| 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                                                                       |

----

----

|   | · | 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 Metal 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 publicoffering; |
|--------|--------|--------------------------------------------------------|

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

|   | · | 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; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | 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. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------|

----

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

|   | · | The      cyclicality of certain of our businesses (such as Kronos’ 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 pricedecreases; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | · | 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 substitute products; |
|--------|--------|----------------------------------------------------|

|   | · | 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 productiondecisions; |
|--------|--------|-----------------------------------------------------|

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

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

|   | · | Restructuring      transactions involving us and ouraffiliates; |
|--------|--------|-----------------------------------------------------------------|

|   | · | Potential      consolidation or solvency of ourcompetitors; |
|--------|--------|-------------------------------------------------------------|

|   | · | Demand      for high performance marinecomponents; |
|--------|--------|----------------------------------------------------|

|   | · | The      extent to which our subsidiaries were to become unable to pay us      dividends; |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | · | Uncertainties      associated with new productdevelopment; |
|--------|--------|------------------------------------------------------------|

|   | · | 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 insurancerecoveries; |
|--------|--------|-----------------------------------------------------|

|   | · | Our      ability to renew or refinance creditfacilities; |
|--------|--------|----------------------------------------------------------|

|   | · | Our      ability to maintain sufficientliquidity; |
|--------|--------|---------------------------------------------------|

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

|   | · | The      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 and litigation surrounding environmental matters of NL and      Tremont); |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

----

| Chemicals  Kronos      Worldwide, Inc.                       | Our      chemicals segment is operated through our majority ownership of      Kronos.  Kronos is a leading global producer and marketer of      value-added titanium dioxide pigments (“TiO2”).  TiO2,      which imparts whiteness, brightness and opacity, is used for a variety of      manufacturing applications including: plastics, paints, paper and other      industrial products.  Kronos has production facilities in Europe      and North America.  TiO2      sales were over 90% of Kronos’ sales in 2008.                                                                                                                                                                                                                                                               |
|------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Component      Products  CompX      International Inc.  | We      operate in the component products industry through our majority ownership      of CompX.  CompX is a leading manufacturer of security products,      precision ball bearing slides and ergonomic computer support systems used      in the office furniture, transportation, postal, tool storage, appliance      and a variety of other industries.  CompX is also a leading      manufacturer of stainless steel exhaust systems, gauges and throttle      controls for the performance marine industry.  CompX has      production facilities in North America and Asia.                                                                                                                                                                                                                                 |
|                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Waste      Management  Waste      Control Specialists LLC    | WCS      is our wholly-owned subsidiary which owns and 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 is in the process of      constructing the byproduct disposal facility, which is expected to be      operational in the second half of 2009.  In January 2009, WCS      received a low-level radioactive waste disposal permit, and construction      of the low-level radioactive waste facility is currently expected to begin      in the second quarter of 2009, following the completion of some      pre-construction licensing and administrative matters, and is expected to      be operational in the second quarter of 2010. |
|                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

----

|   | · | We      own and operate an ilmenite mine in Norway pursuant to a governmental      concession with an unlimited term, and we are currently excavating a      second mine located near the first mine.  Ilmenite is a raw      material used directly as a feedstock by some sulfate-process TiO2      plants, including 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 aggregate      reserves that are expected to last for at least another 60      years. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We      manufacture and sell iron-based chemicals, which are co-products and      processed co-products of sulfate and chloride process TiO2      pigment production.  These co-product chemicals are marketed      through our Ecochem division, and are used primarily 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 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 products      are used primarily in pearlescentpigments. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Location                         |   | Description                                                                                           |
|----------------------------------|--------|-------------------------------------------------------------------------------------------------------|
| Leverkusen,      Germany (1)     |   | TiO2      production, Chloride and sulfate      process,  co-products                       |
| Nordenham,      Germany          |   | TiO2      production, Sulfate process, co-products                                                    |
| Langerbrugge,      Belgium       |   | TiO2      production, Chloride process, co-products, titanium chemicals      products                 |
| Fredrikstad,      Norway (2)     |   | TiO2      production, Sulfate process, co-products                                                    |
| Varennes,      Quebec            |   | TiO2      production, Chloride and sulfate process, slurry facility, titanium      chemicals products |
| Lake      Charles, Louisiana (3) |   | TiO2      production, Chloride process                                                                |
| Lake      Charles, Louisiana     |   | Slurry      facility                                                                                  |
| Hauge      I Dalane, Norway (4)  |   | Ilmenite      mine                                                                                    |

|   | (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 Ti02      production capacity, but we lease the land under the facility from Bayer      AG 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 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 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 Huntsman Holdings      LLC.  See Note 7 to the Consolidated Financial      Statements. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | We      are currently excavating a second mine located near our current mine in      Norway. |
|--------|-----|----------------------------------------------------------------------------------------------|

|  Production Process/Raw    Material                                     |   | Raw      Materials Procured or Mined |   |
|------------------------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                                         |   | (In      thousands of metric tons)        |   |
|                                                                         |   |                                      |   |
| Chloride process plants      -                                               |   |                                      |   |
|   purchased slag or      natural rutile ore                        |   |                                      | 422    |   |
|                                                                         |   |                                      |   |   |
| Sulfate process      plants:                                                 |   |                                      |   |   |
|   Raw ilmenite ore      mined and used   internally |   |                                      | 305    |   |
|   Purchased      slag                                              |   |                                      | 30     |   |

|                                |   |   |   |
|-------------------------------------|--------|--------|--------|
| Europe                              |   |   | 2,000  |   |
| Canada                              |   |   | 400    |   |
| United      States(1)               |   |   | 50     |   |
|      Total |   |   | 2,450  |   |

|   | · | 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 KeySet high security      system, which allows 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 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 tool boxes, 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 mountfreezers; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

|   | · | complimentary      accessories, such as ergonomic wrist rest aids, mouse pad supports and      flat screen computer monitor supportarms. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | 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     |   |               |

| ·   | zinc,      copper and brass (used in the Security Products business unit for the      manufacture of locking mechanisms); |
|--------------------|---------------------------------------------------------------------------------------------------------------------------|

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

| ·   | 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                               |   |                                       |

| ·   | shifting      the manufacture of some products to our lower cost    facilities, |
|--------------------|---------------------------------------------------------------------------------|

| ·   | working      to reduce costs and gain operational efficiencies through workforce      reductions and lean process improvements in all of our facilities,      and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | by      working with our customers to be their value-added supplier of choice by      offering customer support services which Asian based suppliers are      generally unable to provide. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                |   |   |     |
|-------------------------------------|--------|--------|----------|
| United      States                  |   |   | 658      |   |
| Canada(1)                           |   |   | 237      |   |
| Taiwan                              |   |   |  81 |   |
|      Total |   |   | 976      |   |
|                                |   |   |     |   |

|   | · | 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 industry in which we operate;and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

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

ITEM 1B.                      UNRESOLVEDSTAFF COMMENTS

|   | · | 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; and |
|--------|--------|----------------------------------------------|

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

|   | · | 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. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

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

|                                             |   |   High |   |   |   Low |   |   | Cashdividends paid |   |
|--------------------------------------------------|--------|------------------|--------|--------|-----------------|--------|--------|-------------------------|--------|
|                                             |   |             |   |   |            |   |   |                    |   |
| Year      ended December 31, 2007                |   |             |   |   |            |   |   |                    |   |
|                                             |   |             |   |   |            |   |   |                    |   |
|   First Quarter                   |   | $                | 31.32  |   |            | $      | 13.20  |                    |   | $ | .10 |   |
|   Second Quarter                  |   |             | 19.56  |   |            |   | 14.90  |                    |   |   | .10 |   |
|   Third Quarter                   |   |             | 25.15  |   |            |   | 15.44  |                    |   |   | .10 |   |
|   Fourth Quarter                  |   |             | 26.69  |   |            |   | 15.94  |                    |   |   | .10 |   |
|                                             |   |             |   |   |            |   |   |                    |   |   |   |   |
| Year ended December 31, 2008 |   |             |   |   |            |   |   |                    |   |   |   |   |
|                                             |   |             |   |   |            |   |   |                    |   |   |   |   |
|   First Quarter                   |   | $                | 23.70  |   |            | $      | 14.14  |                    |   | $ | .10 |   |
|   Second Quarter                  |   |             | 31.24  |   |            |   | 24.21  |                    |   |   | .10 |   |
|   Third Quarter                   |   |             | 27.64  |   |            |   | 14.04  |                    |   |   | .10 |   |
|   Fourth Quarter                  |   |             | 17.31  |   |            |   | 6.80   |                    |   |   | .10 |   |
|                                             |   |             |   |   |            |   |   |                    |   |   |   |   |
| First      Quarter 2009 through February 27      |   | $                | 15.48  |   |            | $      | 11.60  |                    |   | $ | .10 |   |

|                                            |   | December      31, |   |
|-------------------------------------------------|--------|-------------------|--------|
|                                            |   | 2003              |   |   | 2004 |   |   | 2005 |   |   | 2006 |   |   | 2007 |   |   | 2008 |   |
|                                            |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Valhi      common stock                         |   | $                 | 100    |   |   | $ | 109 |   |   | $ | 129 |   |   | $ | 184 |   |   | $ | 258 |   |   | $ | 177 |   |
| S&P      500 Composite Stock Price Index    |   |              | 100    |   |   |   | 111 |   |   |   | 116 |   |   |   | 135 |   |   |   | 142 |   |   |   | 90 |   |
| S&P      500 Industrial Conglomerates Index |   |              | 100    |   |   |   | 119 |   |   |   | 115 |   |   |   | 125 |   |   |   | 130 |   |   |   | 63 |   |

|      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, 2008  to December 31,  2008 |   |                                        |   79,017 |   |                                                       | $      | 13.68  |                                                                             |   |   |   - 0 -                                                                                                     |   |   |   |   4,006,600 |   |

----

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

|                                                                                             |   | Years ended December 31,                  |        |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------------|-------------|
|                                                                                             |   | 2004                                      |        |   | 2005 |   |   | 2006 |   |   | 2007 |   |   | 2008 |   |
|                                                                                             |   | (In      millions, except per share data) |        |
|                                                                                             |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |
| STATEMENTS      OF OPERATIONS DATA:                                                              |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net sales:                                                                      |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |
|     Chemicals                                                                |   | $                                         | 1,128.6     |   |   | $ | 1,196.7 |   |   | $ | 1,279.5 |   |   | $ | 1,310.3 |   |   | $ | 1,316.9 |   |
|     Component products                                                  |   |                                      | 182.6       |   |   |   | 186.3 |   |   |   | 190.1 |   |   |   | 177.7 |   |   |   | 165.5 |   |
|     Waste management                                                    |   |                                      | 8.9         |   |   |   | 9.8 |   |   |   | 11.8 |   |   |   | 4.2 |   |   |   | 2.9 |   |
|                                                                                             |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total      net sales                                         |   | $                                         | 1,320.1     |   |   | $ | 1,392.8 |   |   | $ | 1,481.4 |   |   | $ | 1,492.2 |   |   | $ | 1,485.3 |   |
|                                                                                             |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Operating income      (loss):                                                   |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Chemicals                                                           |   | $                                         | 102.4       |   |   | $ | 165.6 |   |   | $ | 138.1 |   |   | $ | 88.6 |   |   | $ | 52.0 |   |
|     Component products                                                  |   |                                      | 16.2        |   |   |   | 19.3 |   |   |   | 20.6 |   |   |   | 16.0 |   |   |   | 5.5 |   |
|     Waste management                                                    |   |                                      | (10.2       | ) |   |   | (12.1 | ) |   |   | (9.5 | ) |   |   | (14.1 | ) |   |   | (21.5 | ) |
|                                                                                             |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total      operating income                                  |   | $                                         | 108.4       |   |   | $ | 172.8 |   |   | $ | 149.2 |   |   | $ |  90.5 |   |   | $ |  36.0 |   |
|                                                                                             |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                             |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Equity in earnings of TIMET                                      |   | $                                         | 22.7        |   |   | $ | 64.9 |   |   | $ | 101.1 |   |   | $ |  26.9 |   |   | $ |  - |   |
|                                                                                             |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                             |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Income (loss) from continuing    operations  |   | $                                         | 225.5       |   |   | $ | 82.1 |   |   | $ | 141.7 |   |   | $ | (45.7 | ) |   | $ | (.8 | ) |
|   Discontinued operations                                                         |   |                                      | 3.7         |   |   |   | (.2 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                             |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Net income (loss)                                  |   | $                                         | 229.2       |   |   | $ | 81.9 |   |   | $ | 141.7 |   |   | $ | (45.7 | ) |   | $ | (.8 | ) |
|                                                                                             |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| DILUTED EARNINGS PER SHARE DATA:                                             |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Income (loss) from continuing    operations  |   | $                                         | 1.87        |   |   | $ | .69 |   |   | $ | 1.20 |   |   | $ | (.40 | ) |   | $ | (.01 | ) |
|                                                                                             |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net income (loss)                                                          |   | $                                         | 1.90        |   |   | $ | .69 |   |   | $ | 1.20 |   |   | $ | (.40 | ) |   | $ | (.01 | ) |
|                                                                                             |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Cash dividends                                                                  |   | $                                         | .24         |   |   | $ | .40 |   |   | $ | .40 |   |   | $ | .40 |   |   | $ | .40 |   |
|                                                                                             |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Weighted average common shares   outstanding           |   |                                      |  120.4 |   |   |   |  118.5 |   |   |   |  116.5 |   |   |   |  114.7 |   |   |   |  114.4 |   |
|                                                                                             |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| STATEMENTS OF CASH FLOW DATA:                                                |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Cash provided by      (used in):                                           |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Operating activities                                                |   | $                                         | 142.1       |   |   | $ | 104.3 |   |   | $ | 86.3 |   |   | $ | 63.5 |   |   | $ | (24.5 | ) |
|     Investing activities                                                |   |                                      | (58.1       | ) |   |   | 20.4 |   |   |   | (89.5 | ) |   |   | (65.4 | ) |   |   | (60.9 | ) |
|     Financing activities                                                |   |                                      | 78.4        |   |   |   | (115.8 | ) |   |   | (87.6 | ) |   |   | (56.1 | ) |   |   | (12.0 | ) |
|                                                                                             |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE SHEET DATA (at year end):                                       |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Total assets      (1)                                                           |   | $                                         | 2,690.5     |   |   | $ | 2,578.4 |   |   | $ | 2,804.7 |   |   | $ | 2,603.0 |   |   | $ | 2,389.4 |   |
|   Long-term debt                                                                  |   |                                      | 769.5       |   |   |   | 715.8 |   |   |   | 785.3 |   |   |   | 889.8 |   |   |   | 911.0 |   |
|   Stockholders’ equity      (1)(2)                                          |   |                                      | 876.1       |   |   |   | 797.3 |   |   |   | 866.8 |   |   |   | 618.4 |   |   |   | 468.8 |   |

|  (1) | We      adopted the asset and liability recognition provisions of Statement of      Financial Accounting Standard (“SFAS”) No. 158 as of December 31, 2006 and      the measurement date provisions of SFAS No. 158 as of December 31,      2007.  See Notes 11 and 18 to our Consolidated Financial      Statements. |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | We      adopted FASB Interpretation Number (“FIN”) 48 as of January 1,      2007.  See Note 18 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 ownership of      Kronos.  Kronos is a leading global producer and marketer of      value-added titanium dioxide pigments (“TiO2”).  TiO2 is      used for a variety of manufacturing applications, including plastics,      paints, paper and other industrialproducts. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Component Products – We      operate in the component products industry through our majority ownership      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, postal, tool      storage, appliance and a variety of other industries.  CompX is      also a leading manufacturer of stainless steel exhaust systems, gauges and      throttle controls for the performance marine  industry. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Waste Management – WCS      is our wholly-owned subsidiary which owns and 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 is in the process      constructing the byproduct disposal facility, which is expected to be      operational in the second half of 2009.  In January 2009 WCS      received a low-level radioactive waste disposal permit, and construction      of the low-level radioactive waste facility is currently expected to begin      in the second quarter of 2009, following the completion of some      pre-construction licensing and administrative matters, and is expected to      be operational in the second quarter of2010. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an      income tax charge recognized by our Chemicals Segment in 2007 primarily as      a result of a reduction in German taxrates; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------|

|   | · | ceasing      to record equity in earnings from TIMET due to the distribution of our      TIMET shares in the first quarter of2007; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an      income tax charge recognized by our Chemicals Segment related to an      adjustment of certain German tax attributes in  2007; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an      income tax benefit due to a net decrease in our reserve for uncertain tax      positions in 2007; |
|--------|--------|-----------------------------------------------------------------------------------------------------------|

|   | · | a      litigation settlement gain in 2008 received by  NL; |
|--------|--------|------------------------------------------------------------|

|   | · | lower      operating income from each of our segments in  2008; |
|--------|--------|-----------------------------------------------------------------|

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

|   | · | an      income tax benefit recognized by our Chemicals Segment in 2008 related to      a net reduction in our reserve for uncertain tax  positions; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an      income tax charge recognized in 2008 due to a net increase in our reserve      for uncertain tax positions; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

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

|   | · | a      charge of $.52 per diluted share as a result of the effect of a reduction      of the German income tax rates in2007; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      charge of $.05 per diluted share related to the adjustment of certain      German tax attributes within our Chemicals  Segment; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an      income tax benefit of $.03 per diluted share due to a net decrease in our      reserve for uncertain tax positions;and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | income      of $.03 per diluted share related to certain insurance recoveries      recognized by NL. |
|--------|--------|------------------------------------------------------------------------------------------------------|

|   | · | 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 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. |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

|   | · | an      income tax charge recognized by our Chemicals Segment in 2007 primarily as      a result of a reduction in German taxrates; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an      income tax benefit due to a net decrease in our reserve for uncertain tax      positions in 2007; |
|--------|--------|-----------------------------------------------------------------------------------------------------------|

|   | · | a      lower effective income tax rate in 2006 primarily due to the favorable      resolution in 2006 of audits in our Chemicals Segment’s operations in      Germany, Belgium and Norway; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | ceasing      to record equity in earnings from TIMET due to the distribution of our      TIMET shares in the first quarter of2007; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      gain in 2006 from the sale of certain land in  Nevada; |
|--------|--------|-----------------------------------------------------------------|

|   | · | lower      operating income from each of our segments in  2007; |
|--------|--------|-----------------------------------------------------------------|

|   | · | a      charge in 2006 from the redemption of our 8.875% Senior Secured      Notes; |
|--------|--------|------------------------------------------------------------------------------------|

|   | · | lower      interest expense in 2007 resulting from the April 2006 refinancing of our      Senior Secured Notes; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|

|   | · | lower      dividend income from the Amalgamated Sugar Company, LLC in 2007 as the      additional dividend it owed to us was completely paid in    2006. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      net income tax benefit of $.21 per diluted share at our Chemicals Segment      related to the net effect of the withdrawal of certain income tax      assessments previously made by Belgian and Norwegian tax authorities, the      favorable resolution of certain income tax issues related to our German      and Belgian operations and the enactment of a reduction in Canadian      federal income tax rates offset by the unfavorable resolution of certain      other income tax issues related to our German  operations; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | income      of $.20 per diluted share related to the sale of certain of our land in      Nevada; |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | · | a      charge related to the redemption of our 8.875% Senior Secured Notes of      $.09 per diluted share; |
|--------|--------|------------------------------------------------------------------------------------------------------------|

|   | · | a      gain of $.09 per diluted share related to TIMET’s sale of its minority      interest in VALTIMET, a manufacturing joint venture located in France;      and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | income      of $.03 per diluted share related to certain insurance recoveries      recognized by NL. |
|--------|--------|------------------------------------------------------------------------------------------------------|

|   | · | a      charge of $.52 per diluted share as a result of the effect of a reduction      of the German income tax rates in2007; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      charge of $.05 per diluted share related to the adjustment of certain      German tax attributes within our Chemicals  Segment; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an      income tax benefit of $.03 per diluted share due to a net decrease in our      reserve for uncertain tax positions;and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | income      of $.03 per diluted share related to certain insurance recoveries      recognized by NL. |
|--------|--------|------------------------------------------------------------------------------------------------------|

|   | · | lower      expected operating income from our Chemicals Segment due to anticipated      higher production costs; |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

|   | · | recording      a lower gain on litigation settlement in 2009;  and |
|--------|--------|--------------------------------------------------------------------|

|   | · | lower      operating losses at WCS as we expect more revenues with the completion of      the byproduct disposal facility in the second quarter of    2009. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 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 SFAS No. 157, 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 SFAS No.      157 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 18 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 $396.8 million at December 31, 2008 resulting primarily from our      various step acquisitions of Kronos and NL and to a lesser extent CompX’s      purchase of various businesses.  In accordance with SFAF No.      142, Goodwill and Other      Intangible Assets, we do not amortize  goodwill. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | We      perform a goodwill impairment test annually in the third quarter of each      year.  Goodwill is also evaluated for impairment if the book      value of its reporting unit exceeds its estimated fair value.  A      reporting unit can be a segment or an operating division based on the      operations of the segment.  For example, our Chemicals Segment      produces a globally coordinated homogeneous product whereas our Component      Products Segment operates as three distinct business units.  For      our Chemicals Segment, we use Level 1 inputs of publicly traded market      prices to compare the book value to assess impairment.  Because      we test for goodwill at a reporting unit level for our Component Products      Segment, we use Level 3 inputs of a discounted cash flow technique since      Level 1 inputs of market prices are not available at the reporting unit      level.  If the fair value is less than the book value, the asset      is written down to the estimated fairvalue. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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 forecasted growth rates and our cost      of capital, are consistent with our internal projections and operating      plans.  However, different assumptions and estimates could      result in materially different findings which could result in the      recognition of a material goodwillimpairment. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Long-lived assets – We      account for our long-lived assets, including our investment in WCS, in      accordance with SFAS No. 144, Accounting for the Impairment      or Disposal of Long-Lived Assets. We assess property, equipment and      capitalized permit costs for impairment only when circumstances as      specified in SFAS No. 144 indicate an impairment may      exist.  During 2008, as a result of continued operating losses,      certain long-lived assets of our Waste Management Segment were evaluated      for impairment as of December 31, 2008.  WCS has had limited      operations as it seeks regulatory approval for several licenses it needs      for full scale operations.  In January 2009, WCS received an      order for the final license it needs to commence full scale      operations.  We have begun construction of the byproduct      disposal facility which we expect to begin operations in the second      quarter of 2009 and currently plan to commence construction of the      low-level and mixed low-level site in the second half of 2009, following      the completion of some pre-construction licensing and administrative      matters.  We estimate it will cost approximately $70 million to      construct this facility which will be incurred over the construction      period from the second quarter of 2009 until the third quarter of      2010.  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, 2008 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,      different assumptions and estimates could result in materially different      findings which could result in the recognition of a material asset      impairment. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Employee benefit plan costs -      We provide a range of benefits including various defined benefit      pension and other postretirement benefits 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 in accordance with      SFAS 109, Accounting for Income Taxes.  While we have considered      future taxable income and ongoing prudent and feasible tax planning      strategies in assessing the need for a deferred income tax asset 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.  If such changes      take place, there is a risk that an adjustment to our deferred income tax      asset valuation allowance may be required that would either increase or      decrease, as applicable, our reported net income in the period such change      in estimate was made.  For example, our Chemicals Segment has      substantial net operating loss carryforwards in Germany (the equivalent of      $817 million for German corporate purposes and $229 million for German      trade tax purposes at December 31, 2008).  At December 31, 2008, 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 generated cumulative income in Germany over the most recent      three-year period and consequently utilized a portion of such      carryforwards during that period and (iii) we currently expect to utilize      the remainder of such carryforwards over the long      term.  However, prior to the complete utilization of these      carryforwards, particularly if the current economic downturn continues and      we were to generate operating losses in our German operations for an      extended period of time, it is possible we might conclude the benefit of      the 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 SFAS No. 5, 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, 2008 we      have recorded total accrued environmental liabilities of $52.9      million. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Chemicals      – allowance for doubtful accounts, reserves for obsolete or unmarketable      inventories, impairment of equity method investees, goodwill and other      long-lived assets, defined benefit pension and OPEB plans and loss      accruals. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Component      Products – reserves for obsolete or unmarketable inventories, impairment      of goodwill and long-lived assets and loss  accruals. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | · | TiO2      average selling prices; |
|--------|--------|-----------------------------------|

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

|   | · | TiO2      sales and production volumes; and |
|--------|--------|---------------------------------------------|

