repaid $.8 million on its promissory note to TIMET. |
|--------|--------|-----------------------------------------------------------|

|   | · | borrowed a net $44.4 million on Kronos’ European credit facility; |
|--------|--------|-------------------------------------------------------------------------|

|   | · | repaid $7.0 million on CompX’s promissory note to TIMET; and |
|--------|--------|--------------------------------------------------------------------|

|   | · | KII’s euro 400 million aggregate principal amount of its 6.5% Senior Secured Notes ($532.8 million) due in 2013; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------|

|   | · | Valhi’s $250 million loan from Snake River Sugar Company due in 2027; |
|--------|--------|-----------------------------------------------------------------------------|

|   | · | CompX’s promissory note payable to TIMET ($42.2 million outstanding) which is due in 2014; |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | · | CompX’s revolving credit facility ($3.0 million outstanding) due in January 2012; |
|--------|--------|----------------------------------------------------------------------------------------------|

|   | · | NL’s $18.0 million promissory note issued in connection with a litigation settlement due in 2011 and 2012; |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

|   | · | WCS’ $72.0 million financing capital lease with Andrews County, Texas which has an effective interest rate of 7.0% and is due in monthly installments through August 2035; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | WCS’ two 6.0% promissory notes ($15.4 million outstanding) due in 2011 through 2014; and |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | approximately $6.9 million of other indebtedness, primarily capital lease obligations. |
|--------|--------|----------------------------------------------------------------------------------------|

----

----

|   | · | $107(1) million under Kronos’ European revolving credit facility; |
|--------|--------|-------------------------------------------------------------------------|

|   | · | $28 million under CompX’s bank credit facility, and |
|--------|--------|-----------------------------------------------------------|

|   | · | $100(2) million under Valhi’s Contran credit facility. |
|--------|--------|--------------------------------------------------------------|

|   | (1) Excludes Kronos’ borrowing availability as of December 31, 2010 under its U.S. and Canadian facilities.  As noted above, Kronos voluntarily terminated the U.S. and Canadian facilities in February 2011 and January 2011, respectively. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) Amounts available under this facility are at the sole discretion of Contran. |
|--------|----------------------------------------------------------------------------------|

----

|                                                   |   |          |     |
|--------------------------------------------------------|--------|---------------|----------|
|                                                   |   | Amount        |     |
|                                                   |   | (In millions) |     |
|                                                   |   |          |     |
|   Valhi exclusive of its subsidiaries        |   | $             | 15.9     |   |
|   Kronos                                     |   |          | 353.6    |   |
|   NL Parent exclusive of its subsidiaries    |   |          | 33.9     |   |
|   CompX                                      |   |          | 13.9     |   |
|   Tremont                                    |   |          | 9.3      |   |
|   Waste Control Specialists                  |   |          |  .3 |   |
|                                                   |   |          |     |   |
| Total cash, cash equivalents and marketable securities |   | $             | 426.9    |   |

|   | · | $58 million by our Chemicals Segment, including approximately $21 million in the area of environmental protection and compliance; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | · | $5 million by our Component Products Segment; and |
|--------|--------|---------------------------------------------------|

|   | · | $80 million by our Waste Management Segment. |
|--------|--------|----------------------------------------------|

----

----

----

|   | · | certain income tax examinations which are underway in various U.S. and non-U.S. jurisdictions; |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | certain environmental remediation matters involving NL, Tremont and Valhi; |
|--------|--------|----------------------------------------------------------------------------|

|   | · | certain litigation related to NL’s former involvement in the manufacture of lead pigment and lead-based paint; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------|

|   | · | certain other litigation to which we are a party. |
|--------|--------|---------------------------------------------------|

----

|                                                                                          |   | Payment due date |               |
|-----------------------------------------------------------------------------------------------|--------|------------------|--------------------|
|  Contractual commitment                                                                  |   | 2011             |               |   |   | 2012/2013 |   |   |   | 2014/2015 |   |   | 2016 and after |   |   | Total |   |
|                                                                                          |   | (In millions)    |               |
|                                                                                          |   |             |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Indebtedness(1):                                                                              |   |             |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Principal                                                                         |   | $                | 17.5               |   |   | $ | 561.7 |   |   | $ | 45.4 |   |   | $ | 315.7 |   |   | $ | 940.3 |   |
|   Interest                                                                          |   |             | 65.8               |   |   |   | 105.9 |   |   |   | 56.9 |   |   |   | 313.8 |   |   |   | 542.4 |   |
|                                                                                          |   |             |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating leases(2)                                                                           |   |             | 10.8               |   |   |   | 11.9 |   |   |   | 6.1 |   |   |   | 18.0 |   |   |   | 46.8 |   |
|                                                                                          |   |             |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Kronos’ long-term supply contracts for the purchase of TiO2 feedstock(3) |   |             |    260.0 |   |   |   |    185.0 |   |   |   |    147.0 |   |   |   |    - |   |   |   |    592.0 |   |
|                                                                                          |   |             |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Kronos’ long-term service and other supply contracts(4)                            |   |             |  53.4         |   |   |   |  50.8 |   |   |   |  26.6 |   |   |   |  1.2 |   |   |   |  132.0 |   |
|                                                                                          |   |             |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CompX raw material and other purchase commitments(5)                                     |   |             |  16.5         |   |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  16.5 |   |
|                                                                                          |   |             |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed asset acquisitions(2)                                                                   |   |             | 78.4               |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 78.4 |   |
|                                                                                          |   |             |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Estimated tax obligations(6)                                                                  |   |             |  12.2         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 12.2 |   |
|                                                                                          |   |             |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                                                         |   | $                | 514.6              |   |   | $ | 915.3 |   |   | $ | 282.0 |   |   | $ | 648.7 |   |   | $ | 2,360.6 |   |

| (1) | The amount shown for indebtedness involving revolving credit facilities is based upon the actual amount outstanding at December 31, 2010, and the amount shown for interest for any outstanding variable-rate indebtedness is based upon the December 31, 2010 interest rate and assumes that such variable-rate indebtedness remains outstanding until the maturity of the facility.  A significant portion of the amount shown for indebtedness relates to KII’s 6.5% Senior Secured Notes ($532.8 million at December 31, 2010), which is denominated in the euro.  See Item 7A – “Quantitative and Qualitative Disclosures About Market Risk” and Note 9 to our Consolidated Financial Statements. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The timing and amount shown for our operating leases and fixed asset acquisitions are based upon the contractual payment amount and the contractual payment date for such commitments. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Our contracts for the purchase of TiO2 feedstock contain fixed quantities we are required to purchase, although certain of these contracts allow for an upward or downward adjustment in the quantity purchased, generally no more than 10%, based on our feedstock requirements.  The pricing under these agreements is generally based on a fixed price with price escalation clauses primarily based on consumer price indices, as defined in the respective contracts.   The timing and amount shown for our commitments related to the long-term supply contracts for TiO2 feedstock are based upon our current estimate of the quantity of material that will be purchased in each time period shown, the payment that would be due based upon such estimated purchased quantity and an estimate of the effect of the price escalation clause.  The actual amount of material purchased, and the actual amount that would be payable by us, may vary from such estimated amounts. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | The amounts shown for the long-term service and other supply contracts primarily pertain to agreements Kronos entered into with various providers of products or services which help to run its plant facilities (electricity, natural gas, etc.), utilizing December 31, 2010 exchange rates. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (5) | CompX’s purchase obligations consist of all open purchase orders and contractual obligations (primarily commitments to purchase raw materials) and are based on the contractual payment amount and the contractual payment date for those commitments.  |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | The amount shown for income taxes is the amount of our consolidated income taxes currently payable at December 31, 2010, which is assumed to be paid during 2011. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Our obligations under the Louisiana Pigment Company, L.P. joint venture, as the timing and amount of such purchases are unknown and dependent on, among other things, the amount of TiO2 produced by the joint venture in the future, and the joint venture’s future cost of producing such TiO2.  However, the table of contractual commitments does include amounts related to our share of the joint venture’s ore requirements necessary for it to produce TiO2 for us.  See Notes 7 and 17 to our Consolidated Financial Statements and “Business – Chemicals – Kronos Worldwide, Inc.” |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | We are party to an agreement that could require us to pay certain amounts to a third party based upon specified percentages of our qualifying Waste Management revenues.  We have not included any amounts for this conditional commitment in the above table because we currently believe it is not probable that we will be required to pay any amounts pursuant to this agreement. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Amounts we might pay to fund our defined benefit pension plans and OPEB plans, as the timing and amount of any such future fundings are unknown and dependent on, among other things, the future performance of defined benefit pension plan assets, interest rate assumptions and actual future retiree medical costs.  Our defined benefit pension plans and OPEB plans are discussed in greater detail in Note 11 to our Consolidated Financial Statements.  We currently expect we will be required to contribute an aggregate of $30.2 million to our defined benefit pension and OPEB plans during 2011. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Any amounts that we might pay to settle any of our uncertain tax positions, as the timing and amount of any such future settlements are unknown and dependent on, among other things, the timing of tax audits.  See Note 12 to our Consolidated Financial Statements. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                             |   | Amount              |   |   |            |   |      |               |   |
|--------------------------------------------------------------------------------------------------|--------|---------------------|--------|--------|-----------------|--------|-----------|--------------------|--------|
|  Indebtedness*                                                                              |   | Carrying value |   |   | Fair value |   |      | Interest rate |   |   | Maturity date |   |
|                                                                                             |   | (In millions)       |   |   |            |   |      |               |   |
|                                                                                             |   |                |   |   |            |   |      |               |   |   |   |   |
| Fixed-rate indebtedness:                                                                         |   |                |   |   |            |   |      |               |   |   |   |   |
|   Euro-denominated KII    6.5% Senior Secured Notes |   | $                   | 532.8  |   |            | $      | 536.0     |               |   |   | 6.5 | % |   |   | 2013 |   |
|   Valhi loans from Snake River                                     |   |                | 250.0  |   |            |   | 250.0     |               |   |   | 9.4 |   |   |   | 2027 |   |
|   WCS financing capital lease                                                          |   |                | 72.0   |   |            |   | 72.0      |               |   |   | 7.0 |   |   |   | 2035 |   |
|   WCS promissory notes                                                                 |   |                | 15.4   |   |            |   | 15.4      |               |   |   | 6.0 |   |   |   | 2013-2015 |   |
|     Fixed-rate                                                               |   |                | 870.2  |   |            |   | 873.4     |               |   |   | 7.3 | % |   |   |   |   |
|                                                                                             |   |                |   |   |            |   |      |               |   |   |   |   |   |   |   |   |
| Variable-rate indebtedness -                                                           |   |                |   |   |            |   |      |               |   |   |   |   |   |   |   |   |
|   CompX promissory note to TIMET                                                       |   |                | 42.2   |   |            |   | 42.2      |               |   |   | 1.3 | % |   |   | 2014 |   |
|   NL promissory note                                                                   |   |                | 18.0   |   |            |   | 18.0      |               |   |   | 3.3 |   |   |   | 2012 |   |
|   CompX bank credit facility                                                           |   |                | 3.0    |   |            |   |  3.0 |               |   |   | 3.5 |   |   |   | 2012 |   |
|                                                                                             |   |                |   |   |            |   |      |               |   |   |   |   |   |   |   |   |
|     Variable-rate                                                            |   |                | 63.2   |   |            |   | 63.2      |               |   |   | 2.0 | % |   |   |   |   |
|                                                                                             |   |                |   |   |            |   |      |               |   |   |   |   |   |   |   |   |
|     Total                                                                    |   | $                   | 933.4  |   |            | $      | 936.6     |               |   |   | 7.0 | % |   |   |   |   |

----

| ·   | an aggregate of $66.0 million for an equivalent value of Canadian dollars at exchange rates ranging from Cdn. $1.05 to Cdn. $1.08 per U.S. dollar.  These contracts with Wachovia Bank, National Association, mature from January 2011 through December 2011 at a rate of $5.5 million per month, subject to early redemption provisions at our option. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an aggregate $20.1 million for an equivalent value of Norwegian kroner at exchange rates ranging from kroner 5.94 to kroner 6.60 per U.S. dollar.  These contracts with DnB Nor Bank ASA mature from January 2011 through July 2011 at a rate of $2.3 million to $5.5 million per month. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an aggregate euro 17.8 million for an equivalent value of Norwegian kroner at exchange rates ranging from kroner 8.16 to kroner 8.28 per euro.  These contracts with DnB Nor Bank ASA mature from January 2011 through August 2011 at a rate of euro 1.8 million to euro 2.5 million per month, subject to early redemption provisions at our option. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

----

|   | · | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets, |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are made only in accordance with authorizations of our management and directors, and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our Consolidated Financial Statements. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTORS INDEPENDENCE |
|---------------|---------------------------------------------------------------------------|

|  (a) and (c) | Financial Statements and Schedules |
|-------------------|------------------------------------|

|   | Our Consolidated Financial Statements and schedule listed on the accompanying Index of Financial Statements and Schedule (see page F-1) are filed as part of this Annual Report. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | We are not required to provide any consolidated financial statements pursuant to Rule 3-09 of Regulation S-X. |
|--------|---------------------------------------------------------------------------------------------------------------|

|  (b) | Exhibits |
|-----------|----------|

----

| Item No.   | Exhibit Index                                                                                                                                                                                                                                                                                                                                       |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                                                                                                                                                                                                                |
|  3.1  | Restated Articles of Incorporation of Valhi, Inc. - incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K/A (File No. 1-5467) dated March 26, 2007 and filed by us on March 29, 2007.                                                                                                                                     |
|       |                                                                                                                                                                                                                                                                                                                                                |
|  3.2  | By-Laws of Valhi, Inc. as amended - incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K (File No. 1-5467) dated November 6, 2007.                                                                                                                                                                                            |
|       |                                                                                                                                                                                                                                                                                                                                                |
|  4.1  | Indenture dated April 11, 2006 between Kronos International, Inc. and The Bank of New York, as Trustee, governing Kronos International's 6.5% Senior Secured Notes due 2013 - incorporated by reference to Exhibit 4.1 to Kronos International, Inc.’s Current Report on Form 8-K (File No. 333-100047) filed with the SEC on April 11, 2006. |
|       |                                                                                                                                                                                                                                                                                                                                                |
| 10.1       | Intercorporate Services Agreement between Valhi, Inc. and Contran Corporation effective as of January 1, 2004 – incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2004.                                                                                                          |
|       |                                                                                                                                                                                                                                                                                                                                                |
| 10.2       | Intercorporate Services Agreement between Contran Corporation and NL Industries, Inc. effective as of January 1, 2004 - incorporated by reference to Exhibit 10.1 to NL's Quarterly Report on Form 10-Q (File No. 1-640) for the quarter ended March 31, 2004.                                                                                 |
|       |                                                                                                                                                                                                                                                                                                                                                |
| 10.3       | Intercorporate Services Agreement between Contran Corporation and CompX International Inc. effective January 1, 2004 – incorporated by reference to Exhibit 10.2 to CompX’s Annual Report on Form 10-K (File No. 1-13905) for the year ended December 31, 2003.                                                                         |
|       |                                                                                                                                                                                                                                                                                                                                                |
| 10.4       | Intercorporate Services Agreement between Contran Corporation and Kronos Worldwide, Inc. effective January 1, 2004 - incorporated by reference to Exhibit No. 10.1 to Kronos’ Quarterly Report on Form 10-Q (File No. 1-31763) for the quarter ended March 31, 2004.                                                                          |
|       |                                                                                                                                                                                                                                                                                                                                                |
|  10.5 | Consent Agreement dated as of March 29, 2007 between Valhi, Inc. and Contran Corporation – incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K/A (File No. 1-5467) dated March 26, 2007 and filed by us on March 30, 2007.                                                                                            |
|       |                                                                                                                                                                                                                                                                                                                                                |

----

| Item No.                            | Exhibit Index                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|-------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|       10.6 | Agreement and Plan of Merger dated as of October 16, 2007 among CompX International Inc., CompX Group, Inc. and CompX KDL LLC - incorporated by reference to Exhibit 10.2 of CompX’s Current Report on Form 8-K (File No. 1-13905) dated October 22, 2007.                                                                                                                                                                                            |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|       10.7 | Subordinated Term Loan Promissory Note dated October 26, 2007 executed by CompX International Inc. and payable to the order of TIMET Finance Management Company – incorporated by reference to Exhibit 10.4 of CompX’s Quarterly Report on Form 10-Q (File No. 1-13905) for the quarter ended September 30, 2007.                                                                                                                               |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.8                                | Form of Subordination Agreement among TIMET Finance Management Company, CompX International Inc., CompX Security Products, Inc., CompX Precision Slides Inc., CompX Marine Inc., Custom Marine Inc., Livorsi Marine Inc., Wachovia Bank, National Association as administrative agent for itself, Compass Bank and Comerica Bank - incorporated by reference to Exhibit 10.4 of CompX’s Current Report on Form 8-K  dated October 22, 2007. |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.9*                               | Valhi, Inc. 1997 Long-Term Incentive Plan - incorporated by reference to Exhibit 10.12 to Valhi, Inc.'s Annual Report on Form 10-K (File No. 1-5467) for the year ended December 31, 1996.                                                                                                                                                                                                                                                                  |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.10*                              | CompX International Inc. 1997 Long-Term Incentive Plan - incorporated by reference to Exhibit 10.2 to CompX's Registration Statement on Form S-1 (File No. 333-42643).                                                                                                                                                                                                                                                                                      |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.11*                              | NL Industries, Inc. 1998 Long-Term Incentive Plan – incorporated by reference to Appendix A to NL’s Proxy Statement on Schedule 14A (File No. 1-640) for the annual meeting of shareholders held on May 9, 1998.                                                                                                                                                                                                                                |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.12*                              | Kronos Worldwide, Inc. 2003 Long-Term Incentive Plan – incorporated by reference to Exhibit 10.4 to Kronos’ Registration Statement on Form 10 (File No. 001-31763).                                                                                                                                                                                                                                                                             |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.13                               | Agreement Regarding Shared Insurance dated as of October 30, 2003 by and between CompX International Inc., Contran Corporation, Keystone Consolidated Industries, Inc., Kronos Worldwide, Inc., NL Industries, Inc., Titanium Metals Corporation and Valhi, Inc. – incorporated by reference to Exhibit 10.32 to Kronos’ Annual Report on Form 10-K (File No. 1-31763) for the year ended December 31, 2003.                                    |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.14                               | Formation Agreement of The Amalgamated Sugar Company LLC dated January 3, 1997 (to be effective December 31, 1996) between Snake River Sugar Company and The Amalgamated Sugar Company - incorporated by reference to Exhibit 10.19 to Valhi, Inc.'s Annual Report on Form 10-K (File No. 1-5467) for the year ended December 31, 1996.                                                                                                                     |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

----

| Item No. | Exhibit Index                                                                                                                                                                                                                                                                                                                                                                       |
|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.15    | Master Agreement Regarding Amendments to The Amalgamated Sugar Company Documents dated October 19, 2000 – incorporated by reference to Exhibit 10.1 to Valhi, Inc.'s Quarterly Report on Form 10-Q (File No. 1-5467) for the quarter ended September 30, 2000.                                                                                                                |
|     |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.16    | Prepayment and Termination Agreement dated October 14, 2005 among Valhi, Inc., Snake River Sugar Company and Wells Fargo Bank Northwest, N.A. – incorporated by reference to Exhibit No. 10.1 to Valhi, Inc.’s Amendment No. 1 to its Current Report on Form 8-K (File No. 1-5467) dated October 18, 2005.                                                              |
|     |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.17    | Company Agreement of The Amalgamated Sugar Company LLC dated January 3, 1997 (to be effective December 31, 1996) - incorporated by reference to Exhibit 10.20 to Valhi, Inc.'s Annual Report on Form 10-K (File No. 1-5467) for the year ended December 31, 1996.                                                                                                                   |
|     |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.18    | First Amendment to the Company Agreement of The Amalgamated Sugar Company LLC dated May 14, 1997 - incorporated by reference to Exhibit 10.1 to Valhi, Inc.'s Quarterly Report on Form 10-Q (File No. 1-5467) for the quarter ended June 30, 1997.                                                                                                                                  |
|     |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.19    | Second Amendment to the Company Agreement of The Amalgamated Sugar Company LLC dated November 30, 1998 - incorporated by reference to Exhibit 10.24 to Valhi, Inc.'s Annual Report on Form 10-K (File No. 1-5467) for the year ended December 31, 1998.                                                                                                                             |
|     |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.20    | Third Amendment to the Company Agreement of The Amalgamated Sugar Company LLC dated October 19, 2000 – incorporated by reference to Exhibit 10.2 to Valhi, Inc.'s Quarterly Report on Form 10-Q (File No. 1-5467) for the quarter ended September 30, 2000.                                                                                                                   |
|     |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.21    | Amended and Restated Company Agreement of The Amalgamated Sugar Company LLC dated October 14, 2005 among The Amalgamated Sugar Company LLC, Snake River Sugar Company and The Amalgamated Collateral Trust – incorporated by reference to Exhibit No. 10.7 to Valhi, Inc.’s Amendment No. 1 to its Current Report on Form 8-K (File No. 1-5467) dated October 18, 2005. |
|     |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.22    | Subordinated Promissory Note in the principal amount of $37.5 million between Valhi, Inc. and Snake River Sugar Company, and the related Pledge Agreement, both dated January 3, 1997  - incorporated by reference to Exhibit 10.21 to Valhi, Inc.'s Annual Report on Form 10-K (File No. 1-5467) for the year ended December 31, 1996.                                   |
|     |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.23    | Limited Recourse Promissory Note in the principal amount of $212.5 million between Valhi, Inc. and Snake River Sugar Company, and the related Limited Recourse Pledge Agreement, both dated January 3, 1997  - incorporated by reference to Exhibit 10.22 to Valhi, Inc.'s Annual Report on Form 10-K (File No. 1-5467) for the year ended December 31, 1996.             |
|     |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.24    | Subordinated Loan Agreement between Snake River Sugar Company and Valhi, Inc., as amended and restated effective May 14, 1997  - incorporated by reference to Exhibit 10.9 to Valhi, Inc.'s Quarterly Report on Form 10-Q (File No. 1-5467) for the quarter ended June 30, 1997.                                                                                          |
|     |                                                                                                                                                                                                                                                                                                                                                                                |

----

| Item No. | Exhibit Index                                                                                                                                                                                                                                                                                                                                                     |
|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                                                                                                                                                                                                                              |
| 10.25    | Second Amendment to the Subordinated Loan Agreement between Snake River Sugar Company and Valhi, Inc. dated November 30, 1998 - incorporated by reference to Exhibit 10.28 to Valhi, Inc.'s Annual Report on Form 10-K (File No. 1-5467) for the year ended December 31, 1998.                                                                                    |
|     |                                                                                                                                                                                                                                                                                                                                                              |
| 10.26    | Third Amendment to the Subordinated Loan Agreement between Snake River Sugar Company and Valhi, Inc. dated October 19, 2000 – incorporated by reference to Exhibit 10.3 to Valhi, Inc.'s Quarterly Report on Form 10-Q (File No. 1-5467) for the quarter ended September 30, 2000.                                                                          |
|     |                                                                                                                                                                                                                                                                                                                                                              |
| 10.27    | Fourth Amendment to the Subordinated Loan Agreement between Snake River Sugar Company and Valhi, Inc. dated March 31, 2003 - incorporated by reference to Exhibit No. 10.1 to Valhi, Inc.'s Quarterly Report on Form 10-Q (file No. 1-5467) for the quarter ended March 31, 2003.                                                                                 |
|     |                                                                                                                                                                                                                                                                                                                                                              |
| 10.28    | Contingent Subordinate Pledge Agreement between Snake River Sugar Company and Valhi, Inc., as acknowledged by First Security Bank National Association as Collateral Agent, dated October 19, 2000 – incorporated by reference to Exhibit 10.4 to Valhi, Inc.'s Quarterly Report on Form 10-Q (File No. 1-5467) for the quarter ended September 30, 2000.   |
|     |                                                                                                                                                                                                                                                                                                                                                              |
| 10.29    | Contingent Subordinate Security Agreement between Snake River Sugar Company and Valhi, Inc., as acknowledged by First Security Bank National Association as Collateral Agent, dated October 19, 2000 – incorporated by reference to Exhibit 10.5 to Valhi, Inc.'s Quarterly Report on Form 10-Q (File No. 1-5467) for the quarter ended September 30, 2000. |
|     |                                                                                                                                                                                                                                                                                                                                                              |
| 10.30    | Contingent Subordinate Collateral Agency and Paying Agency Agreement among Valhi, Inc., Snake River Sugar Company and First Security Bank National Association dated October 19, 2000 – incorporated by reference to Exhibit 10.6 to Valhi, Inc.'s Quarterly Report on Form 10-Q (File No. 1-5467) for the quarter ended September 30, 2000.                |
|     |                                                                                                                                                                                                                                                                                                                                                              |
| 10.31    | Deposit Trust Agreement related to the Amalgamated Collateral Trust among ASC Holdings, Inc. and Wilmington Trust Company dated May 14, 1997  - incorporated by reference to Exhibit 10.2 to Valhi, Inc.'s Quarterly Report on Form 10-Q (File No. 1-5467) for the quarter ended June 30, 1997.                                                         |
|     |                                                                                                                                                                                                                                                                                                                                                              |
| 10.32    | First Amendment to Deposit Trust Agreement dated October 14, 2005 among ASC Holdings, Inc. and Wilmington Trust Company – incorporated by reference to Exhibit No. 10.2 to Valhi, Inc.’s Amendment No. 1 to its Current Report on Form 8-K (File No. 1-5467) dated October 18, 2005.                                                                  |
|     |                                                                                                                                                                                                                                                                                                                                                              |
| 10.33    | Pledge Agreement between The Amalgamated Collateral Trust and Snake River Sugar Company dated May 14, 1997  - incorporated by reference to Exhibit 10.3 to Valhi, Inc.'s Quarterly Report on Form 10-Q (File No. 1-5467) for the quarter ended June 30, 1997.                                                                                           |
|     |                                                                                                                                                                                                                                                                                                                                                              |

----

|                           | Item No.                                                                                                                                                                                                                                                                                                                                    | Exhibit Index |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
|                           |                                                                                                                                                                                                                                                                                                                                        |          |
|      10.34 | Second Pledge Amendment (SPT) dated October 14, 2005 among The Amalgamated Collateral Trust and Snake River Sugar Company – incorporated by reference to Exhibit No. 10.4 to Valhi, Inc.’s Amendment No. 1 to its Current Report on Form 8-K (File No. 1-5467) dated October 18, 2005.                                          |          |
|                           |                                                                                                                                                                                                                                                                                                                                        |          |
|      10.35 | Guarantee by The Amalgamated Collateral Trust in favor of Snake River Sugar Company dated May 14, 1997  - incorporated by reference to Exhibit 10.4 to Valhi, Inc.'s Quarterly Report on Form 10-Q (File No. 1-5467) for the quarter ended June 30, 1997.                                                                         |          |
|                           |                                                                                                                                                                                                                                                                                                                                        |          |
|      10.36 | Second SPT Guaranty Amendment dated October 14, 2005 among The Amalgamated Collateral Trust and Snake River Sugar Company – incorporated by reference to Exhibit No. 10.5 to Valhi, Inc.’s Amendment No. 1 to its Current Report on Form 8-K (File No. 1-5467) dated October 18, 2005.                                          |          |
|                           |                                                                                                                                                                                                                                                                                                                                        |          |
| 10.37                          | Voting Rights and Collateral Deposit Agreement among Snake River Sugar Company, Valhi, Inc., and First Security Bank, National Association dated May 14, 1997  - incorporated by reference to Exhibit 10.8 to Valhi, Inc.'s Quarterly Report on Form 10-Q (File No. 1-5467) for the quarter ended June 30, 1997.                  |          |
|                           |                                                                                                                                                                                                                                                                                                                                        |          |
| 10.38                          | Subordination Agreement between Valhi, Inc. and Snake River Sugar Company dated May 14, 1997  - incorporated by reference to Exhibit 10.10 to Valhi, Inc.'s Quarterly Report on Form 10-Q (File No. 1-5467) for the quarter ended June 30, 1997.                                                                                  |          |
|                           |                                                                                                                                                                                                                                                                                                                                        |          |
| 10.39                          | First Amendment to the Subordination Agreement between Valhi, Inc. and Snake River Sugar Company dated October 19, 2000 – incorporated by reference to Exhibit 10.7 to Valhi, Inc.'s Quarterly Report on Form 10-Q (File No. 1-5467) for the quarter ended September 30, 2000.                                                        |          |
|                           |                                                                                                                                                                                                                                                                                                                                        |          |
| 10.40                          | Form of Option Agreement among Snake River Sugar Company, Valhi, Inc. and the holders of Snake River Sugar Company’s 10.9% Senior Notes Due 2009 dated May 14, 1997  - incorporated by reference to Exhibit 10.11 to the Valhi, Inc.'s Quarterly Report on Form 10-Q (File No. 1-5467) for the quarter ended June 30, 1997. |          |
|                           |                                                                                                                                                                                                                                                                                                                                        |          |
| 10.41                          | Option Agreement dated October 14, 2005 among Valhi, Inc., Snake River Sugar Company, Northwest Farm Credit Services, FLCA and U.S. Bank National Association – incorporated by reference to Exhibit No. 10.6 to Valhi, Inc.’s Amendment No. 1 to its Current Report on Form 8-K (File No. 1-5467) dated October 18, 2005.      |          |
|                           |                                                                                                                                                                                                                                                                                                                                        |          |
| 10.42                          | First Amendment to Option Agreements among Snake River Sugar Company, Valhi Inc., and the holders of Snake River's 10.9% Senior Notes Due 2009 dated October 19, 2000 – incorporated by reference to Exhibit 10.8 to the Valhi, Inc.'s Quarterly Report on Form 10-Q (File No. 1-5467) for the quarter ended September 30, 2000.      |          |
|                           |                                                                                                                                                                                                                                                                                                                                        |          |
|     10.43  | Formation Agreement dated as of October 18, 1993 among Tioxide Americas Inc., Kronos Louisiana, Inc. and Louisiana Pigment Company, L.P. - incorporated by reference to Exhibit 10.2 of NL's Quarterly Report on Form 10-Q (File No. 1-640) for the quarter ended September 30, 1993.                                                  |          |
|                           |                                                                                                                                                                                                                                                                                                                                        |          |

----

|   | Item No.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Exhibit Index |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |          |
| 10.44  | Joint Venture Agreement dated as of October 18, 1993 between Tioxide Americas Inc. and Kronos Louisiana, Inc. - incorporated by reference to Exhibit 10.3 of NL's Quarterly Report on Form 10-Q (File No. 1-640) for the quarter ended September 30, 1993.                                                                                                                                                                                                                                    |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |          |
| 10.45  | Kronos Offtake Agreement dated as of October 18, 1993 by and between Kronos Louisiana, Inc. and Louisiana Pigment Company, L.P. - incorporated by reference to Exhibit 10.4 of NL's Quarterly Report on Form 10-Q (File No. 1-640) for the quarter ended September 30, 1993.                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.46  | Amendment No. 1 to Kronos Offtake Agreement dated as of December 20, 1995 between Kronos Louisiana, Inc. and Louisiana Pigment Company, L.P. - incorporated by reference to Exhibit 10.22 of NL’s Annual Report on Form 10-K (File No. 1-640) for the year ended December 31 1995.                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |          |
| 10.47  | Allocation Agreement dated as of October 18, 1993 between Tioxide Americas Inc., ICI American Holdings, Inc., Kronos Worldwide, Inc. (f/k/a Kronos, Inc.) and Kronos Louisiana, Inc. - incorporated by reference to Exhibit 10.10 to NL's Quarterly Report on Form 10-Q (File No. 1-640) for the quarter ended September 30, 1993.                                                                                                                                                            |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |          |
| 10.48  | Lease Contract dated June 21, 1952, between Farbenfabrieken Bayer Aktiengesellschaft and Titangesellschaft mit beschrankter Haftung (German language version and English translation thereof) - incorporated by reference to Exhibit 10.14 of NL's Annual Report on Form 10-K (File No. 1-640) for the year ended December 31, 1985.                                                                                                                                                          |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |          |
| 10.49  | Administrative Settlement for Interim Remedial Measures, Site Investigation and Feasibility Study dated July 7, 2000 between the Arkansas Department of Environmental Quality, Halliburton Energy Services, Inc., M I, LLC and TRE Management Company - incorporated by reference to Exhibit 10.1 to Tremont Corporation's Quarterly Report on Form 10-Q (File No. 1-10126) for the quarter ended June 30, 2002.                                                                              |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |          |
| 10.50  | Reinstated and Amended Settlement Agreement and Release, dated June 26, 2008, by and among NL Industries, Inc., NL Environmental Management Services, Inc., the Sayreville Economic and Redevelopment Agency, Sayreville Seaport Associates, L.P., and the County of Middlesex - incorporated by reference to Exhibit 10.35 to NL’s Annual Report on NL’s Form 10-K (File No. 1-640) for the year ended December 31, 2009.                                                   |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |          |
| 10.51  | Amendment to Restated and Amended Settlement Agreement and Release, dated September 25, 2008 by and among NL Industries, Inc., NL Environmental Management Services, Inc., the Sayreville Economic and Redevelopment Agency, Sayreville Seaport Associates, L.P., and the County of Middlesex - incorporated by reference to Exhibit 10.2 to NL’s Current Report on Form 8-K, File No. 1-640, that was filed with the U.S. Securities and Exchange Commission on October 16, 2008. |          |

----

|   | Item No.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Exhibit Index |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          |
| 10.52  | Mortgage Note, dated October 15, 2008 by Sayreville Seaport Associates, L.P. in favor of NL Industries, Inc. and NL Environmental Management Services, Inc. - incorporated by reference to Exhibit 10.3 to NL’s Current Report on Form 8-K, File No. 1-640, that was filed with the U.S. Securities and Exchange Commission on October 16, 2008.                                                                                                                                            |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          |
| 10.53  | Leasehold Mortgage, Assignment, Security Agreement and Fixture Filing, dated October 15, 2008, by Sayreville Seaport Associates, L.P. in favor of NL Industries, Inc. and NL Environmental Management Services, Inc. - incorporated by reference to Exhibit 10.38 to NL’s Annual Report on Form 10-K (File No. 1-640) for the year ended December 31, 2009.                                                                                                                            |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          |
| 10.54  | Intercreditor, Subordination and Standstill Agreement, dated October 15, 2008, by NL Industries, Inc., NL Environmental Management Services, Inc., Bank of America, N.A. on behalf of itself and the other financial institutions, and acknowledged and consented to by Sayreville Seaport Associates, L.P. and J. Brian O'Neill - incorporated by reference to Exhibit 10.39 to NL’s Annual Report on Form 10-K (File No. 1-640) for the year ended December 31, 2009.                     |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          |
| 10.55  | Multi Party Agreement, dated October 15, 2008 by and among Sayreville Seaport Associates, L.P., Sayreville Seaport Associates Acquisition Company, LLC, OPG Participation, LLC, J. Brian O'Neill, NL Industries, Inc., NL Environmental Management Services, Inc., The Prudential Insurance Company of America, Sayreville PRISA II LLC.   - incorporated by reference to Exhibit 10.40 to NL’s Annual Report on Form 10-K (File No. 1-640) for the year ended December 31, 2009. |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          |
| 10.56  | Guaranty Agreement, dated October 15, 2008, by J. Brian O’Neill in favor of NL Industries, Inc. and NL Environmental Management Services, Inc. - incorporated by reference to Exhibit 10.7 to NL’s Current Report on Form 8-K, File No. 1-640, that was filed with the U.S. Securities and Exchange Commission on October 16, 2008.                                                                                                                                                   |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          |
| 21.1** | Subsidiaries of Valhi, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          |
| 23.1** | Consent of PricewaterhouseCoopers LLP with respect to Valhi’s Consolidated Financial Statements                                                                                                                                                                                                                                                                                                                                                                                             |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          |
| 31.1** | Certification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          |
| 31.2** | Certification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          |
| 32.1** | Certification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          |

----

|   | VALHI, INC.(Registrant)                                                              |
|--------|--------------------------------------------------------------------------------------|
|   |                                                                                 |
|   | By: /s/ Steven L. Watson           |
|   | Steven L. Watson, March 9, 2011(President and Chief Executive Officer)               |

| /s/ Harold C. Simmons                            |   | /s/ Steven L. Watson                      |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|
| Harold C. Simmons, March 9, 2011(Chairman of the Board)                                                                               |   | Steven L. Watson, March 9, 2011(President, Chief Executive Officer and Director)                                |
|                                                                                                                                  |   |                                                                                                                 |
| /s/ Thomas E. Barry                    |   | /s/ Glenn R. Simmons                      |
| Thomas E. Barry, March 9, 2011 (Director)                                                                                        |   | Glenn R. Simmons, March 9, 2011(Vice Chairman of the Board)                                                          |
|                                                                                                                                  |   |                                                                                                                 |
| /s/ Norman S. Edelcup                            |   | /s/ Bobby D. O’Brien                |
| Norman S. Edelcup, March 9, 2011(Director)                                                                                            |   | Bobby D. O’Brien, March 9, 2011(Vice President and Chief Financial Officer, Principal FinancialOfficer)        |
|                                                                                                                                  |   |                                                                                                                 |
| /s/ W. Hayden McIlroy                            |   | /s/ Gregory M. Swalwell                                  |
| W. Hayden McIlroy, March 9, 2011(Director)                                                                                            |   | Gregory M. Swalwell, March 9, 2011(Vice President and Controller, Principal Accounting Officer)                 |
|                                                                                                                                  |   |                                                                                                                 |
| /s/ J. Walter Tucker, Jr.                                            |   |                                                                                                                 |
| J. Walter Tucker, Jr. March 9, 2011 (Director)                                                                                   |   |                                                                                                                 |
|                                                                                                                                  |   |                                                                                                                 |

----

| Financial Statements                                                                                                                                                                        | Page      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|
|                                                                                                                                                                                        |      |
| Report of Independent Registered Public Accounting Firm                                                                                                                                     | F-2       |
|                                                                                                                                                                                        |      |
| Consolidated Balance Sheets - December 31, 2009 and 2010                                                                                                                                    | F-3       |
|                                                                                                                                                                                        |      |
| Consolidated Statements of Operations –Years ended December 31, 2008, 2009 and 2010                                                                                                   |  F-5 |
|                                                                                                                                                                                        |      |
| Consolidated Statements of Comprehensive Income (Loss) –Years ended December 31, 2008, 2009 and 2010                                                                                  |  F-6 |
|                                                                                                                                                                                        |      |
| Consolidated Statements of Equity –Years ended December 31, 2008, 2009 and 2010                                                                                                       |  F-7 |
|                                                                                                                                                                                        |      |
| Consolidated Statements of Cash Flows –Years ended December 31, 2008, 2009 and 2010                                                                                                   |  F-8 |
|                                                                                                                                                                                        |      |
| Notes to Consolidated Financial Statements                                                                                                                                                  | F-11      |
|                                                                                                                                                                                        |      |
| Financial Statement Schedule                                                                                                                                                                |      |
|                                                                                                                                                                                        |      |
| Schedule I – Condensed Financial Information of Registrant                                                                                                                            | S-1       |
|                                                                                                                                                                                        |      |
| We omitted Schedules II, III and IV because they are not applicable or the required amounts are either not material or are presented in the Notes to the Consolidated Financial Statements. |      |

----

----

| ASSETS                                                         |   | December 31, |    |
|----------------------------------------------------------------|--------|--------------|---------|
|                                                           |   | 2009         |    |   | 2010 |   |
|                                                           |   |         |    |   |   |   |
| Current assets:                                                |   |         |    |   |   |   |
|   Cash and cash equivalents                          |   | $            | 68.7    |   |   | $ | 325.1 |   |
|   Restricted cash equivalents                        |   |         | 8.9     |   |   |   | 9.4 |   |
|   Marketable securities                              |   |         | 6.1     |   |   |   | 1.7 |   |
|   Accounts and other receivables, net                |   |         | 204.1   |   |   |   | 261.3 |   |
|   Refundable income taxes                            |   |         | 2.6     |   |   |   | 1.3 |   |
|   Receivable from affiliates                         |   |         | 16.2    |   |   |   | .1 |   |
|   Inventories, net                                   |   |         | 312.0   |   |   |   | 294.9 |   |
|   Prepaid expenses and other                         |   |         | 17.7    |   |   |   | 14.1 |   |
|   Deferred income taxes                              |   |         | 11.9    |   |   |   | 13.9 |   |
|                                                           |   |         |    |   |   |   |   |   |
|       Total current assets       |   |         | 648.2   |   |   |   | 921.8 |   |
|                                                           |   |         |    |   |   |   |   |   |
| Other assets:                                                  |   |         |    |   |   |   |   |   |
|   Marketable securities                              |   |         | 279.5   |   |   |   | 340.4 |   |
|   Investment in affiliates                           |   |         | 116.1   |   |   |   | 113.2 |   |
|   Goodwill                                           |   |         | 396.9   |   |   |   | 397.4 |   |
|   Other intangible assets                            |   |         | 1.4     |   |   |   | .8 |   |
|   Deferred income taxes                              |   |         | 185.5   |   |   |   | 192.0 |   |
|   Pension asset                                      |   |         | .3      |   |   |   | .3 |   |
|   Other assets                                       |   |         | 101.8   |   |   |   | 102.3 |   |
|                                                           |   |         |    |   |   |   |   |   |
|       Total other assets         |   |         | 1,081.5 |   |   |   | 1,146.4 |   |
|                                                           |   |         |    |   |   |   |   |   |
| Property and equipment:                                        |   |         |    |   |   |   |   |   |
|   Land                                               |   |         | 56.3    |   |   |   | 54.9 |   |
|   Buildings                                          |   |         | 293.8   |   |   |   | 287.4 |   |
|   Equipment                                          |   |         | 1,176.1 |   |   |   | 1,170.3 |   |
|   Mining properties                                  |   |         | 68.4    |   |   |   | 69.1 |   |
|   Construction in progress                           |   |         | 20.7    |   |   |   | 20.2 |   |
|                                                           |   |         | 1,615.3 |   |   |   | 1,601.9 |   |
|   Less accumulated depreciation                      |   |         | 934.7   |   |   |   | 955.8 |   |
|                                                           |   |         |    |   |   |   |   |   |
|       Net property and equipment |   |         | 680.6   |   |   |   | 646.1 |   |
|                                                           |   |         |    |   |   |   |   |   |
|       Total assets               |   | $            | 2,410.3 |   |   | $ | 2,714.3 |   |
|                                                           |   |         |    |   |   |   |   |   |

----

|    LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                            |   | December 31,  |             |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|------------------|
|                                                                                                                                                                              |   | 2009               |             |   | 2010 |   |
|                                                                                                                                                                              |   |               |             |   |   |   |
| Current liabilities:                                                                                                                                                              |   |               |             |   |   |   |
|   Current maturities of long-term debt                                                                                                                                  |   | $                  | 2.5              |   |   | $ | 17.4 |   |
|   Accounts payable                                                                                                                                                      |   |               | 124.5            |   |   |   | 129.6 |   |
|   Accrued liabilities                                                                                                                                                   |   |               | 137.5            |   |   |   | 115.8 |   |
|   Payable to affiliates                                                                                                                                                 |   |               | 26.1             |   |   |   | 30.2 |   |
|   Income taxes                                                                                                                                                          |   |               | 3.9              |   |   |   | 7.9 |   |
|   Deferred income taxes                                                                                                                                                 |   |               | 4.7              |   |   |   | 5.0 |   |
|                                                                                                                                                                              |   |               |             |   |   |   |   |   |
|       Total current liabilities                                                                                                                     |   |               | 299.2            |   |   |   | 305.9 |   |
|                                                                                                                                                                              |   |               |             |   |   |   |   |   |
| Noncurrent liabilities:                                                                                                                                                           |   |               |             |   |   |   |   |   |
|   Long-term debt                                                                                                                                                        |   |               | 988.4            |   |   |   | 922.9 |   |
|   Deferred income taxes                                                                                                                                                 |   |               | 360.7            |   |   |   | 417.6 |   |
|   Accrued pension costs                                                                                                                                                 |   |               | 130.5            |   |   |   | 128.1 |   |
|   Accrued environmental costs                                                                                                                                           |   |               | 37.9             |   |   |   | 32.6 |   |
|   Accrued postretirement benefits costs                                                                                                                                 |   |               | 25.5             |   |   |   | 19.5 |   |
|   Payable to affiliate                                                                                                                                                  |   |               | .3               |   |   |   | - |   |
|   Other                                                                                                                                                                 |   |               | 69.4             |   |   |   | 69.5 |   |
|                                                                                                                                                                              |   |               |             |   |   |   |   |   |
|       Total noncurrent liabilities                                                                                                                  |   |               | 1,612.7          |   |   |   | 1,590.2 |   |
|                                                                                                                                                                              |   |               |             |   |   |   |   |   |
| Equity:                                                                                                                                                                           |   |               |             |   |   |   |   |   |
|   Valhi stockholders’ equity:                                                                                                                                     |   |               |             |   |   |   |   |   |
|     Preferred stock, $.01 par value; 5,000     shares authorized; 5,000 shares issued                                           |   |               |  667.3      |   |   |   |  667.3 |   |
|     Common stock, $.01 par value; 150.0 million     shares authorized; 118.4 million     shares issued |   |               |    1.2 |   |   |   |    1.2 |   |
|     Additional paid-in capital                                                                                                                                |   |               | -                |   |   |   | 76.2 |   |
|     Accumulated deficit                                                                                                                                       |   |               | (197.7           | ) |   |   | (183.2 | ) |
|     Accumulated other comprehensive income (loss)                                                                                                             |   |               | (3.2             | ) |   |   | 21.2 |   |
|     Treasury stock, at cost – 4.1 million shares                                                                                                        |   |               | (38.9            | ) |   |   | (40.9 | ) |
|                                                                                                                                                                              |   |               |             |   |   |   |   |   |
|       Total Valhi stockholders’ equity                                                                                                        |   |               | 428.7            |   |   |   | 541.8 |   |
|                                                                                                                                                                              |   |               |             |   |   |   |   |   |
|   Noncontrolling interest in subsidiaries                                                                                                                               |   |               | 69.7             |   |   |   | 276.4 |   |
|                                                                                                                                                                              |   |               |             |   |   |   |   |   |
|       Total equity                                                                                                                                  |   |               | 498.4            |   |   |   | 818.2 |   |
|                                                                                                                                                                              |   |               |             |   |   |   |   |   |
|       Total liabilities and equity                                                                                                                  |   | $                  | 2,410.3          |   |   | $ | 2,714.3 |   |
|                                                                                                                                                                              |   |               |             |   |   |   |   |   |