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

|                                                                        |   | Years ended December 31,   |    |   | % Change |   |
|-----------------------------------------------------------------------------|--------|----------------------------|---------|--------|----------|--------|
|                                                                        |   | 2006                       |    |   | 2007     |   |   | 2008 |   |   |   | 2006-07 |   |   |   | 2007-08 |   |
|                                                                        |   | (Dollars      in millions) |    |   |     |   |   |   |   |   |   |
|                                                                        |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                                                              |   | $                          | 1,279.5 |   |     | $      | 1,310.3 |   |   | $ | 1,316.9 |   |   |   | 2 | % |   |   | 1 | % |
| Cost of goods      sold                                           |   |                       | 980.8   |   |     |   | 1,062.2 |   |   |   | 1,098.7 |   |   |   | 8 | % |   |   | 3 | % |
|                                                                        |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross margin                                                           |   | $                          | 298.7   |   |     | $      | 248.1 |   |   | $ | 218.2 |   |   |   | (17 | )% |   |   | (12 | )% |
|                                                                        |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income                                                       |   | $                          | 138.1   |   |     | $      | 88.6 |   |   | $ | 52.0 |   |   |   | (36 | )% |   |   | (41 | )% |
|                                                                        |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent of net sales:                                        |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Cost of       sales                                   |   |                       | 77      | %      |     |   | 81 | % |   |   | 83 | % |   |   |   |   |   |   |   |   |
|   Gross margin                                               |   |                       | 23      | %      |     |   | 19 | % |   |   | 17 | % |   |   |   |   |   |   |   |   |
|   Operating income                                           |   |                       | 11      | %      |     |   | 7 | % |   |   | 4 | % |   |   |   |   |   |   |   |   |
|                                                                        |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TiO2 operating statistics:                                        |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Sales volumes*                                             |   |                       | 511     |   |     |   | 519 |   |   |   | 478 |   |   |   | 1 | % |   |   | (8 | )% |
|   Production volumes*                                        |   |                       | 516     |   |     |   | 512 |   |   |   | 514 |   |   |   | (1 | )% |   |   | - | % |
|   Production rate as percent of capacity |   |  Full                 |    |   |     | 98     | % |   |   | 97 | % |   |   |   |   |   |   |   |   |
|                                                                        |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent change in net sales:                            |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   TiO2 product pricing                                  |   |                       |    |   |     |   |   |   |   |   |   |   |   |   | (4 | )% |   |   | 2 | % |
|   TiO2 sales volumes                                    |   |                       |    |   |     |   |   |   |   |   |   |   |   |   | 1 | % |   |   | (8 | )% |
|   TiO2 product mix                                      |   |                       |    |   |     |   |   |   |   |   |   |   |   |   | - | % |   |   | 2 | % |
| Changes      in currency exchange rates                                     |   |                       |    |   |     |   |   |   |   |   |   |  5 | % |   |   |  5 | % |
|                                                                        |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                                       |   |                       |    |   |     |   |   |   |   |   |   |  2 | % |   |   |  1 | % |

|                              |   | Increase      (decrease) – Year ended December    31, |   |
|-----------------------------------|--------|------------------------------------------------------------------|--------|
|                              |   | 2006 vs. 2007                                               |   |   | 2007 vs. 2008 |   |
|                              |   | (In      millions)                                               |   |
| Impact      on:                   |   |                                                             |   |   |   |   |
|   Net      sales        |   | $                                                                | 65     |   |   | $ | 61 |   |
|   Operating      income |   |                                                             | (4     | ) |   |   | (4 | ) |

|                                |   | Years ended December 31,   |   |   | % Change |   |
|-------------------------------------|--------|----------------------------|--------|--------|----------|--------|
|                                |   | 2006                       |   |   | 2007     |   |   | 2008 |   |   |   | 2006-07 |   |   |   | 2007-08 |   |
|                                |   | (Dollars      in millions) |   |   |     |   |   |   |   |   |   |
|                                |   |                       |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      sales                      |   | $                          | 190.1  |   |     | $      | 177.7 |   |   | $ | 165.5 |   |   |   | (7 | )% |   |   | (7 | )% |
| Cost      of goods sold             |   |                       | 143.6  |   |     |   | 132.5 |   |   |   | 125.7 |   |   |   | (8 | )% |   |   | (5 | )% |
|                                |   |                       |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      margin                   |   | $                          | 46.5   |   |     | $      | 45.2 |   |   | $ | 39.8 |   |   |   | (3 | )% |   |   | (12 | )% |
|                                |   |                       |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income               |   | $                          | 20.6   |   |     | $      | 16.0 |   |   | $ | 5.5 |   |   |   | (22 | )% |   |   | (66 | )% |
|                                |   |                       |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent      of net sales:          |   |                       |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Cost      of goods sold |   |                       | 76     | %      |     |   | 75 | % |   |   | 76 | % |   |   |   |   |   |   |   |   |
|   Gross      margin       |   |                       | 24     | %      |     |   | 25 | % |   |   | 24 | % |   |   |   |   |   |   |   |   |
|   Operating      income   |   |                       | 11     | %      |     |   | 9 | % |   |   | 3 | % |   |   |   |   |   |   |   |   |

| ·   | a      negative impact of approximately $5.4 million relating to lower order      rates from many of our customers resulting from unfavorable economic      conditions in North America, and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | increased      raw material costs that we were not able to fully recover through sales      price increases by approximately $1.0 million due to the competitive      nature of the markets we serve. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the      one-time $2.7 million of facility consolidation costs incurred in      2007; |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | $1.8      million in lower depreciation expense in 2008 due to a reduction in      capital expenditures for shorter lived assets over the last several years      in response to lower sales; and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the      $1.3 million favorable effect on operating income of changes in foreign      currency exchange rates. |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | a      higher portion of the sales decline in 2007 occurring among lower margin      products; |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | an      increased percentage of sales from our higher margin Marine business;      and |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | improved      operating efficiency within our recently acquired Marine      operations. |
|--------------------|-----------------------------------------------------------------------------------------|

| ·   | the      $2.7 million one-time facility consolidation costs noted      above; |
|--------------------|-------------------------------------------------------------------------------|

| ·   | a      $2.4 million unfavorable effect of relative changes in foreign currency      exchange rates (including the $1.2 million related to foreign exchange      transaction losses noted above); |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | lower      sales to the office furniture industry due to competition from lower      priced Asian manufacturers; and |
|--------------------|----------------------------------------------------------------------------------------------------------------------|

| ·   | lower      order rates from many of our customers due to unfavorable economic      conditions. |
|--------------------|------------------------------------------------------------------------------------------------|

|                              |   | Increase      (decrease) – Year ended December    31, |   |
|-----------------------------------|--------|------------------------------------------------------------------|--------|
|                              |   | 2006 vs. 2007                                               |   |   | 2007 vs. 2008 |   |
|                              |   | (In      millions)                                               |   |
|                              |   |                                                             |   |   |   |   |
| Impact      on:                   |   |                                                             |   |   |   |   |
|   Net      sales        |   | $                                                                | .9     |   |   | $ | .4 |   |
|   Operating      income |   |                                                             | (2.4   | ) |   |   | 1.3 |   |

| ·   | Our      Security Products reporting unit is the least affected by the softness in      consumer demand, because we sell products to a diverse number of business      customers across a wide range of markets, most of which are not directly      impacted by changes in consumer demand.  While demand within      this reporting unit is not as significantly affected by softness in the      overall economy, we expect sales to be lower over the next twelve      months. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      Furniture Components reporting unit sales are primarily concentrated in      the office furniture, toolbox, home appliance and a number of other      industries.  Several of these industries, primarily toolbox and      home appliance, are more directly affected by consumer demand than those      served by our Security Products reporting unit.  We expect many      of the markets served by Furniture Components to continue to experience      low demand over the next twelvemonths. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      Marine Component reporting unit has been the most affected by the slowing      economy as the decrease in consumer confidence, the decline in home      values, a tighter credit market and volatile fuel costs have resulted in a      significant reduction in consumer spending in the marine      market.  We do not expect the marine market to recover until      consumer confidence returns and home values  stabilize. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                    |   | Years ended December 31, |   |
|-------------------------|--------|--------------------------|--------|
|                    |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                    |   | (In      millions)       |   |
|                    |   |                     |   |   |   |   |   |   |   |
| Net      sales          |   | $                        | 11.8   |   |   | $ | 4.2 |   |   | $ | 2.9 |   |
| Cost      of goods sold |   |                     | 15.0   |   |   |   | 11.7 |   |   |   | 14.7 |   |
|                    |   |                     |   |   |   |   |   |   |   |   |   |   |
| Gross      margin       |   | $                        | (3.2   | ) |   | $ | (7.5 | ) |   | $ | (11.8 | ) |
|                    |   |                     |   |   |   |   |   |   |   |   |   |   |
| Operating      loss     |   | $                        | (9.5   | ) |   | $ | (14.1 | ) |   | $ | (21.5 | ) |

| ·   | Litigation      and related costs at NL of $14.6 million in 2008 compared to $22.1 in      2007; and |
|--------------------|------------------------------------------------------------------------------------------------------|

| ·   | Environmental      expenses of $6.5 million in 2008, compared to $4.4 million in      2007. |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | Litigation      and related costs at NL of $22.1 million in 2007 compared to $15.3 million      in 2006; and |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | Environmental      expense of $4.4 million in 2007, compared to $4.0 million in      2006. |
|--------------------|--------------------------------------------------------------------------------------------|

|   | · | 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. |
|--------|--------|----------------------------------------------------------------------------------------------------|

|   | · | a      charge of $87.4 million related to the reduction of our net deferred      income tax asset in Germany resulting from the reduction in its income tax      rates; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      charge of $8.7 million related to the adjustment of certain German income      tax attributes; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------|

|   | · | a      $3.8 million benefit resulting from a net reduction in our reserve for      uncertain tax positions. |
|--------|--------|-------------------------------------------------------------------------------------------------------------|

|   | · | an      income tax benefit of $21.7 million related to an increase in the amount      of our German trade tax net operating loss carryforward, as a result of      the resolution of certain income tax audits in  Germany; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an      income tax benefit of $10.4 million primarily resulting from the reduction      in our income tax contingency reserves related to favorable developments      of income tax audit issues in Belgium, Norway and  Germany; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an      income tax benefit of $1.4 million related to the favorable resolution of      certain income tax audit issues in Germany and Belgium;  and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      $1.3 million benefit resulting from the enactment of a reduction in      Canadian income tax rates.  |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

|                      |   | Discount      rates used for:                                 |   |
|---------------------------|--------|---------------------------------------------------------------|--------|
|                      |   | Obligations      atDecember      31, 2006 and expense in 2007 |   |   | Obligations      atDecember      31, 2007 and expense in 2008 |   |   | Obligations      atDecember      31, 2008 and expense in 2009 |   |
|                      |   |                                                          |   |   |   |   |   |   |   |
| Kronos      and NL plans: |   |                                                          |   |   |   |   |   |
|   Germany       |   |                                                          | 4.5    | % |   |   | 5.5 | % |   |   | 5.8 | % |
|   Canada        |   |                                                          | 5.0    |   |   |   | 5.3 |   |   |   | 6.5 |   |
|   Norway        |   |                                                          | 4.8    |   |   |   | 5.5 |   |   |   | 5.8 |   |
|   U.S.          |   |                                                          | 5.8    |   |   |   | 6.1 |   |   |   | 6.1 |   |
| Medite      plan          |   |                                                          | 5.8    |   |   |   | 6.4 |   |   |   | 6.2 |   |

|   | · | During      2008, substantially all of the Kronos, NL and Medite 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.  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.  During the 20-year history      of the CMRT through December 31, 2008, the average annual rate of return      of the CMRT (excluding the CMRT’s investment in TIMET common stock) has      been 11%. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 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 60% to equity      securities and 40% to fixed income securities, with an expected 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, 64% 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, 2007 |   |
|------------------------------------------------------|--------|-------------------|--------|
|                                                 |   | CMRT              |   |   | Germany |   |   | Canada |   |   | Norway |   |
|                                                 |   |              |   |   |   |   |   |   |   |   |   |   |
| Equity      securities and limited partnerships |   |              | 98     | % |   |   | 28 | % |   |   | 60 | % |   |   | 18 | % |
| Fixed      income securities                         |   |              | -      |   |   |   | 49 |   |   |   | 34 |   |   |   | 68 |   |
| Real      estate                                     |   |              | 2      |   |   |   | 12 |   |   |   | - |   |   |   | - |   |
| Cash,      cash equivalents and other                |   |              | -      |   |   |   | 11 |   |   |   | 6 |   |   |   | 14 |   |
|                                                 |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                        |   |              | 100    | % |   |   | 100 | % |   |   | 100 | % |   |   | 100 | % |

|                                                 |   | December 31, 2008 |   |
|------------------------------------------------------|--------|-------------------|--------|
|                                                 |   | CMRT              |   |   | Germany |   |   | Canada |   |   | Norway |   |
|                                                 |   |              |   |   |   |   |   |   |   |   |   |   |
| Equity      securities and limited partnerships |   |              | 68     | % |   |   | 24 | % |   |   | 53 | % |   |   | 14 | % |
| Fixed      income securities                         |   |              | 29     |   |   |   | 52 |   |   |   | 39 |   |   |   | 83 |   |
| Real      estate                                     |   |              | 2      |   |   |   | 12 |   |   |   | - |   |   |   | - |   |
| Cash,      cash equivalents and other                |   |              | 1      |   |   |   | 12 |   |   |   | 8 |   |   |   | 3 |   |
|                                                 |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                        |   |              | 100    | % |   |   | 100 | % |   |   | 100 | % |   |   | 100 | % |

|                      |   | 2006   |   |   | 2007   |   |   | 2008   |   |
|---------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                      |   |   |   |   |   |   |   |   |   |
| Kronos      and NL plans: |   |   |   |   |   |   |   |   |   |
|   Germany       |   |   | 5.3    | %      |   |   | 5.8    | %      |   |   | 5.3 | % |
|   Canada        |   |   | 7.0    |   |   |   | 6.8    |   |   |   | 6.3 |   |
|   Norway        |   |   | 6.5    |   |   |   | 5.5    |   |   |   | 6.1 |   |
|   U.S.          |   |   | 10.0   |   |   |   | 10.0   |   |   |   | 10.0 |   |
| Medite      plan          |   |   | 10.0   |   |   |   | 10.0   |   |   |   | 10.0 |   |

|   | · | lower      consolidated operating income in 2008 of $54.5 million, due to lower      earnings across all of our segments, particularly at our Chemicals      Segment; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | higher      net cash used by changes in receivables, inventories, payables and accrued      liabilities in 2008 of $61.1 million, primarily due to relative changes in      Kronos’ inventory levels; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | higher      cash paid for interest in 2007 of $5.4 million, primarily as a result of      the effects of currency exchange rates on the semiannual interest payments      on our 6.5% Senior Secured Notes and higher average debt      balances; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | lower      cash paid for income taxes in 2008 of $17.1 million primarily due to our      lower earnings in 2008 as compared to 2007;and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | higher      net distributions from our TiO2      joint venture in 2008 of $14.9 million due to relative changes in its cash      requirements. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | lower      consolidated operating income in 2007 of $58.7 million, due to lower      earnings across all of our segments, particularly at our Chemicals      Segment; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      $20.9 million call premium we paid in 2006 when we prepaid our 8.85%      Senior Secured Notes, which is required to be included in cash flows from      operating activities; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | lower      net cash used by changes in receivables, inventories, payables and accrued      liabilities in 2007 of $11.6 million, due primarily to relative changes in      Kronos’ inventory levels; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | lower      cash paid for income taxes in 2007 of $10.6 million due in part to the      2006 payment of certain income taxes associated with the settlement of      prior year income tax audits; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | higher      net cash contributed to our Ti02      joint venture which increased $7.2 million in 2007 as compared to      2006. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | Kronos’      average days sales outstanding (“DSO”) increased from 63 days at December      31, 2007 to 64 days at December 31, 2008, due to the timing of collection      of accounts receivables balances at the end of 2008.  CompX’s      average DSO decreased from 44 days at December 31, 2007 to 41 days at      December 31, 2008 due to the timing of collections on a lower accounts      receivable balance as of December 31,2008 |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Kronos’      average number of days in inventory (“DII”) increased from 59 days at      December 31, 2007 to 113 days at December 31, 2008 as our sales volumes      decreased in 2008 (mostly in the fourth quarter) and our production      volumes exceeded our TiO2      sales volumes during the last half of 2008. CompX’s average DII increased      from 66 days at December 31, 2007 to 70 days at December 31, 2008      primarily due to lower sales in the fourth quarter of 2008 which impacted      the DII calculation although in absolute terms, CompX reduced inventory by      $1.6 million from 2007 to 2008. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Kronos’      average days sales outstanding (“DSO”) increased from 61 days at December      31, 2006 to 63 days at December 31, 2007, due to the timing of collection      of higher accounts receivables balances at the end of      2007.  CompX’s average DSO increased from 41 days at December      31, 2006 to 44 days at December 31, 2007 due to timing of collection on      the higher accounts receivable balance at the end of  2007. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Kronos’      average number of days in inventory (“DII”) decreased from 68 days at      December 31, 2006 to 59 days at December 31, 2007 due to the effects of      higher Ti02      sales volumes and lower Ti02      production volumes.  CompX’s average DII increased from 57 days      at December 31, 2006 to 66 days at December 31, 2007 due primarily to      higher cost of commodity raw materials during 2007 and higher inventory      balances associated with its facility consolidation in    2007. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                  |   | Years ended December 31, |   |
|-------------------------------------------------------|--------|--------------------------|--------|
|                                                  |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                                  |   | (In      millions)       |   |
|                                                  |   |                     |   |   |   |   |   |   |   |
| Cash      provided by (used in) operating activities: |   |                     |   |   |   |   |   |   |   |
|   Kronos                                    |   | $                        | 71.8   |   |   | $ | 89.9 |   |   | $ | 2.7 |   |
|   NL      Parent                            |   |                     | 6.9    |   |   |   | (11.2 | ) |   |   | (11.5 | ) |
|   CompX                                     |   |                     | 27.4   |   |   |   | 11.9 |   |   |   | 15.7 |   |
|   Waste      Control Specialists            |   |                     | (3.9   | ) |   |   | (11.2 | ) |   |   | (9.9 | ) |
|   Tremont                                   |   |                     | (1.5   | ) |   |   | (3.1 | ) |   |   | (.7 | ) |
|   Valhi      exclusive of subsidiaries      |   |                     | 96.6   |   |   |   | 59.9 |   |   |   | 54.6 |   |
|   Other                                     |   |                     | (1.1   | ) |   |   | (.7 | ) |   |   | (1.6 | ) |
|   Eliminations                              |   |                     | (109.9 | ) |   |   | (72.0 | ) |   |   | (73.8 | ) |
|                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
|       Total             |   | $                        | 86.3   |   |   | $ | 63.5 |   |   | $ | (24.5 | ) |
|                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |

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

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

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

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

|   | · | other      marketable securities of $23.3million; |
|--------|--------|---------------------------------------------------|

|   | · | CompX      common stock through their stock repurchase program for $3.3 million;      and |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | · | TIMET      common stock for $.7 million. |
|--------|--------|------------------------------------------|

|   | · | Kronos      common stock for $25.4 million; |
|--------|--------|---------------------------------------------|

|   | · | TIMET      common stock for $18.7 million; |
|--------|--------|--------------------------------------------|

|   | · | CompX      common stock for $2.3 million; and |
|--------|--------|-----------------------------------------------|

|   | · | other      marketable securities for $43.4million. |
|--------|--------|----------------------------------------------------|

|   | · | sold      other marketable securities for $42.9million; |
|--------|--------|---------------------------------------------------------|

|   | · | sold      certain land holdings in Nevada for $37.9 million;  and |
|--------|--------|-------------------------------------------------------------------|

|   | · | acquired      a high performance marine components products company for $9.8 million;      and |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | made      net borrowings of $44.4 million on Kronos’ European credit      facility; |
|--------|--------|-------------------------------------------------------------------------------------------|

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

|   | · | repaid      $2.6 million under CompX’s promissory note payable to TIMET;      and |
|--------|--------|-----------------------------------------------------------------------------------------|

|   | · | borrowed      a net of $9 million under Kronos’ U.S. bank credit    facility. |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | borrowed      and repaid $4.4 million under Kronos’ Canadian revolving credit      facility; |
|--------|--------|----------------------------------------------------------------------------------------------------|

|   | · | repaid      a net $5.1 million under Kronos’ U.S. bank credit facility;      and |
|--------|--------|----------------------------------------------------------------------------------------|

|   | · | repaid      $1.5 million of certain of CompX’sindebtedness. |
|--------|--------|-------------------------------------------------------------------|

|   | · | KII’s      euro 400 million aggregate principal amount of its 6.5% Senior Secured      Notes ($560.0 million at December 31, 2008) due in  2013; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | · | CompX’s      promissory note payable to TIMET ($43.0 million outstanding at December      31, 2008) which has quarterly principal repayments of $250,000 and is due      in 2014; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Kronos’      U.S. revolving credit facility ($13.7 million outstanding) due in      2011; |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | KII's      European revolving credit facility ($42.2 million outstanding) due in      2011; |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | Valhi’s  revolving      credit facility ($7.3 million outstanding) due in 2010;  and |
|--------|--------|------------------------------------------------------------------------------------------------------|

|   | · | approximately      $4.2 million of other indebtedness. |
|--------|--------|--------------------------------------------------------|

|   | · | $112      million under Kronos’ various U.S. and non-U.S. credit facilities(1); |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | $68      million under Valhi’s revolving bank credit facility;  and |
|--------|--------|---------------------------------------------------------------------------|

|   | · | $50      million under CompX’s revolving creditfacility. |
|--------|--------|----------------------------------------------------------------|

| (1) | $70      million of Kronos’ borrowing availability is related to the European      credit facility and is subject to being in compliance with financial      covenants or obtaining a waiver or amendment to the credit facility, as      more fully described in Outstanding Debt      Obligations. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                        |   |               |   |
|-------------------------------------------------------------|--------|--------------------|--------|
|                                                        |   | Amount             |   |
|                                                        |   | (In      millions) |   |
|                                                        |   |               |   |
|   Valhi      exclusive of its subsidiaries        |   | $                  | 9.3    |   |
|   Kronos                                          |   |               | 18.6   |   |
|   NL      Parent                                  |   |               | 27.8   |   |
|   CompX                                           |   |               | 14.4   |   |
|   Tremont                                         |   |               | 8.1    |   |
|   Waste      Control Specialists                  |   |               | 2.5    |   |
|                                                        |   |               |   |   |
| Total      cash, cash equivalents and marketable securities |   | $                  | 80.7   |   |

|   | · | $29      million in our Chemicals Segment; |
|--------|--------|--------------------------------------------|

|   | · | $4      million in our Component Products Segment;and |
|--------|--------|-------------------------------------------------------|

|   | · | $70      million in our Waste ManagementSegment. |
|--------|--------|--------------------------------------------------|

|   | · | 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 aparty. |
|--------|--------|-------------------------------------------------------|

|                                                                                                              |   | Payment due date   |               |
|-------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------------------|
|  Contractual commitment                                                                                      |   | 2009               |               |   |   | 2010/2011 |   |   |   | 2012/2013 |   |   | 2014      and after |   |   | Total |   |
|                                                                                                              |   | (In      millions) |               |
|                                                                                                              |   |               |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Indebtedness(1):                                                                                                  |   |               |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Principal                                                                                             |   | $                  | 9.4                |   |   | $ | 60.1 |   |   | $ | 562.9 |   |   | $ | 288.0 |   |   | $ | 920.4 |   |
|   Interest                                                                                              |   |               | 25.8               |   |   |   | 51.1 |   |   |   | 50.9 |   |   |   | 306.9 |   |   |   | 434.7 |   |
|                                                                                                              |   |               |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      leases(2)                                                                                          |   |               | 5.9                |   |   |   | 7.2 |   |   |   | 3.9 |   |   |   | 18.9 |   |   |   | 35.9 |   |
|                                                                                                              |   |               |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Kronos’      long-term supply contracts      for the purchase of      TiO2      feedstock(3) |   |               |    229.0 |   |   |   |   276.0 |   |   |   |    - |   |   |   |    - |   |   |   |    505.0 |   |
|                                                                                                              |   |               |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Kronos’      long-term service and      other supply contracts(4)                                      |   |               |  48.4         |   |   |   |  51.5 |   |   |   |  11.3 |   |   |   |  1.8 |   |   |   |  113.0 |   |
|                                                                                                              |   |               |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CompX      raw material and other      purchase commitments(5)                                               |   |               |  16.5         |   |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  16.5 |   |
|                                                                                                              |   |               |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed      asset acquisitions(2)                                                                                  |   |               | 43.7               |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 43.7 |   |
|                                                                                                              |   |               |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      taxes(6)                                                                                              |   |               | 6.2                |   |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   | 6.2 |   |
|                                                                                                              |   |               |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                                                                             |   | $                  | 384.9              |   |   | $ | 445.9 |   |   | $ | 629.0 |   |   | $ | 615.6 |   |   | $ | 2,075.4 |   |