----

|                                                                                |   |                     |        |   |   |   |        |   |   |
|-------------------------------------------------------------------------------------|--------|--------------------------|-------------|--------|--------|--------|-------------|--------|--------|
|                                                                                |   | Years ended December 31, |        |
|                                                                                |   | 2008                     |        |   | 2009   |   |        | 2010   |   |
|                                                                                |   |                     |        |   |   |   |
|                                                                                |   |                     |        |   |   |   |        |   |   |
| Revenues and other income:                                                          |   |                     |        |   |   |   |        |   |   |
|   Net sales                                                               |   | $                        | 1,485.3     |   |   | $      | 1,272.1     |   |   | $ | 1,592.7 |   |
|   Other income, net                                                       |   |                     | 92.7        |   |   |   | 69.7        |   |   |   | 58.5 |   |
|                                                                                |   |                     |        |   |   |   |        |   |   |   |   |   |
|     Total revenues and other income                             |   |                     | 1,578.0     |   |   |   | 1,341.8     |   |   |   | 1,651.2 |   |
|                                                                                |   |                     |        |   |   |   |        |   |   |   |   |   |
| Costs and expenses:                                                                 |   |                     |        |   |   |   |        |   |   |   |   |   |
|   Cost of sales                                                           |   |                     | 1,239.1     |   |   |   | 1,135.7     |   |   |   | 1,229.9 |   |
|   Selling, general and administrative                                     |   |                     | 238.5       |   |   |   | 227.6       |   |   |   | 236.8 |   |
|   Litigation settlement and contract   termination expense |   |                     |  -     |   |   |   |  -     |   |   |   |  33.3 |   |
|   Goodwill impairment                                                     |   |                     |  10.1  |   |   |   |  -     |   |   |   |  - |   |
|   Assets held for sale write-down                                         |   |                     | -           |   |   |   |  .7    |   |   |   |  .5 |   |
|   Interest                                                                |   |                     | 68.7        |   |   |   | 66.7        |   |   |   | 68.4 |   |
|                                                                                |   |                     |        |   |   |   |        |   |   |   |   |   |
|     Total costs and expenses                                    |   |                     | 1,556.4     |   |   |   | 1,430.7     |   |   |   | 1,568.9 |   |
|                                                                                |   |                     |        |   |   |   |        |   |   |   |   |   |
|     Income (loss) before income taxes                           |   |                     | 21.6        |   |   |   | (88.9       | )      |   |   | 82.3 |   |
|                                                                                |   |                     |        |   |   |   |        |   |   |   |   |   |
| Provision for income taxes (benefit)                                                |   |                     | 16.7        |   |   |   | (50.8       | )      |   |   | 18.5 |   |
|                                                                                |   |                     |        |   |   |   |        |   |   |   |   |   |
|     Net income (loss)                                           |   |                     | 4.9         |   |   |   | (38.1       | )      |   |   | 63.8 |   |
|                                                                                |   |                     |        |   |   |   |        |   |   |   |   |   |
| Noncontrolling interest in net income (loss) of subsidiaries                        |   |                     |  5.7   |   |   |   | (3.9        | )      |   |   |  13.5 |   |
|                                                                                |   |                     |        |   |   |   |        |   |   |   |   |   |
|     Net income (loss) attributable to Valhi stockholders        |   | $                        | (.8         | )      |   | $      | (34.2       | )      |   | $ | 50.3 |   |
|                                                                                |   |                     |        |   |   |   |        |   |   |   |   |   |
| Amounts attributable to Valhi stockholders:                                    |   |                     |        |   |   |   |        |   |   |   |   |   |
|                                                                                |   |                     |        |   |   |   |        |   |   |   |   |   |
|   Basic and diluted earnings per share                                    |   | $                        | (.01        | )      |   | $      | (.30        | )      |   | $ | .42 |   |
|                                                                                |   |                     |        |   |   |   |        |   |   |   |   |   |
|   Cash dividends per share                                                |   | $                        | .40         |   |   | $      | .40         |   |   | $ | .40 |   |
|                                                                                |   |                     |        |   |   |   |        |   |   |   |   |   |
|   Basic and diluted weighted average   shares outstanding  |   |                     |  114.4 |   |   |   |  114.3 |   |   |   |  114.3 |   |
|                                                                                |   |                     |        |   |   |   |        |   |   |   |   |   |

----

|                                                                                        |   | Years ended December 31, |   |
|---------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                        |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                                                                                        |   |                     |   |   |   |   |   |   |   |
| Net income (loss)                                                                           |   | $                        | 4.9    |   |   | $ | (38.1 | ) |   | $ | 63.8 |   |
|                                                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss), net of tax:                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Marketable securities                                                           |   |                     | (28.3  | ) |   |   | 7.0 |   |   |   | 10.7 |   |
|                                                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Currency translation                                                            |   |                     | (38.1  | ) |   |   | 22.0 |   |   |   | .3 |   |
|                                                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Defined benefit pension plans                                                   |   |                     | (51.7  | ) |   |   | 7.7 |   |   |   | (6.4 | ) |
|                                                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Other postretirement benefit plans                                              |   |                     | 1.3    |   |   |   | 3.6 |   |   |   | 4.4 |   |
|                                                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total other comprehensive income (loss), net                        |   |                     | (116.8 | ) |   |   | 40.3 |   |   |   | 9.0 |   |
|                                                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss)                                                                 |   |                     | (111.9 | ) |   |   | 2.2 |   |   |   | 72.8 |   |
|                                                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss) attributable  to noncontrolling interest              |   |                     | (8.6   | ) |   |   | 1.5 |   |   |   | 17.9 |   |
|                                                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Comprehensive income (loss) attributable   to Valhi stockholders |   | $                        | (103.3 | ) |   | $ | .7 |   |   | $ | 54.9 |   |
|                                                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |

----

|                                                       |   | Valhi Stockholders’ Equity |    |   |                    |   |    |                           |   |
|------------------------------------------------------------|--------|----------------------------------|---------|--------|-------------------------|--------|---------|--------------------------------|--------|
|                                                       |   |  Preferred stock       |    |   |  Common stock |   |    | Additionalpaid-in capital |   |   |  Accumulated deficit |   |   | Accumulatedothercomprehensiveincome (loss) |   |   |  Treasury stock |   |   | Non-controlling interest |   |   |  Total equity |   |
|                                                       |   |                             |    |   |                    |   |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2007                               |   | $                                | 667.3   |   |                    | $      | 1.2     |                           |   | $ | 10.4 |   |   | $ | (74.1 | ) |   | $ | 51.5 |   |   | $ | (37.9 | ) |   | $ | 90.5 |   |   | $ | 708.9 |   |
|                                                       |   |                             |    |   |                    |   |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                          |   |                             | -       |   |                    |   | -       |                           |   |   | - |   |   |   | (.8 | ) |   |   | - |   |   |   | - |   |   |   | 5.7 |   |   |   | 4.9 |   |
| Cash dividends                                             |   |                             | -       |   |                    |   | -       |                           |   |   | (10.4 | ) |   |   | (35.1 | ) |   |   | - |   |   |   | - |   |   |   | (7.3 | ) |   |   | (52.8 | ) |
| Other comprehensive loss, net                              |   |                             | -       |   |                    |   | -       |                           |   |   | - |   |   |   | - |   |   |   | (102.5 | ) |   |   | - |   |   |   | (14.3 | ) |   |   | (116.8 | ) |
| Treasury stock acquired                                    |   |                             | -       |   |                    |   | -       |                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1.0 | ) |   |   | - |   |   |   | (1.0 | ) |
| Equity transactions with noncontrolling interest, net |   |                             |  - |   |                    |   |  - |                           |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   | (1.3 | ) |   |   | (1.3 | ) |
| Other, net                                                 |   |                             | -       |   |                    |   | -       |                           |   |   | - |   |   |   | .2 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | .2 |   |
|                                                       |   |                             |    |   |                    |   |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2008                               |   |                             | 667.3   |   |                    |   | 1.2     |                           |   |   | - |   |   |   | (109.8 | ) |   |   | (51.0 | ) |   |   | (38.9 | ) |   |   | 73.3 |   |   |   | 542.1 |   |
|                                                       |   |                             |    |   |                    |   |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                   |   |                             | -       |   |                    |   | -       |                           |   |   | - |   |   |   | (34.2 | ) |   |   | - |   |   |   | - |   |   |   | (3.9 | ) |   |   | (38.1 | ) |
| Cash dividends                                             |   |                             | -       |   |                    |   | -       |                           |   |   | (.3 | ) |   |   | (45.1 | ) |   |   | - |   |   |   | - |   |   |   | (4.9 | ) |   |   | (50.3 | ) |
| Other comprehensive income, net                            |   |                             | -       |   |                    |   | -       |                           |   |   | - |   |   |   | - |   |   |   | 34.9 |   |   |   | - |   |   |   | 5.4 |   |   |   | 40.3 |   |
| Equity transactions with noncontrolling interest, net |   |                             |  - |   |                    |   |  - |                           |   |   |  .3 |   |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   | (.2 | ) |   |   |  .1 |   |
| Transfer of Medite pension plan                            |   |                             | -       |   |                    |   | -       |                           |   |   | - |   |   |   | (8.6 | ) |   |   | 12.9 |   |   |   | - |   |   |   | - |   |   |   | 4.3 |   |
|                                                       |   |                             |    |   |                    |   |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2009                               |   |                             | 667.3   |   |                    |   | 1.2     |                           |   |   | - |   |   |   | (197.7 | ) |   |   | (3.2 | ) |   |   | (38.9 | ) |   |   | 69.7 |   |   |   | 498.4 |   |
|                                                       |   |                             |    |   |                    |   |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                 |   |                             | -       |   |                    |   | -       |                           |   |   | - |   |   |   | 50.3 |   |   |   | - |   |   |   | - |   |   |   | 13.5 |   |   |   | 63.8 |   |
| Cash dividends                                             |   |                             | -       |   |                    |   | -       |                           |   |   | (11.7 | ) |   |   | (33.8 | ) |   |   | - |   |   |   | - |   |   |   | (7.8 | ) |   |   | (53.3 | ) |
| Other comprehensive income, net                            |   |                             | -       |   |                    |   | -       |                           |   |   | - |   |   |   | - |   |   |   | 4.6 |   |   |   | - |   |   |   | 4.4 |   |   |   | 9.0 |   |
| Treasury stock acquired                                    |   |                             | -       |   |                    |   | -       |                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2.0 | ) |   |   | - |   |   |   | (2.0 | ) |
| Equity transactions with noncontrolling interest, net |   |                             |  - |   |                    |   |  - |                           |   |   |  87.8 |   |   |   |  - |   |   |   |  19.8 |   |   |   |  - |   |   |   |  197.0 |   |   |   |  304.6 |   |
| Other                                                      |   |                             | -       |   |                    |   | -       |                           |   |   | .1 |   |   |   | (2.0 | ) |   |   | - |   |   |   | - |   |   |   | (.4 | ) |   |   | (2.3 | ) |
|                                                       |   |                             |    |   |                    |   |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2010                               |   | $                                | 667.3   |   |                    | $      | 1.2     |                           |   | $ | 76.2 |   |   | $ | (183.2 | ) |   | $ | 21.2 |   |   | $ | (40.9 | ) |   | $ | 276.4 |   |   | $ | 818.2 |   |

----

|                                                                                                                             |   | Years ended December 31, |    |
|----------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|---------|
|                                                                                                                             |   | 2008                     |    |   | 2009 |   |   | 2010 |   |
|                                                                                                                             |   |                     |    |   |   |   |
|                                                                                                                             |   |                     |    |   |   |   |   |   |   |
| Cash flows from operating activities:                                                                                            |   |                     |    |   |   |   |   |   |   |
|   Net income (loss)                                                                                                    |   | $                        | 4.9     |   |   | $ | (38.1 | ) |   | $ | 63.8 |   |
|   Depreciation and amortization                                                                                        |   |                     | 66.1    |   |   |   | 67.4 |   |   |   | 62.1 |   |
|   Gain on sale of business                                                                                             |   |                     | -       |   |   |   | (6.3 | ) |   |   | - |   |
|   Litigation settlement gains                                                                                          |   |                     | (47.9   | ) |   |   | (11.1 | ) |   |   | - |   |
|   Accrued litigation settlement and   contract termination                                              |   |                     |  - |   |   |   |  - |   |   |   |  33.3 |   |
|   Litigation settlement payments                                                                                       |   |                     | -       |   |   |   | - |   |   |   | (19.0 | ) |
|   Goodwill impairment                                                                                                  |   |                     | 10.1    |   |   |   | - |   |   |   | - |   |
|   Assets held for sale write-down                                                                                      |   |                     | -       |   |   |   | .7 |   |   |   | .5 |   |
|   Securities transactions, net                                                                                         |   |                     | 1.2     |   |   |   | (.5 | ) |   |   | (.3 | ) |
|   Loss on disposal of property and equipment                                                                           |   |                     | 1.0     |   |   |   | 1.2 |   |   |   | 1.8 |   |
|   Noncash interest expense                                                                                             |   |                     | 2.1     |   |   |   | 2.0 |   |   |   | 2.4 |   |
|   Benefit plan expense greater (less) than   cash funding requirements:                                 |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Defined benefit pension expense                                                                          |   |                     | (22.3   | ) |   |   | .3 |   |   |   | (1.3 | ) |
|     Other postretirement benefit expense                                                                     |   |                     | .9      |   |   |   | .4 |   |   |   | .3 |   |
|   Deferred income taxes                                                                                                |   |                     | (12.4   | ) |   |   | (21.9 | ) |   |   | (11.1 | ) |
|   Equity in joint venture earnings                                                                                     |   |                     | 1.0     |   |   |   | 1.1 |   |   |   | .4 |   |
|   Net distributions from                                                                                               |   |                     |    |   |   |   |   |   |   |   |   |   |
|    TiO2 manufacturing joint venture                                                                               |   |                     | 10.0    |   |   |   | 7.7 |   |   |   | 2.4 |   |
|   Other, net                                                                                                           |   |                     | 2.7     |   |   |   | 3.5 |   |   |   | 2.2 |   |
|   Change in assets and liabilities:                                                                                    |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Accounts and other receivables, net                                                                      |   |                     | 15.0    |   |   |   | 6.0 |   |   |   | (53.4 | ) |
|     Inventories, net                                                                                         |   |                     | (93.0   | ) |   |   | 105.2 |   |   |   | 4.6 |   |
|     Accounts payable and accrued liabilities                                                                 |   |                     | 15.6    |   |   |   | 4.3 |   |   |   | (15.1 | ) |
|     Income taxes                                                                                             |   |                     | 2.7     |   |   |   | (3.0 | ) |   |   | 9.5 |   |
|     Accounts with affiliates                                                                                 |   |                     | 10.5    |   |   |   | (18.1 | ) |   |   | 21.4 |   |
|     Other noncurrent assets                                                                                  |   |                     | (3.5    | ) |   |   | .3 |   |   |   | .2 |   |
|     Other noncurrent liabilities                                                                             |   |                     | 5.3     |   |   |   | (9.5 | ) |   |   | 7.4 |   |
|     Other, net                                                                                               |   |                     | 5.5     |   |   |   | (15.6 | ) |   |   | 10.1 |   |
|                                                                                                                             |   |                     |    |   |   |   |   |   |   |   |   |   |
|       Net cash provided by (used in) operating       Activities |   |                     | (24.5   | ) |   |   |  76.0 |   |   |   |  122.2 |   |
|                                                                                                                             |   |                     |    |   |   |   |   |   |   |   |   |   |

----

|                                                                                        |   | Years ended December 31, |    |
|---------------------------------------------------------------------------------------------|--------|--------------------------|---------|
|                                                                                        |   | 2008                     |    |   | 2009 |   |   | 2010 |   |
|                                                                                        |   |                     |    |   |   |   |
|                                                                                        |   |                     |    |   |   |   |   |   |   |
| Cash flows from investing activities:                                                       |   |                     |    |   |   |   |   |   |   |
|   Capital expenditures                                                            |   | $                        | (84.9   | ) |   | $ | (57.5 | ) |   | $ | (44.7 | ) |
|   Capitalized permit costs                                                        |   |                     | (13.8   | ) |   |   | (9.4 | ) |   |   | (5.8 | ) |
|   Purchases of:                                                                   |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Kronos common stock                                                 |   |                     | (.8     | ) |   |   | - |   |   |   | - |   |
|     CompX common stock                                                  |   |                     | (1.0    | ) |   |   | - |   |   |   | - |   |
|     Marketable securities                                               |   |                     | (6.1    | ) |   |   | (5.4 | ) |   |   | (55.0 | ) |
|   Proceeds from disposal of:                                                      |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Marketable securities                                               |   |                     | 7.9     |   |   |   | 9.5 |   |   |   | 7.6 |   |
|     Restricted marketable securities                                    |   |                     | -       |   |   |   | - |   |   |   | 5.2 |   |
|     Property and equipment                                              |   |                     | .3      |   |   |   | - |   |   |   | - |   |
|     Sale of business                                                    |   |                     | -       |   |   |   | 6.7 |   |   |   | .5 |   |
|     Real estate-related litigation settlement                           |   |                     | 39.6    |   |   |   | 11.8 |   |   |   | - |   |
|   Change in restricted cash equivalents, net                                      |   |                     | (2.5    | ) |   |   | .5 |   |   |   | (.4 | ) |
|   Other, net                                                                      |   |                     | 1.3     |   |   |   | (.7 | ) |   |   |  (.5 | ) |
|                                                                                        |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Net cash used in investing activities                               |   |                     | (60.0   | ) |   |   | (44.5 | ) |   |   | (93.1 | ) |
|                                                                                        |   |                     |    |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Indebtedness:                                                                   |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Borrowings                                                          |   |                     | 427.7   |   |   |   | 447.6 |   |   |   | 497.5 |   |
|     Principal payments                                                  |   |                     | (385.6  | ) |   |   | (401.1 | ) |   |   | (537.3 | ) |
|     Deferred financing costs paid                                       |   |                     | (1.2    | ) |   |   | (.8 | ) |   |   | (.8 | ) |
|   Lease deposit held for loan repayment                                           |   |                     | -       |   |   |   | - |   |   |   | (6.2 | ) |
|   Purchases of Kronos common stock                                                |   |                     | -       |   |   |   | (.1 | ) |   |   | - |   |
|   Valhi cash dividends paid                                                       |   |                     | (45.5   | ) |   |   | (45.4 | ) |   |   | (45.5 | ) |
|   Distributions to noncontrolling interest in    subsidiaries |   |                     | (7.3    | ) |   |   | (4.9 | ) |   |   | (7.8 | ) |
|   Treasury stock acquired                                                         |   |                     | (1.0    | ) |   |   | - |   |   |   | (2.0 | ) |
|   Purchase of noncontrolling interest in   subsidiary              |   |                     |  - |   |   |   |  - |   |   |   | (7.0 | ) |
|   Issuance of subsidiary common stock                                             |   |                     | -       |   |   |   | - |   |   |   | 337.6 |   |
|   Issuance of Valhi common stock and other, net                                   |   |                     | -       |   |   |   | - |   |   |   | .1 |   |
|                                                                                        |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Net cash provided by (used in) financing activities                             |   |                     | (12.9   | ) |   |   | (4.7 | ) |   |   |  228.6 |   |
|                                                                                        |   |                     |    |   |   |   |   |   |   |   |   |   |
| Net increase (decrease)                                                                     |   | $                        | (97.4   | ) |   | $ | 26.8 |   |   | $ | 257.7 |   |

----

|                                                                                            |   | Years ended December 31, |       |
|-------------------------------------------------------------------------------------------------|--------|--------------------------|------------|
|                                                                                            |   | 2008                     |       |   | 2009 |   |   | 2010 |   |
|                                                                                            |   |                     |       |   |   |   |
|                                                                                            |   |                     |       |   |   |   |   |   |   |
| Cash and cash equivalents - net change from:                                                    |   |                     |       |   |   |   |   |
|   Operating, investing and financing   activities                      |   | $                        | (97.4      | ) |   | $ | 26.8 |   |   | $ | 257.7 |   |
|   Currency translation                                                                |   |                     | (3.9       | ) |   |   | 4.9 |   |   |   | (1.3 | ) |
|       Net change for the year                                     |   |                     | (101.3     | ) |   |   | 31.7 |   |   |   | 256.4 |   |
|                                                                                            |   |                     |       |   |   |   |   |   |   |   |   |   |
|   Balance at beginning of year                                                        |   |                     | 138.3      |   |   |   | 37.0 |   |   |   | 68.7 |   |
|                                                                                            |   |                     |       |   |   |   |   |   |   |   |   |   |
|   Balance at end of year                                                              |   | $                        | 37.0       |   |   | $ | 68.7 |   |   | $ | 325.1 |   |
|                                                                                            |   |                     |       |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |                     |       |   |   |   |   |   |   |   |   |   |
| Supplemental disclosures:  Cash paid (received) for:                                  |   |                     |       |   |   |   |   |   |   |   |   |   |
|     Interest, net of amounts capitalized                                    |   | $                        | 66.7       |   |   | $ | 64.8 |   |   | $ | 64.5 |   |
|     Income taxes, net                                                       |   |                     | 15.2       |   |   |   | 6.4 |   |   |   | (6.2 | ) |
|                                                                                            |   |                     |       |   |   |   |   |   |   |   |   |   |
|   Noncash investing activities:                                                       |   |                     |       |   |   |   |   |   |   |   |   |   |
|     Accruals for capital expenditures                                       |   |                     | 12.7       |   |   |   | 11.8 |   |   |   | 11.6 |   |
|     Accruals for capitalized permits                                        |   |                     | .7         |   |   |   | 1.2 |   |   |   | 1.1 |   |
|     Note receivable from litigation     settlement |   |                     |  15.0 |   |   |   |  - |   |   |   |  - |   |
|     Note receivable from sale of business                                   |   |                     | -          |   |   |   | .8 |   |   |   | - |   |
|                                                                                            |   |                     |       |   |   |   |   |   |   |   |   |   |
|   Noncash financing activities:                                                       |   |                     |       |   |   |   |   |   |   |   |   |   |
|     Promissory note issued in connection with litigation settlement         |   |                     |  -    |   |   |   |  - |   |   |   |  18.0 |   |
|     Promissory note issued in connection with contract termination          |   |                     |  -    |   |   |   |  - |   |   |   |  12.0 |   |
|     Accrued construction retainage payable converted into note payable      |   |                     |  -    |   |   |   |  - |   |   |   |  5.8 |   |
|     Transfer of Medite pension plan     to Contran |   |                     |  -    |   |   |   |  4.3 |   |   |   |  - |   |