| (1) | The      amount shown for indebtedness involving revolving credit facilities is      based upon the actual amount outstanding at December 31, 2008, and the      amount shown for interest for any outstanding variable-rate indebtedness      is based upon the December 31, 2008 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 ($560.0 million at      December 31, 2008), which is denominated in the euro.  See Item      7A – “Quantitative and Qualitative Disclosures About Market Risk” and Note      9 to our Consolidated FinancialStatements. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| (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, and 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, 2008 exchange      rates. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | CompX’s      purchase obligations consist of all open purchase orders and contractual      obligations (primarily commitments to purchase raw materials) and is 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 current      income taxes payable including the net amount payable to Contran under our      tax sharing agreement at December 31, 2008, which is assumed to be paid      during 2009. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (1) | Our      obligation 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.” |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | 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. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | 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 $21.8 million to our defined benefit pension      and OPEB plans during 2009. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | 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      Notes 12 and 18 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 |   | $                   | 560.0  |   |            | $      | 129.4  |   |   |   | 6.5 | % |  2013 |
|   Valhi loans from Snake River                                          |   |                | 250.0  |   |            |   | 250.0  |   |   |   | 9.4 |   | 2027 |
|   Other                                                                                     |   |                | 4.2    |   |            |   | 4.2    |   |   | Various |   | Various |
|     Fixed-rate                                                                    |   |                | 814.2  |   |            |   | 383.6  |   |   |   | 7.4 | % |   |
|                                                                                                  |   |                |   |   |            |   |   |   |   |   |   |   |   |
| Variable-rate indebtedness -                                                                |   |                |   |   |            |   |   |   |   |   |   |   |   |
|   CompX      promissory note to TIMET                                                       |   |                | 43.0   |   |            |   | 43.0   |   |   |   | 5.0 | % | 2014 |
|   Kronos Euro      denominated revolver                                           |   |                | 42.2   |   |            |   | 42.2   |   |   |   | 4.5 |   | 2011 |
|   Kronos U.S. revolver                                                            |   |                | 13.7   |   |            |   | 13.7   |   |   |   | 3.3 |   | 2011 |
|   Valhi revolver                                                                       |   |                | 7.3    |   |            |   | 7.3    |   |   |   | 3.3 |   | 2009 |
|                                                                                                  |   |                |   |   |            |   |   |   |   |   |   |   |   |
|     Variable-rate                                                                 |   |                | 106.2  |   |            |   | 106.2  |   |   |   | 4.5 | % |   |
|                                                                                                  |   |                |   |   |            |   |   |   |   |   |   |   |   |
|     Total                                                                         |   | $                   | 920.4  |   |            | $      | 489.8  |   |   |   | 7.1 | % |   |

|   | · | Our      Component Products Segment entered into a series of short-term forward      exchange contracts maturing through June 2009 to exchange an aggregate of      $7.5 million for an equivalent value of Canadian dollars at an exchange      rates of Cdn. $1.25 to $1.26 per U.S. dollar.  At December 31,      2008, the actual exchange rate was Cdn. $1.22 per U.S.      dollar.; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      Chemicals Segment entered into an aggregate of $30.0 million for an      equivalent value of Canadian dollars at exchange rates ranging from Cdn.      $1.25 to Cdn. $1.26 per U.S. dollar.  These contracts with U.S. Bank      mature from January 2009 through December 2009 at a rate of $2.5 million      per month. At December 31, 2008, the actual exchange rate was Cdn.      $1.22 per U.S. dollar. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      Chemicals Segment entered an aggregate $57 million for an equivalent value      of Norwegian kroner at exchange rates ranging from kroner 6.91 to kroner      7.18.  These contracts with DnB Nor Bank ASA mature from January 2009      through December 2009 at a rate of .5 million to $2.5 million per      month.  At December 31, 2008, the actual exchange rate was      kroner 7.0 per U.S. dollar.  |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      Chemicals Segment entered an aggregate euro 16.4 million for an equivalent      value of Norwegian kroner at exchange rates ranging from kroner 8.64 to      kroner 9.23.  These contracts with DnB Nor Bank ASA mature from      January 2009 through December 2009 at a rate of euro .5 million to euro .7      million per month.  At December 31, 2008, the actual exchange      rate was kroner 9.7 per euro. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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 Condensed 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. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | TIMET’s      condensed consolidated financial statements are filed as Exhibit 99.1 of      this Annual Report pursuant to Rule 3-09 of Regulation      S-X.  TIMET’s Management’s Report on Internal Control Over      Financial Reporting is not included as part of Exhibit 99.1.  We      are not required to provide any other consolidated financial statements      pursuant to Rule 3-09 of RegulationS-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 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 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     | Stock      Purchase Agreement dated April 1, 2005 between Valhi, Inc. and Contran      Corporation – incorporated by reference to Exhibit 99.1 to our Current      Report on Form 8-K (File No. 1-5467) dated April 1,  2005.                                                                                                                                          |
|     |                                                                                                                                                                                                                                                                                                                                                                         |
| 10.6     | Stock      Purchase Agreement dated November 1, 2006 between Valhi, Inc. and Valhi      Holding Company – incorporated by reference to Exhibit 10.1 – to our      Current Report on Form 8-K (File No. 1-5467) dated November 1,      2006.                                                                                                                      |
|     |                                                                                                                                                                                                                                                                                                                                                                         |
| 10.7     | Stock      Purchase Agreement dated as of March 26, 2007 between Valhi, Inc. and      Contran Corporation - incorporated by reference to Exhibit 10.1 to our      Current Report on Form 8-K (File No. 1-5467) dated March 26, 2007 and      filed by us on March 27, 2007.                                                                                             |
|     |                                                                                                                                                                                                                                                                                                                                                                         |
| 10.8     | 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 29, 2007.                                                                                                 |
|     |                                                                                                                                                                                                                                                                                                                                                                         |

----

| Item No. | Exhibit Index                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.9     | Stock      Purchase Agreement dated as of October 16, 2007 between TIMET Finance      Management Company and CompX International Inc. - incorporated by      reference to Exhibit 10.1 of CompX’s Current Report on Form 8-K (File No.      1-13905) dated October 22, 2007.                                                                                                                                                                                                             |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.10    | 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.                                                                                                                                                                                                           |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.11    | 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.                                                                                                                                         |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.12    | 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. |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.13*   | 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.                                                                                                                                                                                                                                                                                      |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.14*   | 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).                                                                                                                                                                                                                                                                                                          |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.15*   | 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.                                                                                                                                                                                                                                                    |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.16*   | 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).                                                                                                                                                                                                                                                                                                 |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.17    | 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.                                         |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.18    | 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                                                                                                                                                                                                                                                                                                                                                                                                     |
|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.19    | 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.                                                                                                                          |
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.20    | 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.                                                                   |
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.21    | 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.                                                                                                                             |
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.22    | 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.                                                                                                                                            |
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.23    | 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.                                                                                                                                       |
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.24    | 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.                                                                                                                             |
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.25    | 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. |
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.26    | 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.                                        |
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.27    | 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.             |
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.28    | 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                                                                                                                                                                                                                                                                                                                                                                              |
|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.29    | 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.                                                                                         |
|     |                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.30    | 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.                                                                               |
|     |                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.31    | 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.                                                                                      |
|     |                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.32    | 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.   |
|     |                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.33    | 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. |
|     |                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.34    | 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.                |
|     |                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.35    | 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.                                                         |
|     |                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.36    | 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.                                                                       |
|     |                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.37    | 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 |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
|              |                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.38             | 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.                                               |          |
|              |                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.39             | 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.                                                                              |          |
|              |                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.40             | 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.                                               |          |
|              |                                                                                                                                                                                                                                                                                                                                                                 |          |
|        10.41 | 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.                  |          |
|              |                                                                                                                                                                                                                                                                                                                                                                 |          |
|        10.42 | 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.                                                                                       |          |
|              |                                                                                                                                                                                                                                                                                                                                                                 |          |
|        10.43 | 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.                                                             |          |
|              |                                                                                                                                                                                                                                                                                                                                                                 |          |
|        10.44 | 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. |          |
|              |                                                                                                                                                                                                                                                                                                                                                                 |          |
|        10.45 | 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.      |          |
|              |                                                                                                                                                                                                                                                                                                                                                                 |          |
|        10.46 | 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.      |          |
|              |                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.47             | 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 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.48  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.49  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.50  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.51  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                          |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.52  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                        |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.53  | 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.                                                                                                                                                                                                                                                                                                                                       |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.54  | 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.  Certain      schedules, exhibits, annexes and similar attachments to this Exhibit 10.1      have not been filed; upon request, Valhi, Inc. will furnish supplementally      to the Commission a copy of any omitted exhibit, annex or attachment      (incorporated by reference to Exhibit 10.1 to NL’s Current Report on NL’s      Form 8-K, File No. 1-640, that was filed with the U.S. Securities and      Exchange Commission on October 16, 2008). |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.55  | 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 |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |          |
| 10.56  | 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                               |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |          |
| 10.57  | 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.  Certain schedules, exhibits, annexes and similar      attachments to this Exhibit 10.4 have not been filed; upon request, Valhi,      Inc. will furnish supplementally to the Commission a copy of any omitted      exhibit, annex or attachment (incorporated by reference to Exhibit 10.4 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).                                                                                                                                 |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |          |
| 10.58  | 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.  Certain schedules, exhibits, annexes and      similar attachments to this Exhibit 10.5 have not been filed; upon      request, Valhi, Inc. will furnish supplementally to the Commission a copy      of any omitted exhibit, annex or attachment (incorporated by reference to      Exhibit 10.5 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).             |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |          |
| 10.59  | 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.  Certain schedules,      exhibits, annexes and similar attachments to this Exhibit 10.6 have not      been filed; upon request, Valhi, Inc. will furnish supplementally to the      Commission a copy of any omitted exhibit, annex or attachment (incorporated      by reference to Exhibit 10.6 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). |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |          |
| 10.60  | 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |          |
| 23.2** | Consent      of PricewaterhouseCoopers LLP with respect to TIMET’s Consolidated      Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |          |
| 31.1** | Certification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |          |

----

|   | Item No.                                                                                                                                                                                                       | Exhibit Index |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
|   |                                                                                                                                                                                                           |          |
| 31.2** | Certification                                                                                                                                                                                                  |          |
|   |                                                                                                                                                                                                           |          |
| 32.1** | Certification                                                                                                                                                                                                  |          |
|   |                                                                                                                                                                                                           |          |
| 99.1   | Consolidated      financial statements of Titanium Metals Corporation incorporated by      reference to TIMET’s Annual Report on Form 10-K (File No. 0-28538) for the      year ended December 31, 2008. |          |
|   |                                                                                                                                                                                                           |          |

----

|   | VALHI,      INC.(Registrant)                                                              |
|--------|-------------------------------------------------------------------------------------------|
|   |                                                                                      |
|   | By: /s/ Steven L.      Watson           |
|   | Steven      L. Watson, March 12, 2009(President      and Chief Executive Officer)         |

| /s/ Harold C.      Simmons                            |   | /s/ Steven L.      Watson                      |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|
| Harold      C. Simmons, March 12, 2009(Chairman      of the Board)                                                                         |   | Steven      L. Watson, March 12, 2009(President,      Chief Executive Officer and      Director)                     |
|                                                                                                                                       |   |                                                                                                                      |
| /s/ Thomas E.      Barry                    |   | /s/ Glenn R.      Simmons                      |
| Thomas      E. Barry, March 12, 2009(Director)                                                                                             |   | Glenn      R. Simmons, March 12, 2009(Vice      Chairman of the Board)                                                    |
|                                                                                                                                       |   |                                                                                                                      |
| /s/ Norman S.      Edelcup                            |   | /s/ Bobby D.      O’Brien                |
| Norman      S. Edelcup, March 12, 2009(Director)                                                                                           |   | Bobby      D. O’Brien, March 12, 2009(Vice      President and Chief Financial Officer, Principal FinancialOfficer)  |
|                                                                                                                                       |   |                                                                                                                      |
| /s/ W. Hayden      McIlroy                            |   | /s/ Gregory M.      Swalwell                                  |
| W.      Hayden McIlroy, March 12, 2009(Director)                                                                                           |   | Gregory      M. Swalwell, March 12, 2009(Vice      President and Controller, Principal      Accounting Officer)      |
|                                                                                                                                       |   |                                                                                                                      |
| /s/ J. Walter Tucker,      Jr.                                            |   |                                                                                                                      |
| J.      Walter Tucker, Jr. March 12, 2009 (Director)                                                                                  |   |                                                                                                                      |
|                                                                                                                                       |   |                                                                                                                      |

----

| Financial      Statements                                                                                                                                                                                  | Page       |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
|                                                                                                                                                                                                       |       |
| Report of Independent Registered      Public Accounting Firm                                                                                                                                               | F-2        |
|                                                                                                                                                                                                       |       |
| Consolidated Balance Sheets -      December 31, 2007 and 2008                                                                                                                                              | F-4        |
|                                                                                                                                                                                                       |       |
| Consolidated Statements of      Operations –Years ended December 31, 2006,      2007 and 2008                                                                                                        |  F-6  |
|                                                                                                                                                                                                       |       |
| Consolidated Statements of      Comprehensive Income (Loss) –Years ended December 31, 2006,      2007 and 2008                                                                                       |  F-7  |
|                                                                                                                                                                                                       |       |
| Consolidated Statements of      Stockholders’ Equity –Years ended December 31, 2006,      2007 and 2008                                                                                        |  F-9  |
|                                                                                                                                                                                                       |       |
| Consolidated Statements of Cash      Flows –Years ended December 31, 2006,      2007 and 2008                                                                                                        |  F-10 |
|                                                                                                                                                                                                       |       |
| Notes to Consolidated Financial      Statements                                                                                                                                                            | F-13       |
|                                                                                                                                                                                                       |       |
| 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, |    |
|---------------------------------------------------------------------|--------|--------------|---------|
|                                                                |   | 2007         |    |   | 2008 |   |
|                                                                |   |         |    |   |   |   |
| Current      assets:                                                |   |         |    |   |   |   |
|   Cash      and cash equivalents                          |   | $            | 138.3   |   |   | $ | 37.0 |   |
|   Restricted      cash equivalents                        |   |         | 7.2     |   |   |   | 9.4 |   |
|   Marketable      securities                              |   |         | 7.2     |   |   |   | 8.8 |   |
|   Accounts      and other receivables, net                |   |         | 241.4   |   |   |   | 203.5 |   |
|   Refundable      income taxes                            |   |         | 7.7     |   |   |   | 1.6 |   |
|   Receivable      from affiliates                         |   |         | 4.6     |   |   |   | .1 |   |
|   Inventories,      net                                   |   |         | 337.9   |   |   |   | 408.5 |   |
|   Prepaid      expenses and other                         |   |         | 16.2    |   |   |   | 15.4 |   |
|   Deferred      income taxes                              |   |         | 10.4    |   |   |   | 12.1 |   |
|                                                                |   |         |    |   |   |   |   |   |
|       Total      current assets       |   |         | 770.9   |   |   |   | 696.4 |   |
|                                                                |   |         |    |   |   |   |   |   |
| Other      assets:                                                  |   |         |    |   |   |   |   |   |
|   Marketable      securities                              |   |         | 319.8   |   |   |   | 275.5 |   |
|   Investment      in affiliates                           |   |         | 137.9   |   |   |   | 124.0 |   |
|   Pension      asset                                      |   |         | 47.6    |   |   |   | - |   |
|   Goodwill                                                |   |         | 406.8   |   |   |   | 396.8 |   |
|   Other      intangible assets                            |   |         | 2.7     |   |   |   | 2.0 |   |
|   Deferred      income taxes                              |   |         | 168.7   |   |   |   | 166.4 |   |
|   Other      assets                                       |   |         | 67.3    |   |   |   | 87.3 |   |
|                                                                |   |         |    |   |   |   |   |   |
|       Total      other assets         |   |         | 1,150.8 |   |   |   | 1,052.0 |   |
|                                                                |   |         |    |   |   |   |   |   |
| Property      and equipment:                                        |   |         |    |   |   |   |   |   |
|   Land                                                    |   |         | 48.2    |   |   |   | 46.4 |   |
|   Buildings                                               |   |         | 277.1   |   |   |   | 268.5 |   |
|   Equipment                                               |   |         | 1,051.9 |   |   |   | 1,025.3 |   |
|   Mining      properties                                  |   |         | 39.8    |   |   |   | 30.3 |   |
|   Construction      in progress                           |   |         | 48.9    |   |   |   | 58.2 |   |
|                                                                |   |         | 1,465.9 |   |   |   | 1,428.7 |   |
|   Less      accumulated depreciation                      |   |         | 784.6   |   |   |   | 787.7 |   |
|                                                                |   |         |    |   |   |   |   |   |
|       Net      property and equipment |   |         | 681.3   |   |   |   | 641.0 |   |
|                                                                |   |         |    |   |   |   |   |   |
|       Total      assets               |   | $            | 2,603.0 |   |   | $ | 2,389.4 |   |
|                                                                |   |         |    |   |   |   |   |   |

----

|    LIABILITIES      AND STOCKHOLDERS' EQUITY                                                                                          |   | December 31,  |        |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-------------|
|                                                                                                                                                 |   | 2007               |        |   | 2008 |   |
|                                                                                                                                                 |   |               |        |   |   |   |
| Current      liabilities:                                                                                                                            |   |               |        |   |   |   |
|   Current      maturities of long-term debt                                                                                                |   | $                  | 16.8        |   |   | $ | 9.4 |   |
|   Accounts      payable                                                                                                                    |   |               | 115.6       |   |   |   | 121.0 |   |
|   Accrued      liabilities                                                                                                                 |   |               | 133.2       |   |   |   | 128.4 |   |
|   Payable      to affiliates                                                                                                               |   |               | 19.0        |   |   |   | 25.8 |   |
|   Income      taxes                                                                                                                        |   |               | 9.8         |   |   |   | 4.9 |   |
|   Deferred      income taxes                                                                                                               |   |               | 3.3         |   |   |   | 4.7 |   |
|                                                                                                                                                 |   |               |        |   |   |   |   |   |
|       Total      current liabilities                                                                                   |   |               | 297.7       |   |   |   | 294.2 |   |
|                                                                                                                                                 |   |               |        |   |   |   |   |   |
| Noncurrent      liabilities:                                                                                                                         |   |               |        |   |   |   |   |   |
|   Long-term      debt                                                                                                                      |   |               | 889.8       |   |   |   | 911.0 |   |
|   Deferred      income taxes                                                                                                               |   |               | 415.0       |   |   |   | 346.6 |   |
|   Accrued      pension costs                                                                                                               |   |               | 140.0       |   |   |   | 146.1 |   |
|   Accrued      environmental costs                                                                                                         |   |               | 40.3        |   |   |   | 41.3 |   |
|   Accrued      postretirement benefits cost                                                                                                |   |               | 33.6        |   |   |   | 29.3 |   |
|   Other                                                                                                                                    |   |               | 77.7        |   |   |   | 78.8 |   |
|                                                                                                                                                 |   |               |        |   |   |   |   |   |
|       Total      noncurrent liabilities                                                                                |   |               | 1,596.4     |   |   |   | 1,553.1 |   |
|                                                                                                                                                 |   |               |        |   |   |   |   |   |
| Minority      interest in net assets of subsidiaries                                                                                                 |   |               | 90.5        |   |   |   | 73.3 |   |
|                                                                                                                                                 |   |               |        |   |   |   |   |   |
| 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                                                                                                          |   |               | 10.4        |   |   |   | - |   |
|   Retained      deficit                                                                                                                    |   |               | (74.1       | ) |   |   | (109.8 | ) |
|   Accumulated      other comprehensive income (loss)                                                                                       |   |               | 51.5        |   |   |   | (51.0 | ) |
|   Treasury      stock, at cost – 4.0 million and   4.1      million shares                                            |   |               | (37.9       | ) |   |   | (38.9 | ) |
|                                                                                                                                                 |   |               |        |   |   |   |   |   |
|       Total      stockholders' equity                                                                                  |   |               | 618.4       |   |   |   | 468.8 |   |
|                                                                                                                                                 |   |               |        |   |   |   |   |   |
|       Total      liabilities, minority interest and       stockholders'      equity |   | $                  | 2,603.0     |   |   | $ | 2,389.4 |   |
|                                                                                                                                                 |   |               |        |   |   |   |   |   |

----

|                                                                  |   |                     |       |   |   |   |    |   |   |
|-----------------------------------------------------------------------|--------|--------------------------|------------|--------|--------|--------|---------|--------|--------|
|                                                                  |   | Years ended December 31, |       |
|                                                                  |   | 2006                     |       |   | 2007   |   |    | 2008   |   |
|                                                                  |   |                     |       |   |   |   |
|                                                                  |   |                     |       |   |   |   |    |   |   |
| Revenues      and other income:                                       |   |                     |       |   |   |   |    |   |   |
|   Net      sales                                            |   | $                        | 1,481.4    |   |   | $      | 1,492.2 |   |   | $ | 1,485.3 |   |
|   Other      income, net                                    |   |                     | 89.9       |   |   |   | 42.3    |   |   |   | 93.7 |   |
|   Equity      in earnings of:                               |   |                     |       |   |   |   |    |   |   |   |   |   |
|     Titanium      Metals Corporation ("TIMET")    |   |                     | 101.1      |   |   |   | 26.9    |   |   |   | - |   |
|     Other                                         |   |                     | 3.8        |   |   |   | 1.7     |   |   |   | (1.0 | ) |
|                                                                  |   |                     |       |   |   |   |    |   |   |   |   |   |
|     Total      revenues and other income          |   |                     | 1,676.2    |   |   |   | 1,563.1 |   |   |   | 1,578.0 |   |
|                                                                  |   |                     |       |   |   |   |    |   |   |   |   |   |
| Costs      and expenses:                                              |   |                     |       |   |   |   |    |   |   |   |   |   |
|   Cost      of goods sold                                   |   |                     | 1,139.4    |   |   |   | 1,206.3 |   |   |   | 1,239.1 |   |
|   Selling,      general and administrative                  |   |                     | 229.4      |   |   |   | 238.4   |   |   |   | 238.5 |   |
|   Goodwill      impairment                                  |   |                     | -          |   |   |   | -       |   |   |   |  10.1 |   |
|   Loss      on prepayment of debt                           |   |                     | 22.3       |   |   |   | -       |   |   |   | - |   |
|   Interest                                                  |   |                     | 67.6       |   |   |   | 64.4    |   |   |   | 68.7 |   |
|                                                                  |   |                     |       |   |   |   |    |   |   |   |   |   |
|     Total      costs and expenses                 |   |                     | 1,458.7    |   |   |   | 1,509.1 |   |   |   | 1,556.4 |   |
|                                                                  |   |                     |       |   |   |   |    |   |   |   |   |   |
|     Income      before taxes                      |   |                     | 217.5      |   |   |   | 54.0    |   |   |   | 21.6 |   |
|                                                                  |   |                     |       |   |   |   |    |   |   |   |   |   |
| Provision      for income taxes                                       |   |                     | 63.8       |   |   |   | 103.2   |   |   |   | 16.7 |   |
|                                                                  |   |                     |       |   |   |   |    |   |   |   |   |   |
| Minority      interest in after-tax  earnings      (losses) |   |                     |  12.0 |   |   |   | (3.5    | )      |   |   |  5.7 |   |
|                                                                  |   |                     |       |   |   |   |    |   |   |   |   |   |
|     Net      income (loss)                        |   | $                        | 141.7      |   |   | $      | (45.7   | )      |   | $ | (.8 | ) |
|                                                                  |   |                     |       |   |   |   |    |   |   |   |   |   |
| Net      income (loss) per share:                                     |   |                     |       |   |   |   |    |   |   |   |   |   |
|                                                                  |   |                     |       |   |   |   |    |   |   |   |   |   |
|     Basic                                         |   | $                        | 1.22       |   |   | $      | (.40    | )      |   | $ | (.01 | ) |
|                                                                  |   |                     |       |   |   |   |    |   |   |   |   |   |
|     Diluted                                       |   |                     | 1.20       |   |   |   | (.40    | )      |   |   | (.01 | ) |
|                                                                  |   |                     |       |   |   |   |    |   |   |   |   |   |
| Cash      dividends per share                                         |   |                     | .40        |   |   |   | .40     |   |   |   | .40 |   |
|                                                                  |   |                     |       |   |   |   |    |   |   |   |   |   |
| Weighted average shares outstanding:                   |   |                     |       |   |   |   |    |   |   |   |   |   |
|   Basic                                                     |   |                     | 116.1      |   |   |   | 114.7   |   |   |   | 114.4 |   |
|   Diluted                                                   |   |                     | 116.5      |   |   |   | 114.7   |   |   |   | 114.4 |   |
|                                                                  |   |                     |       |   |   |   |    |   |   |   |   |   |