----

----

|   | · | Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the assets or liability; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                                                                                                                               |   | December 31,  2009 |       |   | December 31, 2010 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|------------|--------|------------------------|--------|
|                                                                                                                                                               |   | (In thousands)               |       |
| Net permit costs for:                                                                                                                                              |   |                         |       |   |                   |   |
|   Pending renewals of prior permits                                                                                                                      |   | $                            | .5         |   |                   | $      | .4 |   |
|                                                                                                                                                               |   |                         |       |   |                   |   |   |   |
|   Issued permits which are being amortized at    December 31, 2010:                                                                  |   |                         |       |   |                   |   |   |   |
|      Byproduct License – (expires in 2018)                                                                                          |   |                         | 8.0        |   |                   |   | 7.4 |   |
|      Other – (expires 2013 – 2024)                                                                                            |   |                         | 2.5        |   |                   |   | 2.1 |   |
|        Total pending renewals and issued permits         which are being amortized |   |                         |  11.0 |   |                   |   |  9.9 |   |
|                                                                                                                                                               |   |                         |       |   |                   |   |   |   |
|   Issued permits not yet subject to amortization:                                                                                                        |   |                         |       |   |                   |   |   |   |
|      LLRW License – (expires in 2024)                                                                                               |   |                         | 42.0       |   |                   |   | 48.4 |   |
|      Other – (expires 2018)                                                                                                         |   |                         | .5         |   |                   |   | .5 |   |
|        Total issued permits not yet subject to         amortization                |   |                         | 42.5       |   |                   |   | 48.9 |   |
|                                                                                                                                                               |   |                         |       |   |                   |   |   |   |
|      Total                                                                                                                                |   | $                            | 53.5       |   |                   | $      | 58.8 |   |

| Asset                      |   | Useful lives        |
|----------------------------|--------|---------------------|
|                       |   |                |
| Buildings and improvements |   | 10 to 40 years      |
| Machinery and equipment    |   |  3 to 20 years |
| Mine development costs     |   | Units-of-production |

----

----

|   Business segment  |   |        Entity       |   | % controlled atDecember 31, 2010 |
|------------------------------------|--------|--------------------------------------------------------------------------------------|--------|----------------------------------|
|                               |   |                                                                                 |   |                             |
| Chemicals                          |   | Kronos                                                                               |   |  80%                        |
| Component products                 |   | CompX                                                                                |   |  87%                        |
| Waste management                   |   | WCS                                                                                  |   |  100%                       |

|   | · | Chemicals – Our chemicals segment is operated through our majority control of Kronos.  Kronos is a leading global producer and marketer of titanium dioxide pigments (“TiO2”), a base industrial product used in a wide range of customer applications and end-use markets, including coatings, plastics, paper, food, cosmetics, printing inks, textile fibers, rubber, pharmaceuticals, glass, ceramics and other industrial and consumer markets. Kronos also owns a one-half interest in a TiO2 production facility located in Louisiana.  See Note 7. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Component Products – We operate in the component products industry through our majority control of CompX.  CompX is a leading global manufacturer of security products, precision ball bearing slides and ergonomic computer support systems used in the office furniture, transportation, tool storage and a variety of other industries.  CompX also manufactures stainless steel exhaust systems, gauges and throttle controls for the performance boat industry. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Waste Management – WCS is our subsidiary which operates a West Texas facility for the processing, treatment, storage and disposal of hazardous, toxic and certain types of low-level radioactive waste.  WCS obtained a byproduct disposal license in 2008 and began disposal operations at this facility in October 2009.  In January 2009 WCS received a low-level radioactive waste disposal license, which was signed in September 2009.  Construction of the low-level radioactive waste facility began in January 2011, and the facility is expected to be operational in late 2011. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                      |   | Years ended December 31, |    |
|-----------------------------------------------------------|--------|--------------------------|---------|
|                                                      |   | 2008                     |    |   | 2009 |   |   | 2010 |   |
|                                                      |   | (In millions)            |    |
|                                                      |   |                     |    |   |   |   |   |   |   |
| Net sales:                                                |   |                     |    |   |   |   |   |   |   |
|   Chemicals                                     |   | $                        | 1,316.9 |   |   | $ | 1,142.0 |   |   | $ | 1,449.7 |   |
|   Component products                            |   |                     | 165.5   |   |   |   | 116.1 |   |   |   | 135.3 |   |
|   Waste management                              |   |                     | 2.9     |   |   |   | 14.0 |   |   |   | 7.7 |   |
|                                                      |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total net sales                   |   | $                        | 1,485.3 |   |   | $ | 1,272.1 |   |   | $ | 1,592.7 |   |
|                                                      |   |                     |    |   |   |   |   |   |   |   |   |   |
| Cost of sales:                                            |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Chemicals                                     |   | $                        | 1,098.7 |   |   | $ | 1,014.0 |   |   | $ | 1,106.7 |   |
|   Component products                            |   |                     | 125.7   |   |   |   | 92.3 |   |   |   | 99.3 |   |
|   Waste management                              |   |                     | 14.7    |   |   |   | 29.4 |   |   |   | 23.9 |   |
|                                                      |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total cost of sales               |   | $                        | 1,239.1 |   |   | $ | 1,135.7 |   |   | $ | 1,229.9 |   |
|                                                      |   |                     |    |   |   |   |   |   |   |   |   |   |
| Gross margin:                                             |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Chemicals                                     |   | $                        | 218.2   |   |   | $ | 128.0 |   |   | $ | 343.0 |   |
|   Component products                            |   |                     | 39.8    |   |   |   | 23.8 |   |   |   | 36.0 |   |
|   Waste management                              |   |                     | (11.8   | ) |   |   | (15.4 | ) |   |   | (16.2 | ) |
|                                                      |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total gross margin                |   | $                        | 246.2   |   |   | $ | 136.4 |   |   | $ | 362.8 |   |
|                                                      |   |                     |    |   |   |   |   |   |   |   |   |   |
| Operating income (loss):                                  |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Chemicals                                     |   | $                        | 52.0    |   |   | $ | (10.6 | ) |   | $ | 183.2 |   |
|   Component products                            |   |                     | 5.5     |   |   |   | (4.0 | ) |   |   | 9.4 |   |
|   Waste management                              |   |                     | (21.5   | ) |   |   | (27.0 | ) |   |   | (30.8 | ) |
|                                                      |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total operating income (loss)     |   |                     | 36.0    |   |   |   | (41.6 | ) |   |   | 161.8 |   |
|                                                      |   |                     |    |   |   |   |   |   |   |   |   |   |
| Equity in earnings of joint venture             |   |                     | (1.0    | ) |   |   | (1.1 | ) |   |   | (.4 | ) |
| General corporate items:                                  |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Securities earnings                           |   |                     | 30.7    |   |   |   | 26.6 |   |   |   | 26.3 |   |
|   Insurance recoveries                          |   |                     | 9.6     |   |   |   | 4.6 |   |   |   | 18.8 |   |
|   Litigation settlement gains                   |   |                     | 47.9    |   |   |   | 23.1 |   |   |   | 6.3 |   |
|   Litigation settlement expense                 |   |                     | -       |   |   |   | - |   |   |   | (32.2 | ) |
|   Gain on sale of business                      |   |                     | -       |   |   |   | 6.3 |   |   |   | - |   |
|   General expenses, net                         |   |                     | (32.9   | ) |   |   | (40.1 | ) |   |   | (29.9 | ) |
| Interest expense                                          |   |                     | (68.7   | ) |   |   | (66.7 | ) |   |   | (68.4 | ) |
|                                                      |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Income (loss) before income taxes |   | $                        | 21.6    |   |   | $ | (88.9 | ) |   | $ | 82.3 |   |

----

|                           |   |  Years ended December 31, |   |
|--------------------------------|--------|--------------------------------|--------|
|                           |   | 2008                           |   |   | 2009 |   |   | 2010 |   |
|                           |   | (In millions)                  |   |
|                           |   |                           |   |   |   |   |   |   |   |
| Depreciation and amortization: |   |                           |   |   |   |   |   |   |   |
|   Chemicals          |   | $                              | 53.9   |   |   | $ | 49.5 |   |   | $ | 47.4 |   |
|   Component products |   |                           | 9.2    |   |   |   | 8.2 |   |   |   | 7.7 |   |
|   Waste management   |   |                           | 2.7    |   |   |   | 9.6 |   |   |   | 7.0 |   |
|   Corporate          |   |                           | .3     |   |   |   | .1 |   |   |   | - |   |
|                           |   |                           |   |   |   |   |   |   |   |   |   |   |
|     Total  |   | $                              | 66.1   |   |   | $ | 67.4 |   |   | $ | 62.1 |   |
|                           |   |                           |   |   |   |   |   |   |   |   |   |   |
| Capital expenditures:          |   |                           |   |   |   |   |   |   |   |   |   |   |
|   Chemicals          |   | $                              | 68.2   |   |   | $ | 23.6 |   |   | $ | 37.7 |   |
|   Component products |   |                           | 6.8    |   |   |   | 2.3 |   |   |   | 2.1 |   |
|   Waste management   |   |                           | 9.4    |   |   |   | 31.6 |   |   |   | 4.9 |   |
|   Corporate          |   |                           | .5     |   |   |   | - |   |   |   | - |   |
|                           |   |                           |   |   |   |   |   |   |   |   |   |   |
|     Total  |   | $                              | 84.9   |   |   | $ | 57.5 |   |   | $ | 44.7 |   |
|                           |   |                           |   |   |   |   |   |   |   |   |   |   |

|                                                                          |   | December 31,  |    |
|-------------------------------------------------------------------------------|--------|---------------|---------|
|                                                                          |   | 2008          |    |   | 2009 |   |   | 2010 |   |
|                                                                          |   | (In millions) |    |
| Total assets:                                                                 |   |          |    |   |   |   |   |   |   |
|   Operating segments:                                               |   |          |    |   |   |   |   |   |   |
|     Chemicals                                             |   | $             | 1,760.2 |   |   | $ | 1,726.4 |   |   | $ | 2,101.4 |   |
|     Component products                                    |   |          | 163.9   |   |   |   | 149.2 |   |   |   | 141.5 |   |
|     Waste management                                      |   |          | 85.8    |   |   |   | 129.7 |   |   |   | 166.4 |   |
|   Joint venture accounted for by the   equity method |   |          | 18.4    |   |   |   | 17.4 |   |   |   | 17.0 |   |
|   Corporate and eliminations                                        |   |          | 361.1   |   |   |   | 387.6 |   |   |   | 288.0 |   |
|                                                                          |   |          |    |   |   |   |   |   |   |   |   |   |
|     Total                                                 |   | $             | 2,389.4 |   |   | $ | 2,410.3 |   |   | $ | 2,714.3 |   |

----

|                              |   | Years ended December 31, |    |
|-----------------------------------|--------|--------------------------|---------|
|                              |   | 2008                     |    |   | 2009 |   |   | 2010 |   |
|                              |   | (In millions)            |    |
|                              |   |                     |    |   |   |   |   |   |   |
| Net sales - point of origin:      |   |                     |    |   |   |   |   |   |   |
|   United States         |   | $                        | 617.2   |   |   | $ | 521.4 |   |   | $ | 668.4 |   |
|   Germany               |   |                     | 694.8   |   |   |   | 616.5 |   |   |   | 714.2 |   |
|   Canada                |   |                     | 243.8   |   |   |   | 206.3 |   |   |   | 281.5 |   |
|   Norway                |   |                     | 194.2   |   |   |   | 139.5 |   |   |   | 188.3 |   |
|   Belgium               |   |                     | 207.7   |   |   |   | 164.4 |   |   |   | 209.1 |   |
|   Taiwan                |   |                     | 8.3     |   |   |   | 5.8 |   |   |   | 8.8 |   |
|   Eliminations          |   |                     | (480.7  | ) |   |   | (381.8 | ) |   |   | (477.6 | ) |
|                              |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total     |   | $                        | 1,485.3 |   |   | $ | 1,272.1 |   |   | $ | 1,592.7 |   |
|                              |   |                     |    |   |   |   |   |   |   |   |   |   |
| Net sales - point of destination: |   |                     |    |   |   |   |   |   |   |   |   |   |
|   North America         |   | $                        | 530.2   |   |   | $ | 444.3 |   |   | $ | 550.2 |   |
|   Europe                |   |                     | 814.6   |   |   |   | 671.0 |   |   |   | 822.2 |   |
|   Asia and other        |   |                     | 140.5   |   |   |   | 156.8 |   |   |   | 220.3 |   |
|                              |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total     |   | $                        | 1,485.3 |   |   | $ | 1,272.1 |   |   | $ | 1,592.7 |   |
|                              |   |                     |    |   |   |   |   |   |   |   |   |   |

|                          |   | December 31,  |   |
|-------------------------------|--------|---------------|--------|
|                          |   | 2008          |   |   | 2009 |   |   | 2010 |   |
|                          |   | (In millions) |   |
|                          |   |          |   |   |   |   |   |   |   |
| Net property and equipment:   |   |          |   |   |   |   |   |   |   |
|   United States     |   | $             | 97.0   |   |   | $ | 122.3 |   |   | $ | 120.1 |   |
|   Germany           |   |          | 310.7  |   |   |   | 299.7 |   |   |   | 267.8 |   |
|   Canada            |   |          | 69.7   |   |   |   | 77.9 |   |   |   | 80.4 |   |
|   Norway            |   |          | 88.5   |   |   |   | 107.0 |   |   |   | 100.5 |   |
|   Belgium           |   |          | 68.0   |   |   |   | 66.4 |   |   |   | 69.4 |   |
|   Taiwan            |   |          | 7.1    |   |   |   | 7.3 |   |   |   | 7.9 |   |
|                          |   |          |   |   |   |   |   |   |   |   |   |   |
|     Total |   | $             | 641.0  |   |   | $ | 680.6 |   |   | $ | 646.1 |   |
|                          |   |          |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                |   | December 31,  |     |
|-------------------------------------------------------------------------------------|--------|---------------|----------|
|                                                                                |   | 2009          |     |   | 2010 |   |
|                                                                                |   | (In millions) |     |
|                                                                                |   |          |     |   |   |   |
| Current assets:                                                                     |   |          |     |   |   |   |
|   Restricted debt securities                                              |   | $             | 5.2      |   |   | $ | - |   |
|   U.S. treasuries and other debt securities                               |   |          | .4       |   |   |   | .6 |   |
|   Certificates of deposits not classified as cash   Equivalents |   |          |  .5 |   |   |   |  1.1 |   |
|                                                                                |   |          |     |   |   |   |   |   |
|     Total                                                       |   | $             | 6.1      |   |   | $ | 1.7 |   |
|                                                                                |   |          |     |   |   |   |   |   |
| Noncurrent assets:                                                                  |   |          |     |   |   |   |   |   |
|   The Amalgamated Sugar Company LLC                                       |   | $             | 250.0    |   |   | $ | 250.0 |   |
|   Titanium Metals Corporation (“TIMET”) common stock          |   |          | 28.5     |   |   |   | 86.1 |   |
|   Other common stocks                                                     |   |          | 1.0      |   |   |   | 1.1 |   |
|   U.S. treasuries and other debt securities                               |   |          | -        |   |   |   | 3.2 |   |
|                                                                                |   |          |     |   |   |   |   |   |
|     Total                                                       |   | $             | 279.5    |   |   | $ | 340.4 |   |

----

|                                                                                     |   | Fair Value Measurements |             |
|------------------------------------------------------------------------------------------|--------|-------------------------|------------------|
|                                                                                     |   | Total                   |             |   | Quoted Prices in Active Markets (Level 1) |   |   | Significant Other Observable Inputs (Level 2) |   |   | Significant Unobservable Inputs (Level 3) |   |
|                                                                                     |   | (In millions)           |             |
|                                                                                     |   |                    |             |   |   |   |   |   |   |   |   |   |
| December 31, 2009:                                                                       |   |                    |             |   |   |   |   |   |   |   |   |   |
| Current assets:                                                                          |   |                    |             |   |   |   |   |   |   |   |   |   |
|   Restricted debt securities                                                   |   | $                       | 5.2              |   |   | $ | - |   |   | $ | 5.2 |   |   | $ | - |   |
|   U.S. treasuries and other   debt securities                   |   |                    |  .4         |   |   |   |  - |   |   |   |  .4 |   |   |   |  - |   |
|   Certificates of deposits not   classified as cash equivalents |   |                    |     .5 |   |   | $ | - |   |   |   |  .5 |   |   |   |  - |   |
|                                                                                     |   |                    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                                                            |   | $                       | 6.1              |   |   | $ | - |   |   | $ | 6.1 |   |   | $ | - |   |
|                                                                                     |   |                    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noncurrent assets:                                                                       |   |                    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   The Amalgamated Sugar Company LLC                                            |   | $                       | 250.0            |   |   | $ | - |   |   | $ | - |   |   | $ | 250.0 |   |
|   TIMET common stock                                                           |   |                    | 28.5             |   |   |   | 28.5 |   |   |   | - |   |   |   | - |   |
|   Other debt securities and common stocks                                      |   |                    |  1.0        |   |   |   |  .1 |   |   |   |  .9 |   |   |   |  - |   |
|                                                                                     |   |                    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                                                            |   | $                       | 279.5            |   |   | $ | 28.6 |   |   | $ | .9 |   |   | $ | 250.0 |   |
|                                                                                     |   |                    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2010:                                                                       |   |                    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current assets:                                                                          |   |                    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   U.S. treasuries and other debt   Securities                   |   | $                       | .6               |   |   | $ | - |   |   | $ | .6 |   |   | $ | - |   |
|   Certificates of deposit not   classified as cash equivalents  |   |                    |  1.1        |   |   |   |  - |   |   |   |  1.1 |   |   |   |  - |   |
|                                                                                     |   |                    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                                                            |   | $                       | 1.7              |   |   | $ | - |   |   | $ | 1.7 |   |   | $ | - |   |
|                                                                                     |   |                    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noncurrent assets:                                                                       |   |                    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   The Amalgamated Sugar Company LLC                                            |   | $                       | 250.0            |   |   | $ | - |   |   | $ | - |   |   | $ | 250.0 |   |
|   TIMET common stock                                                           |   |                    | 86.1             |   |   |   | 86.1 |   |   |   | - |   |   |   | - |   |
|   Other common stocks                                                          |   |                    | 1.1              |   |   |   | 1.1 |   |   |   | - |   |   |   | - |   |
|   U.S. treasuries and other debt   securities                   |   |                    |  3.2        |   |   |   |  - |   |   |   |  3.2 |   |   |   |  - |   |
|                                                                                     |   |                    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                                                            |   | $                       | 340.4            |   |   | $ | 87.2 |   |   | $ | 3.2 |   |   | $ | 250.0 |   |

----

----

|                                      |   | December 31,  |   |
|-------------------------------------------|--------|---------------|--------|
|                                      |   | 2009          |   |   | 2010 |   |
|                                      |   | (In millions) |   |
|                                      |   |          |   |   |   |   |
| Accounts receivable                       |   | $             | 204.0  |   |   | $ | 246.1 |   |
| Real-estate related note receivable       |   |          | -      |   |   |   | 15.0 |   |
| Notes receivable                          |   |          | 3.4    |   |   |   | 2.9 |   |
| Accrued interest and dividends receivable |   |          | -      |   |   |   | .1 |   |
| Allowance for doubtful accounts           |   |          | (3.3   | ) |   |   | (2.8 | ) |
|                                      |   |          |   |   |   |   |   |   |
|     Total             |   | $             | 204.1  |   |   | $ | 261.3 |   |

----

|                                              |   | December 31,  |   |
|---------------------------------------------------|--------|--------------------|--------|
|                                              |   | 2009               |   |   | 2010 |   |
|                                              |   | (In millions)      |   |
|                                              |   |               |   |   |   |   |
| Raw materials:                                    |   |               |   |   |   |   |
|   Chemicals                             |   | $                  | 56.4   |   |   | $ | 52.1 |   |
|   Component products                    |   |               | 4.8    |   |   |   | 6.3 |   |
|                                              |   |               |   |   |   |   |   |   |
|     Total raw materials       |   |               | 61.2   |   |   |   | 58.4 |   |
|                                              |   |               |   |   |   |   |   |   |
| Work in process:                                  |   |               |   |   |   |   |   |   |
|   Chemicals                             |   |               | 18.2   |   |   |   | 13.6 |   |
|   Component products                    |   |               | 6.2    |   |   |   | 6.7 |   |
|                                              |   |               |   |   |   |   |   |   |
|     Total in-process products |   |               | 24.4   |   |   |   | 20.3 |   |
|                                              |   |               |   |   |   |   |   |   |
| Finished products:                                |   |               |   |   |   |   |   |   |
|   Chemicals                             |   |               | 161.8  |   |   |   | 155.3 |   |
|   Component products                    |   |               | 5.3    |   |   |   | 5.4 |   |
|                                              |   |               |   |   |   |   |   |   |
|     Total finished products   |   |               | 167.1  |   |   |   | 160.7 |   |
|                                              |   |               |   |   |   |   |   |   |
| Supplies (primarily chemicals)                    |   |               | 59.3   |   |   |   | 55.5 |   |
|                                              |   |               |   |   |   |   |   |   |
|     Total                     |   | $                  | 312.0  |   |   | $ | 294.9 |   |

|                                                                            |   | December 31,  |   |
|---------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                            |   | 2009               |   |   | 2010 |   |
|                                                                            |   | (In millions)      |   |
|                                                                            |   |               |   |
| Investment in affiliates:                                                       |   |               |   |   |   |   |
|   Ti02 manufacturing joint venture                     |   | $                  | 98.7   |   |   | $ | 96.2 |   |
|   Basic Management and Landwell                        |   |               | 17.4   |   |   |   | 17.0 |   |
|                                                                            |   |               |   |   |   |   |   |   |
|       Total                                       |   | $                  | 116.1  |   |   | $ | 113.2 |   |
|                                                                            |   |               |   |   |   |   |   |   |
| Other assets:                                                              |   |               |   |   |   |   |   |   |
|   Waste disposal site operating permits, net |   | $                  | 53.5   |   |   | $ | 58.8 |   |
|   Real-estate related note receivable                            |   |               | 15.0   |   |   |   | - |   |
|   Capital lease deposit                                               |   |               | -      |   |   |   | 6.2 |   |
|   Deferred financing costs                                  |   |               | 6.0    |   |   |   | 4.5 |   |
|   IBNR receivables                                               |   |               | 7.5    |   |   |   | 6.6 |   |
|   Assets held for sale                                                |   |               | 3.3    |   |   |   | 3.0 |   |
|   Other                                                               |   |               | 16.5   |   |   |   | 23.2 |   |
|                                                                            |   |               |   |   |   |   |   |   |
|     Total                                                   |   | $                  | 101.8  |   |   | $ | 102.3 |   |