----

|                                                                      |   | Years ended December 31, |   |
|---------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                      |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                                                      |   |                     |   |   |   |   |
|                                                                      |   |                     |   |   |   |   |   |   |   |
| Net      income (loss)                                                    |   | $                        | 141.7  |   |   | $ | (45.7 | ) |   | $ | (.8 | ) |
|                                                                      |   |                     |   |   |   |   |   |   |   |   |   |   |
| Other      comprehensive income (loss), net of tax:                       |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Marketable      securities                                    |   |                     | 2.0    |   |   |   | 23.3 |   |   |   | (22.8 | ) |
|                                                                      |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Currency      translation                                     |   |                     | 27.5   |   |   |   | 29.4 |   |   |   | (33.6 | ) |
|                                                                      |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Defined      benefit pension plans                            |   |                     | 5.6    |   |   |   | 32.1 |   |   |   | (47.3 | ) |
|                                                                      |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Other      postretirement benefit plans                       |   |                     | -      |   |   |   | .6 |   |   |   | 1.2 |   |
|                                                                      |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total      other comprehensive income (loss), net |   |                     | 35.1   |   |   |   | 85.4 |   |   |   | (102.5 | ) |
|                                                                      |   |                     |   |   |   |   |   |   |   |   |   |   |
|       Comprehensive      income (loss)      |   | $                        | 176.8  |   |   | $ | 39.7 |   |   | $ | (103.3 | ) |
|                                                                      |   |                     |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                            |   | Years ended December 31, |           |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|----------------|
|                                                                                                                                            |   | 2006                     |           |   | 2007 |   |   | 2008 |   |
|                                                                                                                                            |   |                     |           |   |   |   |   |   |   |
| Accumulated      other comprehensive income (net      of tax):                                                                                  |   |                     |           |   |   |   |   |   |   |
|   Marketable      securities:                                                                                                         |   |                     |           |   |   |   |   |   |   |
|     Balance at beginning of year                                                                        |   | $                        | 4.2            |   |   | $ | 6.2 |   |   | $ | 27.1 |   |
|     Other      comprehensive income (loss)                                                                        |   |                     | 2.0            |   |   |   | 23.3 |   |   |   | (22.8 | ) |
|     TIMET      distribution                                                                                                 |   |                     | -              |   |   |   | (2.4 | ) |   |   | - |   |
|     Balance at end of year                                                                              |   | $                        | 6.2            |   |   | $ | 27.1 |   |   | $ | 4.3 |   |
|                                                                                                                                            |   |                     |           |   |   |   |   |   |   |   |   |   |
|   Currency translation:                                                                                                          |   |                     |           |   |   |   |   |   |   |   |   |   |
|     Balance at beginning of year                                                                        |   | $                        | 11.6           |   |   | $ | 39.1 |   |   | $ | 64.5 |   |
|     Other      comprehensive income (loss)                                                                        |   |                     | 27.5           |   |   |   | 29.4 |   |   |   | (33.6 | ) |
|     TIMET      distribution                                                                                                 |   |                     | -              |   |   |   | (4.0 | ) |   |   | - |   |
|     Balance at end of year                                                                              |   | $                        | 39.1           |   |   | $ | 64.5 |   |   | $ | 30.9 |   |
|                                                                                                                                            |   |                     |           |   |   |   |   |   |   |   |   |   |
|   Minimum pension liabilities:                                                                                              |   |                     |           |   |   |   |   |   |   |   |   |   |
|     Balance at beginning of year                                                                        |   | $                        | (78.1          | ) |   | $ | - |   |   | $ | - |   |
|     Other      comprehensive income                                                                               |   |                     | 5.6            |   |   |   | - |   |   |   | - |   |
|     Adoption of SFAS No. 158                                                                            |   |                     | 72.5           |   |   |   | - |   |   |   | - |   |
|                                                                                                                             |   |                     |           |   |   |   |   |   |   |   |   |   |
|     Balance at end of year                                                                              |   | $                        | -              |   |   | $ | - |   |   | $ | - |   |
|                                                                                                                                            |   |                     |           |   |   |   |   |   |   |   |   |   |
|   Defined benefit pension plans:                                                                                       |   |                     |           |   |   |   |   |   |   |   |   |   |
|     Balance at beginning of year                                                                        |   | $                        | -              |   |   | $ | (85.0 | ) |   | $ | (38.8 | ) |
|     Other      comprehensive income (loss):                                                                                 |   |                     |           |   |   |   |   |   |   |   |   |   |
|       Amortization      of prior service cost and net losses included in net periodic      pension cost |   |                     |    - |   |   |   |    4.1 |   |   |   |    .1 |   |
|       Net      actuarial gain (loss) arising during  year                                               |   |                     |  -        |   |   |   |  28.0 |   |   |   | (47.4 | ) |
|     Adoption of SFAS No. 158                                                                            |   |                     | (85.0          | ) |   |   | 1.2 |   |   |   | - |   |
|     TIMET      distribution                                                                                                 |   |                     | -              |   |   |   | 12.9 |   |   |   | - |   |
|     Balance at end of year                                                                              |   | $                        | (85.0          | ) |   | $ | (38.8 | ) |   | $ | (86.1 | ) |
|                                                                                                                                            |   |                     |           |   |   |   |   |   |   |   |   |   |
|   OPEB plans:                                                                                                                    |   |                     |           |   |   |   |   |   |   |   |   |   |
|     Balance at beginning of year                                                                        |   | $                        | -              |   |   | $ | (3.4 | ) |   | $ | (1.3 | ) |
|     Other      comprehensive income (loss):                                                                                 |   |                     |           |   |   |   |   |   |   |   |   |   |
|       Amortization      of prior service cost and net losses included in net periodic      pension cost |   |                     |    - |   |   |   |    - |   |   |   | (.1 | ) |
|       Net      actuarial gain arising during year                                                                 |   |                     | -              |   |   |   | .6 |   |   |   | 1.3 |   |
|     Adoption of SFAS No. 158                                                                            |   |                     | (3.4           | ) |   |   | - |   |   |   | - |   |
|     TIMET      distribution                                                                                                 |   |                     | -              |   |   |   | 1.5 |   |   |   | - |   |
|     Balance at end of year                                                                              |   | $                        | (3.4           | ) |   | $ | (1.3 | ) |   | $ | (.1 | ) |
|                                                                                                                                            |   |                     |           |   |   |   |   |   |   |   |   |   |
|   Total accumulated other comprehensive income      (loss):                                                       |   |                     |           |   |   |   |   |   |   |   |   |   |
|     Balance at beginning of year                                                                        |   | $                        | (62.3          | ) |   | $ | (43.1 | ) |   | $ | 51.5 |   |
|     Other      comprehensive income (loss)                                                                        |   |                     | 35.1           |   |   |   | 85.4 |   |   |   | (102.5 | ) |
|     Adoption of SFAS No. 158                                                                            |   |                     | (15.9          | ) |   |   | 1.2 |   |   |   | - |   |
|     TIMET      distribution                                                                                                 |   |                     | -              |   |   |   | 8.0 |   |   |   | - |   |
|     Balance at end of year                                                                              |   | $                        | (43.1          | ) |   | $ | 51.5 |   |   | $ | (51.0 | ) |

----

|                                                                                                                          |   |  Preferred stock |           |   |  Common stock |   |           | Additionalpaid-in capital |   |   | Retainedearnings(deficit) |   |   | Accumulatedothercomprehensiveincome (loss) |           |   |  Treasury stock |   |      | Totalstockholders' equity |   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|----------------|--------|-------------------------|--------|----------------|--------------------------------|--------|--------|---------------------------|--------|--------|--------------------------------------------|----------------|--------|---------------------------|--------|-----------|--------------------------------|--------|
|                                                                                                                          |   |                       |           |   |                    |   |           |                           |   |   |                      |   |   |                                       |           |   |                      |   |      |                           |   |
| Balance      at December 31, 2005                                                                                             |   | $                          | -              |   |                    | $      | 1.2            |                           |   | $      | 108.8                     |   |   | $                                          | 787.6          |   |                      | $      | (62.3     | )                              |   | $ | (37.9 | ) |   | $ | 797.4 |   |
|                                                                                                                          |   |                       |           |   |                    |   |           |                           |   |   |                      |   |   |                                       |           |   |                      |   |      |                           |   |   |   |   |   |   |   |   |
| Net      income                                                                                                               |   |                       | -              |   |                    |   | -              |                           |   |   | -                         |   |   |                                       | 141.7          |   |                      |   | -         |                           |   |   | - |   |   |   | 141.7 |   |
| Cash      dividends                                                                                                           |   |                       | -              |   |                    |   | -              |                           |   |   | -                         |   |   |                                       | (48.0          | )      |                      |   | -         |                           |   |   | - |   |   |   | (48.0 | ) |
| Other      comprehensive income, net                                                                                          |   |                       | -              |   |                    |   | -              |                           |   |   | -                         |   |   |                                       | -              |   |                      |   | 35.1      |                           |   |   | - |   |   |   | 35.1 |   |
| Change      in accounting SFAS No. 158 – asset      and liability recognition provisions      of SFAS No. 158 |   |                       |    - |   |                    |   |    - |                           |   |   |    -            |   |   |                                       |    - |   |                      |   | (15.9     | )                              |   |   |    - |   |   |   | (15.9 | ) |
| Treasury      stock:                                                                                                          |   |                       |           |   |                    |   |           |                           |   |   |                      |   |   |                                       |           |   |                      |   |      |                           |   |   |   |   |   |   |   |   |
|   Acquired                                                                                                          |   |                       | -              |   |                    |   | -              |                           |   |   | -                         |   |   |                                       | -              |   |                      |   | -         |                           |   |   | (43.8 | ) |   |   | (43.8 | ) |
|   Retired                                                                                                           |   |                       | -              |   |                    |   | -              |                           |   |   | (1.7                      | )      |   |                                       | (42.1          | )      |                      |   | -         |                           |   |   | 43.8 |   |   |   | - |   |
| Other,      net                                                                                                               |   |                       | -              |   |                    |   | -              |                           |   |   | .3                        |   |   |                                       | -              |   |                      |   | -         |                           |   |   | - |   |   |   | .3 |   |
|                                                                                                                          |   |                       |           |   |                    |   |           |                           |   |   |                      |   |   |                                       |           |   |                      |   |      |                           |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2006                                                                                             |   |                       | -              |   |                    |   | 1.2            |                           |   |   | 107.4                     |   |   |                                       | 839.2          |   |                      |   | (43.1     | )                              |   |   | (37.9 | ) |   |   | 866.8 |   |
|                                                                                                                          |   |                       |           |   |                    |   |           |                           |   |   |                      |   |   |                                       |           |   |                      |   |      |                           |   |   |   |   |   |   |   |   |
| Net      loss                                                                                                                 |   |                       | -              |   |                    |   | -              |                           |   |   | -                         |   |   |                                       | (45.7          | )      |                      |   | -         |                           |   |   | - |   |   |   | (45.7 | ) |
| Cash      dividends                                                                                                           |   |                       | -              |   |                    |   | -              |                           |   |   | (34.2                     | )      |   |                                       | (11.4          | )      |                      |   | -         |                           |   |   | - |   |   |   | (45.6 | ) |
| Dividend      of TIMET common stock                                                                                           |   |                       | -              |   |                    |   | -              |                           |   |   | (55.0                     | )      |   |                                       | (850.4         | )      |                      |   | 8.0       |                           |   |   | - |   |   |   | (897.4 | ) |
| Change      in accounting:                                                                                                    |   |                       |           |   |                    |   |           |                           |   |   |                      |   |   |                                       |           |   |                      |   |      |                           |   |   |   |   |   |   |   |   |
|   FIN      No. 48                                                                                                   |   |                       | -              |   |                    |   | -              |                           |   |   | -                         |   |   |                                       | (1.6           | )      |                      |   | -         |                           |   |   | - |   |   |   | (1.6 | ) |
|   SFAS      No. 158 - measurement date    provisions                                                 |   |                       |  -        |   |                    |   |  -        |                           |   |   |  -                   |   |   |                                       | (2.2           | )      |                      |   |  1.2 |                           |   |   |  - |   |   |   | (1.0 | ) |
| Issuance      of preferred stock                                                                                              |   |                       | 667.3          |   |                    |   | -              |                           |   |   | -                         |   |   |                                       | -              |   |                      |   | -         |                           |   |   | - |   |   |   | 667.3 |   |
| Other      comprehensive income, net                                                                                          |   |                       | -              |   |                    |   | -              |                           |   |   | -                         |   |   |                                       | -              |   |                      |   | 85.4      |                           |   |   | - |   |   |   | 85.4 |   |
| Treasury      stock:                                                                                                          |   |                       |           |   |                    |   |           |                           |   |   |                      |   |   |                                       |           |   |                      |   |      |                           |   |   |   |   |   |   |   |   |
|   Acquired                                                                                                          |   |                       | -              |   |                    |   | -              |                           |   |   | -                         |   |   |                                       | -              |   |                      |   | -         |                           |   |   | (11.1 | ) |   |   | (11.1 | ) |
|   Retired                                                                                                           |   |                       | -              |   |                    |   | -              |                           |   |   | (9.2                      | )      |   |                                       | (1.9           | )      |                      |   | -         |                           |   |   | 11.1 |   |   |   | - |   |
| Othr,      net                                                                                                                |   |                       | -              |   |                    |   | -              |                           |   |   | 1.4                       |   |   |                                       | (.1            | )      |                      |   | -         |                           |   |   | - |   |   |   | 1.3 |   |
|                                                                                                                          |   |                       |           |   |                    |   |           |                           |   |   |                      |   |   |                                       |           |   |                      |   |      |                           |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2007                                                                                             |   |                       | 667.3          |   |                    |   | 1.2            |                           |   |   | 10.4                      |   |   |                                       | (74.1          | )      |                      |   | 51.5      |                           |   |   | (37.9 | ) |   |   | 618.4 |   |
|                                                                                                                          |   |                       |           |   |                    |   |           |                           |   |   |                      |   |   |                                       |           |   |                      |   |      |                           |   |   |   |   |   |   |   |   |
| Net      loss                                                                                                                 |   |                       | -              |   |                    |   | -              |                           |   |   | -                         |   |   |                                       | (.8            | )      |                      |   | -         |                           |   |   | - |   |   |   | (.8 | ) |
| Cash      dividends                                                                                                           |   |                       | -              |   |                    |   | -              |                           |   |   | (10.4                     | )      |   |                                       | (35.1          | )      |                      |   | -         |                           |   |   | - |   |   |   | (45.5 | ) |
| Other      comprehensive loss, net                                                                                            |   |                       | -              |   |                    |   | -              |                           |   |   | -                         |   |   |                                       | -              |   |                      |   | (102.5    | )                              |   |   | - |   |   |   | (102.5 | ) |
| Treasury      stock acquired                                                                                                  |   |                       | -              |   |                    |   | -              |                           |   |   | -                         |   |   |                                       | -              |   |                      |   | -         |                           |   |   | (1.0 | ) |   |   | (1.0 | ) |
| Other,      net                                                                                                               |   |                       | -              |   |                    |   | -              |                           |   |   | -                         |   |   |                                       | .2             |   |                      |   | -         |                           |   |   | - |   |   |   | .2 |   |
|                                                                                                                          |   |                       |           |   |                    |   |           |                           |   |   |                      |   |   |                                       |           |   |                      |   |      |                           |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2008                                                                                             |   | $                          | 667.3          |   |                    | $      | 1.2            |                           |   | $      | -                         |   |   | $                                          | (109.8         | )      |                      | $      | (51.0     | )                              |   | $ | (38.9 | ) |   | $ | 468.8 |   |

----

|                                                                                                                                  |   | Years ended December 31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                                                  |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                                                                                                                  |   |                     |   |   |   |   |
|                                                                                                                                  |   |                     |   |   |   |   |   |   |   |
| Cash      flows from operating activities:                                                                                            |   |                     |   |   |   |   |   |   |   |
|   Net      income (loss)                                                                                                    |   | $                        | 141.7  |   |   | $ | (45.7 | ) |   | $ | (.8 | ) |
|   Depreciation      and amortization                                                                                        |   |                     | 72.5   |   |   |   | 66.3 |   |   |   | 66.1 |   |
|   Securities      transactions, net                                                                                         |   |                     | (.7    | ) |   |   | .1 |   |   |   | 1.2 |   |
|   Gain      on litigation settlement                                                                                        |   |                     | -      |   |   |   | - |   |   |   | (47.9 | ) |
|   Goodwill      impairment                                                                                                  |   |                     | -      |   |   |   | - |   |   |   | 10.1 |   |
|   Loss      on prepayment of debt                                                                                           |   |                     | 22.3   |   |   |   | - |   |   |   | - |   |
|   Call      premium paid on redemption of   Senior      Secured Notes                                        |   |                     | (20.9  | ) |   |   |  - |   |   |   |  - |   |
|   Loss      (gain) on disposal of property and   equipment                                                   |   |                     | (35.3  | ) |   |   |  1.3 |   |   |   |  1.0 |   |
|   Noncash      interest expense                                                                                             |   |                     | 2.0    |   |   |   | 1.6 |   |   |   | 2.1 |   |
|   Benefit      plan expense greater (less) than   cash      funding requirements:                            |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Defined      benefit pension expense                                                                          |   |                     | (5.3   | ) |   |   | (4.6 | ) |   |   | (22.3 | ) |
|     Other      postretirement benefit expense                                                                     |   |                     | (1.5   | ) |   |   | .9 |   |   |   | .9 |   |
|   Deferred      income taxes                                                                                                |   |                     | 37.3   |   |   |   | 86.4 |   |   |   | (12.4 | ) |
|   Minority      interest                                                                                                    |   |                     | 12.0   |   |   |   | (3.5 | ) |   |   | 5.7 |   |
|   Equity      in:                                                                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
|     TIMET                                                                                                         |   |                     | (101.1 | ) |   |   | (26.9 | ) |   |   | - |   |
|     Other                                                                                                         |   |                     | (3.9   | ) |   |   | (1.7 | ) |   |   | 1.0 |   |
|   Net      distributions from (contributions to):                                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
|     TiO2      manufacturing joint venture                                                                         |   |                     | 2.3    |   |   |   | (4.9 | ) |   |   | 10.0 |   |
|     Other                                                                                                         |   |                     | 2.3    |   |   |   | 1.0 |   |   |   | - |   |
|   Other,      net                                                                                                           |   |                     | 1.0    |   |   |   | 1.9 |   |   |   | 2.7 |   |
|   Change      in assets and liabilities:                                                                                    |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Accounts      and other receivables, net                                                                      |   |                     | 8.2    |   |   |   | 9.1 |   |   |   | 15.0 |   |
|     Inventories,      net                                                                                         |   |                     | (3.8   | ) |   |   | 3.9 |   |   |   | (93.0 | ) |
|     Accounts      payable and accrued liabilities                                                                 |   |                     | (6.8   | ) |   |   | (4.8 | ) |   |   | 15.6 |   |
|     Income      taxes                                                                                             |   |                     | (21.1  | ) |   |   | (9.6 | ) |   |   | 2.7 |   |
|     Accounts      with affiliates                                                                                 |   |                     | 1.4    |   |   |   | (2.0 | ) |   |   | 10.5 |   |
|     Other      noncurrent assets                                                                                  |   |                     | 6.0    |   |   |   | (2.7 | ) |   |   | (3.5 | ) |
|     Other      noncurrent liabilities                                                                             |   |                     | (13.8  | ) |   |   | (4.3 | ) |   |   | 5.3 |   |
|     Other,      net                                                                                               |   |                     | (8.5   | ) |   |   | 1.7 |   |   |   | 5.5 |   |
|                                                                                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
|       Net      cash provided by (used in) operating       activities |   | $                        | 86.3   |   |   | $ | 63.5 |   |   | $ | (24.5 | ) |
|                                                                                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                      |   | Years ended December 31, |    |
|-------------------------------------------------------------------------------------------|--------|--------------------------|---------|
|                                                                                      |   | 2006                     |    |   | 2007 |   |   | 2008 |   |
|                                                                                      |   |                     |    |   |   |   |
|                                                                                      |   |                     |    |   |   |   |   |   |   |
| Cash      flows from investing activities:                                                |   |                     |    |   |   |   |   |   |   |
|   Capital      expenditures                                                     |   | $                        | (63.8   | ) |   | $ | (63.8 | ) |   | $ | (84.9 | ) |
|   Purchases      of:                                                            |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Kronos      common stock                                          |   |                     | (25.4   | ) |   |   | - |   |   |   | (.8 | ) |
|     TIMET      common stock                                           |   |                     | (18.7   | ) |   |   | (.7 | ) |   |   | - |   |
|     CompX      common stock                                           |   |                     | (2.3    | ) |   |   | (3.3 | ) |   |   | (1.0 | ) |
|     NL      common stock                                              |   |                     | (.4     | ) |   |   | - |   |   |   | - |   |
|     Business      units                                               |   |                     | (9.8    | ) |   |   | - |   |   |   | - |   |
|     Marketable      securities                                        |   |                     | (43.4   | ) |   |   | (23.3 | ) |   |   | (6.1 | ) |
|   Capitalized      permit costs                                                 |   |                     | (8.3    | ) |   |   | (7.1 | ) |   |   | (13.8 | ) |
|   Proceeds      from disposal of:                                               |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Marketable      securities                                        |   |                     | 42.9    |   |   |   | 28.5 |   |   |   | 7.9 |   |
|     Property      and equipment                                       |   |                     | 39.4    |   |   |   | .6 |   |   |   | .3 |   |
|   Change      in restricted cash equivalents, net                               |   |                     | (2.9    | ) |   |   | 2.4 |   |   |   | (2.5 | ) |
|   Proceeds      from real estate-related litigation   settlement |   |                     |  - |   |   |   |  - |   |   |   |  39.6 |   |
|   Other,      net                                                               |   |                     | 3.2     |   |   |   | 1.3 |   |   |   |  1.3 |   |
|                                                                                      |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Net      cash used in investing activities                        |   |                     | (89.5   | ) |   |   | (65.4 | ) |   |   | (60.0 | ) |
|                                                                                      |   |                     |    |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                                |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Indebtedness:                                                                 |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Borrowings                                                        |   |                     | 772.7   |   |   |   | 331.1 |   |   |   | 427.7 |   |
|     Principal      payments                                           |   |                     | (751.6  | ) |   |   | (324.4 | ) |   |   | (385.6 | ) |
|     Deferred      financing costs paid                                |   |                     | (9.0    | ) |   |   | - |   |   |   | (1.2 | ) |
|   Valhi      cash dividends paid                                                |   |                     | (48.0   | ) |   |   | (45.6 | ) |   |   | (45.5 | ) |
|   Distributions      to minority interest                                       |   |                     | (8.9    | ) |   |   | (8.5 | ) |   |   | (7.3 | ) |
|   Treasury      stock acquired                                                  |   |                     | (43.8   | ) |   |   | (11.1 | ) |   |   | (1.0 | ) |
|   NL      common stock issued                                                   |   |                     | .1      |   |   |   | - |   |   |   | - |   |
|   Issuance      of Valhi common stock and other, net                            |   |                     | .9      |   |   |   | 2.4 |   |   |   | - |   |
|                                                                                      |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Net      cash used in financing activities                        |   |                     | (87.6   | ) |   |   | (56.1 | ) |   |   | (12.9 | ) |
|                                                                                      |   |                     |    |   |   |   |   |   |   |   |   |   |
| Net      decrease                                                                         |   | $                        | (90.8   | ) |   | $ | (58.0 | ) |   | $ | (97.4 | ) |

----

|                                                                                                                                  |   | Years ended December 31, |    |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|---------|
|                                                                                                                                  |   | 2006                     |    |   | 2007 |   |   | 2008 |   |
|                                                                                                                                  |   |                     |    |   |   |   |
|                                                                                                                                  |   |                     |    |   |   |   |   |   |   |
| Cash      and cash equivalents - net change from:                                                                                     |   |                     |    |   |   |   |   |
|   Operating,      investing and financing   Activities                                                       |   | $                        | (90.8   | ) |   | $ | (58.0 | ) |   | $ | (97.4 | ) |
|   Currency      translation                                                                                                 |   |                     | 5.0     |   |   |   | 7.1 |   |   |   | (3.9 | ) |
|       Net      change for the year                                                                      |   |                     | (85.8   | ) |   |   | (50.9 | ) |   |   | (101.3 | ) |
|                                                                                                                                  |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Balance      at beginning of year                                                                                         |   |                     | 275.0   |   |   |   | 189.2 |   |   |   | 138.3 |   |
|                                                                                                                                  |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Balance      at end of year                                                                                               |   | $                        | 189.2   |   |   | $ | 138.3 |   |   | $ | 37.0 |   |
|                                                                                                                                  |   |                     |    |   |   |   |   |   |   |   |   |   |
|                                                                                                                                  |   |                     |    |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosures:  Cash      paid for:                                                                         |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Interest,      net of amounts capitalized                                                                     |   | $                        | 57.9    |   |   | $ | 62.5 |   |   | $ | 66.7 |   |
|     Income      taxes, net                                                                                        |   |                     | 42.9    |   |   |   | 32.3 |   |   |   | 15.2 |   |
|                                                                                                                                  |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Noncash      investing activities:                                                                                        |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Accruals      for capital expenditures                                                                        |   |                     | -       |   |   |   | 9.7 |   |   |   | 12.7 |   |
|     Accruals      for capitalized permits                                                                         |   |                     | 1.0     |   |   |   | .3 |   |   |   | .7 |   |
|     Note      receivable from legal settlement                                                                    |   |                     | -       |   |   |   | - |   |   |   | 15.0 |   |
|                                                                                                                                  |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Noncash      financing activities:                                                                                        |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Dividend      of TIMET common stock                                                                           |   |                     | -       |   |   |   | 897.4 |   |   |   | - |   |
|     Issuance      of preferred stock in     settlement      of tax obligation            |   |                     |  - |   |   |   |  667.3 |   |   |   |  - |   |
|     Issuance      of note payable to TIMET     for      acquisition of minority interest |   |                     |  - |   |   |   |  52.6 |   |   |   |  - |   |

----

|   | · | 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 andunobservable. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Asset                           |   | Useful lives           |
|---------------------------------|--------|------------------------|
|                            |   |                   |
| Buildings and      improvements |   | 10 to 40  years        |
| Machinery and      equipment    |   |  3 to 20    years |

|   Businesssegment  |   |        Entity       |   | %      owned atDecember 31, 2008 |
|-----------------------------------|--------|--------------------------------------------------------------------------------------|--------|----------------------------------|
|                              |   |                                                                                 |   |                             |
| Chemicals                         |   | Kronos                                                                               |   |  95%                        |
| Component      products           |   | CompX                                                                                |   |  87%                        |
| Waste      management             |   | WCS                                                                                  |   |  100%                       |

|   | · | Chemicals – Our      Chemicals Segment is operated through our majority ownership of      Kronos.  Kronos is a leading global producer and marketer of      value-added titanium dioxide pigments (“TiO2”).  TiO2 is      used for a variety of manufacturing applications, including plastics,      paints, paper and other industrial products. Kronos has production      facilities located in North America and Europe.  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 ownership      of CompX.  CompX is a leading manufacturer of security products,      precision ball bearing slides and ergonomic computer support systems used      in the office furniture, transportation, postal tool storage appliance and      a variety of other industries.  CompX is also a leading      manufacturer of stainless steel exhaust systems, gauges and throttle      controls for the performance marineindustry. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Waste Management – WCS      is our wholly-owned subsidiary which owns and 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 is in the process      constructing the byproduct disposal facility which is expected to be      operational in the second half of 2009.  In January 2009 WCS      received a low-level radioactive waste disposal      permit.  Construction of the low-level radioactive waste      facility is currently expected to begin in the second quarter of 2009,      following the completion of some pre-construction licensing and      administrative matters, and is expected to be operational in the second      quarter of 2010. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                    |   | Years ended December 31, |    |
|---------------------------------------------------------|--------|--------------------------|---------|
|                                                    |   | 2006                     |    |   | 2007 |   |   | 2008 |   |
|                                                    |   | (In      millions)       |    |
| Net      sales:                                         |   |                     |    |   |   |   |   |   |   |
|   Chemicals                                   |   | $                        | 1,279.5 |   |   | $ | 1,310.3 |   |   | $ | 1,316.9 |   |
|   Component      products                     |   |                     | 190.1   |   |   |   | 177.7 |   |   |   | 165.5 |   |
|   Waste      management                       |   |                     | 11.8    |   |   |   | 4.2 |   |   |   | 2.9 |   |
|                                                    |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total      net sales            |   | $                        | 1,481.4 |   |   | $ | 1,492.2 |   |   | $ | 1,485.3 |   |
|                                                    |   |                     |    |   |   |   |   |   |   |   |   |   |
| Cost      of goods sold:                                |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Chemicals                                   |   | $                        | 980.8   |   |   | $ | 1,062.2 |   |   | $ | 1,098.7 |   |
|   Component      products                     |   |                     | 143.6   |   |   |   | 132.4 |   |   |   | 125.7 |   |
|   Waste      management                       |   |                     | 15.0    |   |   |   | 11.7 |   |   |   | 14.7 |   |
|                                                    |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total      cost of goods sold   |   | $                        | 1,139.4 |   |   | $ | 1,206.3 |   |   | $ | 1,239.1 |   |
|                                                    |   |                     |    |   |   |   |   |   |   |   |   |   |
| Gross      margin:                                      |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Chemicals                                   |   | $                        | 298.7   |   |   | $ | 248.1 |   |   | $ | 218.2 |   |
|   Component      products                     |   |                     | 46.5    |   |   |   | 45.3 |   |   |   | 39.8 |   |
|   Waste      management                       |   |                     | (3.2    | ) |   |   | (7.5 | ) |   |   | (11.8 | ) |
|                                                    |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total      gross margin         |   | $                        | 342.0   |   |   | $ | 285.9 |   |   | $ | 246.2 |   |
|                                                    |   |                     |    |   |   |   |   |   |   |   |   |   |
| Operating      income (loss):                           |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Chemicals                                   |   | $                        | 138.1   |   |   | $ | 88.6 |   |   | $ | 52.0 |   |
|   Component      products                     |   |                     | 20.6    |   |   |   | 16.0 |   |   |   | 5.5 |   |
|   Waste      management                       |   |                     | (9.5    | ) |   |   | (14.1 | ) |   |   | (21.5 | ) |
|                                                    |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total      operating income     |   |                     | 149.2   |   |   |   | 90.5 |   |   |   | 36.0 |   |
|                                                    |   |                     |    |   |   |   |   |   |   |   |   |   |
| Equity      in earnings of:                             |   |                     |    |   |   |   |   |   |   |   |   |   |
|   TIMET                                       |   |                     | 101.1   |   |   |   | 26.9 |   |   |   | - |   |
|   Other                                       |   |                     | 3.8     |   |   |   | 1.7 |   |   |   | (1.0 | ) |
| General      corporate items:                           |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Securities      earnings                    |   |                     | 42.3    |   |   |   | 30.8 |   |   |   | 30.7 |   |
|   Gain      on litigation settlement          |   |                     | -       |   |   |   | - |   |   |   | 47.9 |   |
|   Gain      on disposal of fixed assets       |   |                     | 36.4    |   |   |   | - |   |   |   | - |   |
|   Insurance      recoveries                   |   |                     | 7.6     |   |   |   | 6.1 |   |   |   | 9.6 |   |
|   General      expenses, net                  |   |                     | (33.0   | ) |   |   | (37.6 | ) |   |   | (32.9 | ) |
|   Loss      on prepayment of debt             |   |                     | (22.3   | ) |   |   | - |   |   |   | - |   |
| Interest      expense                                   |   |                     | (67.6   | ) |   |   | (64.4 | ) |   |   | (68.7 | ) |
|                                                    |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Income      before income taxes |   | $                        | 217.5   |   |   | $ | 54.0 |   |   | $ | 21.6 |   |

----

|                                |   |  Years ended December    31, |   |
|-------------------------------------|--------|-----------------------------------|--------|
|                                |   | 2006                              |   |   | 2007 |   |   | 2008 |   |
|                                |   | (In      millions)                |   |
|                                |   |                              |   |   |   |   |   |   |   |
| Depreciation      and amortization: |   |                              |   |   |   |   |   |   |   |
|   Chemicals               |   | $                                 | 57.4   |   |   | $ | 52.5 |   |   | $ | 53.9 |   |
|   Component      products |   |                              | 11.8   |   |   |   | 11.0 |   |   |   | 9.2 |   |
|   Waste      management   |   |                              | 2.7    |   |   |   | 2.3 |   |   |   | 2.7 |   |
|   Corporate               |   |                              | .6     |   |   |   | .5 |   |   |   | .3 |   |
|                                |   |                              |   |   |   |   |   |   |   |   |   |   |
|     Total       |   | $                                 | 72.5   |   |   | $ | 66.3 |   |   | $ | 66.1 |   |
|                                |   |                              |   |   |   |   |   |   |   |   |   |   |
| Capital      expenditures:          |   |                              |   |   |   |   |   |   |   |   |   |   |
|   Chemicals               |   | $                                 | 50.9   |   |   | $ | 47.4 |   |   | $ | 68.2 |   |
|   Component      products |   |                              | 12.1   |   |   |   | 13.8 |   |   |   | 6.8 |   |
|   Waste      management   |   |                              | .5     |   |   |   | 2.4 |   |   |   | 9.4 |   |
|   Corporate               |   |                              | .3     |   |   |   | .2 |   |   |   | .5 |   |
|                                |   |                              |   |   |   |   |   |   |   |   |   |   |
|     Total       |   | $                                 | 63.8   |   |   | $ | 63.8 |   |   | $ | 84.9 |   |
|                                |   |                              |   |   |   |   |   |   |   |   |   |   |

|                                                                                   |   | December 31,       |    |
|----------------------------------------------------------------------------------------|--------|--------------------|---------|
|                                                                                   |   | 2006               |    |   | 2007 |   |   | 2008 |   |
|                                                                                   |   | (In      millions) |    |
|                                                                                   |   |               |    |   |   |   |   |   |   |
| Total      assets:                                                                     |   |               |    |   |   |   |   |   |   |
|   Operating      segments:                                                   |   |               |    |   |   |   |   |   |   |
|     Chemicals                                                      |   | $                  | 1,826.8 |   |   | $ | 1,862.6 |   |   | $ | 1,760.2 |   |
|     Component      products                                        |   |               | 169.2   |   |   |   | 185.4 |   |   |   | 163.9 |   |
|     Waste      management                                          |   |               | 53.4    |   |   |   | 59.7 |   |   |   | 85.8 |   |
|   Investments      accounted for by the   Equity      method: |   |               |    |   |   |   |   |   |   |   |   |   |
|     TIMET      common stock                                        |   |               | 264.1   |   |   |   | - |   |   |   | - |   |
|     Other      - joint ventures                                    |   |               | 18.8    |   |   |   | 19.4 |   |   |   | 18.4 |   |
|   Corporate      and eliminations                                            |   |               | 472.4   |   |   |   | 475.9 |   |   |   | 361.1 |   |
|                                                                                   |   |               |    |   |   |   |   |   |   |   |   |   |
|     Total                                                          |   | $                  | 2,804.7 |   |   | $ | 2,603.0 |   |   | $ | 2,389.4 |   |
|                                                                                   |   |               |    |   |   |   |   |   |   |   |   |   |
|                                                                                   |   |               |    |   |   |   |   |   |   |   |   |   |

----

|                                   |   | Years ended December 31, |    |
|----------------------------------------|--------|--------------------------|---------|
|                                   |   | 2006                     |    |   | 2007 |   |   | 2008 |   |
|                                   |   | (In      millions)       |    |
|                                   |   |                     |    |   |   |   |   |   |   |
| Net      sales - point of origin:      |   |                     |    |   |   |   |   |   |   |
|   United      States         |   | $                        | 667.1   |   |   | $ | 638.4 |   |   | $ | 617.2 |   |
|   Germany                    |   |                     | 672.0   |   |   |   | 700.6 |   |   |   | 694.8 |   |
|   Canada                     |   |                     | 265.2   |   |   |   | 260.7 |   |   |   | 243.8 |   |
|   Belgium                    |   |                     | 192.9   |   |   |   | 209.8 |   |   |   | 207.7 |   |
|   Norway                     |   |                     | 173.5   |   |   |   | 184.3 |   |   |   | 194.2 |   |
|   Taiwan                     |   |                     | 15.9    |   |   |   | 11.7 |   |   |   | 8.3 |   |
|   Eliminations               |   |                     | (505.2  | ) |   |   | (513.3 | ) |   |   | (480.7 | ) |
|                                   |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total          |   | $                        | 1,481.4 |   |   | $ | 1,492.2 |   |   | $ | 1,485.3 |   |
|                                   |   |                     |    |   |   |   |   |   |   |   |   |   |
| Net      sales - point of destination: |   |                     |    |   |   |   |   |   |   |   |   |   |
|   North      America         |   | $                        | 609.9   |   |   | $ | 545.8 |   |   | $ | 530.2 |   |
|   Europe                     |   |                     | 732.9   |   |   |   | 811.8 |   |   |   | 814.6 |   |
|   Asia      and other        |   |                     | 138.6   |   |   |   | 134.6 |   |   |   | 140.5 |   |
|                                   |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total          |   | $                        | 1,481.4 |   |   | $ | 1,492.2 |   |   | $ | 1,485.3 |   |
|                                   |   |                     |    |   |   |   |   |   |   |   |   |   |

|                             |   | December 31,       |   |
|----------------------------------|--------|--------------------|--------|
|                             |   | 2006               |   |   | 2007 |   |   | 2008 |   |
|                             |   | (In      millions) |   |
|                             |   |               |   |   |   |   |   |   |   |
| Net      property and equipment: |   |               |   |   |   |   |   |   |   |
|   United      States   |   | $                  | 78.2   |   |   | $ | 82.3 |   |   | $ | 97.0 |   |
|   Germany              |   |               | 301.4  |   |   |   | 332.1 |   |   |   | 310.7 |   |
|   Canada               |   |               | 80.6   |   |   |   | 89.6 |   |   |   | 69.7 |   |
|   Norway               |   |               | 76.2   |   |   |   | 95.8 |   |   |   | 88.5 |   |
|   Belgium              |   |               | 67.2   |   |   |   | 74.1 |   |   |   | 68.0 |   |
|   Taiwan               |   |               | 7.7    |   |   |   | 7.4 |   |   |   | 7.1 |   |
|                             |   |               |   |   |   |   |   |   |   |   |   |   |
|     Total    |   | $                  | 611.3  |   |   | $ | 681.3 |   |   | $ | 641.0 |   |
|                             |   |               |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                     |   | Amount             |        |
|----------------------------------------------------------------------------------------------------------|--------|--------------------|-------------|
|                                                                                                     |   | (In      millions) |        |
|                                                                                                     |   |               |        |
| Investment      in TIMET                                                                                 |   | $                  | 276.7       |   |
| Deferred      income taxes previously recognized:                                                        |   |               |        |   |
|   Investment      in TIMET                                                                     |   |               | (56.9       | ) |
|   NOL      and AMT carryforwards                                                               |   |               | 21.4        |   |
| Income      taxes generated from the special dividend:                                                   |   |               |        |   |
|   Valhi      level, net of amount included in other   comprehensive      income |   |               |  646.9 |   |
|   NL      level                                                                                |   |               |  9.3   |   |
|                                                                                                     |   |               |        |   |
|      Total                                                                      |   | $                  | 897.4       |   |

----

|                                                     |   | December 31,       |   |
|----------------------------------------------------------|--------|--------------------|--------|
|                                                     |   | 2007               |   |   | 2008 |   |
|                                                     |   | (In      millions) |   |
|                                                     |   |               |   |   |   |   |
| Current      assets:                                     |   |               |   |   |   |   |
|   Restricted      debt securities              |   | $                  | 5.9    |   |   | $ | 5.5 |   |
|   Other      debt securities                   |   |               | 1.3    |   |   |   | 3.3 |   |
|                                                     |   |               |   |   |   |   |   |   |
|     Total                            |   | $                  | 7.2    |   |   | $ | 8.8 |   |
|                                                     |   |               |   |   |   |   |   |   |
| Noncurrent      assets:                                  |   |               |   |   |   |   |   |   |
|   The      Amalgamated Sugar Company LLC       |   | $                  | 250.0  |   |   | $ | 250.0 |   |
|   TIMET                                        |   |               | 60.2   |   |   |   | 20.1 |   |
|   Restricted      debt securities              |   |               | 3.2    |   |   |   | 3.5 |   |
|   Other      debt securities and common stocks |   |               | 6.4    |   |   |   | 1.9 |   |
|                                                     |   |               |   |   |   |   |   |   |
|     Total                            |   | $                  | 319.8  |   |   | $ | 275.5 |   |

|                                                     |   | Fair Value Measurements at December 31,      2008 |      |
|----------------------------------------------------------|--------|---------------------------------------------------|-----------|
|                                                     |   | Total                                             |      |   | Quoted      Prices in Active Markets (Level      1) |   |   | Significant      Other Observable Inputs (Level      2) |   |   | Significant      Unobservable Inputs (Level      3) |   |
|                                                     |   | (In      millions)                                |      |
| Current      assets:                                     |   |                                              |      |   |   |   |   |   |   |   |   |   |
|   Restricted      debt securities              |   | $                                                 | 5.5       |   |   | $ | - |   |   | $ | 5.5 |   |   | $ | - |   |
|   Other      debt securities                   |   |                                              | 3.3       |   |   |   | - |   |   |   | 3.3 |   |   |   | - |   |
|                                                     |   |                                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                            |   | $                                                 | 8.8       |   |   | $ | - |   |   | $ | 8.8 |   |   | $ | - |   |
|                                                     |   |                                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noncurrent      assets:                                  |   |                                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   The      Amalgamated Sugar Company LLC       |   | $                                                 | 250.0     |   |   | $ | - |   |   | $ | - |   |   | $ | 250.0 |   |
|   TIMET                                        |   |                                              | 20.1      |   |   |   | 20.1 |   |   |   | - |   |   |   | - |   |
|   Other      debt securities and common stocks |   |                                              |  5.4 |   |   |   |  5.0 |   |   |   |  .4 |   |   |   |  - |   |
|                                                     |   |                                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                            |   | $                                                 | 275.5     |   |   | $ | 25.1 |   |   | $ | .4 |   |   | $ | 250.0 |   |

|                                                       |   | December 31,       |   |
|------------------------------------------------------------|--------|--------------------|--------|
|                                                       |   | 2007               |   |   | 2008 |   |
|                                                       |   | (In      millions) |   |
|                                                       |   |               |   |   |   |   |
| Accounts      receivable                                   |   | $                  | 239.2  |   |   | $ | 194.9 |   |
| Accrued      insurance recoveries – NL (see Note 15) |   |               | -      |   |   |   | 7.2 |   |
| Notes      receivable                                      |   |               | 4.5    |   |   |   | 4.0 |   |
| Accrued      interest and dividends receivable             |   |               | .1     |   |   |   | .1 |   |
| Allowance      for doubtful accounts                       |   |               | (2.4   | ) |   |   | (2.7 | ) |
|                                                       |   |               |   |   |   |   |   |   |
|     Total                              |   | $                  | 241.4  |   |   | $ | 203.5 |   |

|                                                   |   | December      31,  |   |
|--------------------------------------------------------|--------|-------------------------|--------|
|                                                   |   | 2007                    |   |   | 2008 |   |
|                                                   |   | (In      millions)      |   |
|                                                   |   |                    |   |   |   |   |
| Raw      materials:                                    |   |                    |   |   |   |   |
|   Chemicals                                  |   | $                       | 66.2   |   |   | $ | 67.1 |   |
|   Component      products                    |   |                    | 6.3    |   |   |   | 7.5 |   |
|                                                   |   |                    |   |   |   |   |   |   |
|     Total      raw materials       |   |                    | 72.5   |   |   |   | 74.6 |   |
|                                                   |   |                    |   |   |   |   |   |   |
| Work      in process:                                  |   |                    |   |   |   |   |   |   |
|   Chemicals                                  |   |                    | 19.9   |   |   |   | 19.8 |   |
|   Component      products                    |   |                    | 9.8    |   |   |   | 8.2 |   |
|                                                   |   |                    |   |   |   |   |   |   |
|     Total      in-process products |   |                    | 29.7   |   |   |   | 28.0 |   |
|                                                   |   |                    |   |   |   |   |   |   |
| Finished      products:                                |   |                    |   |   |   |   |   |   |
|   Chemicals                                  |   |                    | 171.6  |   |   |   | 243.8 |   |
|   Component      products                    |   |                    | 8.2    |   |   |   | 6.9 |   |
|                                                   |   |                    |   |   |   |   |   |   |
|     Total      finished products   |   |                    | 179.8  |   |   |   | 250.7 |   |
|                                                   |   |                    |   |   |   |   |   |   |
| Supplies      (primarily chemicals)                    |   |                    | 55.9   |   |   |   | 55.2 |   |
|                                                   |   |                    |   |   |   |   |   |   |
|     Total                          |   | $                       | 337.9  |   |   | $ | 408.5 |   |