----

|                       |   | Years ended December 31, |   |
|----------------------------|--------|--------------------------|--------|
|                       |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                       |   | (In millions)            |   |
|                       |   |                     |   |   |   |   |   |   |   |
| Distributions from LPC     |   | $                        | 20.6   |   |   | $ | 22.7 |   |   | $ | 26.1 |   |
| Contributions to LPC       |   |                     | (10.6  | ) |   |   | (15.0 | ) |   |   | (23.7 | ) |
|                       |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net distributions from LPC |   | $                        | 10.0   |   |   | $ | 7.7 |   |   | $ | 2.4 |   |

|                                                                                                 |   | December 31,  |   |
|------------------------------------------------------------------------------------------------------|--------|---------------|--------|
|                                                                                                 |   | 2009          |   |   | 2010 |   |
|                                                                                                 |   | (In millions) |   |
|                                                                                                 |   |          |   |   |   |   |
|                                                                                                 |   |          |   |   |   |   |
| Assets:                                                                                              |   |          |   |   |   |   |
|   Current assets                                                                      |   | $             | 72.7   |   |   | $ | 68.6 |   |
|   Property and equipment, net                                                    |   |          | 166.3  |   |   |   | 154.4 |   |
|                                                                                                 |   |          |   |   |   |   |   |   |
|       Total assets                                                |   | $             | 239.0  |   |   | $ | 223.0 |   |
|                                                                                                 |   |          |   |   |   |   |   |   |
|                                                                                                 |   |          |   |   |   |   |   |   |
| Liabilities and Partner’s Equity:                                                              |   |          |   |   |   |   |   |   |
|   Liabilities, primarily current                                                 |   | $             | 38.8   |   |   | $ | 27.9 |   |
|   Partners’ equity                                                         |   |          | 200.2  |   |   |   | 195.1 |   |
|                                                                                                 |   |          |   |   |   |   |   |   |
|       Total liabilities and partners’ equity |   | $             | 239.0  |   |   | $ | 223.0 |   |

|                |   | Years ended December 31, |   |
|---------------------|--------|--------------------------|--------|
|                |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                |   | (In millions)            |   |
|                |   |                     |   |   |   |   |   |   |   |
| Net sales:          |   |                     |   |   |   |   |   |   |   |
|   Kronos  |   | $                        | 140.3  |   |   | $ | 121.2 |   |   | $ | 133.7 |   |
|   Tioxide |   |                     | 140.7  |   |   |   | 121.8 |   |   |   | 134.5 |   |
|                |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cost of sales       |   |                     | 280.5  |   |   |   | 243.0 |   |   |   | 267.7 |   |
|                |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net income          |   |                     | -      |   |   |   | - |   |   |   | - |   |

----

|                                                                                      |   | September 30, |   |
|-------------------------------------------------------------------------------------------|--------|---------------|--------|
|                                                                                      |   | 2009          |   |   | 2010 |   |
|                                                                                      |   | (In millions) |   |
|                                                                                      |   |          |   |   |   |   |
|                                                                                      |   |          |   |   |   |   |
|   Current assets                                                           |   | $             | 26.3   |   |   | $ | 21.4 |   |
|   Prepaid costs and other                                        |   |          | 17.1   |   |   |   | 20.2 |   |
|   Property and equipment, net                                         |   |          | 8.3    |   |   |   | 7.3 |   |
|   Investment in undeveloped land and water rights |   |          | 32.1   |   |   |   | 31.4 |   |
|   Land and development costs                                     |   |          | 15.5   |   |   |   | 14.9 |   |
|                                                                                      |   |          |   |   |   |   |   |   |
|       Total assets                                     |   | $             | 99.3   |   |   | $ | 95.2 |   |
|                                                                                      |   |          |   |   |   |   |   |   |
|   Current liabilities                                                      |   | $             | 5.7    |   |   | $ | 4.0 |   |
|   Long-term debt                                                           |   |          | 18.3   |   |   |   | 17.3 |   |
|   Deferred income taxes                                               |   |          | 5.6    |   |   |   | 5.9 |   |
|   Other noncurrent liabilities                                        |   |          | 3.8    |   |   |   | 4.0 |   |
|   Equity                                                                        |   |          | 65.9   |   |   |   | 64.0 |   |
|                                                                                      |   |          |   |   |   |   |   |   |
|       Total liabilities and equity           |   | $             | 99.3   |   |   | $ | 95.2 |   |

|                     |   | Twelve months ended September 30, |   |
|--------------------------|--------|-----------------------------------|--------|
|                     |   | 2008                              |   |   | 2009 |   |   | 2010 |   |
|                     |   | (In millions)                     |   |
|                     |   |                              |   |   |   |   |   |   |   |
| Total revenues           |   | $                                 | 9.0    |   |   | $ | 8.7 |   |   | $ | 6.9 |   |
| Loss before income taxes |   |                              | (4.7   | ) |   |   | (2.8 | ) |   |   | (4.6 | ) |
| Net loss                 |   |                              | (3.9   | ) |   |   | (2.5 | ) |   |   | (3.6 | ) |

----

|                                |   | Operating segment |   |   |              |   |
|-------------------------------------|--------|-------------------|--------|--------|-------------------|--------|
|                                |   | Chemicals         |   |   | ComponentProducts |   |   | Total |   |
|                                |   | (In millions)     |   |
|                                |   |              |   |   |              |   |   |   |   |
| Gross goodwill at December 31, 2007 |   | $                 | 358.5  |   |              | $      | 48.3 |   |   | $ | 406.8 |   |
| Goodwill impairment                 |   |              | -      |   |              |   | (10.1 | ) |   |   | (10.1 | ) |
| Changes in foreign exchange rates   |   |              | -      |   |              |   | (.1 | ) |   |   | (.1 | ) |
| Goodwill acquired                   |   |              | .5     |   |              |   | (.3 | ) |   |   | .2 |   |
|                                |   |              |   |   |              |   |   |   |   |   |   |   |
| Balance at December 31, 2008        |   |              | 359.0  |   |              |   | 37.8 |   |   |   | 396.8 |   |
| Changes in foreign exchange rates   |   |              | -      |   |              |   | .1 |   |   |   | .1 |   |
|                                |   |              |   |   |              |   |   |   |   |   |   |   |
| Balance at December 31, 2009        |   |              | 359.0  |   |              |   | 37.9 |   |   |   | 396.9 |   |
| Changes in foreign exchange rates   |   |              | -      |   |              |   | .5 |   |   |   | .5 |   |
|                                |   |              |   |   |              |   |   |   |   |   |   |   |
| Balance at December 31, 2010        |   | $                 | 359.0  |   |              | $      | 38.4 |   |   | $ | 397.4 |   |
|                                |   |              |   |   |              |   |   |   |   |   |   |   |

----

| 2011 |   | $.4 million           |
|------|--------|-----------------------|
| 2012 |   |  .3 million      |
| 2013 |   |  .1 million      |
| 2014 |   |   - million      |
| 2015 |   |   - million |

|                                                                 |   | December 31,  |   |
|----------------------------------------------------------------------|--------|---------------|--------|
|                                                                 |   | 2009          |   |   | 2010 |   |
|                                                                 |   | (In millions) |   |
|                                                                 |   |          |   |   |   |   |
| Valhi:                                                               |   |          |   |   |   |   |
|   Snake River Sugar Company                                |   | $             | 250.0  |   |   | $ | 250.0 |   |
|   Contran credit facility                                  |   |          | 54.9   |   |   |   | - |   |
|   Promissory notes payable to Contran                      |   |          | 30.0   |   |   |   | - |   |
|       Total Valhi debt                 |   |          | 334.9  |   |   |   | 250.0 |   |
|                                                                 |   |          |   |   |   |   |   |   |
| Subsidiary debt:                                                     |   |          |   |   |   |   |   |   |
|   Kronos International:                               |   |          |   |   |   |   |   |   |
|     6.5% Senior Secured Notes     |   |          | 574.6  |   |   |   | 532.8 |   |
|     European bank credit facility |   |          | 13.0   |   |   |   | - |   |
|   Kronos U.S. bank credit facility     |   |          | 16.7   |   |   |   | - |   |
|   CompX promissory note payable to TIMET                   |   |          | 42.2   |   |   |   | 42.2 |   |
|   CompX bank credit facility                |   |          | -      |   |   |   | 3.0 |   |
|   NL promissory note (See Note 17)                         |   |          | -      |   |   |   | 18.0 |   |
|   WCS financing capital lease                              |   |          | -      |   |   |   | 72.0 |   |
|   WCS 6% promissory notes                                  |   |          | -      |   |   |   | 15.4 |   |
|   Other                                                    |   |          | 9.5    |   |   |   | 6.9 |   |
|     Total subsidiary debt              |   |          | 656.0  |   |   |   | 690.3 |   |
|                                                                 |   |          |   |   |   |   |   |   |
|     Total debt                              |   |          | 990.9  |   |   |   | 940.3 |   |
|                                                                 |   |          |   |   |   |   |   |   |
|     Less current maturities            |   |          | 2.5    |   |   |   | 17.4 |   |
|                                                                 |   |          |   |   |   |   |   |   |
|     Total long-term debt               |   | $             | 988.4  |   |   | $ | 922.9 |   |

----

----

----

----

| Years ending December 31,                                                                       |   | Amount        |       |
|-------------------------------------------------------------------------------------------------|--------|---------------|------------|
|                                                                                            |   | (In millions) |       |
|                                                                                            |   |          |       |
| Gross amounts due each year:                                                                    |   |          |       |
|   2011                                                                                |   | $             | 22.7       |   |
|   2012                                                                                |   |          | 26.6       |   |
|   2013                                                                                |   |          | 546.3      |   |
|   2014                                                                                |   |          | 48.4       |   |
|   2015                                                                                |   |          | 6.5        |   |
|   2016 and thereafter                                                                 |   |          | 371.1      |   |
|                                                                                            |   |          |       |   |
|       Subtotal                                                    |   |          | 1,021.6    |   |
|                                                                                            |   |          |       |   |
| Less amounts representing interest on capital lease and discount on other debt obligations |   |          |  81.3 |   |
|                                                                                            |   |          |       |   |
| Total long-term debt                                                                            |   | $             | 940.3      |   |

----

|                                            |   | December 31,  |   |
|-------------------------------------------------|--------|---------------|--------|
|                                            |   | 2009          |   |   | 2010 |   |
|                                            |   | (In millions) |   |
| Current:                                        |   |          |   |   |   |   |
|   Employee benefits                   |   | $             | 34.8   |   |   | $ | 44.8 |   |
|   Accrued sales discounts and rebates |   |          | 21.4   |   |   |   | 11.3 |   |
|   Environmental costs                 |   |          | 11.0   |   |   |   | 9.7 |   |
|   Interest                            |   |          | 8.0    |   |   |   | 7.4 |   |
|   Deferred income                     |   |          | 7.5    |   |   |   | 3.3 |   |
|   Reserve for uncertain tax positions |   |          | .1     |   |   |   | - |   |
|   Other                               |   |          | 54.7   |   |   |   | 39.3 |   |
|                                            |   |          |   |   |   |   |   |   |
|     Total                   |   | $             | 137.5  |   |   | $ | 115.8 |   |
|                                            |   |          |   |   |   |   |   |   |
| Noncurrent:                                     |   |          |   |   |   |   |   |   |
|   Reserve for uncertain tax positions |   | $             | 35.2   |   |   | $ | 41.3 |   |
|   Insurance claims and expenses       |   |          | 11.7   |   |   |   | 10.3 |   |
|   Employee benefits                   |   |          | 9.2    |   |   |   | 9.8 |   |
|   Deferred income                     |   |          | 8.5    |   |   |   | 1.1 |   |
|   Other                               |   |          | 4.8    |   |   |   | 7.0 |   |
|                                            |   |          |   |   |   |   |   |   |
|     Total                   |   | $             | 69.4   |   |   | $ | 69.5 |   |

----

| 2011         |   | $ 26.7 million      |
|--------------|--------|---------------------|
| 2012         |   |   29.4 million |
| 2013         |   |   28.3 million |
| 2014         |   |   28.7 million |
| 2015         |   |   28.3 million |
| Next 5 years |   |  151.8 million |

|                                                                                   |   | Years ended December 31, |   |
|----------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                   |   | 2009                     |   |   | 2010 |   |
|                                                                                   |   | (In millions)            |   |
| Change in projected benefit obligations ("PBO"):                                       |   |                     |   |   |   |   |
|   Balance at beginning of the year                       |   | $                        | 87.6   |   |   | $ | 57.2 |   |
|   Interest cost                                                         |   |                     | 5.2    |   |   |   | 3.2 |   |
|   Actuarial loss                                                        |   |                     | 3.2    |   |   |   | 3.1 |   |
|   Change in currency exchange rates                      |   |                     | .2     |   |   |   | - |   |
|   Transfer of Medite Pension Plan to Contran                                 |   |                     | (33.1  | ) |   |   | - |   |
|   Benefits paid                                                         |   |                     | (5.9   | ) |   |   | (3.7 | ) |
|                                                                                   |   |                     |   |   |   |   |   |   |
|       Balance at end of the year     |   | $                        | 57.2   |   |   | $ | 59.8 |   |
|                                                                                   |   |                     |   |   |   |   |   |   |
| Change in plan assets:                                                  |   |                     |   |   |   |   |   |   |
|   Fair value at beginning of the year          |   | $                        | 65.3   |   |   | $ | 43.5 |   |
|   Actual return on plan assets                           |   |                     | 10.4   |   |   |   | 10.4 |   |
|   Employer contributions                                                |   |                     | .2     |   |   |   | .2 |   |
|   Transfer of Medite pension plan to Contran                                 |   |                     | (26.5  | ) |   |   | - |   |
|   Benefits paid                                                         |   |                     | (5.9   | ) |   |   | (3.7 | ) |
|                                                                                   |   |                     |   |   |   |   |   |   |
|       Fair value at end of year |   | $                        | 43.5   |   |   | $ | 50.4 |   |
|                                                                                   |   |                     |   |   |   |   |   |   |
| Funded status                                                                          |   | $                        | (13.7  | ) |   | $ | (9.4 | ) |
|                                                                                   |   |                     |   |   |   |   |   |   |
| Amounts recognized in the Consolidated Balance Sheets:        |   |                     |   |   |   |   |   |   |
|   Accrued pension costs:                                           |   |                     |   |   |   |   |   |   |
|     Current                                                        |   | $                        | (.3    | ) |   | $ | (.3 | ) |
|     Noncurrent                                                     |   |                     | (13.4  | ) |   |   | (9.1 | ) |
|                                                                                   |   |                     |   |   |   |   |   |   |
|       Total                                              |   |                     | (13.7  | ) |   |   | (9.4 | ) |
|                                                                                   |   |                     |   |   |   |   |   |   |
|   Accumulated other comprehensive loss:                       |   |                     |   |   |   |   |   |   |
|     Actuarial loss                                            |   |                     | 29.7   |   |   |   | 25.3 |   |
|                                                                                   |   |                     |   |   |   |   |   |   |
|     Total                                                          |   | $                        | 16.0   |   |   | $ | 15.9 |   |
|                                                                                   |   |                     |   |   |   |   |   |   |
| Accumulated benefit obligations (“ABO”)                                    |   | $                        | 57.2   |   |   | $ | 59.8 |   |

----

|                                                           |   | Years ended December 31, |   |
|----------------------------------------------------------------|--------|--------------------------|--------|
|                                                           |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                                                           |   | (In millions)            |   |
|                                                           |   |                     |   |   |   |   |   |   |   |
| Net periodic pension benefit cost for U.S. plans:              |   |                     |   |   |   |   |   |   |   |
|   Interest cost                            |   | $                        | 5.2    |   |   | $ | 5.2 |   |   | $ | 3.2 |   |
|   Expected return on plan assets |   |                     | (13.1  | ) |   |   | (6.3 | ) |   |   | (4.2 | ) |
|   Amortization of unrecognized:                      |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Net actuarial loss (gain)         |   |                     | (.6    | ) |   |   | 2.2 |   |   |   | 1.2 |   |
|                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                                  |   | $                        | (8.5   | ) |   | $ | 1.1 |   |   | $ | .2 |   |
|                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |

|                                              |   | December 31,  |   |
|---------------------------------------------------|--------|---------------|--------|
|                                              |   | 2009          |   |   | 2010 |   |
|                                              |   | (In millions) |   |
| Plans for which the ABO exceeds plan assets: |   |          |   |   |   |   |
|   Projected benefit obligations         |   | $             | 57.2   |   |   | $ | 59.8 |   |
|   Accumulated benefit obligations       |   |          | 57.2   |   |   |   | 59.8 |   |
|   Fair value of plan assets             |   |          | 43.5   |   |   |   | 50.4 |   |
|                                              |   |          |   |   |   |   |   |   |

|                                   |   | December 31, |   |
|----------------------------------------|--------|--------------|--------|
| Rate                                   |   | 2009         |   |   | 2010 |   |
|                                   |   |         |   |   |   |   |
| Discount rate                          |   |         | 5.7    | % |   |   | 5.1 | % |
| Increase in future compensation levels |   |         | -      |   |   |   | - |   |

|                                   |   | Years ended December 31, |   |
|----------------------------------------|--------|--------------------------|--------|
| Rate                                   |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                                   |   |                     |   |   |   |   |   |
| Discount rate                          |   |                     | 6.2    | % |   |   | 6.1 | % |   |   | 5.7 | % |
| Increase in future compensation levels |   |                     | -      |   |   |   | - |   |   |   | - |   |
| Long-term return on plan assets        |   |                     | 10.0   | % |   |   | 10.0 | % |   |   | 10.0 | % |

----

|                                                                                   |   | Years ended December 31, |   |
|----------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                   |   | 2009                     |   |   | 2010 |   |
|                                                                                   |   | (In millions)            |   |
|                                                                                   |   |                     |   |   |   |   |
| Change in PBO:                                                                         |   |                     |   |   |   |   |
|   Balance at beginning of the year                       |   | $                        | 382.3  |   |   | $ | 432.3 |   |
|   Service cost                                                          |   |                     | 8.6    |   |   |   | 10.4 |   |
|   Interest cost                                                         |   |                     | 22.5   |   |   |   | 22.3 |   |
|   Participants’ contributions                                     |   |                     | 1.6    |   |   |   | 1.7 |   |
|   Plan amendments                                                            |   |                     | -      |   |   |   | 3.8 |   |
|   Actuarial loss                                                        |   |                     | 13.2   |   |   |   | 25.3 |   |
|   Change in currency exchange rates                      |   |                     | 28.1   |   |   |   | (18.3 | ) |
|   Benefits paid                                                         |   |                     | (24.0  | ) |   |   | (22.7 | ) |
|                                                                                   |   |                     |   |   |   |   |   |   |
|       Balance at end of the year     |   | $                        | 432.3  |   |   | $ | 454.8 |   |
|                                                                                   |   |                     |   |   |   |   |   |   |
| Change in plan assets:                                                  |   |                     |   |   |   |   |   |   |
|   Fair value  at beginning of the year         |   | $                        | 258.2  |   |   | $ | 314.0 |   |
|   Actual return on plan assets                           |   |                     | 32.4   |   |   |   | 27.3 |   |
|   Employer contributions                                                |   |                     | 23.4   |   |   |   | 25.0 |   |
|   Participants’ contributions                                     |   |                     | 1.6    |   |   |   | 1.7 |   |
|   Change in currency exchange rates                      |   |                     | 22.4   |   |   |   | (10.5 | ) |
|   Benefits paid                                                         |   |                     | (24.0  | ) |   |   | (22.7 | ) |
|                                                                                   |   |                     |   |   |   |   |   |   |
|       Fair value at end of year |   | $                        | 314.0  |   |   | $ | 334.8 |   |
|                                                                                   |   |                     |   |   |   |   |   |   |
| Funded status                                                                          |   | $                        | (118.3 | ) |   | $ | (120.0 | ) |
|                                                                                   |   |                     |   |   |   |   |   |   |
| Amounts recognized in the Consolidated Balance Sheets:        |   |                     |   |   |   |   |   |   |
|   Pension asset                                                         |   | $                        | .3     |   |   | $ | .3 |   |
|   Accrued pension costs:                                           |   |                     |   |   |   |   |   |   |
|     Current                                                        |   |                     | (1.5   | ) |   |   | (1.3 | ) |
|     Noncurrent                                                     |   |                     | (117.1 | ) |   |   | (119.0 | ) |
|                                                                                   |   |                     |   |   |   |   |   |   |
|       Total                                              |   |                     | (118.3 | ) |   |   | (120.0 | ) |
|                                                                                   |   |                     |   |   |   |   |   |   |
|   Accumulated other comprehensive loss:                       |   |                     |   |   |   |   |   |   |
|     Actuarial loss                                            |   |                     | 115.4  |   |   |   | 124.0 |   |
|     Prior service cost                                   |   |                     | 4.8    |   |   |   | 7.7 |   |
|     Net transition obligations                           |   |                     | 2.7    |   |   |   | 2.2 |   |
|                                                                                   |   |                     |   |   |   |   |   |   |
|       Total                                              |   |                     | 122.9  |   |   |   | 133.9 |   |
|                                                                                   |   |                     |   |   |   |   |   |   |
|       Total                                              |   | $                        | 4.6    |   |   | $ | 13.9 |   |
|                                                                                   |   |                     |   |   |   |   |   |   |
|   ABO                                                                             |   | $                        | 455.5  |   |   | $ | 423.5 |   |

----

|                                                           |   | Years ended December 31, |   |
|----------------------------------------------------------------|--------|--------------------------|--------|
|                                                           |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                                                           |   | (In millions)            |   |
|                                                           |   |                     |   |   |   |   |   |   |   |
| Net periodic pension cost for foreign plans:                   |   |                     |   |   |   |   |   |   |   |
|   Service cost                             |   | $                        | 9.6    |   |   | $ | 8.6 |   |   | $ | 10.4 |   |
|   Interest cost                            |   |                     | 18.5   |   |   |   | 22.5 |   |   |   | 22.3 |   |
|   Expected return on plan assets |   |                     | (18.6  | ) |   |   | (15.7 | ) |   |   | (16.8 | ) |
|   Amortization of unrecognized:                      |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Prior service cost           |   |                     | .9     |   |   |   | .8 |   |   |   | .9 |   |
|     Net transition obligations   |   |                     | .5     |   |   |   | .5 |   |   |   | .5 |   |
|     Net actuarial loss (gain)         |   |                     | (.5    | ) |   |   | 5.9 |   |   |   | 5.8 |   |
|                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                                  |   | $                        | 10.4   |   |   | $ | 22.6 |   |   | $ | 23.1 |   |
|                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |

|                                              |   | December 31,  |   |
|---------------------------------------------------|--------|---------------|--------|
|                                              |   | 2009          |   |   | 2010 |   |
|                                              |   | (In millions) |   |
|                                              |   |          |   |   |   |   |
| Plans for which the ABO exceeds plan assets: |   |          |   |   |   |   |
|   Projected benefit obligations         |   | $             | 374.3  |   |   | $ | 395.0 |   |
|   Accumulated benefit obligations       |   |          | 349.1  |   |   |   | 371.0 |   |
|   Fair value of plan assets             |   |          | 257.3  |   |   |   | 276.0 |   |
|                                              |   |          |   |   |   |   |   |   |

|                                   |   | December 31, |   |
|----------------------------------------|--------|--------------|--------|
| Rate                                   |   | 2009         |   |   | 2010 |   |
|                                   |   |         |   |   |   |   |
| Discount rate                          |   |         | 5.5    | % |   |   | 5.1 | % |
| Increase in future compensation levels |   |         | 3.0    | % |   |   | 3.0 | % |

|                                   |   | Years ended December 31, |   |
|----------------------------------------|--------|--------------------------|--------|
| Rate                                   |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                                   |   |                     |   |   |   |   |   |
| Discount rate                          |   |                     | 5.5    | % |   |   | 5.9 | % |   |   | 5.5 | % |
| Increase in future compensation levels |   |                     | 3.0    | % |   |   | 3.2 | % |   |   | 3.0 | % |
| Long-term return on plan assets        |   |                     | 6.0    | % |   |   | 5.9 | % |   |   | 5.5 | % |

----

|                                                                                                      |   | Years ended December 31, |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                      |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                                                                                                      |   | (In millions)            |   |
|                                                                                                      |   |                     |   |   |   |   |   |   |   |
| Changes in plan assets and benefit obligations recognized in other comprehensive income (loss): |   |                     |   |   |   |   |   |   |   |
|   Net actuarial gain (loss) arising during   the year                            |   | $                        | (81.6  | ) |   | $ | 3.0 |   |   | $ | (11.4 | ) |
|   Amortization of unrecognized:                                                                 |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Prior service cost                                                      |   |                     | .9     |   |   |   | .8 |   |   |   | .9 |   |
|     Net transition obligations                                              |   |                     | .5     |   |   |   | .5 |   |   |   | .5 |   |
|     Net actuarial loss (gain)                                                    |   |                     | (1.1   | ) |   |   | 8.1 |   |   |   | 7.0 |   |
|   Plan amendment                                                                                |   |                     | -      |   |   |   | - |   |   |   | (3.8 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |   |   |   |   |
|       Total                                                                 |   | $                        | (81.3  | ) |   | $ | 12.4 |   |   | $ | (6.8 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |   |   |   |   |

----

|                                                                |   | December 31,  |     |
|---------------------------------------------------------------------|--------|---------------|----------|
|                                                                |   | 2009          |     |   | 2010 |   |
|                                                                |   | (In millions) |     |
|                                                                |   |          |     |   |   |   |
| CMRT asset value (portion which includes our U.S. plan assets)      |   | $             | 407.3    |   |   | $ | 714.9 |   |
|                                                                |   |          |     |   |   |   |   |   |
| CMRT fair value input (portion which includes our U.S. plan assets) |   |          |     |   |   |   |   |   |
| Level 1                                                             |   |          | 75       | % |   |   | 83 | % |
| Level 2                                                             |   |          | 4        |   |   |   | 1 |   |
| Level 3                                                             |   |          | 21       |   |   |   | 16 |   |
|                                                                |   |          |     |   |   |   |   |   |
|                                                                |   |          | 100      | % |   |   | 100 | % |
|                                                                |   |          |     |   |   |   |   |   |
| CMRT asset mix (portion which includes our U.S. plan assets)        |   |          |     |   |   |   |   |   |
| Domestic equities, principally publicly traded                      |   |          |  49 | % |   |   |  73 | % |
| International equities, publicly traded                             |   |          | 7        |   |   |   | 2 |   |
| Fixed income securities, publicly traded                            |   |          |  31 |   |   |   |  16 |   |
| Privately managed limited partnerships                              |   |          | 11       |   |   |   | 8 |   |
| Other                                                               |   |          |  2  |   |   |   |  1 |   |
|                                                                |   |          |     |   |   |   |   |   |
|                                                                |   |          | 100      | % |   |   | 100 | % |

----

| ·   | In Germany, the composition of our plan assets is established to satisfy the requirements of the German insurance commissioner.  Our German pension plan assets represent an investment in a large collective investment fund established and maintained by Bayer AG in which several pension plans, including our German pension plan and Bayer’s pension plans, have invested.  These plan assets are a Level 3 input because there is not an active market that approximates the value of our investment in the Bayer investment fund.  We determine the fair value of the Bayer plan assets based on periodic reports we receive from the managers of the Bayer plan which are subject to audit by the German pension regulator. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In Canada, we currently have a plan asset target allocation of 55% to equity securities and 45% to fixed income securities.  We expect the long-term rate of return for such investments to average approximately 125 basis points above the applicable equity or fixed income index.  The Canadian assets are Level 1 input because they are traded in active markets. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In Norway, we currently have a plan asset target allocation of 14% to equity securities, 72% to fixed income securities and the remainder primarily to liquid investments such as money markets.  The expected long-term rate of return for such investments is approximately 9.0%, 5.0% and 4.0%, respectively.  The majority of Norwegian plan assets are Level 1 inputs because they are traded in active markets; however a portion of our Norwegian plan assets are invested in certain individualized fixed income insurance contracts for the benefit of each plan participant as required by the local regulators and are therefore a Level 3 input. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We also have plan assets in Belgium and the United Kingdom.  The Belgian plan assets are invested in certain individualized fixed income insurance contracts for the benefit of each plan participant as required |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                      |   | Fair Value Measurements at December 31, 2009 |   |
|-------------------------------------------|--------|----------------------------------------------|--------|
|                                      |   | Total                                        |   |   | Quoted Prices in Active Markets (Level 1) |   |   | Significant Other Observable Inputs (Level 2) |   |   | Significant Unobservable Inputs (Level 3) |   |
|                                      |   | (In millions)                                |   |
|                                      |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Germany                                   |   | $                                            | 172.3  |   |   | $ | - |   |   | $ | - |   |   | $ | 172.3 |   |
| Canada:                                   |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Local currency equities       |   |                                         | 16.6   |   |   |   | 16.6 |   |   |   | - |   |   |   | - |   |
|   Foreign equities              |   |                                         | 24.3   |   |   |   | 24.3 |   |   |   | - |   |   |   | - |   |
|   Local currency fixed income   |   |                                         | 26.2   |   |   |   | 26.2 |   |   |   | - |   |   |   | - |   |
|   Foreign currency fixed income |   |                                         | .2     |   |   |   | .2 |   |   |   | - |   |   |   | - |   |
|   Cash and other                |   |                                         | 1.6    |   |   |   | 1.6 |   |   |   | - |   |   |   | - |   |
| Norway:                                   |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Local currency equities       |   |                                         | 3.6    |   |   |   | 3.6 |   |   |   | - |   |   |   | - |   |
|   Foreign equities              |   |                                         | 6.4    |   |   |   | 6.4 |   |   |   | - |   |   |   | - |   |
|   Local currency fixed income   |   |                                         | 31.9   |   |   |   | 7.7 |   |   |   | - |   |   |   | 24.2 |   |
|   Foreign fixed income          |   |                                         | 4.4    |   |   |   | 1.3 |   |   |   | - |   |   |   | 3.1 |   |
|   Cash and other                |   |                                         | 10.4   |   |   |   | 9.7 |   |   |   | - |   |   |   | .7 |   |
| U.S. – CMRT                         |   |                                         | 43.5   |   |   |   | - |   |   |   | 43.5 |   |   |   | - |   |
| Other                                     |   |                                         | 16.0   |   |   |   | 9.2 |   |   |   | - |   |   |   | 6.8 |   |
|                                      |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total             |   | $                                            | 357.4  |   |   | $ | 106.8 |   |   | $ | 43.5 |   |   | $ | 207.1 |   |

|                                      |   | Fair Value Measurements at December 31, 2010 |   |
|-------------------------------------------|--------|----------------------------------------------|--------|
|                                      |   | Total                                        |   |   | Quoted Prices in Active Markets (Level 1) |   |   | Significant Other Observable Inputs (Level 2) |   |   | Significant Unobservable Inputs (Level 3) |   |
|                                      |   | (In millions)                                |   |
|                                      |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Germany                                   |   | $                                            | 176.2  |   |   | $ | - |   |   | $ | - |   |   | $ | 176.2 |   |
| Canada:                                   |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Local currency equities       |   |                                         | 19.6   |   |   |   | 19.6 |   |   |   | - |   |   |   | - |   |
|   Foreign equities              |   |                                         | 28.3   |   |   |   | 28.3 |   |   |   | - |   |   |   | - |   |
|   Local currency fixed income   |   |                                         | 30.7   |   |   |   | 30.7 |   |   |   | - |   |   |   | - |   |
|   Foreign currency fixed income |   |                                         | .2     |   |   |   | .2 |   |   |   | - |   |   |   | - |   |
|   Cash and other                |   |                                         | 2.4    |   |   |   | 2.4 |   |   |   | - |   |   |   | - |   |
| Norway:                                   |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Local currency equities       |   |                                         | 11.5   |   |   |   | 11.5 |   |   |   | - |   |   |   | - |   |
|   Foreign equities              |   |                                         | .2     |   |   |   | .2 |   |   |   | - |   |   |   | - |   |
|   Local currency fixed income   |   |                                         | 42.3   |   |   |   | 15.9 |   |   |   | - |   |   |   | 26.4 |   |
|   Foreign fixed income          |   |                                         | 3.5    |   |   |   | .5 |   |   |   | - |   |   |   | 3.0 |   |
|   Cash and other                |   |                                         | 1.2    |   |   |   | .6 |   |   |   | - |   |   |   | .6 |   |
| U.S. – CMRT                         |   |                                         | 50.1   |   |   |   | - |   |   |   | 50.1 |   |   |   | - |   |
| Cash and other                            |   |                                         | .3     |   |   |   | .3 |   |   |   | - |   |   |   | - |   |
| Other                                     |   |                                         | 18.7   |   |   |   | 10.0 |   |   |   | - |   |   |   | 8.7 |   |
|                                      |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total             |   | $                                            | 385.2  |   |   | $ | 120.2 |   |   | $ | 50.1 |   |   | $ | 214.9 |   |

----

|                                                    |   | Years Ended December 31, |   |
|---------------------------------------------------------|--------|--------------------------|--------|
|                                                    |   | 2009                     |   |   | 2010 |   |
|                                                    |   | (In millions)            |   |
|                                                    |   |                     |   |   |   |   |
| Fair value at beginning of year                         |   | $                        | 178.9  |   |   | $ | 207.1 |   |
| Gain on assets held at end of year                      |   |                     | 19.8   |   |   |   | 15.9 |   |
| Gain (loss) on assets sold during the year              |   |                     | (1.4   | ) |   |   | 1.5 |   |
| Assets purchased                                        |   |                     | 20.2   |   |   |   | 20.0 |   |
| Assets sold                                             |   |                     | (19.0  | ) |   |   | (15.9 | ) |
| Currency exchange rate fluctuations                     |   |                     | 8.6    |   |   |   | (13.7 | ) |
|                                                    |   |                     |   |   |   |   |   |   |
|      Fair value at end of year |   | $                        | 207.1  |   |   | $ | 214.9 |   |

|         |   |                    |
|--------------|--------|-------------------------|
| 2011         |   | $ 1.9 million      |
| 2012         |   |   1.8 million |
| 2013         |   |   1.7 million |
| 2014         |   |   1.6 million |
| 2015         |   |   1.5 million |
| Next 5 years |   |   6.2 million      |

----

|                                                                                                      |   | Years ended December 31, |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                      |   | 2009                     |   |   | 2010 |   |
|                                                                                                      |   | (In millions)            |   |
|                                                                                                      |   |                     |   |   |   |   |
| Actuarial present value of accumulated OPEB obligations:                                             |   |                     |   |   |   |   |
|   Balance at beginning of the year                                               |   | $                        | 32.5   |   |   | $ | 28.0 |   |
|   Service cost                                                                             |   |                     | .2     |   |   |   | .6 |   |
|   Interest cost                                                                            |   |                     | 1.8    |   |   |   | 1.2 |   |
|   Actuarial (gain) loss                                                                    |   |                     | (.3    | ) |   |   | 2.3 |   |
|   Plan amendment                                                                                |   |                     | (4.8   | ) |   |   | (9.5 | ) |
|   Change in currency exchange rates                                         |   |                     | 1.2    |   |   |   | .5 |   |
|   Benefits paid from employer contributions                                      |   |                     | (2.6   | ) |   |   | (1.7 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |
|   Balance at end of the year                                           |   | $                        | 28.0   |   |   | $ | 21.4 |   |
|                                                                                                      |   |                     |   |   |   |   |   |   |
| Fair value of plan assets                                                                                 |   | $                        | -      |   |   | $ | - |   |
|                                                                                                      |   |                     |   |   |   |   |   |   |
| Funded status                                                                                             |   | $                        | (28.0  | ) |   | $ | (21.4 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |
| Accrued OPEB costs recognized in the Consolidated Balance Sheets: |   |                     |   |   |   |   |   |   |
|   Current                                                                                       |   | $                        | (2.5   | ) |   | $ | (1.9 | ) |
|   Noncurrent                                                                                    |   |                     | (25.5  | ) |   |   | (19.5 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |
|     Total                                                                             |   |                     | (28.0  | ) |   |   | (21.4 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |
|   Accumulated other comprehensive income (loss):                                                |   |                     |   |   |   |   |   |   |
|     Net actuarial loss                                                 |   |                     | .2     |   |   |   | 2.4 |   |
|     Prior service  credit                                                   |   |                     | (5.8   | ) |   |   | (14.6 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |
|     Total                                                                             |   |                     | (5.6   | ) |   |   | (12.2 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |
|     Total                                                                             |   | $                        | (33.6  | ) |   | $ | (33.6 | ) |

----

|                                                                                 |   | Years ended December 31, |   |
|--------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                 |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                                                                                 |   | (In millions)            |   |
|                                                                                 |   |                     |   |   |   |   |   |   |   |
| Changes in benefit obligations recognized in other comprehensive income (loss): |   |                     |   |   |   |   |   |   |   |
| Net actuarial gain (loss) arising during the year                               |   | $                        | 2.4    |   |   | $ | .4 |   |   | $ | (2.3 | ) |
| Plan amendments                                                                      |   |                     | -      |   |   |   | 4.8 |   |   |   | 9.5 |   |
| Amortization of unrecognized:                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Prior service cost                                 |   |                     | (.4    | ) |   |   | (.4 | ) |   |   | (.7 | ) |
|     Net actuarial loss                                      |   |                     | .2     |   |   |   | .3 |   |   |   | - |   |
|                                                                                 |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                                                        |   | $                        | 2.2    |   |   | $ | 5.1 |   |   | $ | 6.5 |   |
|                                                                                 |   |                     |   |   |   |   |   |   |   |   |   |   |

|                                                   |   | Years ended December 31, |   |
|--------------------------------------------------------|--------|--------------------------|--------|
|                                                   |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                                                   |   | (In millions)            |   |
|                                                   |   |                     |   |   |   |   |   |   |   |
| Net periodic OPEB cost (credit):                       |   |                     |   |   |   |   |   |   |   |
|   Service cost                          |   | $                        | .3     |   |   | $ | .2 |   |   | $ | .6 |   |
|   Interest cost                    |   |                     | 2.1    |   |   |   | 1.8 |   |   |   | 1.2 |   |
|   Amortization of unrecognized:              |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Prior service credit |   |                     | (.4    | ) |   |   | (.4 | ) |   |   | (.7 | ) |
|     Actuarial loss       |   |                     | .2     |   |   |   | .3 |   |   |   | - |   |
|                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                          |   | $                        | 2.2    |   |   | $ | 1.9 |   |   | $ | 1.1 |   |

|                                          |   | December 31, |       |
|-----------------------------------------------|--------|--------------|------------|
|                                          |   | 2009         |       |   | 2010 |   |
|                                          |   |         |       |   |   |   |
| Healthcare inflation:                         |   |         |       |   |   |   |
|   Initial rate                      |   |         | 7.5% - 8.5 | % |   |   | 8.0% - 8.5 | % |
|   Ultimate rate                     |   |         | 4.5% - 5.5 | % |   |   | 5.0% - 5.5 | % |
|   Year of ultimate rate achievement |   |         | 2017       |   |   |   | 2018 |   |
| Discount rate                                 |   |         | 5.4        | % |   |   | 4.65 | % |

|                                                           |   | 1% Increase   |     |   | 1% Decrease |   |
|----------------------------------------------------------------|--------|---------------|----------|--------|-------------|--------|
|                                                           |   | (In millions) |     |
|                                                           |   |          |     |   |        |   |
| Effect on net OPEB cost during 2010                       |   | $             | .3       |   |        | $      | (.2 | ) |
| Effect at December 31, 2010 on postretirement obligations |   |          |  .4 |   |        |   | (.4 | ) |

----

----

|                                                                                                                                                |   |  Years ended December 31, |      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|-----------|
|                                                                                                                                                |   | 2008                           |      |   | 2009 |   |   | 2010 |   |
|                                                                                                                                                |   | (In millions)                  |      |
| Pre-tax income (loss):                                                                                                                              |   |                           |      |   |   |   |   |   |   |
|   United States                                                                                                                      |   | $                              | 8.8       |   |   | $ | (9.9 | ) |   | $ | (1.9 | ) |
|   Non-U.S. subsidiaries                                                                                                              |   |                           | 12.8      |   |   |   | (79.0 | ) |   |   | 84.2 |   |
|                                                                                                                                                |   |                           |      |   |   |   |   |   |   |   |   |   |
|     Total                                                                                                                       |   | $                              | 21.6      |   |   | $ | (88.9 | ) |   | $ | 82.3 |   |
|                                                                                                                                                |   |                           |      |   |   |   |   |   |   |   |   |   |
| Expected tax expense (benefit), at U.S.  federal statutory income tax rate of 35%  |   | $                              | 7.5       |   |   | $ | (31.1 | ) |   | $ | 28.8 |   |
| Non-U.S. tax rates                                                                                                                        |   |                           | (.6       | ) |   |   | 1.5 |   |   |   | (4.2 | ) |
| Incremental U.S. tax and rate differences on equity in earnings                                   |   |                           |  4.3 |   |   |   | (10.0 | ) |   |   |  21.8 |   |
| German  tax attribute adjustments                                                                                                         |   |                           | (7.2      | ) |   |   | .2 |   |   |   | (35.2 | ) |
| U.S. state income taxes, net                                                                                                    |   |                           | 2.0       |   |   |   | (.2 | ) |   |   | 3.1 |   |
| Change in reserve for uncertain tax Positions, net                                                                                        |   |                           |  5.6 |   |   |   | (14.0 | ) |   |   |  5.2 |   |
| Change in valuation allowance                                                                                                                       |   |                           | -         |   |   |   | 1.4 |   |   |   | (.1 | ) |
| No income tax benefit on goodwill impairment                                                                                                        |   |                           | 3.5       | (1) |   |   | - |   |   |   | - |   |
| Nondeductible expenses                                                                                                                         |   |                           | 2.6       |   |   |   | 2.6 |   |   |   | 2.5 |   |
| Non-U.S. tax rate changes                                                                                                                           |   |                           | -         |   |   |   | - |   |   |   | (1.6 | ) |
| Nontaxable income                                                                                                                                   |   |                           | (1.0      | ) |   |   | (.9 | ) |   |   | (.9 | ) |
| Other, net                                                                                                                                     |   |                           | -         |   |   |   | (.3 | ) |   |   | (.9 | ) |
|                                                                                                                                                |   |                           |      |   |   |   |   |   |   |   |   |   |
|   Provision for income taxes (benefit)                                                                                     |   | $                              | 16.7      |   |   | $ | (50.8 | ) |   | $ | 18.5 |   |
|                                                                                                                                                |   |                           |      |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                |   |                           |      |   |   |   |   |   |   |   |   |   |
| Components of income tax expense (benefit):                                                                                |   |                           |      |   |   |   |   |   |   |   |   |   |
|   Currently payable (refundable):                                                                                                    |   |                           |      |   |   |   |   |   |   |   |   |   |
|     U.S. federal and state                                                                                       |   | $                              | 12.8      |   |   | $ | (14.4 | ) |   | $ | 6.0 |   |
|     Non-U.S.                                                                                                                    |   |                           | 11.3      |   |   |   | 1.8 |   |   |   | 17.8 |   |
|                                                                                                                                                |   |                           |      |   |   |   |   |   |   |   |   |   |
|       Total                                                                                                           |   |                           | 24.1      |   |   |   | (12.6 | ) |   |   | 23.8 |   |
|   Deferred income taxes (benefit):                                                                                         |   |                           |      |   |   |   |   |   |   |   |   |   |
|     U.S. federal and state                                                                                       |   |                           | 4.3       |   |   |   | (7.4 | ) |   |   | 19.0 |   |
|     Non-U.S.                                                                                                                    |   |                           | (11.7     | ) |   |   | (30.8 | ) |   |   | (24.3 | ) |
|       Total                                                                                                           |   |                           | (7.4      | ) |   |   | (38.2 | ) |   |   | (5.3 | ) |
|                                                                                                                                                |   |                           |      |   |   |   |   |   |   |   |   |   |
|   Provision for income taxes (benefit)                                                                                     |   | $                              | 16.7      |   |   | $ | (50.8 | ) |   | $ | 18.5 |   |
|                                                                                                                                                |   |                           |      |   |   |   |   |   |   |   |   |   |
| Comprehensive provision for  income taxes (benefit) allocable to:                                           |   |                           |      |   |   |   |   |   |   |   |   |   |
|   Income (loss) from  operations                                                                                                |   | $                              | 16.7      |   |   | $ | (50.8 | ) |   | $ | 18.5 |   |
|   Other comprehensive income:                                                                                                   |   |                           |      |   |   |   |   |   |   |   |   |   |
|     Marketable securities                                                                                                  |   |                           | (15.6     | ) |   |   | 3.9 |   |   |   | 6.0 |   |
|     Currency translation                                                                                                   |   |                           | (10.0     | ) |   |   | 5.6 |   |   |   | (.2 | ) |
|     Pension plans                                                                                                               |   |                           | (32.7     | ) |   |   | 5.8 |   |   |   | (.5 | ) |
|     OPEB plans                                                                                                                  |   |                           | .9        |   |   |   | 1.5 |   |   |   | 2.1 |   |
|                                                                                                                                                |   |                           |      |   |   |   |   |   |   |   |   |   |
|         Total                                                                                               |   | $                              | (40.7     | ) |   | $ | (34.0 | ) |   | $ | 25.9 |   |

| (1) | The goodwill impairment of $10.1 million recorded in 2009 (see Note 8) is nondeductible goodwill for income tax purposes.  Accordingly, there is no income tax benefit associated with the goodwill impairment for financial reporting purposes. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                           |   | December 31,  |        |
|--------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-------------|
|                                                                                                                           |   |  2009    |        |   | 2010 |   |
|                                                                                                                           |   | Assets        |        |   | Liabilities |   |   | Assets |   |   | Liabilities |   |
|                                                                                                                           |   | (In millions) |        |
| Tax effect of temporary differences  related to:                                            |   |          |        |   |   |   |   |   |   |   |   |   |
|   Inventories                                                                                                        |   | $             | 3.1         |   |   | $ | (4.3 | ) |   | $ | 3.3 |   |   | $ | (4.0 | ) |
|   Marketable securities                                                                                         |   |          | 15.6        |   |   |   | (120.7 | ) |   |   | 9.6 |   |   |   | (125.5 | ) |
|   Property and equipment                                                                                   |   |          | -           |   |   |   | (86.7 | ) |   |   | - |   |   |   | (86.3 | ) |
|   Accrued OPEB costs                                                                                       |   |          | 9.0         |   |   |   | - |   |   |   | 6.8 |   |   |   | - |   |
|   Accrued pension costs                                                                                              |   |          | 8.0         |   |   |   | - |   |   |   | 10.5 |   |   |   | - |   |
|   Accrued environmental liabilities and    other deductible differences |   |          |  50.6  |   |   |   |  - |   |   |   |  45.1 |   |   |   |  - |   |
|   Other taxable differences                                                                                |   |          | -           |   |   |   | (30.1 | ) |   |   | - |   |   |   | (27.6 | ) |
|   Investments in subsidiaries and    affiliates                              |   |          |  -     |   |   |   | (213.7 | ) |   |   |  - |   |   |   | (266.6 | ) |
|   Tax loss and tax credit carryforwards                                                                              |   |          | 203.2       |   |   |   | - |   |   |   | 219.9 |   |   |   | - |   |
|   Valuation allowance                                                                                                |   |          | (2.0        | ) |   |   | - |   |   |   | (1.9 | ) |   |   | - |   |
|     Adjusted gross deferred tax assets     (liabilities)      |   |          |  287.5 |   |   |   | (455.5 | ) |   |   |  293.3 |   |   |   | (510.0 | ) |
| Netting of items by tax jurisdiction                                                                  |   |          | (90.1       | ) |   |   | 90.1 |   |   |   | (87.4 | ) |   |   | 87.4 |   |
|                                                                                                                           |   |          | 197.4       |   |   |   | (365.4 | ) |   |   | 205.9 |   |   |   | (422.6 | ) |
| Less net current deferred tax asset  (liability)                                            |   |          |  11.9  |   |   |   | (4.7 | ) |   |   |  13.9 |   |   |   | (5.0 | ) |
|                                                                                                                           |   |          |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Net noncurrent deferred tax asset      (liability)   |   | $             | 185.5       |   |   | $ | (360.7 | ) |   | $ | 192.0 |   |   | $ | (417.6 | ) |

|                                                                               |   | Years ended December 31, |   |
|------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                               |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                                                                               |   | (In millions)            |   |
|                                                                               |   |                     |   |   |   |   |   |   |   |
| Unrecognized tax benefits:                                                         |   |                     |   |   |   |   |   |   |   |
|   Amount beginning of year                                               |   | $                        | 42.4   |   |   | $ | 46.6 |   |   | $ | 31.8 |   |
|   Net increase (decrease):                                               |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Tax positions taken in prior periods                       |   |                     | (2.1   | ) |   |   | (5.3 | ) |   |   | .3 |   |
|     Tax positions taken in current period                      |   |                     | 11.8   |   |   |   | (6.4 | ) |   |   | 5.4 |   |
|   Settlements with taxing authorities –   cash paid |   |                     | (.1    | ) |   |   | (.1 | ) |   |   |  - |   |
|   Lapse due to applicable statute of   limitations        |   |                     | (4.1   | ) |   |   | (3.7 | ) |   |   | (.5 | ) |
|   Changes in currency exchange rates                                     |   |                     | (1.3   | ) |   |   | .7 |   |   |   | .4 |   |
|                                                                               |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Amount at end of year                                                  |   | $                        | 46.6   |   |   | $ | 31.8 |   |   | $ | 37.4 |   |
|                                                                               |   |                     |   |   |   |   |   |   |   |   |   |   |