----

|                                                                            |   | December 31,   |   |
|---------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                            |   | 2007                     |   |   | 2008 |   |
|                                                                            |   | (In      millions)       |   |
|                                                                            |   |                     |   |
| Investment      in affiliates:                                                  |   |                     |   |   |   |   |
|   Ti02 manufacturing joint venture                     |   | $                        | 118.5  |   |   | $ | 105.6 |   |
|   Basic Management and Landwell                        |   |                     | 19.4   |   |   |   | 18.4 |   |
|                                                                            |   |                     |   |   |   |   |   |   |
|       Total                                       |   | $                        | 137.9  |   |   | $ | 124.0 |   |
|                                                                            |   |                     |   |   |   |   |   |   |
| Other assets:                                                              |   |                     |   |   |   |   |   |   |
|   Waste disposal site operating permits, net |   | $                        | 29.8   |   |   | $ | 43.7 |   |
|   Deferred financing costs                                  |   |                     | 8.2    |   |   |   | 7.1 |   |
|   IBNR receivables                                               |   |                     | 7.8    |   |   |   | 7.5 |   |
|   Loans and other receivables                          |   |                     | 1.8    |   |   |   | 15.6 |   |
|   Other                                                               |   |                     | 19.7   |   |   |   | 13.4 |   |
|                                                                            |   |                     |   |   |   |   |   |   |
|     Total                                                   |   | $                        | 67.3   |   |   | $ | 87.3 |   |

|                                                                                                 |   | December 31,       |   |
|------------------------------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                                                 |   | 2007               |   |   | 2008 |   |
|                                                                                                 |   | (In      millions) |   |
|                                                                                                 |   |               |   |   |   |   |
|                                                                                                 |   |               |   |   |   |   |
|   Current assets                                                                      |   | $                  | 68.3   |   |   | $ | 68.9 |   |
|   Property and equipment,      net                                               |   |               | 195.2  |   |   |   | 181.7 |   |
|                                                                                                 |   |               |   |   |   |   |   |   |
|       Total assets                                                |   | $                  | 263.5  |   |   | $ | 250.6 |   |
|                                                                                                 |   |               |   |   |   |   |   |   |
|                                                                                                 |   |               |   |   |   |   |   |   |
|   Liabilities, primarily current                                                 |   | $                  | 23.8   |   |   | $ | 36.7 |   |
|   Partners’ equity                                                         |   |               | 239.7  |   |   |   | 213.9 |   |
|                                                                                                 |   |               |   |   |   |   |   |   |
|       Total liabilities and partners’ equity |   | $                  | 263.5  |   |   | $ | 250.6 |   |

|                |   | Years ended December 31, |   |
|---------------------|--------|--------------------------|--------|
|                |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                |   | (In      millions)       |   |
|                |   |                     |   |   |   |   |   |   |   |
| Net      sales:     |   |                     |   |   |   |   |   |   |   |
|   Kronos  |   | $                        | 124.2  |   |   | $ | 124.6 |   |   | $ | 140.3 |   |
|   Tioxide |   |                     | 125.2  |   |   |   | 125.0 |   |   |   | 140.7 |   |
|                |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cost      of sales  |   |                     | 249.3  |   |   |   | 249.6 |   |   |   | 280.5 |   |
|                |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      income     |   |                     | -      |   |   |   | - |   |   |   | - |   |

|                                                                                      |   | September 30,      |   |
|-------------------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                                      |   | 2007               |   |   | 2008 |   |
|                                                                                      |   | (In      millions) |   |
|                                                                                      |   |               |   |   |   |   |
|                                                                                      |   |               |   |   |   |   |
|   Current assets                                                           |   | $                  | 39.6   |   |   | $ | 31.3 |   |
|   Property and equipment,      net                                    |   |               | 11.1   |   |   |   | 10.4 |   |
|   Prepaid costs and other                                        |   |               | 4.7    |   |   |   | 4.4 |   |
|   Land and development costs                                     |   |               | 15.4   |   |   |   | 15.4 |   |
|   Notes and other receivables                                    |   |               | 1.6    |   |   |   | .4 |   |
|   Investment in undeveloped land and water rights |   |               | 45.7   |   |   |   | 50.8 |   |
|                                                                                      |   |               |   |   |   |   |   |   |
|       Total assets                                     |   | $                  | 118.1  |   |   | $ | 112.7 |   |
|                                                                                      |   |               |   |   |   |   |   |   |
|   Current liabilities                                                      |   | $                  | 15.2   |   |   | $ | 15.0 |   |
|   Long-term debt                                                           |   |               | 18.2   |   |   |   | 19.8 |   |
|   Deferred income taxes                                               |   |               | 6.5    |   |   |   | 6.3 |   |
|   Other noncurrent liabilities                                        |   |               | 1.3    |   |   |   | 1.3 |   |
|   Equity                                                                        |   |               | 76.9   |   |   |   | 70.3 |   |
|                                                                                      |   |               |   |   |   |   |   |   |
|       Total liabilities and equity           |   | $                  | 118.1  |   |   | $ | 112.7 |   |

|                                   |   | Twelve months ended September      30, |   |
|----------------------------------------|--------|----------------------------------------|--------|
|                                   |   | 2006                                   |   |   | 2007 |   |   | 2008 |   |
|                                   |   | (In      millions)                     |   |
|                                   |   |                                   |   |   |   |   |   |   |   |
| Total      revenues                    |   | $                                      | 31.4   |   |   | $ | 23.5 |   |   | $ | 9.0 |   |
| Income      (loss) before income taxes |   |                                   | 16.6   |   |   |   | 10.2 |   |   |   | (4.7 | ) |
| Net      income (loss)                 |   |                                   | 13.5   |   |   |   | 9.0 |   |   |   | (3.9 | ) |

|                                   |   | Operating segment  |   |   |              |   |
|----------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                   |   | Chemicals          |   |   | ComponentProducts |   |   | Total |   |
|                                   |   | (In      millions) |   |
|                                   |   |               |   |   |              |   |   |   |   |
| Balance      at December 31, 2005      |   | $                  | 341.0  |   |              | $      | 20.8 |   |   | $ | 361.8 |   |
| Goodwill      acquired                 |   |               | 17.6   |   |              |   | 5.6 |   |   |   | 23.2 |   |
| Changes      in foreign exchange rates |   |               | -      |   |              |   | .2 |   |   |   | .2 |   |
|                                   |   |               |   |   |              |   |   |   |   |   |   |   |
| Balance      at December 31, 2006      |   |               | 358.6  |   |              |   | 26.6 |   |   |   | 385.2 |   |
| Goodwill      acquired                 |   |               | (.1    | )      |              |   | 21.7 |   |   |   | 21.6 |   |
|                                   |   |               |   |   |              |   |   |   |   |   |   |   |
| Balance      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 |   |

|                                                           |   | December 31,       |   |
|----------------------------------------------------------------|--------|--------------------|--------|
|                                                           |   | 2007               |   |   | 2008 |   |
|                                                           |   | (In      millions) |   |
|                                                           |   |               |   |   |   |   |
|                                                           |   |               |   |   |   |   |
|   Definite-lived      customer list intangible asset |   | $                  | .6     |   |   | $ | - |   |
|   Patents      and other intangible assets           |   |               | 2.1    |   |   |   | 2.0 |   |
|     Total                                  |   | $                  | 2.7    |   |   | $ | 2.0 |   |

| 2009 |   | $.6 million       |
|------|--------|-------------------|
| 2010 |   |  .6  million |
| 2011 |   |  .4  million |
| 2012 |   |  .3  million |
| 2013 |   |  .1  million |

|                                                                                |   | December 31,       |   |
|-------------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                                |   | 2007               |   |   | 2008 |   |
|                                                                                |   | (In      millions) |   |
|                                                                                |   |               |   |   |   |   |
| Valhi:                                                                              |   |               |   |   |   |   |
|   Snake      River Sugar Company                                          |   | $                  | 250.0  |   |   | $ | 250.0 |   |
|   Revolving      bank credit facility                                     |   |               | -      |   |   |   | 7.3 |   |
|       Total      Valhi debt                           |   |               | 250.0  |   |   |   | 257.3 |   |
|                                                                                |   |               |   |   |   |   |   |   |
| Subsidiary      debt:                                                               |   |               |   |   |   |   |   |   |
|   Kronos International 6.5% Senior Secured Notes |   |               | 585.5  |   |   |   | 560.0 |   |
|   CompX      promissory note payable to TIMET                             |   |               | 50.0   |   |   |   | 43.0 |   |
|   Kronos European bank credit facility                |   |               | -      |   |   |   | 42.2 |   |
|   Kronos U.S. bank credit facility                    |   |               | 15.4   |   |   |   | 13.7 |   |
|   Other                                                                   |   |               | 5.7    |   |   |   | 4.2 |   |
|                                                                                |   |               |   |   |   |   |   |   |
|     Total subsidiary debt                             |   |               | 656.6  |   |   |   | 663.1 |   |
|                                                                                |   |               |   |   |   |   |   |   |
|     Total debt                                             |   |               | 906.6  |   |   |   | 920.4 |   |
|                                                                                |   |               |   |   |   |   |   |   |
|     Less current maturities                           |   |               | 16.8   |   |   |   | 9.4 |   |
|                                                                                |   |               |   |   |   |   |   |   |
|     Total long-term debt                              |   | $                  | 889.8  |   |   | $ | 911.0 |   |

| Years ending December 31,                 |   | Amount             |   |
|-------------------------------------------|--------|--------------------|--------|
|                                      |   | (In      millions) |   |
|                                      |   |               |   |
|   2009                          |   | $                  | 9.4    |   |
|   2010                          |   |               | 2.3    |   |
|   2011                          |   |               | 57.8   |   |
|   2012                          |   |               | 1.9    |   |
|   2013                          |   |               | 561.0  |   |
|   2014      and thereafter      |   |               | 288.0  |   |
|                                      |   |               |   |   |
|       Total |   | $                  | 920.4  |   |
|                                      |   |               |   |   |

|                                                 |   | December 31,       |   |
|------------------------------------------------------|--------|--------------------|--------|
|                                                 |   | 2007               |   |   | 2008 |   |
|                                                 |   | (In      millions) |   |
|                                                 |   |               |   |   |   |   |
| Current:                                             |   |               |   |   |   |   |
|   Employee      benefits                   |   | $                  | 37.6   |   |   | $ | 33.6 |   |
|   Environmental      costs                 |   |               | 15.4   |   |   |   | 11.6 |   |
|   Accrued      sales discounts and rebates |   |               | 15.3   |   |   |   | 14.9 |   |
|   Reserve      for uncertain tax positions |   |               | .3     |   |   |   | .2 |   |
|   Deferred      income                     |   |               | 4.0    |   |   |   | 8.4 |   |
|   Interest                                 |   |               | 8.3    |   |   |   | 7.9 |   |
|   Other                                    |   |               | 52.3   |   |   |   | 51.8 |   |
|                                                 |   |               |   |   |   |   |   |   |
|     Total                        |   | $                  | 133.2  |   |   | $ | 128.4 |   |
|                                                 |   |               |   |   |   |   |   |   |
| Noncurrent:                                          |   |               |   |   |   |   |   |   |
|   Reserve      for uncertain tax positions |   | $                  | 47.2   |   |   | $ | 50.4 |   |
|   Insurance      claims and expenses       |   |               | 15.2   |   |   |   | 13.5 |   |
|   Employee      benefits                   |   |               | 8.4    |   |   |   | 9.1 |   |
|   Deferred      income                     |   |               | 1.1    |   |   |   | .9 |   |
|   Other                                    |   |               | 5.8    |   |   |   | 4.9 |   |
|                                                 |   |               |   |   |   |   |   |   |
|     Total                        |   | $                  | 77.7   |   |   | $ | 78.8 |   |

| 2009         |   | $ 25.8  million        |
|--------------|--------|------------------------|
| 2010         |   |   26.0    million |
| 2011         |   |   26.4    million |
| 2012         |   |   28.5    million |
| 2013         |   |   26.6    million |
| Next 5 years |   |  144.1    million |

|                                                                                    |   | Years ended December 31, |   |
|-----------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                    |   | 2007                     |   |   | 2008 |   |
|                                                                                    |   | (In      millions)       |   |
|                                                                                    |   |                     |   |   |   |   |
| Change      in projected benefit obligations ("PBO"):                                   |   |                     |   |   |   |   |
|   Balance      at beginning of the year                   |   | $                        | 547.9  |   |   | $ | 538.1 |   |
|   Service cost                                                           |   |                     | 7.9    |   |   |   | 9.6 |   |
|   Interest cost                                                          |   |                     | 26.8   |   |   |   | 23.7 |   |
|   Participants’ contributions                                      |   |                     | 2.1    |   |   |   | 1.9 |   |
|   Actuarial gains                                                        |   |                     | (75.1  | ) |   |   | (22.6 | ) |
|   Change      in measurement date                                             |   |                     | 7.9    |   |   |   | - |   |
|   Plan      amendments                                                        |   |                     | 4.4    |   |   |   | - |   |
|   Change in foreign currency exchange rates          |   |                     | 53.0   |   |   |   | (49.9 | ) |
|   Benefits paid                                                          |   |                     | (36.8  | ) |   |   | (30.9 | ) |
|                                                                                    |   |                     |   |   |   |   |   |   |
|       Balance      at end of the year |   | $                        | 538.1  |   |   | $ | 469.9 |   |
|                                                                                    |   |                     |   |   |   |   |   |   |
| Change in plan assets:                                                   |   |                     |   |   |   |   |   |   |
|   Fair value       at beginning of the year     |   | $                        | 399.0  |   |   | $ | 445.4 |   |
|   Actual return on plan assets                            |   |                     | 18.3   |   |   |   | (75.6 | ) |
|   Employer contributions                                                 |   |                     | 28.0   |   |   |   | 21.2 |   |
|   Participants’ contributions                                      |   |                     | 2.1    |   |   |   | 1.9 |   |
|   Change      in measurement date                                             |   |                     | (.6    | ) |   |   | - |   |
|   Change in foreign currency exchange rates          |   |                     | 35.4   |   |   |   | (38.5 | ) |
|   Benefits paid                                                          |   |                     | (36.8  | ) |   |   | (30.9 | ) |
|                                                                                    |   |                     |   |   |   |   |   |   |
|       Fair value at end of year  |   | $                        | 445.4  |   |   | $ | 323.5 |   |
|                                                                                    |   |                     |   |   |   |   |   |   |
| Funded      status                                                                      |   | $                        | (92.7  | ) |   | $ | (146.4 | ) |
|                                                                                    |   |                     |   |   |   |   |   |   |
| Amounts recognized in the Consolidated      Balance Sheets:    |   |                     |   |   |   |   |   |   |
|   Pension asset                                                          |   | $                        | 47.6   |   |   | $ | - |   |
|   Accrued pension costs:                                            |   |                     |   |   |   |   |   |   |
|     Current                                                         |   |                     | (.3    | ) |   |   | (.3 | ) |
|     Noncurrent                                                      |   |                     | (140.0 | ) |   |   | (146.1 | ) |
|                                                                                    |   |                     |   |   |   |   |   |   |
|       Total                                               |   |                     | (92.7  | ) |   |   | (146.4 | ) |
|                                                                                    |   |                     |   |   |   |   |   |   |
|   Accumulated other comprehensive loss:                        |   |                     |   |   |   |   |   |   |
|     Actuarial losses                                           |   |                     | 94.9   |   |   |   | 176.0 |   |
|     Prior service cost                                    |   |                     | 6.6    |   |   |   | 5.6 |   |
|     Net transition obligations                            |   |                     | 3.7    |   |   |   | 3.2 |   |
|                                                                                    |   |                     |   |   |   |   |   |   |
|       Total                                               |   |                     | 105.2  |   |   |   | 184.8 |   |
|                                                                                    |   |                     |   |   |   |   |   |   |
|     Total                                                           |   | $                        | 12.5   |   |   | $ | 38.4 |   |
|                                                                                    |   |                     |   |   |   |   |   |   |
| Accumulated      benefit obligations (“ABO”)                                |   | $                        | 466.9  |   |   | $ | 437.6 |   |

|                                                                                                    |   | Years ended December 31, |   |
|---------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                    |   | 2007                     |   |   | 2008 |   |
|                                                                                                    |   | (In      millions)       |   |
|                                                                                                    |   |                     |   |   |   |   |
| Changes      in plan assets and benefit obligations recognized      in other comprehensive income: |   |                     |   |   |   |   |
|   Net      actuarial gain (loss) arising during the year                                      |   | $                        | 69.6   |   |   | $ | (81.6 | ) |
|   Plan      amendment                                                                         |   |                     | (4.4   | ) |   |   | - |   |
|   Change      in measurement date:                                                            |   |                     |   |   |   |   |   |   |
|     Prior      service cost                                                         |   |                     | .2     |   |   |   | - |   |
|     Transition      obligations                                                     |   |                     | .1     |   |   |   | - |   |
|     Actuarial      losses                                                           |   |                     | 2.5    |   |   |   | - |   |
|   Amortization      of unrecognized:                                                          |   |                     |   |   |   |   |   |   |
|     Prior service cost                                                    |   |                     | .7     |   |   |   | .9 |   |
|     Net transition obligations                                            |   |                     | .5     |   |   |   | .5 |   |
|     Net      actuarial losses                                                  |   |                     | 8.2    |   |   |   | (1.1 | ) |
|                                                                                                    |   |                     |   |   |   |   |   |   |
|       Total                                                               |   | $                        | 77.4   |   |   | $ | (81.3 | ) |
|                                                                                                    |   |                     |   |   |   |   |   |   |

|                                                           |   | Years ended December    31,  |   |
|----------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                           |   | 2006                              |   |   | 2007 |   |   | 2008 |   |
|                                                           |   | (In      millions)                |   |
|                                                           |   |                              |   |   |   |   |   |   |   |
| Net      periodic pension cost:                                |   |                              |   |   |   |   |   |   |   |
|   Service cost                             |   | $                                 | 7.8    |   |   | $ | 7.9 |   |   | $ | 9.6 |   |
|   Interest cost                            |   |                              | 23.8   |   |   |   | 26.8 |   |   |   | 23.7 |   |
|   Expected return on plan assets |   |                              | (25.7  | ) |   |   | (28.5 | ) |   |   | (31.7 | ) |
|   Amortization      of unrecognized:                 |   |                              |   |   |   |   |   |   |   |   |   |   |
|     Prior service cost           |   |                              | .6     |   |   |   | .7 |   |   |   | .9 |   |
|     Net transition obligations   |   |                              | .4     |   |   |   | .5 |   |   |   | .5 |   |
|     Net      actuarial losses (gains) |   |                              | 9.1    |   |   |   | 8.2 |   |   |   | (1.1 | ) |
|                                                           |   |                              |   |   |   |   |   |   |   |   |   |   |
|     Total                                  |   | $                                 | 16.0   |   |   | $ | 15.6 |   |   | $ | 1.9 |   |

----

|                                                                                    |   | December 31,       |   |
|-----------------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                                    |   | 2007               |   |   | 2008 |   |
|                                                                                    |   | (In      millions) |   |
|                                                                                    |   |               |   |   |   |   |
| Projected      benefit obligations:                                                     |   |               |   |   |   |   |
|   U.S.      plans                                                             |   | $                  | 87.4   |   |   | $ | 87.8 |   |
|   Foreign      plans                                                          |   |               | 450.7  |   |   |   | 382.1 |   |
|                                                                                    |   |               |   |   |   |   |   |   |
|     Total                                                           |   | $                  | 538.1  |   |   | $ | 469.9 |   |
|                                                                                    |   |               |   |   |   |   |   |   |
| Fair      value of plan assets:                                                         |   |               |   |   |   |   |   |   |
|   U.S.      plans                                                             |   | $                  | 133.1  |   |   | $ | 65.3 |   |
|   Foreign      plans                                                          |   |               | 312.3  |   |   |   | 258.2 |   |
|                                                                                    |   |               |   |   |   |   |   |   |
|     Total                                                           |   | $                  | 445.4  |   |   | $ | 323.5 |   |
|                                                                                    |   |               |   |   |   |   |   |   |
| Plans      for which the accumulated benefit obligations exceeds      plan assets: |   |               |   |   |   |   |   |   |
|   Projected      benefit obligations                                          |   | $                  | 287.4  |   |   | $ | 420.0 |   |
|   Accumulated      benefit obligations                                        |   |               | 240.6  |   |   |   | 397.0 |   |
|   Fair      value of plan assets                                              |   |               | 164.4  |   |   |   | 279.2 |   |
|                                                                                    |   |               |   |   |   |   |   |   |

|                                        |   | December 31, |   |
|---------------------------------------------|--------|--------------|--------|
| Rate                                        |   | 2007         |   |   | 2008 |   |
|                                        |   |         |   |   |   |   |
| Discount      rate                          |   |         | 5.6    | % |   |   | 5.9 | % |
| Increase      in future compensation levels |   |         | 2.5    | % |   |   | 2.7 | % |

|                                        |   | Years ended December 31, |   |
|---------------------------------------------|--------|--------------------------|--------|
| Rate                                        |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                        |   |                     |   |   |   |   |   |
| Discount      rate                          |   |                     | 4.5    | % |   |   | 4.9 | % |   |   | 5.6 | % |
| Increase      in future compensation levels |   |                     | 2.3    | % |   |   | 2.5 | % |   |   | 2.5 | % |
| Long-term      return on plan assets        |   |                     | 7.3    | % |   |   | 7.3 | % |   |   | 7.2 | % |

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

|   | · | Canada      - we currently have a plan asset target allocation of 60% to equity      securities and 40% 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. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Norway      - we currently have a plan asset target allocation of 14% to equity      securities, 64% to fixed income securities and the remainder 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. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                 |   | December 31, 2007 |   |
|------------------------------------------------------|--------|-------------------|--------|
|                                                 |   | CMRT              |   |   | Germany |   |   | Canada |   |   | Norway |   |
|                                                 |   |              |   |   |   |   |   |   |   |   |   |   |
| Equity      securities and limited Partnerships |   |              | 98     | % |   |   | 28 | % |   |   | 60 | % |   |   | 18 | % |
| Fixed      income securities                         |   |              | -      |   |   |   | 49 |   |   |   | 34 |   |   |   | 68 |   |
| Real      estate                                     |   |              | 2      |   |   |   | 12 |   |   |   | - |   |   |   | - |   |
| Cash,      cash equivalents and other                |   |              | -      |   |   |   | 11 |   |   |   | 6 |   |   |   | 14 |   |
|                                                 |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                        |   |              | 100    | % |   |   | 100 | % |   |   | 100 | % |   |   | 100 | % |

|                                                 |   | December 31, 2008 |   |
|------------------------------------------------------|--------|-------------------|--------|
|                                                 |   | CMRT              |   |   | Germany |   |   | Canada |   |   | Norway |   |
|                                                 |   |              |   |   |   |   |   |   |   |   |   |   |
| Equity      securities and limited Partnerships |   |              | 68     | % |   |   | 24 | % |   |   | 53 | % |   |   | 14 | % |
| Fixed      income securities                         |   |              | 29     |   |   |   | 52 |   |   |   | 39 |   |   |   | 83 |   |
| Real      estate                                     |   |              | 2      |   |   |   | 12 |   |   |   | - |   |   |   | - |   |
| Cash,      cash equivalents and other                |   |              | 1      |   |   |   | 12 |   |   |   | 8 |   |   |   | 3 |   |
|                                                 |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                        |   |              | 100    | % |   |   | 100 | % |   |   | 100 | % |   |   | 100 | % |

|         |   |                         |
|--------------|--------|------------------------------|
| 2009         |   | $ 3.2    million        |
| 2010         |   |   3.2      million |
| 2011         |   |   3.1      million |
| 2012         |   |   3.0      million |
| 2013         |   |   2.8      million |
| Next 5 years |   |  12.3    million        |

----

|                                                                                                      |   | Years ended December 31, |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                      |   | 2007                     |   |   | 2008 |   |
|                                                                                                      |   | (In      millions)       |   |
|                                                                                                      |   |                     |   |   |   |   |
| Actuarial      present value of accumulated OPEB obligations:                                        |   |                     |   |   |   |   |
|   Balance      at beginning of the year                                          |   | $                        | 37.4   |   |   | $ | 37.1 |   |
|   Service cost                                                                             |   |                     | .3     |   |   |   | .3 |   |
|   Interest cost                                                                            |   |                     | 2.2    |   |   |   | 2.1 |   |
|   Actuarial gains                                                                          |   |                     | (.7    | ) |   |   | (2.6 | ) |
|   Plan      amendments                                                                          |   |                     | (.5    | ) |   |   | - |   |
|   Change in foreign currency exchange rates                            |   |                     | 1.3    |   |   |   | (1.7 | ) |
|   Benefits paid from      employer contributions                                 |   |                     | (2.9   | ) |   |   | (2.7 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |
|   Balance at end of the year                                           |   | $                        | 37.1   |   |   | $ | 32.5 |   |
|                                                                                                      |   |                     |   |   |   |   |   |   |
| Fair      value of plan assets                                                                            |   | $                        | -      |   |   | $ | - |   |
|                                                                                                      |   |                     |   |   |   |   |   |   |
| Funded      status                                                                                        |   | $                        | (37.1  | ) |   | $ | (32.5 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |
| Accrued OPEB costs recognized in the Consolidated Balance Sheets: |   |                     |   |   |   |   |   |   |
|   Current                                                                                       |   | $                        | (3.5   | ) |   | $ | (3.2 | ) |
|   Noncurrent                                                                                    |   |                     | (33.6  | ) |   |   | (29.3 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |
|     Total                                                                             |   |                     | (37.1  | ) |   |   | (32.5 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |
|   Accumulated      other comprehensive income (loss):                                           |   |                     |   |   |   |   |   |   |
|     Net actuarial losses (gains)                                       |   |                     | 3.4    |   |   |   | (1.4 | ) |
|     Prior service credit                                                    |   |                     | (1.8   | ) |   |   | .8 |   |
|                                                                                                      |   |                     |   |   |   |   |   |   |
|     Total                                                                             |   |                     | 1.6    |   |   |   | (.6 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |
|     Total                                                                             |   | $                        | (35.5  | ) |   | $ | (33.1 | ) |

|                                                                                           |   | Years ended December 31, |   |
|------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                           |   | 2007                     |   |   | 2008 |   |
|                                                                                           |   | (In      millions)       |   |
|                                                                                           |   |                     |   |   |   |   |
| Changes      in benefit obligations recognized in other      comprehensive income (loss): |   |                     |   |   |   |   |
| Net      actuarial loss arising during the year                                                |   | $                        | .8     |   |   | $ | 2.4 |   |
| Plan      amendments                                                                           |   |                     | .5     |   |   |   | - |   |
| Amortization      of unrecognized:                                                             |   |                     |   |   |   |   |   |   |
|     Prior service cost                                           |   |                     | (.3    | ) |   |   | (.4 | ) |
|     Net      actuarial losses                                         |   |                     | .2     |   |   |   | .2 |   |
|                                                                                           |   |                     |   |   |   |   |   |   |
|     Total                                                                  |   | $                        | 1.2    |   |   | $ | 2.2 |   |
|                                                                                           |   |                     |   |   |   |   |   |   |

|                                                       |   | Years ended December    31,  |   |
|------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                       |   | 2006                              |   |   | 2007 |   |   | 2008 |   |
|                                                       |   | (In      millions)                |   |
|                                                       |   |                              |   |   |   |   |   |   |   |
| Net      periodic OPEB cost (credit):                      |   |                              |   |   |   |   |   |   |   |
|   Service cost                              |   | $                                 | .3     |   |   | $ | .3 |   |   | $ | .3 |   |
|   Interest cost                        |   |                              | 2.1    |   |   |   | 2.2 |   |   |   | 2.1 |   |
|   Amortization      of unrecognized:             |   |                              |   |   |   |   |   |   |   |   |   |   |
|     Prior service credit     |   |                              | (.2    | ) |   |   | (.3 | ) |   |   | (.4 | ) |
|     Actuarial losses (gains) |   |                              | .1     |   |   |   | .2 |   |   |   | .2 |   |
|                                                       |   |                              |   |   |   |   |   |   |   |   |   |   |
|     Total                              |   | $                                 | 2.3    |   |   | $ | 2.4 |   |   | $ | 2.2 |   |

|                                               |   | December 31, |             |
|----------------------------------------------------|--------|--------------|------------------|
|                                               |   | 2007         |             |   | 2008 |   |
|                                               |   |         |             |   |   |   |
| Healthcare      inflation:                         |   |         |             |   |   |   |
|   Initial      rate                      |   |         | 5.8%      - 8.5  | % |   |   | 5.5%      - 8.0 | % |
|   Ultimate      rate                     |   |         | 4.0%      - 5.5  | % |   |   | 5.5 | % |
|   Year      of ultimate rate achievement |   |         | 2010      - 2014 |   |   | 2015 |   |
| Discount      rate                                 |   |         | 6.1              | % |   |   | 5.9 | % |

|                                                                     |   | 1% Increase        |      |   | 1% Decrease |   |
|--------------------------------------------------------------------------|--------|--------------------|-----------|--------|-------------|--------|
|                                                                     |   | (In      millions) |      |
|                                                                     |   |               |      |   |        |   |
| Effect      on net OPEB cost during 2008                            |   | $                  | .3        |   |        | $      | (.2 | ) |
| Effect      at December 31, 2008 on postretirement      obligations |   |               |  2.5 |   |        |   | (2.2 | ) |

----

|                                                                                                                                      |   |  Years ended December    31, |       |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|------------|
|                                                                                                                                      |   | 2006                              |       |   | 2007 |   |   | 2008 |   |
|                                                                                                                                      |   | (In      millions)                |       |
| Pre-tax      income:                                                                                                                      |   |                              |       |   |   |   |   |   |   |
|   United States                                                                                                            |   | $                                 | 151.4      |   |   | $ | 3.0 |   |   | $ | 8.8 |   |
|   Non-U.S. subsidiaries                                                                                                    |   |                              | 66.1       |   |   |   | 51.0 |   |   |   | 12.8 |   |
|                                                                                                                                      |   |                              |       |   |   |   |   |   |   |   |   |   |
|     Total                                                                                                             |   | $                                 | 217.5      |   |   | $ | 54.0 |   |   | $ | 21.6 |   |
|                                                                                                                                      |   |                              |       |   |   |   |   |   |   |   |   |   |
| Expected tax expense, at U.S.  federal statutory income tax rate of 35%  |   | $                                 | 76.1       |   |   | $ | 18.9 |   |   | $ | 7.5 |   |
| Non-U.S. tax rates                                                                                                              |   |                              | (2.1       | ) |   |   | .1 |   |   |   | (.6 | ) |
| Incremental U.S. tax and rate differences on equity in earnings                         |   |                              |  18.4 |   |   |   | (14.1 | ) |   |   |  4.3 |   |
| German       tax attribute adjustment                                                                                           |   |                              | (21.7      | ) |   |   | 8.7 |   |   |   | (7.2 | ) |
| Assessment (refund) of prior year income  taxes, net                                              |   |                              | (1.4       | ) |   |   | (.8 | ) |   |   |  .1 |   |
| U.S. state income taxes, net                                                                                          |   |                              | 2.9        |   |   |   | 1.5 |   |   |   | 2.0 |   |
| Tax contingency reserve adjustment, net                                                                               |   |                              | (10.4      | ) |   |   | (3.8 | ) |   |   | 5.6 |   |
| No      income tax benefit on goodwill impairment                                                                                         |   |                              | -          |   |   |   |  - |   |   |   | 3.5 | (2) |
| Nondeductible expenses                                                                                                               |   |                              | 4.9        |   |   |   | 3.6 |   |   |   | 2.6 |   |
| German      tax rate change                                                                                                               |   |                              | -          |   |   |   | 87.4 |   |   |   | - |   |
| Canadian      tax rate change                                                                                                             |   |                              | (1.3       | ) |   |   | .4 |   |   |   | - |   |
| Nontaxable      income                                                                                                                    |   |                              | (1.1       | ) |   |   | (.6 | ) |   |   | (1.0 | ) |
| Other, net                                                                                                                           |   |                              | (.5        | ) |   |   | 1.9 |   |   |   | (.1 | ) |
|                                                                                                                                      |   |                              |       |   |   |   |   |   |   |   |   |   |
|   Provision for income taxes                                                                                     |   | $                                 | 63.8       |   |   | $ | 103.2 |   |   | $ | 16.7 |   |
|                                                                                                                                      |   |                              |       |   |   |   |   |   |   |   |   |   |
|                                                                                                                                      |   |                              |       |   |   |   |   |   |   |   |   |   |
| Components of income tax expense (benefit):                                                                      |   |                              |       |   |   |   |   |   |   |   |   |   |
|   Currently payable      (refundable):                                                                                     |   |                              |       |   |   |   |   |   |   |   |   |   |
|     U.S. federal and state                                                                             |   | $                                 | 2.1        |   |   | $ | (1.9 | ) |   | $ | 12.8 |   |
|     Non-U.S.                                                                                                          |   |                              | 24.4       |   |   |   | 14.4 |   |   |   | 11.3 |   |
|                                                                                                                                      |   |                              |       |   |   |   |   |   |   |   |   |   |
|       Total                                                                                                 |   |                              | 26.5       |   |   |   | 12.5 |   |   |   | 24.1 |   |
|   Deferred income taxes (benefit):                                                                               |   |                              |       |   |   |   |   |   |   |   |   |   |
|     U.S. federal and state                                                                             |   |                              | 71.3       |   |   |   | (11.3 | ) |   |   | 4.3 |   |
|     Non-U.S.                                                                                                          |   |                              | (34.0      | ) |   |   | 102.0 |   |   |   | (11.7 | ) |
|       Total                                                                                                 |   |                              | 37.3       |   |   |   | 90.7 |   |   |   | (7.4 | ) |
|                                                                                                                                      |   |                              |       |   |   |   |   |   |   |   |   |   |
|   Provision for income taxes                                                                                     |   | $                                 | 63.8       |   |   | $ | 103.2 |   |   | $ | 16.7 |   |
|                                                                                                                                      |   |                              |       |   |   |   |   |   |   |   |   |   |
| Comprehensive provision for  income taxes (benefit) allocable to:                                 |   |                              |       |   |   |   |   |   |   |   |   |   |
|   Income from       operations                                                                                        |   | $                                 | 63.8       |   |   | $ | 103.2 |   |   | $ | 16.7 |   |
|   Dividend      of TIMET common stock                                                                                           |   |                              | -          |   |   |   | 668.3 | (1) |   |   | - |   |
|   Other comprehensive income:                                                                                         |   |                              |       |   |   |   |   |   |   |   |   |   |
|     Marketable securities                                                                                        |   |                              | 3.3        |   |   |   | 11.3 |   |   |   | (15.6 | ) |
|     Currency translation                                                                                         |   |                              | 9.6        |   |   |   | 8.7 |   |   |   | (10.0 | ) |
|     Pension      plans                                                                                                |   |                              | 9.2        |   |   |   | 38.5 |   |   |   | (32.7 | ) |
|     OPEB      plans                                                                                                   |   |                              | -          |   |   |   | .5 |   |   |   | .9 |   |
|     Other                                                                                                             |   |                              | -          |   |   |   | (.6 | ) |   |   | - |   |
|     Adoption      of SFAS No. 158:                                                                                    |   |                              |       |   |   |   |   |   |   |   |   |   |
|       Pension      plans                                                                                    |   |                              | (19.6      | ) |   |   | (1.4 | ) |   |   | - |   |
|       OPEB      plans                                                                                       |   |                              | (1.7       | ) |   |   | - |   |   |   | - |   |
|                                                                                                                                      |   |                              |       |   |   |   |   |   |   |   |   |   |
|         Total                                                                                     |   | $                                 | 64.6       |   |   | $ | 828.5 |   |   | $ | (40.7 | ) |
|                                                                                                                                      |   |                              |       |   |   |   |   |   |   |   |   |   |

| (1) | Represents      the current income taxes generated at the Valhi level and the associated      utilization of NOL and AMT carryforwards resulting from the TIMET special      dividend.  See Note 3. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The      goodwill impairment charge of $10.1 million recorded in 2008 (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,       |        |
|--------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-------------|
|                                                                                                                           |   |  2007         |        |   | 2008 |   |
|                                                                                                                           |   | Assets             |        |   | Liabilities |   |   | Assets |   |   | Liabilities |   |
|                                                                                                                           |   | (In      millions) |        |
|                                                                                                                           |   |               |        |   |   |   |   |   |   |   |   |   |
| Tax effect of temporary differences  related to:                                            |   |               |        |   |   |   |   |   |   |   |   |   |
|   Inventories                                                                                                        |   | $                  | 1.6         |   |   | $ | (3.2 | ) |   | $ | 1.8 |   |   | $ | (4.6 | ) |
|   Marketable securities                                                                                         |   |               | 4.4         |   |   |   | (116.6 | ) |   |   | 19.9 |   |   |   | (113.5 | ) |
|   Property and equipment                                                                                   |   |               | .5          |   |   |   | (81.9 | ) |   |   | .4 |   |   |   | (78.4 | ) |
|   Accrued OPEB costs                                                                                       |   |               | 12.3        |   |   |   | - |   |   |   | 10.9 |   |   |   | - |   |
|   Pension      asset                                                                                                 |   |               | -           |   |   |   | (17.3 | ) |   |   | - |   |   |   | - |   |
|   Accrued      pension costs                                                                                         |   |               | 8.8         |   |   |   | - |   |   |   | 14.0 |   |   |   | - |   |
|   Accrued environmental liabilities and    other deductible differences |   |               |  49.6  |   |   |   |  - |   |   |   |  50.9 |   |   |   |  - |   |
|   Other taxable differences                                                                                |   |               | -           |   |   |   | (27.6 | ) |   |   | - |   |   |   | (28.1 | ) |
|   Investments in subsidiaries and    affiliates                              |   |               |  -     |   |   |   | (231.0 | ) |   |   |  - |   |   |   | (216.7 | ) |
|   Tax      loss and tax credit carryforwards                                                                         |   |               | 164.2       |   |   |   | - |   |   |   | 171.8 |   |   |   | - |   |
|   Valuation      allowance                                                                                           |   |               | (3.0        | ) |   |   | - |   |   |   | (1.2 | ) |   |   | - |   |
|     Adjusted gross deferred tax assets     (liabilities)      |   |               |  238.4 |   |   |   | (477.6 | ) |   |   |  268.5 |   |   |   | ( 441.3 | )  |
| Netting of items by tax jurisdiction                                                                  |   |               | (59.3       | ) |   |   | 59.3 |   |   |   | (90.0 | ) |   |   | 90.0 |   |
|                                                                                                                           |   |               | 179.1       |   |   |   | (418.3 | ) |   |   | 178.5 |   |   |   | (351.3 | ) |
| Less net current deferred tax asset  (liability)                                            |   |               |  10.4  |   |   |   | (3.3 | ) |   |   |  12.1 |   |   |   | (4.7 | ) |
|                                                                                                                           |   |               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Net noncurrent deferred tax asset      (liability)   |   | $                  | 168.7       |   |   | $ | (415.0 | ) |   | $ | 166.4 |   |   | $ | (346.6 | ) |

----

|                                  |   | December 31,       |   |
|---------------------------------------|--------|--------------------|--------|
|                                  |   | 2007               |   |   | 2008 |   |
|                                  |   | (In      millions) |   |
| Minority      interest in net assets: |   |               |   |   |   |   |
|   NL      Industries        |   | $                  | 55.6   |   |   | $ | 45.8 |   |
|   Kronos      Worldwide     |   |               | 20.5   |   |   |   | 15.6 |   |
|   CompX      International  |   |               | 14.4   |   |   |   | 11.9 |   |
|                                  |   |               |   |   |   |   |   |   |
|     Total         |   | $                  | 90.5   |   |   | $ | 73.3 |   |

|                                                        |   |   Years ended December      31, |   |
|-------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                        |   | 2006                                 |   |   | 2007 |   |   | 2008 |   |
|                                                        |   | (In      millions)                   |   |
| Minority      interest in after-tax earnings (losses): |   |                                 |   |   |   |   |   |   |   |
|   NL      Industries                              |   | $                                    | 4.4    |   |   | $ | (2.8 | ) |   | $ | 5.6 |   |
|   Kronos      Worldwide                           |   |                                 | 4.1    |   |   |   | (3.3 | ) |   |   | .4 |   |
|   CompX      International                        |   |                                 | 3.5    |   |   |   | 2.6 |   |   |   | (.3 | ) |
|                                                        |   |                                 |   |   |   |   |   |   |   |   |   |   |
|     Total                               |   | $                                    | 12.0   |   |   | $ | (3.5 | ) |   | $ | 5.7 |   |

|                              |   | Shares of common      stock |   |
|-----------------------------------|--------|-----------------------------|--------|
|                              |   | Issued                      |   |   | Treasury |   |   | Outstanding |   |
|                              |   | (In      millions)          |   |
|                              |   |                        |   |   |   |   |   |   |   |
| Balance      at December 31, 2005 |   |                        | 120.8  |   |   |   | (4.0 | ) |   |   | 116.8 |   |
|                              |   |                        |   |   |   |   |   |   |   |   |   |   |
| Acquired                          |   |                        | -      |   |   |   | (1.9 | ) |   |   | (1.9 | ) |
| Retired                           |   |                        | (1.9   | ) |   |   | 1.9 |   |   |   | - |   |
|                              |   |                        |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2006 |   |                        | 118.9  |   |   |   | (4.0 | ) |   |   | 114.9 |   |
|                              |   |                        |   |   |   |   |   |   |   |   |   |   |
| Issued                            |   |                        | .1     |   |   |   | - |   |   |   | .1 |   |
| Acquired                          |   |                        | -      |   |   |   | (.6 | ) |   |   | (.6 | ) |
| Retired                           |   |                        | (.6    | ) |   |   | .6 |   |   |   | - |   |
|                              |   |                        |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2007 |   |                        | 118.4  |   |   |   | (4.0 | ) |   |   | 114.4 |   |
|                              |   |                        |   |   |   |   |   |   |   |   |   |   |
| Acquired                          |   |                        | -      |   |   |   | (.1 | ) |   |   | (.1 | ) |
|                              |   |                        |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2008 |   |                        | 118.4  |   |   |   | (4.1 | ) |   |   | 114.3 |   |

|               |   |   Shares  |   |   | Exerciseprice      per share |   |                          | Amountpayableuponexercise |   |
|--------------------|--------|---------------------|--------|--------|-----------------------------------|--------|-------------------------------|---------------------------|--------|
|               |   | (In      thousands) |   |   |                              |   |                          | (In      millions)        |   |
|               |   |                |   |   |                              |   |                          |                      |   |
| NL      Industries |   |                | 95     |   |                              | $      | 2.66      - $11.49            |                      |   | $ | .9 |   |
| CompX              |   |                | 134    |   |                              |   | 12.15 -       19.25 |                      |   |   | 2.3 |   |

|                                          |   |  Years ended December 31,        |   |
|-----------------------------------------------|--------|--------------------------------------------|--------|
|                                          |   | 2006                                       |   |   | 2007 |   |   | 2008 |   |
|                                          |   |                                       |   |
|                                          |   | (In      millions)                         |   |
| Securities      earnings:                     |   |                                       |   |   |   |   |   |   |   |
|   Dividends      and interest       |   | $                                          | 41.6   |   |   | $ | 30.9 |   |   | $ | 31.9 |   |
|   Securities      transactions, net |   |                                       | .7     |   |   |   | (.1 | ) |   |   | (1.2 | ) |
|                                          |   |                                       |   |   |   |   |   |   |   |   |   |   |
|     Total                 |   |                                       | 42.3   |   |   |   | 30.8 |   |   |   | 30.7 |   |
|                                          |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Insurance      recoveries                     |   |                                       | 7.7    |   |   |   | 6.1 |   |   |   | 9.6 |   |
| Currency      transactions, net               |   |                                       | (3.5   | ) |   |   | (.8 | ) |   |   | 1.3 |   |
| Disposal      of property and equipment, net  |   |                                       | 35.3   |   |   |   | (1.3 | ) |   |   | (1.0 | ) |
| Litigation      settlement gain               |   |                                       | -      |   |   |   | - |   |   |   | 47.9 |   |
| Other,      net                               |   |                                       | 8.1    |   |   |   | 7.5 |   |   |   | 5.2 |   |
|                                          |   |                                       |   |   |   |   |   |   |   |   |   |   |
|     Total                 |   | $                                          | 89.9   |   |   | $ | 42.3 |   |   | $ | 93.7 |   |

|                                                   |   |   December 31,  |   |
|--------------------------------------------------------|--------|---------------------------|--------|
|                                                   |   | 2007                      |   |   | 2008 |   |
|                                                   |   | (In      millions)        |   |
|                                                   |   |                      |   |   |   |   |
| Current      receivables from affiliates:              |   |                      |   |   |   |   |
|   Contran      - income taxes, net |   | $                         | 4.4    |   |   | $ | - |   |
|   Other                                      |   |                      | .2     |   |   |   | .1 |   |
|                                                   |   |                      |   |   |   |   |   |   |
|     Total                          |   | $                         | 4.6    |   |   | $ | .1 |   |
|                                                   |   |                      |   |   |   |   |   |   |
| Current payables to affiliates:         |   |                      |   |   |   |   |   |   |
|   Louisiana Pigment Company        |   | $                         | 11.4   |   |   | $ | 14.3 |   |
|   Contran:                                   |   |                      |   |   |   |   |   |   |
|     Income      taxes, net         |   |                      | -      |   |   |   | 1.3 |   |
|     Trade items               |   |                      | 7.1    |   |   |   | 9.7 |   |
|   TIMET                                      |   |                      | .5     |   |   |   | .5 |   |
|                                                   |   |                      |   |   |   |   |   |   |
|     Total                          |   | $                         | 19.0   |   |   | $ | 25.8 |   |
|                                                   |   |                      |   |   |   |   |   |   |
| CompX      promissory note payable to TIMET(1)         |   | $                         | 50.0   |   |   | $ | 43.0 |   |
|                                                   |   |                      |   |   |   |   |   |   |

|   | · | we      have never settled any of thesecases; |
|--------|--------|-----------------------------------------------|

|   | · | 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; and |
|--------|--------|----------------------------------------------|

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

|                                                                                                                                           |   | Years ended December 31, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                                                           |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                                                                                                                           |   | (In      millions)       |   |
|                                                                                                                                           |   |                     |   |   |   |   |   |   |   |
| Balance      at the beginning of the year                                                                                                      |   | $                        | 65.7   |   |   | $ | 59.7 |   |   | $ | 55.7 |   |
| Additions      charged to expense, net                                                                                                         |   |                     | 4.0    |   |   |   | 4.4 |   |   |   | 6.5 |   |
| Payments,      net                                                                                                                             |   |                     | (10.0  | ) |   |   | (8.4 | ) |   |   | (9.3 | ) |
|                                                                                                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Balance      at the end of the year                                                                                                            |   | $                        | 59.7   |   |   | $ | 55.7 |   |   | $ | 52.9 |   |
|                                                                                                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Amounts recognized in our Consolidated  Balance Sheet at the end of the year: |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Current liabilities                                                                                                           |   | $                        | 13.6   |   |   | $ | 15.4 |   |   | $ | 11.6 |   |
|   Noncurrent liabilities                                                                                                        |   |                     | 46.1   |   |   |   | 40.3 |   |   |   | 41.3 |   |
|                                                                                                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                                                                                                                  |   | $                        | 59.7   |   |   | $ | 55.7 |   |   | $ | 52.9 |   |

|   | · | 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. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | facts      concerning our historicaloperations, |
|--------|--------|-------------------------------------------------|

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

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

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

| Years ending December 31,                 |   | Amount             |   |
|-------------------------------------------|--------|--------------------|--------|
|                                      |   | (In      millions) |   |
|                                      |   |               |   |
|   2009                          |   | $                  | 5.9    |   |
|   2010                          |   |               | 4.3    |   |
|   2011                          |   |               | 2.9    |   |
|   2012                          |   |               | 2.2    |   |
|   2013                          |   |               | 1.7    |   |
|   2014 and thereafter |   |               | 18.9   |   |
|                                      |   |               |   |   |
|     Total(1)          |   | $                  | 35.9   |   |

----

|                                                                                         |   | Years ended December 31, |   |
|----------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                         |   | 2007                     |   |   | 2008 |   |
|                                                                                         |   | (In      millions)       |   |
|                                                                                         |   |                     |   |   |   |   |
| Unrecognized      tax benefits:                                                              |   |                     |   |   |   |   |
|   Amount      beginning of period                                                  |   | $                        | -      |   |   | $ | 42.4 |   |
|   Amount      at adoption of FIN No. 48                                            |   |                     | 39.5   |   |   |   | - |   |
|   Net      increase (decrease):                                                    |   |                     |   |   |   |   |   |   |
|     Tax      positions taken in prior periods                            |   |                     | (1.8   | ) |   |   | (2.1 | ) |
|     Tax      positions taken in current period                           |   |                     | 10.8   |   |   |   | 11.8 |   |
|   Settlements      with taxing authorities –   cash      paid |   |                     | (.6    | ) |   |   | (.1 | ) |
|   Lapse      of applicable statute of limitations                                  |   |                     | (6.5   | ) |   |   | (4.1 | ) |
|   Foreign      currency translation                                                |   |                     | 1.0    |   |   |   | (1.3 | ) |
|                                                                                         |   |                     |   |   |   |   |   |   |
|   Amount      at end of period                                                     |   | $                        | 42.4   |   |   | $ | 46.6 |   |
|                                                                                         |   |                     |   |   |   |   |   |   |

|                            |   | Fair Value Measurements at December 31,      2008 |   |
|---------------------------------|--------|---------------------------------------------------|--------|
|                            |   | Total                                             |   |   | Quoted      Prices in Active Markets (Level      1) |   |   | Significant      Other Observable Inputs (Level      2) |   |   | Significant      Unobservable Inputs (Level      3) |   |
|                            |   | (in      millions)                                |   |
|                            |   |                                              |   |   |   |   |   |   |   |   |   |   |
| Marketable      securities:     |   |                                              |   |   |   |   |   |   |   |   |   |   |
|   Current             |   | $                                                 | 8.8    |   |   | $ | - |   |   | $ | 8.8 |   |   | $ | - |   |
|   Noncurrent          |   |                                              | 275.5  |   |   |   | 25.1 |   |   |   | .4 |   |   |   | 250.0 |   |
|                            |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Currency      forward contracts |   |                                              | (1.6   | ) |   |   | (1.6 | ) |   |   | - |   |   |   | - |   |
|                            |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|   | · | Our      Component Products Segment entered into a series of short-term forward      exchange contracts maturing through June 2009 to exchange an aggregate of      $7.5 million for an equivalent value of Canadian dollars at an exchange      rate of Cdn. $1.25 to $1.26 per U.S. dollar.  At December 31,      2008, the actual exchange rate was Cdn. $1.22 per U.S.    dollar. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      Chemicals Segment entered      into                                                                                     an      aggregate of $30.0 million for an equivalent value of Canadian dollars at      exchange rates ranging from Cdn. $1.25 to Cdn. $1.26 per U.S.      dollar.  These contracts with U.S. Bank mature from January 2009      through December 2009 at a rate of $2.5 million per month. At      December 31, 2008, the actual exchange rate was Cdn. $1.22 per U.S.      dollar. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      Chemicals Segment entered an aggregate $57 million for an equivalent value      of Norwegian kroner at exchange rates ranging from kroner 6.91 to kroner      7.18.  These contracts with DnB Nor Bank ASA mature from January 2009      through December 2009 at a rate of .5 million to $2.5 million per      month.  At December 31, 2008, the actual exchange rate was      kroner 7.0 per U.S. dollar.  |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      Chemicals Segment entered an aggregate euro 16.4 million for an equivalent      value of Norwegian Kroner at exchange rates ranging from kroner 8.64 to      kroner 9.23.  These contracts with DnB Nor Bank ASA mature from      January 2009 through December 2009 at a rate of euro .5 million to euro .7      million per month.  At December 31, 2008, the actual exchange      rate was kroner 9.7 per euro. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                             |   | December 31,         |   |
|------------------------------------------------------------------|--------|----------------------|--------|
|                                                             |   | 2007                 |   |   | 2008  |   |
|                                                             |   | Carrying amount |   |   | Fairvalue |   |   | Carrying amount |   |   | Fairvalue |   |
|                                                             |   | (In      millions)   |   |
|                                                             |   |                 |   |   |   |   |   |   |   |   |   |   |
| Cash,      cash equivalents and restricted cash equivalents |   | $                    | 145.6  |   |   | $ | 145.6 |   |   | $ | 46.4 |   |   | $ | 46.4 |   |
| Promissory      note receivable                                  |   |                 | -      |   |   |   | - |   |   |   | 15.0 |   |   |   | 15.0 |   |
|                                                             |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term      debt (excluding capitalized leases):              |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Publicly-traded      fixed rate debt -               |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     KII      Senior Secured Notes            |   | $                    | 585.5  |   |   | $ | 507.7 |   |   | $ | 560.0 |   |   | $ | 129.4 |   |
|   Snake      River Sugar Company fixed rate loans      |   |                 | 250.0  |   |   |   | 250.0 |   |   |   | 250.0 |   |   |   | 250.0 |   |
|   CompX      variable rate promissory note             |   |                 | 50.0   |   |   |   | 50.0 |   |   |   | 43.0 |   |   |   | 43.0 |   |
|   Variable      rate debt                              |   |                 | 15.4   |   |   |   | 15.4 |   |   |   | 63.2 |   |   |   | 63.2 |   |
|   Other      fixed-rate debt                           |   |                 | .4     |   |   |   | .4 |   |   |   | .9 |   |   |   | .9 |   |
|                                                             |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Minority      interest in:                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   NL      common stock                                 |   | $                    | 55.6   |   |   | $ | 93.1 |   |   | $ | 45.8 |   |   | $ | 110.0 |   |
|   Kronos      common stock                             |   |                 | 20.5   |   |   |   | 42.7 |   |   |   | 15.6 |   |   |   | 27.6 |   |
|   CompX      common stock                              |   |                 | 14.4   |   |   |   | 25.2 |   |   |   | 11.9 |   |   |   | 8.5 |   |
|                                                             |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Valhi      common stockholders' equity                           |   | $                    | 618.4  |   |   | $ | 1,823.6 |   |   | $ | 468.8 |   |   | $ | 1,223.4 |   |