----

----

----

|                                   |   | December 31,  |   |
|----------------------------------------|--------|---------------|--------|
|                                   |   | 2009          |   |   | 2010 |   |
|                                   |   | (In millions) |   |
| Noncontrolling interest in net assets: |   |          |   |   |   |   |
|   Kronos Worldwide           |   | $             | 15.0   |   |   | $ | 208.7 |   |
|   NL Industries              |   |          | 43.6   |   |   |   | 56.8 |   |
|   CompX International        |   |          | 11.1   |   |   |   | 10.9 |   |
|                                   |   |          |   |   |   |   |   |   |
|     Total          |   | $             | 69.7   |   |   | $ | 276.4 |   |

|                                                               |   | Years ended December 31, |   |
|--------------------------------------------------------------------|--------|--------------------------|--------|
|                                                               |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                                                               |   | (In millions)            |   |
|                                                               |   |                     |   |   |   |   |   |   |   |
| Noncontrolling interest in net income (loss) of subsidiaries: |   |                     |   |   |   |   |   |   |   |
|   Kronos Worldwide                                       |   | $                        | .4     |   |   | $ | (1.7 | ) |   | $ | 9.8 |   |
|   NL Industries                                          |   |                     | 5.6    |   |   |   | (1.9 | ) |   |   | 3.3 |   |
|   CompX International                                    |   |                     | (.3    | ) |   |   | (.3 | ) |   |   | .4 |   |
|                                                               |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                                      |   | $                        | 5.7    |   |   | $ | (3.9 | ) |   | $ | 13.5 |   |

|                                                                                                         |   | Years ended December 31, |            |
|--------------------------------------------------------------------------------------------------------------|--------|--------------------------|-----------------|
|                                                                                                         |   | 2009                     |            |   | 2010 |   |
|                                                                                                         |   | (In millions)            |            |
|                                                                                                         |   |                     |            |   |   |   |
| Net income (loss) attributable to Valhi stockholders                                                    |   | $                        | (34.2           | ) |   | $ | 50.3 |   |
|                                                                                                         |   |                     |            |   |   |   |   |   |
| Transfers (to) from noncontrolling interest:                                                                 |   |                     |            |   |   |   |   |   |
| Increase in additional paid-in capital for purchase of 14,000 shares of Kronos common stock                  |   |                     |    .2 |   |   |   |    - |   |
| Issuance of subsidiary stock                                                                                 |   |                     | .1              |   |   |   | 87.8 |   |
|                                                                                                         |   |                     |            |   |   |   |   |   |
| Net transfers from noncontrolling interest                                                                   |   |                     | .3              |   |   |   | 87.8 |   |
|                                                                                                         |   |                     |            |   |   |   |   |   |
| Net income (loss) attributable to Valhi stockholders and change from noncontrolling interest in subsidiaries |   | $                        | (33.9           | ) |   | $ | 138.1 |   |

|                                        |   | Shares of common stock |   |
|---------------------------------------------|--------|------------------------|--------|
|                                        |   | Issued                 |   |   | Treasury |   |   | Outstanding |   |
|                                        |   | (In millions)          |   |
|                                        |   |                   |   |   |   |   |   |   |   |
| Balance at December 31, 2007                |   |                   | 118.4  |   |   |   | (4.0 | ) |   |   | 114.4 |   |
|                                        |   |                   |   |   |   |   |   |   |   |   |   |   |
| Acquired during 2008                        |   |                   | -      |   |   |   | (.1 | ) |   |   | (.1 | ) |
|                                        |   |                   |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2008, 2009 and 2010 |   |                   | 118.4  |   |   |   | (4.1 | ) |   |   | 114.3 |   |
|                                        |   |                   |   |   |   |   |   |   |   |   |   |   |

----

|          |   |   Shares |   |   | Exerciseprice per share |   |                | Amountpayableuponexercise |   |
|---------------|--------|--------------------|--------|--------|------------------------------|--------|---------------------|---------------------------|--------|
|          |   | (In thousands)     |   |   |                         |   |                | (In millions)             |   |
|          |   |               |   |   |                         |   |                |                      |   |
| NL Industries |   |               | 43     |   |                         | $      | 11.49               |                      |   | $ | .5 |   |
| CompX         |   |               | 18     |   |                         | $      | 12.15 - $14.30 |                      |   |   | .2 |   |

|                                                                     |   | Years ended December 31, |   |
|--------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                     |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                                                                     |   | (In millions)            |   |
|                                                                     |   |                     |   |   |   |   |   |   |   |
| Net income (loss) attributable to Valhi stockholders                |   | $                        | (.8    | ) |   | $ | (34.2 | ) |   | $ | 50.3 |   |
| Equity adjustment                                                        |   |                     | -      |   |   |   | - |   |   |   | (2.1 | ) |
|                                                                     |   |                     |   |   |   |   |   |   |   |   |   |   |
| Adjusted net income (loss)  attributable to Valhi stockholders |   | $                        | (.8    | ) |   | $ | (34.2 | ) |   | $ | 48.2 |   |

----

|                                                                                                                                  |   | Years ended December 31, |            |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|-----------------|
|                                                                                                                                  |   | 2008                     |            |   | 2009 |   |   | 2010 |   |
|                                                                                                                                  |   | (In millions)            |            |
|                                                                                                                                  |   |                     |            |   |   |   |   |   |   |
| Accumulated other comprehensive income (net of tax):                                                                             |   |                     |            |   |   |   |   |   |   |
|   Marketable securities:                                                                                                    |   |                     |            |   |   |   |   |   |   |
|     Balance at beginning of year                                                              |   | $                        | 27.1            |   |   | $ | 4.3 |   |   | $ | 9.0 |   |
|     Other comprehensive income (loss)                                                                   |   |                     | (22.8           | ) |   |   | 4.7 |   |   |   | 5.6 |   |
|     Balance at end of year                                                                    |   | $                        | 4.3             |   |   | $ | 9.0 |   |   | $ | 14.6 |   |
|                                                                                                                                  |   |                     |            |   |   |   |   |   |   |   |   |   |
|   Currency translation:                                                                                                |   |                     |            |   |   |   |   |   |   |   |   |   |
|     Balance at beginning of year                                                              |   | $                        | 64.5            |   |   | $ | 30.9 |   |   | $ | 50.3 |   |
|     Other comprehensive income (loss)                                                                   |   |                     | (33.6           | ) |   |   | 19.4 |   |   |   | (.1 | ) |
|     Kronos common stock sale                                                                                      |   |                     | -               |   |   |   | - |   |   |   | 9.0 |   |
|     Balance at end of year                                                                    |   | $                        | 30.9            |   |   | $ | 50.3 |   |   | $ | 59.2 |   |
|                                                                                                                                  |   |                     |            |   |   |   |   |   |   |   |   |   |
|   Defined benefit pension plans:                                                                             |   |                     |            |   |   |   |   |   |   |   |   |   |
|     Balance at beginning of year                                                              |   | $                        | (38.8           | ) |   | $ | (86.1 | ) |   | $ | (66.1 | ) |
|     Other comprehensive income (loss):                                                                            |   |                     |            |   |   |   |   |   |   |   |   |   |
|       Amortization of prior service cost and net losses included in net periodic pension cost |   |                     |    .1 |   |   |   |    4.9 |   |   |   |    4.2 |   |
|       Net actuarial gain (loss) arising during year                                                |   |                     | (47.4           | ) |   |   |  2.2 |   |   |   | (6.5 | ) |
|     Plan amendment                                                                                                |   |                     | -               |   |   |   | - |   |   |   | (2.0 | ) |
|     Kronos common stock sale                                                                                      |   |                     | -               |   |   |   | - |   |   |   | 10.6 |   |
|     Transfer of Medite pension plan                                                                               |   |                     | -               |   |   |   | 12.9 |   |   |   | - |   |
|     Balance at end of year                                                                    |   | $                        | (86.1           | ) |   | $ | (66.1 | ) |   | $ | (59.8 | ) |
|                                                                                                                                  |   |                     |            |   |   |   |   |   |   |   |   |   |
|   OPEB plans:                                                                                                          |   |                     |            |   |   |   |   |   |   |   |   |   |
|     Balance at beginning of year                                                              |   | $                        | (1.3            | ) |   | $ | (.1 | ) |   | $ | 3.6 |   |
|     Other comprehensive income (loss):                                                                            |   |                     |            |   |   |   |   |   |   |   |   |   |
|       Amortization of prior service cost and net losses included in net periodic OPEB cost    |   |                     | (.1             | ) |   |   |    - |   |   |   | (.4 | ) |
|       Net actuarial gain (loss) arising       during year            |   |                     |  1.3       |   |   |   |  .6 |   |   |   | (1.3 | ) |
|     Plan amendment                                                                                                |   |                     | -               |   |   |   | 3.1 |   |   |   | 5.1 |   |
|     Kronos common stock sale                                                                                      |   |                     | -               |   |   |   | - |   |   |   | .2 |   |
|     Balance at end of year                                                                    |   | $                        | (.1             | ) |   | $ | 3.6 |   |   | $ | 7.2 |   |
|                                                                                                                                  |   |                     |            |   |   |   |   |   |   |   |   |   |
|   Total accumulated other comprehensive    income (loss):                                |   |                     |            |   |   |   |   |   |   |   |   |   |
|     Balance at beginning of year                                                              |   | $                        | 51.5            |   |   | $ | (51.0 | ) |   | $ | (3.2 | ) |
|     Other comprehensive income (loss)                                                                   |   |                     | (102.5          | ) |   |   | 34.9 |   |   |   | 4.6 |   |
|     Kronos common stock sale                                                                                      |   |                     | -               |   |   |   | - |   |   |   | 19.8 |   |
|     Transfer of Medite pension plan                                                                               |   |                     | -               |   |   |   | 12.9 |   |   |   | - |   |
|     Balance at end of year                                                                    |   | $                        | (51.0           | ) |   | $ | (3.2 | ) |   | $ | 21.2 |   |

----

|                                     |   |  Years ended December 31, |   |
|------------------------------------------|--------|--------------------------------|--------|
|                                     |   | 2008                           |   |   | 2009 |   |   | 2010 |   |
|                                     |   | (In millions)                  |   |
| Securities earnings:                     |   |                           |   |   |   |   |   |   |   |
|   Dividends and interest       |   | $                              | 31.9   |   |   | $ | 26.3 |   |   | $ | 26.0 |   |
|   Securities transactions, net |   |                           | (1.2   | ) |   |   | .5 |   |   |   | .3 |   |
|                                     |   |                           |   |   |   |   |   |   |   |   |   |   |
|     Total            |   |                           | 30.7   |   |   |   | 26.8 |   |   |   | 26.3 |   |
|                                     |   |                           |   |   |   |   |   |   |   |   |   |   |
| Equity in joint venture earnings         |   |                           | (1.0   | ) |   |   | (1.1 | ) |   |   | (.4 | ) |
| Insurance recoveries                     |   |                           | 9.6    |   |   |   | 4.6 |   |   |   | 18.8 |   |
| Currency transactions, net               |   |                           | 1.3    |   |   |   | 9.7 |   |   |   | 7.4 |   |
| Disposal of property and equipment, net  |   |                           | (1.0   | ) |   |   | (1.2 | ) |   |   | (1.8 | ) |
| Litigation settlement gains              |   |                           | 47.9   |   |   |   | 23.1 |   |   |   | 6.3 |   |
| Gain on sale of business                 |   |                           | -      |   |   |   | 6.3 |   |   |   | - |   |
| Other, net                               |   |                           | 5.2    |   |   |   | 1.5 |   |   |   | 1.9 |   |
|                                     |   |                           |   |   |   |   |   |   |   |   |   |   |
|     Total            |   | $                              | 92.7   |   |   | $ | 69.7 |   |   | $ | 58.5 |   |

----

|   | · | to recover response and remediation costs incurred at the site; |
|--------|--------|-----------------------------------------------------------------|

|   | · | a declaration of the parties’ liability for response and remediation costs incurred at the site; |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | a declaration of the parties’ liability for response and remediation costs to be incurred in the future at the site; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | a declaration regarding the obligation of Tremont to indemnify Halliburton and DII for costs and expenses attributable to the site. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

|                                                    |   |   December 31, |   |
|---------------------------------------------------------|--------|---------------------|--------|
|                                                    |   | 2009                |   |   | 2010 |   |
|                                                    |   | (In millions)       |   |
|                                                    |   |                |   |   |   |   |
| Current receivables from affiliates:                    |   |                |   |   |   |   |
|   Contran – income taxes, net |   | $                   | 16.2   |   |   | $ | - |   |
|   Other                                       |   |                | -      |   |   |   | .1 |   |
|                                                    |   |                |   |   |   |   |   |   |
|     Total                           |   | $                   | 16.2   |   |   | $ | .1 |   |
|                                                    |   |                |   |   |   |   |   |   |
| Current payables to affiliates:          |   |                |   |   |   |   |   |   |
|   Louisiana Pigment Company, L.P.   |   | $                   | 12.0   |   |   | $ | 7.4 |   |
|   Contran:                                    |   |                |   |   |   |   |   |   |
|     Income taxes, net               |   |                | -      |   |   |   | 4.3 |   |
|     Trade items                |   |                | 14.1   |   |   |   | 17.4 |   |
|   TIMET                                       |   |                | -      |   |   |   | 1.0 |   |
|   Other                                       |   |                | -      |   |   |   | .1 |   |
|                                                    |   |                |   |   |   |   |   |   |
|     Total                           |   | $                   | 26.1   |   |   | $ | 30.2 |   |
|                                                    |   |                |   |   |   |   |   |   |
|                                                    |   |                |   |   |   |   |   |   |
| Noncurrent payable to affiliate – TIMET           |   | $                   | .3     |   |   | $ | - |   |
|                                                    |   |                |   |   |   |   |   |   |
| Notes payable to affiliates(1) by:                      |   |                |   |   |   |   |   |   |
|   Valhi Contran credit facility               |   | $                   | 54.9   |   |   | $ | - |   |
|   Valhi Contran promissory notes              |   |                | 30.0   |   |   |   | - |   |
|   CompX TIMET note payable                    |   |                | 42.2   |   |   |   | 42.2 |   |
|                                                    |   |                |   |   |   |   |   |   |
|     Total                           |   | $                   | 127.1  |   |   | $ | 42.2 |   |

----

| ·   | we have never settled any of the market share, risk contribution, intentional tort, fraud, nuisance, supplier negligence, breach of warranty, conspiracy, misrepresentation, aiding and abetting, enterprise liability, or statutory cases, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | no final, non-appealable adverse verdicts have ever been entered against us, and |
|--------------------|----------------------------------------------------------------------------------|

| ·   | we have never ultimately been found liable with respect to any such litigation matters. |
|--------------------|-----------------------------------------------------------------------------------------|

----

| ·   | complexity and differing interpretations of governmental regulations, |
|--------------------|-----------------------------------------------------------------------|

| ·   | number of PRPs and their ability or willingness to fund such allocation of costs, |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | financial capabilities of the PRPs and the allocation of costs among them, |
|--------------------|----------------------------------------------------------------------------|

| ·   | solvency of other PRPs, |
|--------------------|-------------------------|

| ·   | multiplicity of possible solutions, |
|--------------------|-------------------------------------|

| ·   | number of years of investigatory, remedial and monitoring activity required and |
|--------------------|---------------------------------------------------------------------------------|

| ·   | number of years between former operations and notice of claims and lack of information and documents about the former operations. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                           |   | Years ended December 31, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                                                           |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                                                                                                                                           |   | (In millions)            |   |
|                                                                                                                                           |   |                     |   |   |   |   |   |   |   |
| Balance at the beginning of the year                                                                                                           |   | $                        | 55.7   |   |   | $ | 52.9 |   |   | $ | 48.9 |   |
| Additions charged to expense, net                                                                                                              |   |                     | 6.5    |   |   |   | 5.4 |   |   |   | .4 |   |
| Settlement agreement                                                                                                                           |   |                     | -      |   |   |   | - |   |   |   | (2.0 | ) |
| Payments, net                                                                                                                                  |   |                     | (9.3   | ) |   |   | (9.5 | ) |   |   | (5.0 | ) |
| Changes in currency exchange rates                                                                                                             |   |                     | -      |   |   |   | .1 |   |   |   | - |   |
|                                                                                                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Balance at the end of the year                                                                                                                 |   | $                        | 52.9   |   |   | $ | 48.9 |   |   | $ | 42.3 |   |
|                                                                                                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Amounts recognized in our Consolidated  Balance Sheet at the end of the year: |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Current liabilities                                                                                                           |   | $                        | 11.6   |   |   | $ | 11.0 |   |   | $ | 9.7 |   |
|   Noncurrent liabilities                                                                                                        |   |                     | 41.3   |   |   |   | 37.9 |   |   |   | 32.6 |   |
|                                                                                                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                                                                                                                  |   | $                        | 52.9   |   |   | $ | 48.9 |   |   | $ | 42.3 |   |

----

----

----

| ·   | facts concerning historical operations, |
|--------------------|-----------------------------------------|

| ·   | the rate of new claims, |
|--------------------|-------------------------|

| ·   | the number of claims from which we have been dismissed and |
|--------------------|------------------------------------------------------------|

| ·   | our prior experience in the defense of these matters, |
|--------------------|-------------------------------------------------------|

----

----

|                                                                                        |   | 2008   |   |   | 2009   |   |   | 2010   |   |
|---------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                        |   |   |   |   |   |   |   |   |   |
|              Europe        |   |   | 53     | %      |   |   | 53     | %      |   |   | 53 | % |
|              North America |   |   | 34     | %      |   |   | 32     | %      |   |   | 33 | % |

| Years ending December 31,                 |   | Amount        |   |
|-------------------------------------------|--------|---------------|--------|
|                                      |   | (In millions) |   |
|                                      |   |          |   |
|   2011                          |   | $             | 10.8   |   |
|   2012                          |   |          | 7.0    |   |
|   2013                          |   |          | 4.9    |   |
|   2014                          |   |          | 3.5    |   |
|   2015                          |   |          | 2.6    |   |
|   2016 and thereafter |   |          | 18.0   |   |
|                                      |   |          |   |   |
|     Total(1)          |   | $             | 46.8   |   |

----

----

|                                   |   | Fair Value Measurements |   |
|----------------------------------------|--------|-------------------------|--------|
|                                   |   | Total                   |   |   | Quoted Prices in Active Markets (Level 1) |   |   | Significant Other Observable Inputs (Level 2) |   |   | Significant Unobservable Inputs (Level 3) |   |
|                                   |   | (In millions)           |   |
|                                   |   |                    |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009:                     |   |                    |   |   |   |   |   |   |   |   |   |   |
|   Marketable securities:     |   |                    |   |   |   |   |   |   |   |   |   |   |
|     Current        |   | $                       | 6.1    |   |   | $ | - |   |   | $ | 6.1 |   |   | $ | - |   |
|     Noncurrent     |   |                    | 279.5  |   |   |   | 28.6 |   |   |   | .9 |   |   |   | 250.0 |   |
|                                   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Currency forward contracts |   |                    | 1.6    |   |   |   | 1.6 |   |   |   | - |   |   |   | - |   |
|                                   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2010:                     |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Marketable securities:     |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Current        |   | $                       | 1.7    |   |   | $ | - |   |   | $ | 1.7 |   |   | $ | - |   |
|     Noncurrent     |   |                    | 340.4  |   |   |   | 87.2 |   |   |   | 3.2 |   |   |   | 250.0 |   |
|                                   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Currency forward contracts |   |                    | 6.3    |   |   |   | 6.3 |   |   |   | - |   |   |   | - |   |
|                                   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| ·   | an aggregate of $66.0 million for an equivalent value of Canadian dollars at exchange rates ranging from Cdn. $1.05 to Cdn. $1.08 per U.S. dollar.  These contracts with Wachovia Bank, National Association, mature from January 2011 through December 2011 at a rate of $5.5 million per month, subject to early redemption provisions at our option. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an aggregate $20.1 million for an equivalent value of Norwegian kroner at exchange rates ranging from kroner 5.94 to kroner 6.60 per U.S. dollar.  These contracts with DnB Nor Bank ASA mature from January 2011 through July 2011 at a rate of $2.3 million to $5.5 million per month. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an aggregate euro 17.8 million for an equivalent value of Norwegian kroner at exchange rates ranging from kroner 8.16 to kroner 8.28 per euro.  These contracts with DnB Nor Bank ASA mature from January 2011 through August 2011 at a rate of euro 1.8 million to euro 2.5 million per month, subject to early redemption provisions at our option. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                        |   | December 31,         |   |
|-------------------------------------------------------------|--------|----------------------|--------|
|                                                        |   | 2009                 |   |   | 2010 |   |
|                                                        |   | Carrying amount |   |   | FairValue |   |   | Carrying amount |   |   | Fairvalue |   |
|                                                        |   | (In millions)        |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |
| Cash, cash equivalents and restricted cash equivalents |   | $                    | 78.0   |   |   | $ | 78.0 |   |   | $ | 334.8 |   |   | $ | 334.8 |   |
| Promissory note receivable                                  |   |                 | 15.0   |   |   |   | 15.0 |   |   |   | 15.0 |   |   |   | 15.0 |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term debt (excluding capitalized leases):              |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Publicly-traded fixed rate debt -               |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     KII Senior Secured Notes            |   | $                    | 574.6  |   |   | $ | 466.2 |   |   | $ | 532.8 |   |   | $ | 536.0 |   |
|   Snake River Sugar Company fixed rate loans      |   |                 | 250.0  |   |   |   | 250.0 |   |   |   | 250.0 |   |   |   | 250.0 |   |
|   CompX variable rate promissory note             |   |                 | 42.2   |   |   |   | 42.2 |   |   |   | 42.2 |   |   |   | 42.2 |   |
|   Variable rate debt to Contran                   |   |                 | 84.9   |   |   |   | 84.9 |   |   |   | - |   |   |   | - |   |
|   Variable rate bank credit facilities            |   |                 | 29.1   |   |   |   | 29.1 |   |   |   | 3.0 |   |   |   | 3.0 |   |
|   NL variable rate promissory note                |   |                 | -      |   |   |   | - |   |   |   | 18.0 |   |   |   | 18.0 |   |
|   WCS fixed rate debt                             |   |                 | -      |   |   |   | - |   |   |   | 87.4 |   |   |   | 87.4 |   |
|   Other fixed-rate debt                           |   |                 | .5     |   |   |   | .5 |   |   |   | - |   |   |   | - |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noncontrolling interest in:                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Kronos common stock                             |   | $                    | 15.0   |   |   | $ | 38.4 |   |   | $ | 208.7 |   |   | $ | 482.0 |   |
|   NL common stock                                 |   |                 | 43.6   |   |   |   | 57.1 |   |   |   | 56.8 |   |   |   | 92.0 |   |
|   CompX common stock                              |   |                 | 11.1   |   |   |   | 12.2 |   |   |   | 10.9 |   |   |   | 18.6 |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Valhi stockholders' equity                                  |   | $                    | 428.7  |   |   | $ | 1,597.3 |   |   | $ | 541.8 |   |   | $ | 2,509.2 |   |

----

|                                                                                                                                                  |   | Quarter ended                   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                                                                                                                  |   | March 31                             |   |   | June 30 |   |   | Sept. 30 |   |   | Dec. 31 |   |
|                                                                                                                                                  |   | (In millions, except per share data) |   |
|                                                                                                                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Year ended December 31, 2009                                                                                                                          |   |                                 |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Net sales                                                                                                                                        |   | $                                    | 277.3  |   |   | $ | 312.1 |   |   | $ | 341.6 |   |   | $ | 341.1 |   |
| Gross margin                                                                                                                                          |   |                                 | 4.6    |   |   |   | 16.2 |   |   |   | 60.1 |   |   |   | 55.5 |   |
| Operating income (loss)                                                                                                                          |   |                                 | (33.0  | ) |   |   | (27.6 | ) |   |   | 13.2 |   |   |   | 5.8 |   |
|                                                                                                                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Net income (loss)(1)                                                                                              |   | $                                    | (23.4  | ) |   | $ | (20.6 | ) |   | $ | 9.4 |   |   | $ | (3.5 | ) |
|                                                                                                                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Net income (loss) attributable        to Valhi stockholders (1) |   |                                 | (20.0  | ) |   |   | (19.0 | ) |   |   | 8.4 |   |   |   | (3.6 | ) |
|                                                                                                                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per basic share:                                                                                                                            |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Net income (loss) attributable        to Valhi stockholders               |   | $                                    | (.18   | ) |   | $ | (.16 | ) |   | $ | .07 |   |   | $ | (.03 | ) |
|                                                                                                                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Year ended December 31, 2010                                                                                                                          |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                                                                                                                                        |   | $                                    | 356.8  |   |   | $ | 415.7 |   |   | $ | 413.2 |   |   | $ | 407.0 |   |
| Gross margin                                                                                                                                          |   |                                 | 66.1   |   |   |   | 89.4 |   |   |   | 100.1 |   |   |   | 107.2 |   |
| Operating income                                                                                                                                 |   |                                 | 17.6   |   |   |   | 35.4 |   |   |   | 53.3 |   |   |   | 55.5 |   |
|                                                                                                                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Net income(2)                                                                                                     |   | $                                    | 15.1   |   |   | $ | 6.4 |   |   | $ | 18.1 |   |   | $ | 24.2 |   |
|                                                                                                                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Net income attributable        to Valhi stockholders (2)             |   |                                 | 13.6   |   |   |   | 4.5 |   |   |   | 14.4 |   |   |   | 17.8 |   |
|                                                                                                                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per basic share:                                                                                                                            |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Net income attributable        to Valhi stockholders                      |   | $                                    | .10    |   |   | $ | .04 |   |   | $ | .13 |   |   | $ | .15 |   |
|                                                                                                                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|   | · | a $4.1 million after-tax gain on the sale of business in the first quarter, see Note 15; |
|--------|--------|------------------------------------------------------------------------------------------|

|   | · | a $18.1 million after-tax and noncontrolling interest charge as a result of a litigation settlement and contract termination in the first quarter, see Note 15; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a $6.0 million after-tax and noncontrolling interest gain in the second quarter for real property settlement, see Note 15; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | $7.1 million in the third quarter and $6.9 million in the fourth quarter in our tax provision related to a net decrease in our reserves for uncertain tax positions, see Note 12. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | a $24.4 million after noncontrolling interest non-cash income tax benefit in the first quarter, see Note 12; |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

|   | · | a $17.4 million after-tax and noncontrolling interest charge as a result of a litigation settlement in the first quarter, see Notes  9 and 17; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a $9.8 million after-tax and noncontrolling interest gain in the first quarter for insurance settlement, see Notes 15 and 17; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------|

|   | · | a $3.5 million after-tax and noncontrolling interest gain in the third quarter as a result of a legal settlement, see Note 15; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $5.2 million charge in the third quarter to our tax provision related to a net increase in our reserves for uncertain tax positions, see Note 12. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                  |   | December 31,  |    |
|---------------------------------------------------------------------------------------|--------|--------------------|---------|
|                                                                                  |   | 2009               |    |   | 2010 |   |
|                                                                                  |   |               |    |   |   |   |
| Current assets:                                                                       |   |               |    |   |   |   |
|   Cash and cash equivalents                                  |   | $                  | 1.4     |   |   | $ | 1.3 |   |
|   Restricted cash equivalents                                     |   |               | -       |   |   |   | .1 |   |
|   Accounts receivable                                                  |   |               | .5      |   |   |   | .3 |   |
|   Receivables from subsidiaries and affiliates:         |   |               |    |   |   |   |   |   |
|     Income taxes, net                                             |   |               | 13.3    |   |   |   | - |   |
|     Other                                                         |   |               | .4      |   |   |   | .8 |   |
|   Deferred income taxes                                           |   |               | 3.0     |   |   |   | 1.3 |   |
|   Other                                                                     |   |               | .1      |   |   |   | .2 |   |
|                                                                                  |   |               |    |   |   |   |   |   |
|       Total current assets                    |   |               | 18.7    |   |   |   | 4.0 |   |
|                                                                                  |   |               |    |   |   |   |   |   |
| Other assets:                                                                    |   |               |    |   |   |   |   |   |
|   Marketable securities                                           |   |               | 260.3   |   |   |   | 264.2 |   |
|   Investment in and advances to subsidiaries  |   |               | 813.2   |   |   |   | 1,004.2 |   |
|   Other assets                                                         |   |               | .7      |   |   |   | .4 |   |
|                                                                                  |   |               |    |   |   |   |   |   |
|       Total other assets                      |   |               | 1,074.2 |   |   |   | 1,268.8 |   |
|                                                                                  |   |               |    |   |   |   |   |   |
|       Total assets                                      |   | $                  | 1,092.9 |   |   | $ | 1,272.8 |   |
|                                                                                  |   |               |    |   |   |   |   |   |
| Current liabilities:                                                             |   |               |    |   |   |   |   |   |
|   Current maturities of long-term debt                                      |   | $                  | -       |   |   | $ | 30.1 |   |
|   Payables to subsidiaries and affiliates:              |   |               |    |   |   |   |   |   |
|     Income taxes, net                                   |   |               | -       |   |   |   | 4.5 |   |
|     Other                                                    |   |               | .1      |   |   |   | .1 |   |
|   Accounts payable and accrued liabilities              |   |               | 1.8     |   |   |   | .8 |   |
|                                                                                  |   |               |    |   |   |   |   |   |
|       Total current liabilities               |   |               | 1.9     |   |   |   | 35.5 |   |
|                                                                                  |   |               |    |   |   |   |   |   |
| Noncurrent liabilities:                                                          |   |               |    |   |   |   |   |   |
|   Long-term debt                                                  |   |               | 334.9   |   |   |   | 311.9 |   |
|   Deferred income taxes                                           |   |               | 311.8   |   |   |   | 362.7 |   |
|   Other                                                                     |   |               | 15.6    |   |   |   | 20.9 |   |
|                                                                                  |   |               |    |   |   |   |   |   |
|       Total noncurrent liabilities            |   |               | 662.3   |   |   |   | 695.5 |   |
|                                                                                  |   |               |    |   |   |   |   |   |
| Stockholders' equity                                                             |   |               | 428.7   |   |   |   | 541.8 |   |
|                                                                                  |   |               |    |   |   |   |   |   |
|       Total liabilities and stockholders’ equity  |   | $                  | 1,092.9 |   |   | $ | 1,272.8 |   |

----

|                                                                           |   | Years ended December 31, |      |
|--------------------------------------------------------------------------------|--------|--------------------------|-----------|
|                                                                           |   | 2008                     |      |   | 2009 |   |   | 2010 |   |
|                                                                           |   |                     |      |   |   |   |   |   |   |
| Revenues and other income:                                                     |   |                     |      |   |   |   |   |   |   |
|   Interest and dividend income                        |   | $                        | 27.0      |   |   | $ | 26.2 |   |   | $ | 26.1 |   |
|   Equity in earnings of subsidiaries   and affiliates |   |                     |  2.0 |   |   |   | (60.5 | ) |   |   |  69.8 |   |
|   Gain on sale of business                                           |   |                     | -         |   |   |   | 6.3 |   |   |   | - |   |
|   Other income, net                                             |   |                     | 2.3       |   |   |   | .1 |   |   |   | - |   |
|                                                                           |   |                     |      |   |   |   |   |   |   |   |   |   |
|     Total revenues and other income                        |   |                     | 31.3      |   |   |   | (27.9 | ) |   |   | 95.9 |   |
|                                                                           |   |                     |      |   |   |   |   |   |   |   |   |   |
| Costs and expenses:                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
|   General and administrative                               |   |                     | 6.6       |   |   |   | 6.3 |   |   |   | 5.7 |   |
|   Interest                                                           |   |                     | 24.2      |   |   |   | 24.5 |   |   |   | 28.0 |   |
|                                                                           |   |                     |      |   |   |   |   |   |   |   |   |   |
|     Total costs and expenses                               |   |                     | 30.8      |   |   |   | 30.8 |   |   |   | 33.7 |   |
|                                                                           |   |                     |      |   |   |   |   |   |   |   |   |   |
|   Income (loss) before income taxes                   |   |                     | .5        |   |   |   | (58.7 | ) |   |   | 62.2 |   |
|                                                                           |   |                     |      |   |   |   |   |   |   |   |   |   |
| Provision for income taxes (benefit)                       |   |                     | 1.3       |   |   |   | (24.5 | ) |   |   | 11.9 |   |
|                                                                           |   |                     |      |   |   |   |   |   |   |   |   |   |
|   Net income (loss)                                                  |   | $                        | (.8       | ) |   | $ | (34.2 | ) |   | $ | 50.3 |   |
|                                                                           |   |                     |      |   |   |   |   |   |   |   |   |   |
|                                                                           |   |                     |      |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                       |   | Years ended December 31, |       |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|------------|
|                                                                                                                                       |   | 2008                     |       |   | 2009 |   |   | 2010 |   |
|                                                                                                                                       |   |                     |       |   |   |   |   |   |   |
| Cash flows from operating activities:                                                                                                      |   |                     |       |   |   |   |   |   |   |
|   Net income (loss)                                                                                                         |   | $                        | (.8        | ) |   | $ | (34.2 | ) |   | $ | 50.3 |   |
|   Deferred income taxes                                                                                                |   |                     | (1.8       | ) |   |   | .5 |   |   |   | 17.4 |   |
|   Gain on sale of business                                                                                                       |   |                     | -          |   |   |   | (6.3 | ) |   |   | - |   |
|   Equity in earnings of subsidiaries   and affiliates                                    |   |                     | (2.0       | ) |   |   |  60.5 |   |   |   | (69.8 | ) |
|   Cash dividends from subsidiaries                                                                                |   |                     | 51.0       |   |   |   | 31.2 |   |   |   | 28.9 |   |
|   Other, net                                                                                                                |   |                     | .1         |   |   |   | (.1 | ) |   |   | - |   |
|   Net change in assets and liabilities                                                                  |   |                     | 8.1        |   |   |   | (26.8 | ) |   |   | 22.0 |   |
|                                                                                                                                       |   |                     |       |   |   |   |   |   |   |   |   |   |
|       Net cash provided by operating       activities |   |                     |  54.6 |   |   |   |  24.8 |   |   |   |  48.8 |   |
|                                                                                                                                       |   |                     |       |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                                                                  |   |                     |       |   |   |   |   |   |   |   |   |   |
|   Loans to subsidiaries and affiliates:                                                                      |   |                     |       |   |   |   |   |   |   |   |   |   |
|     Loans                                                                                                              |   |                     | (32.2      | ) |   |   | (55.2 | ) |   |   | (45.1 | ) |
|     Collections                                                                                                        |   |                     | -          |   |   |   | .6 |   |   |   | 38.1 |   |
|   Proceeds from sale of business                                                                                                 |   |                     | -          |   |   |   | 6.7 |   |   |   | .5 |   |
|   Investment in other subsidiary                                                                                  |   |                     | (3.1       | ) |   |   | (5.5 | ) |   |   | (4.0 | ) |
|   Other, net                                                                                                                |   |                     | (.2        | ) |   |   | (.8 | ) |   |   | - |   |
|                                                                                                                                       |   |                     |       |   |   |   |   |   |   |   |   |   |
|       Net cash used in investing activities                                              |   |                     | (35.5      | ) |   |   | (54.2 | ) |   |   | (10.5 | ) |
|                                                                                                                                       |   |                     |       |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                            |   | Years ended December 31, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                                                            |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                                                                                                                                            |   |                     |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                                                                                           |   |                     |   |   |   |   |   |   |   |
|   Indebtedness:                                                                                                                       |   |                     |   |   |   |   |   |   |   |
|     Borrowings                                                                                                              |   | $                        | 47.6   |   |   | $ | 70.7 |   |   | $ | - |   |
|     Principal payments                                                                                                 |   |                     | (40.3  | ) |   |   | (78.0 | ) |   |   | - |   |
|   Loans from affiliates:                                                                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Borrowings                                                                                                              |   |                     | 3.0    |   |   |   | 99.6 |   |   |   | 237.1 |   |
|     Principal payments                                                                                                      |   |                     | (.7    | ) |   |   | (17.7 | ) |   |   | (230.0 | ) |
|   Cash dividends paid                                                                                                                 |   |                     | (45.5  | ) |   |   | (45.4 | ) |   |   | (45.5 | ) |
|                                                                                                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
|       Net cash provided by (used in)       financing activities |   |                     | (35.9  | ) |   |   |  29.2 |   |   |   | (38.4 | ) |
|                                                                                                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents:                                                                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Net decrease                                                                                                                   |   |                     | (16.8  | ) |   |   | (.2 | ) |   |   | (.1 | ) |
|   Balance at beginning of year                                                                                    |   |                     | 18.4   |   |   |   | 1.6 |   |   |   | 1.4 |   |
|                                                                                                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Balance at end of year                                                                                          |   | $                        | 1.6    |   |   | $ | 1.4 |   |   | $ |  1.3 |   |
|                                                                                                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
| Supplemental disclosures:  Cash paid (received) for:                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Interest                                                                                                                |   | $                        | 24.1   |   |   | $ | 24.5 |   |   | $ | 27.9 |   |
|     Income taxes, net                                                                                             |   |                     | (6.2   | ) |   |   | .5 |   |   |   | (28.5 | ) |
|                                                                                                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Noncash investing activity -                                                                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Note receivable from sale of business                                                                                   |   |                     | -      |   |   |   | .8 |   |   |   | - |   |
|                                                                                                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |

----

|                                           |   | December 31, |   |
|------------------------------------------------|--------|--------------|--------|
|                                           |   | 2009         |   |   | 2010 |   |
|                                           |   |         |   |   |   |   |
| Investment in:                                 |   |         |   |   |   |   |
|   Kronos Worldwide, Inc. (NYSE: KRO) |   | $            | 447.9  |   |   | $ | 599.3 |   |
|   NL Industries (NYSE: NL)           |   |         | 264.2  |   |   |   | 328.9 |   |
|   Waste Control Specialists LLC      |   |         | 81.5   |   |   |   | 49.6 |   |
|   Tremont LLC                        |   |         | 15.1   |   |   |   | 15.4 |   |
|   Medite                             |   |         | (.1    | ) |   |   | (.3 | ) |
|       Total      |   |         | 808.6  |   |   |   | 992.9 |   |
|                                           |   |         |   |   |   |   |   |   |
| Loans to:                                      |   |         |   |   |   |   |   |   |
|   Waste Control Specialists LLC      |   |         | 4.6    |   |   |   | - |   |
|   NL Industries                      |   |         | -      |   |   |   | 11.3 |   |
|                                           |   |         |   |   |   |   |   |   |
|       Total      |   | $            | 813.2  |   |   | $ | 1,004.2 |   |
|                                           |   |         |   |   |   |   |   |   |
|                                           |   |         |   |   |   |   |   |   |

----

|                                                   |   | Years ended December 31, |   |
|--------------------------------------------------------|--------|--------------------------|--------|
|                                                   |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                                                   |   | (In millions)            |   |
|                                                   |   |                     |   |   |   |   |   |   |   |
| Equity in earnings of subsidiaries and Affiliates |   |                     |   |   |   |   |   |   |   |
|                                                   |   |                     |   |   |   |   |   |   |   |
| Kronos Worldwide                                       |   | $                        | 4.2    |   |   | $ | (21.6 | ) |   | $ | 73.8 |   |
| NL Industries                                          |   |                     | 19.4   |   |   |   | (16.9 | ) |   |   | 28.2 |   |
| Tremont LLC                                            |   |                     | (1.9   | ) |   |   | 6.0 |   |   |   | (.2 | ) |
| Waste Control Specialists LLC                          |   |                     | (22.6  | ) |   |   | (27.6 | ) |   |   | (31.9 | ) |
| Medite                                                 |   |                     | 2.9    |   |   |   | (.4 | ) |   |   | (.1 | ) |
|                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                          |   | $                        | 2.0    |   |   | $ | (60.5 | ) |   | $ | 69.8 |   |
|                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash dividends from subsidiaries                       |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Kronos Worldwide                                       |   | $                        | 29.0   |   |   | $ | - |   |   | $ | 7.3 |   |
| NL Industries                                          |   |                     | 20.2   |   |   |   | 20.2 |   |   |   | 20.2 |   |
| Tremont LLC                                            |   |                     | 1.8    |   |   |   | 11.0 |   |   |   | 1.4 |   |
|                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                          |   | $                        | 51.0   |   |   | $ | 31.2 |   |   | $ | 28.9 |   |

|                                                 |   | December 31, |   |
|------------------------------------------------------|--------|--------------|--------|
|                                                 |   | 2009         |   |   | 2010 |   |
|                                                 |   |         |   |   |   |   |
| Snake River Sugar Company                            |   | $            | 250.0  |   |   | $ | 250.0 |   |
| Contran credit facility                              |   |         | 54.9   |   |   |   | - |   |
| Promissory note payable to Contran                   |   |         | 30.0   |   |   |   | - |   |
| Kronos credit facility                               |   |         | -      |   |   |   | 61.9 |   |
| Promissory note payable to Waste Control Specialists |   |         | -      |   |   |   | 30.1 |   |
|     Total                        |   |         | 334.9  |   |   |   | 342.0 |   |
|   Less current maturities                  |   |         | -      |   |   |   | 30.1 |   |
|                                                 |   |         |   |   |   |   |   |   |
|     Total long-term debt         |   | $            | 334.9  |   |   | $ | 311.9 |   |

----

|                                                                              |   | Years ended December 31, |   |
|-----------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                              |   | 2008                     |   |   | 2009 |   |   | 2010 |   |
|                                                                              |   | (In millions)            |   |
|                                                                              |   |                     |   |   |   |   |   |   |   |
| Components of provision for income taxes (benefit): |   |                     |   |   |   |   |   |   |   |
|   Currently refundable                                        |   | $                        | (4.8   | ) |   | $ | (15.6 | ) |   | $ | (10.7 | ) |
|   Deferred income taxes (benefit)                        |   |                     | 6.1    |   |   |   | (8.9 | ) |   |   | 22.6 |   |
|                                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                                                     |   | $                        | 1.3    |   |   | $ | (24.5 | ) |   | $ | 11.9 |   |
|                                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash paid (received) for income taxes, net:         |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Subsidiaries                                                          |   | $                        | (11.0  | ) |   | $ | (1.9 | ) |   | $ | (12.5 | ) |
|   Contran                                                               |   |                     | 4.6    |   |   |   | 2.2 |   |   |   | (16.1 | ) |
|   Tax authorities                                                  |   |                     | .2     |   |   |   | .2 |   |   |   | .1 |   |
|                                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                                                     |   | $                        | (6.2   | ) |   | $ | .5 |   |   | $ | (28.5 | ) |

----

|                                                                                                                      |   |          |      |
|---------------------------------------------------------------------------------------------------------------------------|--------|---------------|-----------|
|                                                                                                                      |   | December 31,  |      |
|                                                                                                                      |   | 2009          |      |   | 2010 |   |
|                                                                                                                      |   | (In millions) |      |
|                                                                                                                      |   |          |      |   |   |   |
| Components of the net deferred tax asset (liability) -                            |   |          |      |   |   |   |
|  tax effect of temporary differences related to:                                       |   |          |      |   |   |   |
|     Investment in:                                                                                    |   |          |      |   |   |   |
|       The Amalgamated Sugar Company LLC                                           |   | $             | (114.6    | ) |   | $ | (120.7 | ) |
|       Kronos Worldwide                                                                 |   |          | (192.1    | ) |   |   | (243.9 | ) |
|     Federal and state loss carryforwards and other     income tax attributes |   |          |  5.3 |   |   |   |  13.8 |   |
|     Accrued liabilities and other deductible differences                     |   |          | 3.5       |   |   |   | 4.2 |   |
|     Valuation allowance                                                                               |   |          | -         |   |   |   | (2.7 | ) |
|     Other taxable differences                                                               |   |          | (10.9     | ) |   |   | (12.0 | ) |
|                                                                                                                      |   |          |      |   |   |   |   |   |
|       Total                                                                                 |   | $             | (308.8    | ) |   | $ | (361.3 | ) |
|                                                                                                                      |   |          |      |   |   |   |   |   |
| Current deferred tax asset                                                                                                |   | $             | 3.0       |   |   | $ | 1.4 |   |
| Noncurrent deferred tax liability                                                                                         |   |          | (311.8    | ) |   |   | (362.7 | ) |
|                                                                                                                      |   |          |      |   |   |   |   |   |
|       Total                                                                                 |   | $             | (308.8    | ) |   | $ | (361.3 | ) |

----