|                                                                                                                |   | Years ended December 31,                  |        |
|---------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|-------------|
|                                                                                                                |   | 2006                                      |        |   | 2007 |   |   | 2008 |   |
|                                                                                                                |   | (In      millions, except per share data) |        |
|                                                                                                                |   |                                      |        |   |   |   |   |   |   |
| Basic      EPS computation:                                                                                         |   |                                      |        |   |   |   |   |   |   |
|                                                                                                                |   |                                      |        |   |   |   |   |   |   |
|   Numerator      -                                                                                        |   |                                      |        |   |   |   |   |   |   |
|     Net      income (loss)                                                                      |   | $                                         | 141.7       |   |   | $ | (45.7 | ) |   | $ | (.8 | ) |
|                                                                                                                |   |                                      |        |   |   |   |   |   |   |   |   |   |
|   Denominator      -                                                                                      |   |                                      |        |   |   |   |   |   |   |   |   |   |
|     Weighted      average common shares                                                         |   |                                      | 116.1       |   |   |   | 114.7 |   |   |   | 114.4 |   |
|                                                                                                                |   |                                      |        |   |   |   |   |   |   |   |   |   |
|   Basic      EPS                                                                                          |   | $                                         | 1.22        |   |   | $ | (.40 | ) |   | $ | (.01 | ) |
|                                                                                                                |   |                                      |        |   |   |   |   |   |   |   |   |   |
| Diluted      EPS computation:                                                                                       |   |                                      |        |   |   |   |   |   |   |   |   |   |
|                                                                                                                |   |                                      |        |   |   |   |   |   |   |   |   |   |
|   Numerator:                                                                                              |   |                                      |        |   |   |   |   |   |   |   |   |   |
|     Net      income (loss)                                                                      |   | $                                         | 141.7       |   |   | $ | (45.7 | ) |   | $ | (.8 | ) |
|     Net      effect of diluted earnings per     share      of TIMET(1) |   |                                      | (2.3        | ) |   |   |  - |   |   |   |  - |   |
|                                                                                                                |   |                                      |        |   |   |   |   |   |   |   |   |   |
|     Net      income (loss) for diluted     earnings      per share     |   | $                                         | 139.4       |   |   | $ | (45.7 | ) |   | $ | (.8 | ) |
|                                                                                                                |   |                                      |        |   |   |   |   |   |   |   |   |   |
|   Denominator:                                                                                            |   |                                      |        |   |   |   |   |   |   |   |   |   |
|     Weighted      average common shares –     Basic              |   |                                      |  116.1 |   |   |   |  114.7 |   |   |   |  114.4 |   |
|     Stock      option conversion(2)                                                             |   |                                      | .4          |   |   |   | - |   |   |   | - |   |
|                                                                                                                |   |                                      |        |   |   |   |   |   |   |   |   |   |
|   Weighted      average common shares –   Diluted                                    |   |                                      |  116.5 |   |   |   |  114.7 |   |   |   |  114.4 |   |
|                                                                                                                |   |                                      |        |   |   |   |   |   |   |   |   |   |
|                                                                                                                |   |                                      |        |   |   |   |   |   |   |   |   |   |
|   Diluted      EPS                                                                                        |   | $                                         | 1.20        |   |   | $ | (.40 | ) |   | $ | (.01 | ) |

| (1) | The      dilutive effect of dilutive earnings per share for Kronos, NL and CompX in      2006, 2007 and 2008 and for TIMET in 2007 was not    significant. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (2) | Stock      option conversion excludes anti-dilutive shares of 267,000 during 2007 and      295,000 during 2008. |
|-----------|-----------------------------------------------------------------------------------------------------------------|

|                                                                     |   | Quarter ended                        |   |
|--------------------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                                     |   | March 31                                  |   |   | June 30 |   |   | Sept. 30 |   |   | Dec. 31 |   |
|                                                                     |   |                                      |   |
|                                                                     |   | (In      millions, except per share data) |   |
|                                                                     |   |                                      |   |   |   |   |   |   |   |   |   |   |
| Year      ended December 31, 2007                                        |   |                                      |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   |                                      |   |   |   |   |   |   |   |   |   |   |
| Net sales                                                           |   | $                                         | 359.0  |   |   | $ | 389.0 |   |   | $ | 390.6 |   |   | $ | 353.6 |   |
| Gross      margin                                                        |   |                                      | 80.1   |   |   |   | 72.9 |   |   |   | 76.3 |   |   |   | 56.6 |   |
| Operating income                                                    |   |                                      | 32.9   |   |   |   | 26.2 |   |   |   | 24.2 |   |   |   | 7.2 |   |
|                                                                     |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Net income      (loss)      (1) |   | $                                         | 26.1   |   |   | $ | (4.9 | ) |   | $ | (52.7 | ) |   | $ | (14.2 | ) |
|                                                                     |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per basic share:                                               |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Net      income (loss)               |   | $                                         | .23    |   |   | $ | (.04 | ) |   | $ | (.46 | ) |   | $ | (.12 | ) |
|                                                                     |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Year      ended December 31, 2008                                        |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                                                           |   | $                                         | 373.9  |   |   | $ | 436.1 |   |   | $ | 390.2 |   |   | $ | 285.1 |   |
| Gross      margin                                                        |   |                                      | 63.5   |   |   |   | 66.4 |   |   |   | 58.0 |   |   |   | 58.3 |   |
| Operating income                                                    |   |                                      | 9.6    |   |   |   | 9.8 |   |   |   | (2.1 | ) |   |   | 18.7 |   |
|                                                                     |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Net income      (loss)      (2) |   | $                                         | (5.9   | ) |   | $ | (.2 | ) |   | $ | (23.2 | ) |   | $ | 28.5 |   |
|                                                                     |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per basic share:                                               |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Net      income (loss)               |   | $                                         | (.05   | ) |   | $ | - |   |   | $ | (.20 | ) |   | $ | .25 |   |

|   | · | Beginning      in the second quarter we no longer had equity in earnings of TIMET, see      Note 3; and |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | · | We      recognized a $87.4 million tax charge in the third quarter for a change in      the German tax rates, see Note 12. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|

|   | · | We      recognized a $10.1 million goodwill impairment charge in the third      quarter, see Note 8; and |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | · | We      recognized a $25.8 million after-tax gain in the fourth quarter for real      property settlement, see Note 15. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                       |   | December 31, |    |
|--------------------------------------------------------------------------------------------|--------|--------------|---------|
|                                                                                       |   | 2007         |    |   | 2008 |   |
|                                                                                       |   |         |    |   |   |   |
| Current      assets:                                                                       |   |         |    |   |   |   |
|   Cash and cash equivalents                                       |   | $            | 18.4    |   |   | $ | 1.6 |   |
|   Restricted cash equivalents                                          |   |         | .4      |   |   |   | .5 |   |
|   Accounts receivable                                                       |   |         | .5      |   |   |   | .2 |   |
|   Receivables from subsidiaries and affiliates               |   |         | -       |   |   |   | .9 |   |
|   Deferred income taxes                                                |   |         | 1.6     |   |   |   | 1.7 |   |
|   Other                                                                          |   |         | .3      |   |   |   | .2 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
|       Total current assets                         |   |         | 21.2    |   |   |   | 5.1 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Other assets:                                                                         |   |         |    |   |   |   |   |   |
|   Marketable securities                                                |   |         | 271.9   |   |   |   | 257.3 |   |
|   Investment in and advances to subsidiaries       |   |         | 918.0   |   |   |   | 798.2 |   |
|   Other assets                                                              |   |         | .3      |   |   |   | .1 |   |
|   Property and equipment, net                                     |   |         | .9      |   |   |   | 1.2 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
|       Total other assets                           |   |         | 1,191.1 |   |   |   | 1,056.8 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
|       Total      assets                                      |   | $            | 1,212.3 |   |   | $ | 1,061.9 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Current liabilities:                                                                  |   |         |    |   |   |   |   |   |
|   Current      maturities of long-term debt                                      |   | $            | -       |   |   | $ | 7.3 |   |
|   Payables to subsidiaries and affiliates:                   |   |         |    |   |   |   |   |   |
|     Income taxes, net                                        |   |         | 1.5     |   |   |   | 2.9 |   |
|     Other                                                         |   |         | .7      |   |   |   | 3.0 |   |
|   Accounts payable and accrued liabilities                   |   |         | 3.1     |   |   |   | 2.0 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
|       Total current liabilities                    |   |         | 5.3     |   |   |   | 15.2 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Noncurrent liabilities:                                                               |   |         |    |   |   |   |   |   |
|   Long-term debt – Snake River Sugar Company |   |         | 250.0   |   |   |   | 250.0 |   |
|   Deferred income taxes                                                |   |         | 321.4   |   |   |   | 302.1 |   |
|   Other                                                                          |   |         | 17.2    |   |   |   | 25.8 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
|       Total noncurrent liabilities                 |   |         | 588.6   |   |   |   | 577.9 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Stockholders' equity                                                                  |   |         | 618.4   |   |   |   | 468.8 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
|       Total      liabilities and stockholders’ equity  |   | $            | 1,212.3 |   |   | $ | 1,061.9 |   |

----

|                                                                                     |   | Years ended December 31, |        |
|------------------------------------------------------------------------------------------|--------|--------------------------|-------------|
|                                                                                     |   | 2006                     |        |   | 2007 |   |   | 2008 |   |
|                                                                                     |   |                     |        |   |   |   |   |   |   |
| Revenues      and other income:                                                          |   |                     |        |   |   |   |   |   |   |
|   Interest and dividend income                                  |   | $                        | 36.0        |   |   | $ | 29.2 |   |   | $ | 27.0 |   |
|   Equity      in earnings of subsidiaries   and      affiliates |   |                     |  151.6 |   |   |   | (63.0 | ) |   |   |  2.0 |   |
|   Other      income, net                                                  |   |                     | 3.9         |   |   |   | 3.8 |   |   |   | 2.3 |   |
|                                                                                     |   |                     |        |   |   |   |   |   |   |   |   |   |
|     Total      revenues and other income                             |   |                     | 191.5       |   |   |   | (30.0 | ) |   |   | 31.3 |   |
|                                                                                     |   |                     |        |   |   |   |   |   |   |   |   |   |
| Costs and expenses:                                                            |   |                     |        |   |   |   |   |   |   |   |   |   |
|   General and administrative                                         |   |                     | 7.9         |   |   |   | 7.6 |   |   |   | 6.6 |   |
|   Interest                                                                     |   |                     | 24.1        |   |   |   | 24.1 |   |   |   | 24.2 |   |
|                                                                                     |   |                     |        |   |   |   |   |   |   |   |   |   |
|     Total      costs and expenses                                    |   |                     | 32.0        |   |   |   | 31.7 |   |   |   | 30.8 |   |
|                                                                                     |   |                     |        |   |   |   |   |   |   |   |   |   |
|   Income (loss)      before income taxes                        |   |                     | 159.5       |   |   |   | (61.7 | ) |   |   | .5 |   |
|                                                                                     |   |                     |        |   |   |   |   |   |   |   |   |   |
| Provision for income taxes (benefit)                                 |   |                     | 17.8        |   |   |   | (16.0 | ) |   |   | 1.3 |   |
|                                                                                     |   |                     |        |   |   |   |   |   |   |   |   |   |
|   Net      income (loss)                                                       |   | $                        | 141.7       |   |   | $ | (45.7 | ) |   | $ | (.8 | ) |
|                                                                                     |   |                     |        |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                     |        |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                       |   | Years ended December 31, |       |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|------------|
|                                                                                                                                       |   | 2006                     |       |   | 2007 |   |   | 2008 |   |
|                                                                                                                                       |   |                     |       |   |   |   |   |   |   |
| Cash      flows from operating activities:                                                                                                 |   |                     |       |   |   |   |   |   |   |
|   Net income      (loss)                                                                                                    |   | $                        | 141.7      |   |   | $ | (45.7 | ) |   | $ | (.8 | ) |
|   Deferred income taxes                                                                                                |   |                     | 20.7       |   |   |   | (19.5 | ) |   |   | (1.8 | ) |
|   Equity in earnings of subsidiaries   and affiliates                                    |   |                     | (151.6     | ) |   |   |  63.0 |   |   |   | (2.0 | ) |
|   Cash      dividends from subsidiaries                                                                           |   |                     | 87.0       |   |   |   | 49.2 |   |   |   | 51.0 |   |
|   Other, net                                                                                                                |   |                     | (.7        | ) |   |   | .1 |   |   |   | .1 |   |
|   Net change in assets and liabilities                                                                  |   |                     | (.6        | ) |   |   | 12.8 |   |   |   | 8.1 |   |
|                                                                                                                                       |   |                     |       |   |   |   |   |   |   |   |   |   |
|       Net cash provided by operating       activities |   |                     |  96.5 |   |   |   |  59.9 |   |   |   |  54.6 |   |
|                                                                                                                                       |   |                     |       |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                                                                  |   |                     |       |   |   |   |   |   |   |   |   |   |
|   Purchases of:                                                                                                             |   |                     |       |   |   |   |   |   |   |   |   |   |
|     Kronos common stock                                                                                      |   |                     | (25.4      | ) |   |   | - |   |   |   | - |   |
|     TIMET common stock                                                                                       |   |                     | (18.7      | ) |   |   | (27.5 | ) |   |   | - |   |
|     NL      common stock                                                                                               |   |                     | (.4        | ) |   |   | - |   |   |   | - |   |
|   Loans to subsidiaries and affiliates:                                                                      |   |                     |       |   |   |   |   |   |   |   |   |   |
|     Loans                                                                                                              |   |                     | (12.9      | ) |   |   | (20.1 | ) |   |   | (32.2 | ) |
|     Collections                                                                                                        |   |                     | .8         |   |   |   | - |   |   |   | - |   |
|   Investment in other subsidiary                                                                                  |   |                     | (2.4       | ) |   |   | (5.3 | ) |   |   | (3.1 | ) |
|   Change in restricted cash equivalents, net                                                            |   |                     | -          |   |   |   | .1 |   |   |   | - |   |
|   Other, net                                                                                                                |   |                     | 1.5        |   |   |   | - |   |   |   | (.2 | ) |
|                                                                                                                                       |   |                     |       |   |   |   |   |   |   |   |   |   |
|       Net cash used      in investing activities                                         |   |                     | (57.5      | ) |   |   | (52.8 | ) |   |   | (35.5 | ) |
|                                                                                                                                       |   |                     |       |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                       |   | Years ended December 31, |    |
|----------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|---------|
|                                                                                                                       |   | 2006                     |    |   | 2007 |   |   | 2008 |   |
|                                                                                                                       |   |                     |    |   |   |   |   |   |   |
| Cash      flows from financing activities:                                                                                 |   |                     |    |   |   |   |   |   |   |
|   Indebtedness:                                                                                                  |   |                     |    |   |   |   |   |   |   |
|     Borrowings                                                                                         |   | $                        | -       |   |   | $ | - |   |   | $ | 47.6 |   |
|     Principal payments                                                                            |   |                     | -       |   |   |   | - |   |   |   | (40.3 | ) |
|   Loans      from affiliates:                                                                                    |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Borrowings                                                                                         |   |                     | -       |   |   |   | - |   |   |   | 3.0 |   |
|     Principal      payments                                                                            |   |                     | -       |   |   |   | - |   |   |   | (.7 | ) |
|   Cash      dividends                                                                                            |   |                     | (48.0   | ) |   |   | (45.6 | ) |   |   | (45.5 | ) |
|   Treasury stock acquired                                                                              |   |                     | (43.8   | ) |   |   | (11.1 | ) |   |   | - |   |
|   Other, net                                                                                                |   |                     | .3      |   |   |   | .7 |   |   |   | - |   |
|                                                                                                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
|       Net cash used by financing activities                         |   |                     | (91.5   | ) |   |   | (56.0 | ) |   |   | (35.9 | ) |
|                                                                                                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents:                                                                                  |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Net decrease                                                                                              |   |                     | (52.5   | ) |   |   | (48.9 | ) |   |   | (16.8 | ) |
|   Balance at beginning of year                                                               |   |                     | 119.8   |   |   |   | 67.3 |   |   |   | 18.4 |   |
|                                                                                                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Balance at end of year                                                                     |   | $                        | 67.3    |   |   | $ | 18.4 |   |   | $ | 1.6 |   |
|                                                                                                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
|                                                                                                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
| Supplemental disclosures –   Cash paid (received) for:                       |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Interest                                                                                                       |   | $                        | 24.7    |   |   | $ | 24.0 |   |   | $ | 24.1 |   |
|   Income taxes, net                                                                                    |   |                     | 1.3     |   |   |   | (10.9 | ) |   |   | (6.2 | ) |
|                                                                                                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Noncash      financing activity:                                                                               |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Dividend      of TIMET common stock                                                                |   |                     | -       |   |   |   | 897.4 |   |   |   | - |   |
|     Issuance      of preferred stock in     Settlement      of tax obligation |   |                     |  - |   |   |   |  667.3 |   |   |   |  - |   |

----

|                                                   |   | December 31,       |   |
|--------------------------------------------------------|--------|--------------------|--------|
|                                                   |   | 2007               |   |   | 2008 |   |
|                                                   |   | (In      millions) |   |
|                                                   |   |               |   |   |   |   |
| Investment      in:                                    |   |               |   |   |   |   |
|   NL      Industries (NYSE: NL)              |   | $                  | 334.7  |   |   | $ | 284.9 |   |
|   Kronos      Worldwide, Inc. (NYSE: KRO)    |   |               | 509.2  |   |   |   | 451.2 |   |
|   Tremont      LLC                           |   |               | 13.4   |   |   |   | 11.1 |   |
|   Medite                                     |   |               | 13.7   |   |   |   | (5.9 | ) |
|   Waste      Control Specialists LLC         |   |               | 40.8   |   |   |   | 50.1 |   |
|       Total              |   |               | 911.8  |   |   |   | 791.4 |   |
|                                                   |   |               |   |   |   |   |   |   |
| Noncurrent      loans to Waste Control Specialists LLC |   |               | 6.2    |   |   |   | 6.8 |   |
|                                                   |   |               |   |   |   |   |   |   |
|       Total              |   | $                  | 918.0  |   |   | $ | 798.2 |   |
|                                                   |   |               |   |   |   |   |   |   |
|                                                   |   |               |   |   |   |   |   |   |

|                                                       |   |  Years ended December 31, |   |
|------------------------------------------------------------|--------|--------------------------------|--------|
|                                                       |   | 2006                           |   |   | 2007 |   |   | 2008 |   |
|                                                       |   | (In      millions)             |   |
|                                                       |   |                           |   |   |   |   |   |   |   |
| Equity      in earnings of subsidiaries and affiliate |   |                           |   |   |   |   |   |   |   |
|                                                       |   |                           |   |   |   |   |   |   |   |
| NL      Industries                                         |   | $                              | 22.7   |   |   | $ | (29.9 | ) |   | $ | 19.4 |   |
| Kronos      Worldwide                                      |   |                           | 43.4   |   |   |   | (39.0 | ) |   |   | 4.2 |   |
| Tremont      LLC                                           |   |                           | 86.4   |   |   |   | 16.6 |   |   |   | (1.9 | ) |
| Valcor      and Medite                                     |   |                           | 1.4    |   |   |   | 2.6 |   |   |   | 2.9 |   |
| Waste      Control Specialists LLC                         |   |                           | (10.3  | ) |   |   | (15.2 | ) |   |   | (22.6 | ) |
| TIMET                                                      |   |                           | 8.0    |   |   |   | 1.9 |   |   |   | - |   |
|                                                       |   |                           |   |   |   |   |   |   |   |   |   |   |
|     Total                              |   | $                              | 151.6  |   |   | $ | (63.0 | ) |   | $ | 2.0 |   |
|                                                       |   |                           |   |   |   |   |   |   |   |   |   |   |
| Cash      dividends from subsidiaries                      |   |                           |   |   |   |   |   |   |   |   |   |   |
|                                                       |   |                           |   |   |   |   |   |   |   |   |   |   |
| NL      Industries                                         |   | $                              | 20.1   |   |   | $ | 20.2 |   |   | $ | 20.2 |   |
| Kronos      Worldwide                                      |   |                           | 29.0   |   |   |   | 29.0 |   |   |   | 29.0 |   |
| Tremont      LLC                                           |   |                           | 37.9   |   |   |   | - |   |   |   | 1.8 |   |
|                                                       |   |                           |   |   |   |   |   |   |   |   |   |   |
|     Total                              |   | $                              | 87.0   |   |   | $ | 49.2 |   |   | $ | 51.0 |   |

|                                                                              |   | Years ended December 31, |   |
|-----------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                              |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                                                              |   | (In      millions)       |   |
|                                                                              |   |                     |   |   |   |   |   |   |   |
| Components of provision for income taxes (benefit): |   |                     |   |   |   |   |   |   |   |
|   Currently payable (refundable)                         |   | $                        | (2.9   | ) |   | $ | .2 |   |   | $ | (4.8 | ) |
|   Deferred income taxes (benefit)                        |   |                     | 20.7   |   |   |   | (16.2 | ) |   |   | 6.1 |   |
|                                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                                                     |   | $                        | 17.8   |   |   | $ | (16.0 | ) |   | $ | 1.3 |   |
|                                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash paid (received) for income taxes, net:         |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Received from subsidiaries                                  |   | $                        | -      |   |   | $ | (16.8 | ) |   | $ | (11.0 | ) |
|   Paid to Contran                                             |   |                     | 1.2    |   |   |   | 5.8 |   |   |   | 4.6 |   |
|   Paid to tax authorities                                |   |                     | .1     |   |   |   | .1 |   |   |   | .2 |   |
|                                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                                                     |   | $                        | 1.3    |   |   | $ | (10.9 | ) |   | $ | (6.2 | ) |

|                                                                                                                                |   |               |      |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|
|                                                                                                                                |   | December 31,       |      |
|                                                                                                                                |   | 2007               |      |   | 2008 |   |
|                                                                                                                                |   | (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    | ) |   | $ | (106.3 | ) |
|       Kronos Worldwide                                                                           |   |               | (204.7    | ) |   |   | (194.2 | ) |
|     Federal      and state loss carryforwards and other     income      tax attributes |   |               |  5.2 |   |   |   |  3.9 |   |
|     Accrued liabilities and other deductible differences                               |   |               | 6.2       |   |   |   | 7.1 |   |
|     Other taxable differences                                                                         |   |               | (11.9     | ) |   |   | (10.9 | ) |
|                                                                                                                                |   |               |      |   |   |   |   |   |
|       Total                                                                                           |   | $                  | (319.8    | ) |   | $ | (300.4 | ) |
|                                                                                                                                |   |               |      |   |   |   |   |   |
| Current      deferred tax asset                                                                                                     |   | $                  | 1.6       |   |   | $ | 1.7 |   |
| Noncurrent      deferred tax liability                                                                                              |   |               | (321.4    | ) |   |   | (302.1 | ) |
|                                                                                                                                |   |               |      |   |   |   |   |   |
|       Total                                                                                           |   | $                  | (319.8    | ) |   | $ | (300.4 | ) |